The true northerner. [volume] (Paw Paw, Mich.) 1855-1920, 1891-08-19
PAW PAW. MICH, AUG. 10, 1891.
A Valuable Lesson.


In view of the proposition of the
peoples party" to inaugurate sys-
tenn of government loans To the people
at a nominal rate of interest, it may be
well to again call the attention of the
leaders of The Telegraph to the expert
ence of the Argentine Republic in the
like financial scheme, from which a
valuable lesson can be drawn. The peo-
pie of this once prosperous South
American country, in 1878 experiencing
temporary stagnation in business, con-
ceived the idea of providing themselves
with an abundance of "cheap money"
expecting thereby to reap rich reward
to improve business and accumulate
fortunes. Like the members of the
Peoples party and the Alliance, the
''financiers" of this country imagined
that an abundance of CHEAP" money
would at once solve all the financial
problems of the day and secure pros
perity to all.
There was established at Buenos Ayres
what was called the Hypothecary or
Mortgage Bank, where owners of land
cold obtain money to the extent of half
the value of the land in the shape of
mortgage bonds Ten years after the
bank was established, there had been
issued $1,000 600 in these bonds. A
second bank was started similar to the
first in 1884, which after six years of
life has issued 1904, 900, 900 in bonds or
money based entirely on land values
In seventeen years the government had
loaned over $40 for every man woman
and child At the outset, this paper
money was at par with gold; but in
1884 and 1885, gold was quoted at a
premium, going as high as 800 per cent,
that is $500 in paper money was worth
one hundred dollars in gold. The mo-
ment this paper money began to
depreciate the demand for il was greater
than ever, and the printing presses
were again set to work providing the
people with more of this '.cheap" money.
All property rose to fictitious value,
everything was inflated, dishonesty and
wild speculation was rife. Enormous
quantities of gold were exported to keep
up the credit of the country in foreingn
countries. In March 1891, it was
estimated that the paper issues of the
several banks amounted to 1880, 900, 600,
worth about % cents on dollar, all
irredeemable and depreciating more
and more every day. At the close of
last year the Argentine Republic found
itself with debt of S772, 500, 900 or
about 1903 per capita.
1t is no wonder that the credit of the
nation collapsed. 1t is no wonder that
the banks were utterly unable to meet
their obligations and stopped payment.
1t is no wonder that the value of the
lands upon which the loans of paper
money were based dropped in value
and became almost unsaleable. The
government tried desperately to tide
over the difficulty and avert "a collapse,
but all to no purpose. The collapse
came, and with it one of the most
disastrous financial failures in modern
times-that of Barring Bros. London
bankers, which had invested in Argen-
tine securities. The whole financial
world was shaken and panic narrowly
averted in the United States.
With such disastrous and far-reach.
ing consequences as this following an
experiment with cheap paper money,
it behooves the members of the Alliance
and the Peoples party who so ardently
advocate a scheme whereby the govern
ment shall be authorized to loan cheap
money in unlimited quantities to own
ers of land and non-perishable products,
to stop and contemplate the almost
inevitable result. A valuable lesson can
be drawn from the recent experience OF
the Argentine Republic. -KalamazoC
Telegraph.