The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1895-05-10
BRAzIL'S NEW SYSTEM
Has a Financial Experience Sim
liar to United States.
But She Deals With It in a
Different Way.
GOLD AND PAPER USED
Are to be Kept Circulating on
an Equality.
At One Time PaperWasActually
At One Time PaperWasActually
at a Premium.

WASHINGTON, May 1O.-The republic of
Brazil is having an experience in finance
much like that of the United States, but
her methods of dealing with the subject
are different and they promise to advance
her to an enviable position. Senor Men
donca, the Brazilian minister here has
been close student of the recent finan-
cial developments in his country and
this, and his long residence in the United
States permits him TO make interesting
observations
lie has received copies of a recent de-
cree for an internal loan of 100.O0O.O00
cqntos, or $5O,OOO,OOO. Part of this was
taken by the people in the form of
popular loan, much as Senator Sherman
urged as the most desirab BILE manner of
floating bonds. Of this $1O,OOO,OO0 was
at once used in redeeming paper money
and $15, 900, 900 more will be used for the
same purpose.
The important feature of this step is
that Brazil has begun to strengthen her
gold reserve and reduce her paper mon
ey, with a view to bringing her two
forms of currency-gold and paper-to
an equality. 1t will not be bi-metallism,
as Brazil has little silver except for sub
sidiary coin, but it will inaugurate the
unique but effective system of gold and
paper circulating side by side on an
equality.
"At the present time," said Senior
Mendonca, tour paper currency is worth
40 cents on 81 in gold This deprecia-
tion was due to the large issue of paper
money some years ago and under the
provisional government, before the re-
| public was ,constitutionally organized.
| The printing presses were started and
| food of paper bills, aggregating $685.
| 000, 900, little short of the United States
issue of greenbacks, was put into circu-
| lation.
at $1O0,00U,0 600 The natural result,
therefore. of putting out this large
amount of paper while the gold reserve
remained unchanged, was to send gold
to a premium and the paper money to a
! discount At one time our paper circu-
=! lation was so small compared with the
| gold balance, that paper was actually at
premium over gold. each paper milreis
! being a gold penny above par
''But with the increase of the paper
currency its value gradually fell until, as
l have stated, the current rate is about
/ forty cents on the dollar of gold, or so
per cent discount"
Senior Mendonca was asked: "Wil
Brazil ultimately be on strictly gold
basis, meeting paper, bonds and all obli-
| cations in gold?"
1t is not as much that as it is deter
mined purpose to restore complete
credit to it's paper currency" said
he. There is some silver used as
subsidiary coin, but not sufficient
to give us bimetallism in the sense used
( in the United States, with gold and sill
yer coined and circulating side by side.
With US it is gold and paper, instead of
coin and silver and we expact to make
our paper as good as gold"
Senor Mendonca was asked concern
ing the popular features of the recent
loan. "The government was careful to
give every advantage to the people at
large in preference to the bankers"
J said he. within three days of
the time notice was given it had
been more than taken. The loan was
for $5O,0O0,O 1000 but the subscripti ons in :
side of three days reached $64,0OO,OO0.
OF this amount private individuals put
in subscriptions amounting to $4,000, :
600. Instead of making pro rata al
lowance between the individuals and
bankers. the government gave the full
$24 000, 900 of bonds subscribed by in
dividuals, leaving the banks to take a
pro rata amount of the balance
"As a rule the Rothschilds are the
bankers of BRAZIL continued the minis
ter, but in the last instance he conf
dence in the government was SO strong at
home that there was no need of going
abroad for money. The Rothschilds and
other financial houses are ready at any
time to take the bonds of Brazil.
Under a somewhat peculiar system
which we have, the government is
always supplied with ready cash, and the
scrap is taken up as fast as the customs
and other revenues are realized The
bankers never have cause for uneasiness
because Brazil has never been a day
late in paying an obligation"
Senior Mendonca was asked as to the
recent report of United States Minister
Buchanan, to the state department, to
the effect that South American merchants
were unable to secure bills of exchange
on New York, because of the fear among
South American bankers that the United
States was on the eve of a silver crisis
which would prevent the honoring OF
these bills in gold.
81 read that report with interest" said
the minister, and was much surprised by
il. 1t indicates that there is great mis-
| apprehension, or lack of information
among the merchants or bankers. As a
matter of fact they need have no fear
whatever that bill of exchange on New
York will not be honored in gold.
ut is the invariable custom to pay
these bills in gold, even if a gold pay
ment is not specified. The mere men
tion of the word dollar in the bill of ex-
change would be sufficient to insure &
gold payment"
| Subscribe for the Daily STATE JOURNAL