The midland journal. (Rising Sun, Md.) 1885-1947, 1897-08-20
A Startling Story.-Where the Bank
ruptcy Comes In.

A Startling Story.-Where the Bank
ruptcy Comes In.
A sensational article was printed by
one of our prominent journals Saturday
morning last, saying that "Mexico groans
under its load of gold obligations"
"rhat the fall in silver causes the out
look to mean Mexican reputation, public
and private" etc.
So far as the word "public" is used in
this inference, it, in meaning the Mexican
Government, is grave error that requires
an apology.
Mexico's gold debt today is less than
one hundred millions, OIL which less than
six millions is paid annually i'll gold,
about three-fourths to Europe, the other
fourth to home owners.
Now, when the principal of the bonded
debt of New York City alone is remem-
bered to exceed all Mexico's indebtedness,
it may be realized that so small sum,
comparatively speaking, cuts but a small
figure in the direction of any reputation,
even should silver go much lower than it
now is.
Silver at 81 for 81 of gold, or at pre-
MUM in Mexico of 100 per cent means
that $4,000, 900 annual interest in gold
amounts to ST., 10000 silver, to be paid
to get the gold.
Silver Mexican dollars, if quoted at 40
cents in Europe, means a premium in
Mexico of $50, or that it costs s. so i'll
silver for each gold dollar. This incaeases
the above annual payment to $I2 500, 900
in silver to get the $1,000, 900 gold.
Should the Mexican dollar fall to IS
cents gold, that means premium in
Mexico of 800 per cent, or that it would
cost Mexico s. in silver to obtain 81 in
gold.
Thus 800 per cent premium would
mean four times the Sc, 900 annual
gold payment in silver Mexican dollars to
get such gold with, a matter of $24, 900, 600
Should the Mexican dollar fall to ten
cents gold, that means Mexico would
have to pay ten times Sc, 900, ooo or $780,
COO, 900 year in silver to get the neces-
sary gold.
| This is an Illustration of the effects of a
government, or railway, or a corpora
ton, guaranteeing to pay gold when the
gold is not under its control, and may be
made by the COLDS owners to cost
anything.
A firm guaranteeing to thus pay what
it has no idea the future value of the
thing guaranteed will be, is conducting
his business on unsound principles.
Regarding the effect of decline in
silver upon Mexican railway securities
now payable in gold, the above relations
of gold to silver set forth show a serious
state of affairs.
The three leading railway systems of
Mexico now owe about $I45, 900, 900, on
which, at an average of S per cent an
annual payment of $3.50, 900 gold is
called for. If the quotation of the Mex
lean dollar is as cents gold, it means 222
times that sum in silver to get it.
2.22 times $3.50, 900 equals $I6, o95, 900
annually to be paid in Mexican silver
dollars. Should the silver dollar fall to
80 cents gold, that means $685. times
S725o, 900, or $24, 100, 600 in silver an
nually.
Such an obligation would probably
bankrupt these railways; they would have
no choice but reputation.
Because such an obligation might re-
quire all increase of freight, &c., charges
that would practically stop traffic. All of
which European and American holders of
these Mexican railway or other Mexican,
Argentine, &C., &C., corporation secu-
rites must consider as they watch the
quotations for silver daily made in
London.
Now, ON the other hand, this increased
cost to get gold on the part of Mexicans
forms wall of protection to them on all
their industries to precisely the same ratio
of percentage above set forth.
Mexico now has 1000 different manu-
featuring industries. Every day the
number of plants in some one of these
different industries is increasing.
Mexico is now turning out of its man
factories fine grades of carpets and the
finest grades of woolens i'll all lines.
Without taking into consideration diff
ferences in cost of labor and incidentals,
we here suppose roll of carpet costs in
New York $50, on which our New York
manufacturer makes 10 per cent profit.
This same roll of carpet is, say, 40 per
cent, or reduces what the exporting Mex
lean gets to $50 for the roll.
Say silver drops to 40 cents gold for a
Mexican dollar.
That means the Mexican exporter will
get two and a-half times his $3o-less