The evening times., 1898-10-10
money CRISIS IN Chile
American Minister Wilson's
Report on the Trouble.
RUN ON BANKS AVERTED
All Such Institutions Were Closed
by Consent of the Chilean Gov
ernnient and Business Was Prac-
tically Suspended Pending the Ar
rangements-Dificu Not Over.

The State Department has given out
the report of United States Minister Hen
ry l.. Wilson on the Financial Condi-
tions in Chile" The minister says:
''On July 9. 1 telegraphed the depart
ment:
a. Severe financial crisis precipitated by
run on sI8ank OF Chile. All banks in
Chile closed by consent of government.
Bushes practically suspended pending
arrangements.
For a period of about thirty days pri-
or 10 the date Of my telegram, there had
been gradual tightening in the money
market, and visible perturbation in finan-
cial circles. Discounts were heavily re-
duced and exchange fell, not violently,
but steadily, from l7Ssd. TO I'D.
ION June Is, 1888, Senior Dario Zanartu.
the minister of finance, resigned his port
folio, and his post was promptly filled
by the appointment of Senor Sotomayor.
The circumstances under which this
change in the ministry was made called
! out an animated discussion in the press
relative to the condition of Chilean fl
/ nances. The public excitement was fur
/ ther accentuated by various charges and
/ admissions made in the house of depu-
! ties and quiet but steady withdrawal
! of deposits from the Bank of Chile was
! begun by its depositors. 4 few days aft
| er, the minister of war, Senor Ventura
| Blanco, amplfying a statement of the
minister of finance, stated in congress
! that unless the Bank of Chile received
! the proceeds of the loan of f50O,0o0. re-
Gently made by the Bank of Tarapaca
! and London TO the government of Chile.
1 IL would have TO close. The minister of
! finance, at later date, in making state
ments relative to the conditions of the
Bank of Chile, took occasion TO enlarge
upon the necessity and great benefits Of
/ an issue of paper money by the govern
ment. 1T is also said that in secret ses-
! sion, it was revealed that the govern
ment. instead of having on hand, as was
stated at the opening of congress, a sur
| plus of 100000 pesos, had in reality, taxi
/ ing into account all resources, a balance
/ of only $4,000 pesos.
| These grave disclosures, taken to-
! gether with the apparent favorable at
/ tftude of the Government toward an is
sue of paper money, brought on a wide
spread panic. resulting in a run on the
/ banks, which practically exhausted their
| reserves. Ii was evident that unless
8 SOiue pIOUlpl anu Sltp WIS taken
| by the government, not only the Bank of
Chile but all the banking institutions in
! the country. except the foreign banks
would be involved in hopeless and ire
| trievable ruin.
Accordingly. after some hesitation
| due primarily, l think, to doubt as to
/ the legality of the act, the government.
! upon July 6, 1885, issued 10 all banks
! doing business in the country, permission
/ to temporarily close their doors. Fol-
lowing Immediately. at an interval of
only five days, congress passed an act
called the 'MOratoria' or license to
Debtors the effect of which was the
suspension of all payments or actions at
! law for debts for thirty days. without
/ prejudice to the debtor. After the pas
sage of this act the banks opened their
doors, but paid TO depositors such sums
only would relieve their actual and
! present necessities, exercising full dis
crettion as 10 the amount in each case
| The Immediate effect of this unprecedent-
! ed policy was the closing of all facto-
| ries and establishments with large pay
rolls, and thousands of workingmen were
! thrown out of employment
/ THE President sent a message to con-
! gress on July 13. 1898. recommending the
emission of 5O.0c0OGO pesos of paper
! money. on account of the boarding of the
metallic currency. the entire issue to be
4 retired within the term of four years
| from the date of the act In the mean
/ time, while congress was considering the
measure, the existing distress among all
classes of the people became greatly in
tensified.
Among the small tradesmen, artisans
and people of the working classes gen.
orally who appear to universally favor the
gold standard and oppose with extreme
/ bitterness an issue of paper mony by
the government, feeling ran very high,
and, in several instances, has found ex-
preston in tumultuous and threatening
gatherings. Upon July 90 1898, these ele-
ments of the population, to a number
which / have heard estimated as high as
6.000. assembled and marched to the
'Moneda' fthe government palace, and
presented a petition of grievances and de-
mands (translation of which | enclose) to
the president. The president replied that
he regretted the situation, and fully SYM
pathized with their condition: but that
the responsibility had passed from him to
congress, which body it seemed to him
was devoting entirely too much time to
the measures intended for the prompt re-
lief of the people. Acting upon this sug-
gestion, the immense throng marched to
the house of deputies, where congress was
in session, and through a committee de-
manded the immediate enactment of the
legislation necessary TO relieve the situa-
tion. The house of deputies was fully
surrounded by mounted police. and before
the crowd was dispersed number of sharp
encounters occurred. The assemblage
however, was finally dispersed, although
the severe methods by which it was ac-
complished have called forth some crfti-
cisms from the radical press"
Congress on July 90 passed bill for the
emission of So 0500o0 paper pesos of 1Sd
(36.5 cents), and Chile entered upon new
chapter in her somewhat eventfuI financial
history, the results of which time and
experience must demonstrate.