Little Falls herald., 1898-04-08
The Monetary Prob blen1.
CHILI,S EXPERIENCE.

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cH1L1's EXPERIENCE. .
ne Exception to the Rule-cycloas
* Of Disaster Always Follows Geld
Standard Contraction.
=$# La Tribuna, Valparaiso, Chill, COM
ments on the cyclone Of disaster which
always follows gold standard contrac-
tion in most graphic style. It will
be remembered that Chill few years
ago had sound financial policy, using
gold, silver and paper as money and
advancing more rapidly in wealth and
prosperity than any other South Amer
lean country. She came out of her
war with Peru and her civil war as
cheeky and as impudent as Japan was
after her victory over China Japan,
as it will be remembered, was on the
high road to an advanced position
among the great nations of the world
when she committed financial hari kari
by adopting the gold standard and now
is in state of bankruptcy and liquida-
ton. The condition of Chilli is pre-
cisely similar. The following is the
article in question, translated for the
Silver Knight by A. NJ. Soteldo:
Two years have already elapsed since
gold has taken the place of paper money
issued by the states and the banks.
Gold has remained in circulation as
money, but not as an evidence Of wealth
or even welfare, but on the contrary,
AS an expression of poverty and parali-
zation of every kind of business.
The scarcity of products, to draw in
payment of obligations in Europe, has
forced the banks, in order to avoid the
export of species-the circulating gold
land the consequent weakening Of
their chests, to series of measures of
restriction.
AS consequence three orders of facts
have been produced Intimately bound
among themselves, and properly being
each one the consequence of the other;
scarcity of circulation, depreciation Of
values and higher rate of interest OF
money. The type of interest from
seven to eight per centum, which was
ruling four years ago, has advanced to
IL per centun.
This situation is to a great extent a
consequence of the imprudence with
which the conversion of gold for the
fiscal and bank bills was effected. At
that time all circumstances were ad-
verse, as they continue to be, up to the
present day, allowing no chance for an
easy transition from one regime to
the other.
In the commercial order our produc-
ton was restricted, both in quantity
and value, and that in no small part due
to causes of universal character-the
! constant decline Of our products in Eu.
roPe: -,z's -: g.:
In the moral ordeE we We're just
emerging from civil war, which had
profoundly shaken our credit, on &C.
| count of the losses sustained by for
eign capitalists in their Chilian inver-
s1ons IN movable values, by the lowest
| type of the money in which they re-
ceive their interests. Besides, in this
Same order Of anteceaents. e ]jYe and
still live in q precarious Situation in
regard to eVT relatiQns With the Argen.
tine Republic and the boundary ques-
ton between the two countries.
Once the gold thrown into circula-
ton the natural tendency was to con
ceal and export it. Only by nieaDs OF
higher interest could be secured. in
part, it's return to the banks and cir
culation as money: ~"*~**=stst>> *=tstt>>.l!:
The stringency produced has natural
~ affected private parties and those
institutions of credit which were found
in weaker condition. Among the lat
ter the banks, weakened in advance,
have been unable to withdraw it.
At the time of the metallic CONVEX
sion there were in existence in the coun-
try 20 national banks of emission and
discount, with paid capital of SAT ,o0o,-
900.
After two years of this new regime,
ten of them have either failed or been
put in liquidation.
Failed. Capital
Credito Unido.... ..................... 81 O00, 900
La Union. ........... -. 90. OOO, 600
Ahorros Prestamos. 100000
san Fornando. ....................... 3UO,V0
-Four smaller banks. $4,000
y In liquidation s,3OO, 900