The Anaconda standard. [volume] (Anaconda, Mont.) 1889-1970, 1899-06-19
Gold Bonds and Interest.

much significance in the report
ed fact that Mexico has CONSOLE
dated her loans in such a way that by
giving a gold guaranty she has reduced
the interest rate from six per cent. to
five. The American says geefully:
Money talks, but to have any effect
the money must be sound" We have
not run across any specific statement as
to the precise character of Mexico's Ie-
funding operations, but it is not neces-
sary to know anything at all about it
in order to perceive the absurdity of the
Americans position.
The smallest modicum of intelligence
should enable one ito perceive that if
silver bonds be refunded into gold bonds
if that Is what occurred-either the
principal should be cut down or the in
terest rate should be reduced. Com
pared with silver, gold has greatly APP
preciated and Mexico would be very
foolish to make such refunding or to
give any sort of a gold guaranty with
out getting something as an equivalent
nation promises to pay two dollars for
one, his or its credit should be better
than if only one dollar be promised,
provided always that the promise can
be made good
But it is difficult to see how a debtor
is benefited by making such promise
The promise to pay gold instead of sill
Yer amounts to the same thing. If the
change be made dollar for dollar, it is
practically doubling of the debt. If
represent just the silver valuation, then
the debtor has gained nothing, for it is
just as hard for him to pay one dollar
in gold as two dollars in silver.
But how comes it that Mexico a sill
ver-standard country, can afford 50
give a gold guarantee, and how is it
that the financial world is willing to ac-
cept it? We have been constantly told
in this country that II we adopted free
coinage we would go at once to a silver
basis, that we would be unable to pay
our gold debts and that our credit
would utterly collapse. The answer is
perfectly simple. No matter what a
country's money standard may be or
what kind of currency it may have in
use, it can get just all the gold that it
is able to buy and pay for.
To illustrate: Mexico does not pay her
foreign debt with the silver she has in
circulation. Argentine does not pay
her debt with the paper currency in use
there. Both countries pay with mer-,
chandise exported. A bushel OF wheat,
or hide, or any other article shipped
from either country and sold in London,
will command as much gold as the
same product from the United States.
Consequently it is just as easy for them
to pay gold debts as it is for US to do so.
In short, the ability of any country to
pay gold debts depends upon its re-
sources-its productive capacity-not
upon the kind of money it uses at home.
Carrying the argument a step farther,
it may be affirmed with economic GER
tainty that Mexico can now pay a gold
debt abroad much easier than she could
if she were TO place herself upon the
gold standard. In the latter case she
would have to provide gold both for
home use and to meet the foreign de-
mand. AS it is, she has only the latter
to provide for, while her silver satisfies
all the requirements of her internal
trade. More than this her adoption of
the gold standard would still further
depress the export value of her silver
bullion, and in fact everything else that
she has for sale, thus adding still more
to the burden of her debt
All this talk about people borrowing
money more easily on a gold basis is
the creditors argument, and generally