Evening star., 1895-06-10
ON A GOLD BASIS
Chile's Decision May Play an In
portant Part in This Country.
WHAT SECRETARY OF LEGATION SAYS
SiIver's Cause May Not Suffer
Through the Chilean Conclusion.
FOREIGN LOANS UNAFFECTED

On the 1st irstant the government of
Chile placed its currency on q gold basis
and began the retirement of its paper
money.
A cablegram announcing this action has
been received by the Chilean minister in
this city. For seventeen years Chile has
been using paper currency that was IN
troduced into its monetary system with the
idea of keeping it at par. The result was
that the paper money drove the gold and
silver out of the country. until paper was
the only medium of exchange. Then came
a depreciation in the value of the paper
dollar which from circulating as the equiv
alent of an American dollar deprecated
until it was worth but b cents. This was
the condition of the governments finances
when a metal money was demanded. and
when, last February, the Chilean congress
passed a law retiring the paper money and
substituting gold and silver in its stead,
though it is not expected that there Will
be any metal except silver in actual circu-
lation, the value Of which will be fixed by
its ratio of exchange with gold.
What is snid in This Country.
This action of the Chilean government
comes at a time when it will play an inn
portant part in the great political fight
men claim that it is but another move on
the part of the Rothschilds to add to the
value of gold. The gold standard or sound
money men say it is another practical les
son on the danger of having currency
based on anything that cannot command
value through intrinsic properties. They
say it is a lesson on the danger of depreci-
alton in the currency that should warn the
United States and prevent the people of
this country from making dangerous ex-
periments with its currency.
Secretary Cruz of the Chilean legation
was asked today by 6 Star reporter to eX-
plain the practical effect of the action OF
his government in placing its currency on
a gold basis.
No Effect on It's Foreign Lonns.
''It will have no effect on our foreign
Ioans,'' he replied, but will simply insure
to the country a stable currency. All of
the Chilean foreign loans have been pay
able in gold, both principal and interest.
The bondholders will not be given any ad-
vantage CT placed under any disadvantage
by this action of Chile. l do not anticipate
that gold will be actually in circulation in
Chile. The money handled by the people
will be both silvcr-its value determined by
a fixed ratio with gold-and bank notes is
sued under a system similar in many re-
spacts to the national bank system in the
United States. This will be the entire ef
feet of the act which was passed last Feb
ruary and went into eIation on the first
day of this month"
The government of Chile now owns large
nitrate interests, which the congress of
that country has provided shall be sold, the
coin so secured.to be used as metal money
for circulation in that country. The
Chilean currency conversion BILL" as 1t is
known, provides that the president of the
republic, for the term of three years, shall
coin up to Sl0.o0n.ouo in silver money. This
currency is II be used in the redemption
of state paper money, which is 10 be de-
mon ival N n ma "
meHt of purchase money to be derived
from the nitrate properties. the president
of the republic is empowered to discount or
negotiate advances abroad upon such I'M
paid purchase money. All bank notes of a
valUe less than 50 are to be retired, and
their place in the currency of the country
will be taken by gold and silver. 1t is also
provided that silver shall not be a legal
tender for more than so, and for the pay
ment of sums above that amount it is stip-
ulated that the mint shall exchange for
gold the silver dollars presented to it. All
obligations TO ray to the government can
be Cancelled with silver money, whatev
the amount of the obligations may be.
Through this provision it will be seen the
silver dollar bears about the same relation
to gold in Chile the greenback does in
the United States, except that the silver
dollar has an additional intrinsic value.
Many people of conservative tendencies
in this city are not inclined to think that
the action of Chile will be real detriment
to the cause of silver. Comparatively little
gold. it is expected, will be placed in actual
use in Chile, but that metal will figure
there as important because it fixes the
value of the silver dollar. On the other
hand, the law of last February required
the president to coin a large amount of
silver and in this way the white meta,
will be used as money, and will be in de-
mand there, though for seventeen years it
has been displaced by a paper currency.
But the Chilean government will be under
the necessity of having gold reserve, just
as the United States maintains gold re-
serve, and this may cause complications iE
manipulating the Chilean treasury, as The
currency conversion bill distinctly stpu-
lates that all obligations 10 the government
can be Cancelled in silver.
The movement that has now given to
Chile metallic currency has been on foot
actively for two or three years. 1t seems
to have had its entire support from the de
rnand of the people that they be provided
with money that would not shrink in value.
Chile was one of the two great nations of
the earth, the other being Japan, that had
previously declined to accept gold STAN
dard for its currency. Her present action
leaves the burden of maintaining a silver