Evening star. [volume] (Washington, D.C.) 1854-1972, 1901-03-07
Unsatisfactory Business Conditions in
Mexico
IN GOVERNMENT FINANCES
sink
Silver Dollars Being Piled Up in
-! ta3i
the Vaults.
LIMITED USE OF PAPER
Special Correspondence Of The Evening Star.

CITY OF MEXICO, March 1, 1901.
The statement made by the Mexican
minister of finance as to the condition of
the treasury of his country Is most satis-
factory, as 1t shows a surplus of receipts
over expenditures during the past year.
The official declaration regarding financial
conditions generally throughout the repub-
TIC Is not SO satisfactory, and the minister
frankly acknowledges. contrary to the Gus
tom of many who are interested in securing
the investment of capital, that things are
not just as they should be. His tone is
naturally optimistic, and his expressed be-
lief that time and patience will smooth
away all wrinkles is entirely honest and
perhaps well founded. If it were not in ac-
cordance with the real understanding of the
situation by the Mexican government dras-
TIC measures would have been taken long
ago to correct influences threatening dis
aster.
The people of Mexico are suffering from
a lack OF money, though in no sense has
anything in the nature of a crisis been
reached There is no lack of opportunity
10 earn money, for labor is scarce; no lack
OF opportunity to sell goods. for trade Is
actlVe. There Is no lack of development Of
natural resources, for Mexico was never
exploited more thoroughly than at present.
Such financial inconvenience as the people
are now experiencing Is due to an actual
shortage Of silver the universal circulating
fneolum or exchange in this country.
Paper Used but Little.
Bank notes and checks are little used
among the people. Their dealings do not
reach the dignity of paper denominations
and checks are not looked upon with under
standing or favor. Hard silver dollars are
wanted, and when these become scarce
commerce is congested and suffers accord
lnSly. Ihero said n no fifteen mill
people in Mexico. For all these people
tnere is about one hundred million in
money In circulation. Sixty-fve million of
TINS IS IN bank paper Of denominations over
80, hence does not circulate among the
masses The money available for the bust
ness OF the people may be said, therefore, to
amount to between thirty-flve and forty
million silver dollars. There are fifty-fve
million more silver dollars in existence, but
they are locked up in the bank vaults to
secure the paper money referred to.
Forty million dollars for fifteen million
people is a small circulation. Allowing
that the need of the people of Mexico in
their daily trading is only one-tenth that
OF the people of the United States. these
nsufes give the Mexicans but thirteen dol
lars In gold per capita circulation or one
dollar and thrty-three cents in reality
Inc present money supply is nearly 20 per
cent less than usual, and the relative situa-
tlon may be expressed by saying that the
industries of the country are consequently
~ per cent less free from possibility of
disaster than under normal conditions.
The bad features of doubtful investments
are emphasized, and close corners are that
much harder to turn. :
Failures Practically Unknown,
There is an element Of safety, however,
In the long-established methods of trans
acting business among the Mexicans. Fail
ures are practically unknown. Commercial
credit is almost unlimited. The resources
of man are generally well understood be-
fore he can borrow and he seldom Is able
to exceed his assets. With all the tightness
or money which has prevailed Of late but
one firm OF any size in the republic has
been In trouble, and that firm has been on
the edge Of disaster for several years mast
this fact being quite generally known.
Mr.. CreeI After a Loan.
1t has been a universal appreciation of
this money shortage which has led to so
many rumors as to the real mission OF Mr..
Enrique Creel to the United States Mr..
Creel is a Mexican banker of large influence
and extensive connections. He does not
represent the Mexican government and has
no connection in his business with that gov
eminent except as the banks In which he
is interested are banks Of issue and more
or less subject to government superyision
Mr.. Creel did not go to New York to ar
range for loan to the Mexican govern
ment. His visit had nothing whatever to
do with the possibility of Mexico adopting
the gold standard, which Is denied by the
administration The purpose of Mr.. Creeps
visit to New York was to secure a private
loan Of two million dollars Mexican money
to add to the capital Of his central or clear
ing house bank in the City Of Mexico. He
was exploited in New York by the we'll
known promoter, Charles r. Flint and the
loan was secured from one of the largest
on excellent authority that Mr. ], Pierpont
Morgan was at one time interested with
Creel in the Central Bank of Mexico. but
becoming dissatisfied with the outlook he
sold his interest, which, 1t Is reported,
amounted to one-third Of the stock. Creel
is an enterprising man of great energy.
and has the reputation of being somewhat
OF plunger In country where industrial
and railroad stocks have been offered and
accepted by the banks In large quantities
as collateral.
Speculation In Stocks.
Unfortunately for the stability for some
of the newer enterprises, there has been con-
siderable "kiting" of industrials This stock
speculation in the republic is a develop
| ment Of the last five years, and it is more
than probable that some one will be severe
| ly hurt before all the possibilities of indus
| trial securities are fully understood by
Mexican flnanciers.
When it Is said that there Is a shorta ee
| Of money in Mexico this does not mean the
government is affected in any way. On the
| contrary, few governments can make such
condition. The total receipts Of the govern
ment last year were over $64, OO0, COO while
| the expenditures were less than $59. 600 600
| There is now a surplus in the treasury of
more than $50, 900 COO The increases in rev
enue from various sources during the last
ten years haveo been from 30 to 100 per
cent. The increase in expenditure has kept
manning safely within the high-water
| mark.
| To this very prosperity Of the government
is due some Of the money shortage among
| the people owing to the peculiarities of the
! Mexican banking system. Two banks in
the federal district of Mexico are author
| lied to issue paper money to the extent Of
| held In reserve. In each one of the other
| Mexican states one bank Is authorized to
issue paper money. but only to the amount
| ~ tuo ma mar doliQraf n op1 .If,,o~ S.I,..