Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1891-08-01
MAKINGM0 M0NEYCHEAP
The Experience Through Which the
Argentine Republic
Is PASSING TO FIND PROSPERITY.
An Effort to Make Dollars More Plentiful
Among the People.
MOST RAPID DEVELOPMENTIN HISTORY

Inthe August Century, there is a careful
account of the experience through which
the Argentine Republic is passing in an at
tempt to increase the general prosperity by
making money cheap and plentiful, which
ought to be read and considered in every
hamlet in the United States. The writer
says:
The Government of the Argentine. Re
public is closely modelled upon that Of the
United States. 1t is a country of almost
boundless natural resources, whose develop
ment has been so rapid as to be almost with
out parallel in history, and whose growth
in wealth, prosperity and commercial i'm
portance has been so nearly approached by
no other country in the world as by Amer
lea. Itspeople are an energetic, buoyant, self
confident race full of pride in their
country, and inclined to the belief that it is
capable of withstanding any strain that
may be put upon it. Yet, rich and pros
porous as they were, these people conceived
the idea, when slight check to their de-
velopment was felt a few years ago, that
what they needed in order to attain the full
measure of their prosperity was to make
money ''cheap and plenty"
Perceiving the Importance of their ex-
perience as an object lesson for our own
| country, bearing as it does directly upon
discussions and propositions current here,
we have gone thoroughly into the matter,
examining all available sources of informa-
tion, and have thus been able to prepare for
our readers what we believe to be the most
complete as wall as the most accurate ac-
count yet published.
A COMING ESTABLISHMENT
In 1873 there was established in the
capital city of the Argentine Republic,
Buenos Ayres, the Hypothecary or Mort
gage. Bank, whose main object was to make
loans on all kinds of landed property. The
| principles upon which tthese loans were to
be made were much the same as Senator
Stanford is advocating as basis for similar
loans by the United States Government.
ANY person owning landed property in the
province could go to the bank and secure
loan for half its value, which was to be fixed
! by the banks appraisers. The bank gave
him a mortgage bond, called cedula, which
was to run for "a years. at from to per
cent interest, 2 per cent amortization, and
per cent commission. The interest was pay
able quarterly, and there were coupons at
tached for the "a years.
The cedulas were issued in alphabetical
series, beginning with A and running to P.
|
| Stock Exchange, and from their first issue
became an important element in specula-
| tion. The first of series A was between
| S13, ,O00, 900 and $4,000, 600, the Argentine
| dollar being about 96 cents of our money,
| being based upon the unit of the French
monetary system. These remained at par
for only a short time after issue. They
were quickly followed by others, until
series A closed with a total issue of S27,-
1894, 900. Then came series B, with an issue
of 81, ,092, 900; series c, with 1913, 900; series
| D, with S2SS, 200, all at per cent. Then
came series E, with total issue of S15,-
$4,000 at 6 per cent, and F, with a total
issue of Sc, ,100 900 at per cent. Ten years
after the banks establishment over $780,
900, 900 of these cedulas had been issued, all
based, be it remembered, upon the landed.
property Of single province.
THEY FORMED A RING.
They had from the outset been used, for
speculative purposes, and every year this
use became more wild and reckless. A ring
was formed between directors of the bank
and certain favored brokers for the absolute
control of the successive issues. No one
could obtain concession for loan who did
not make application through these brokers,
and in order that all the members of the
ring might reap their share of the profit the
value of the property upon which the loans
were placed was raised to extravagant
figures.
The fictitious prosperity which the Hy-
pothecary Bank brought to Buenos Ayres
infected the entire Republic, and in 1884
Congress passed a law annexing a National
Hypothecary Bank to the National Bank,
! which was the fiscal agent of the Govern
ment and of all the provinces except Buenos
Ayres. The issue of cedulas on the landed
property of the nation was authorized for
so per cent. of its value, at interest from
to per cent, with per sent amortization
and per cent commission, no single loan
to exceed S25O,00O, and all payable at the
end of u years. The issue of cedulas was
at first limited to $40, 600 900, but this. was
extended from time to time so that in No
vember, 1890, six years after the National
Bank began the experiment, it had out no
less than S2O4, 100000 in gold, all bearing
interest. The Buenos Ayres Bank had in
creased its issue of cedulas so that at the
same date it had out no less than $3.50, ,00O,-
600, but these were in paper, making the
grand total of money which had been
loaned upon land in the Republic during II
years 1854, ,000, 900, or over S140 for every
man, woman and child.
IMMIGRATION CHECKED.
When the National Bank went into the
hypothecary business, In 1884, paper money
was at par with gold. Several severe
checks to the national prosperity were felt 4
during that year. Cholera made necessary
that year a rigorous quarantine against
Mediterranean steamers and checked immi-
grafton. Heavy floods during the fall de-,
layed the shipment of crops from the in
terror to the seaboard. A new Government
loan of $50 ,O00, 900 was to be placed, but the
European market which was expected to
take $40, 0,000, 900 of 1t was so nearly sated
with Argentine investments of one kind or
another that it declined to take more than
S., 100000.
In January, 1885, a run began upon the, I,
Provincial Bank of Buenos Ayres, and COM
PEELED it to suspend specie payments,
whereupon the President of the republic
declared the national currency legal ten
der Gold rose at once to II per cent pre-
mium, and then to 20 per cent. In Febru-
ary it had reached SO per cent, and it con-
tinued to rise steadily till at one time it was
at 800 per cent That is to say, S4OO in paper
was worth only S10O in gold. From the mo-
ment that the gold standard was abandoned |
the demand for more paper money began to
be heard, and it was poured out by the Gov
ernnent in almost unlimited volume. Un-
der the pretense of creating a sounder
financial system and securing more stable |
currency, law was passed in November,
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