The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1890-07-28
LAND As BASIS FoE MONEY.
Tho Panic in South America Contain
Lesson for United States.
Chicago Tribune.

The Panic in South America Contains
Lesson for United States.
Chicago Tribune.
There have during the last few days,
been brief dispatches regarding financial
panic in the South American republic OF
Uruguay. There is a run on the Monte
video banks, and the government, in order
to check II, has suspended for six months
the law requiring the banks to redeem
their notes. Uruguay is so near the Ar
gentine Republic, which has been suffering
from similar panic for some time, and
has patterned its financial methods so
closely after those Of its larger neighbor,
that it is not surprising it should be in hot
water.
One Of the great causes of the Argentine
panic, which has sent gold up to premium
of COZ per cent, was the making of mort
gage loans by the government to any one
who wished to borrow money on them.
The Argentine Republic did not do what
tie American cranks asked footprint It's
notes and give them to every real estate
owner at two per cent. on the security OF
his land, but 1t took his mortgage bond,
ssld it for what it would fetch, gave him
that money and promised the purchaser of
the bond to pay interest and principal
If the mortgagor failed to do it. The re-
suit was an apparent immense increase
in the value of lands. Fraudulent
valuations became common, and men
mortgaged their land for more than they
were worth. Real estate seemed to adj
vance in value so rapidly that everybody
went wild. and speculation became uni
versal. Then came the smash. Instead OF
perceiving that the mischief had been done,
and that the sick man cannot get well till
he has passed through long and tedious
convalescence. the president of the Argen-
tine Republic has authorized the issue of
500 000, 900 worth in bank notes ito relieve
the financial situation" He will be lucky
he does not add fuel to the flames. His
plan is too much like that of giving whisky
to drunken fellow to sober him.
Uruguay went into this same land mort
gage business, though little later than its
neignbor. The first results were just the
same Land seemed to increase in value
rapidly, and everybody thought he was
getting rich. The selling price of all the
land in Montevideo was more than doubled
in two years. A bank was started on about
every street corner. A man with q small
he wanted. Finally the reaction has come
The Montevideo banks have suspended
specie payment, and it is impossible to tell
when they will resume It. After the dust
has cleared away. it will be found that the
debts of the state have enormously in
creased and the power of the people to pay
taxes greatly lessened.
Were the United States, rich as it is, to
adopt any of the schemes of cranks and
go directly or indirectly into the business
of cheap fiat money lending ON land there
would at first be an enormous apparent in
crease of prices, for the lands seemingly
would double or treble in value. Specula-
ton would go Wild in them and then in
other things. to be followed shortly bv re-
action more deadly than that of 1873. The
smash would leave things fatter than a
cold pancake.