New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-08-07
Argentina Plans
To Issue Loan
Of s2OO,OOO,0OO
Authorization Of Lottery Bond
Flotation Asked to Rehab-.
ilitate Finances

10 VIC pcllNO NC Ao NNfS
sponsors of the programme, who rep
resent the administration now holding
the reins of government in Argentina
believe that the Inauguration OF the
proposed new system will so a long
way toward assisting in the rehsbilita-
ton of Argentine finances.
Authorization is given the Argentine
President in the bill now before the
CONGRESS TO raise an internal loan of
$500, 900 900 national currency to be is
sued at par, the bonds being entitled to
interest at 4 per cent per snnum, the
issuing bank TO be given per cent per
annum for amortization purposes. In
addition it is proposed that per cent
Of the total value of the issue shall!
be applied annually in the form OF
prizes, including two annual prizes OF
100000 UNITED States currency each;
two of 100000 each, and two Of s4o,-
600 each. Half-yesrly, at the dates
fixed for the payment of the interests
the drawings shall take place at the
Banco de la Republics to determine the
numbers Of the bonds entitled to the
prizes. The bonds, if authorized, VIII
he issued in two series, one of Sl2O,OOo,-
600 UNITED States currency, whlca
shall be offered to the credit lnstitu-
tions which incorporate themselves
with the Banco de la Republica, ana
the other of S80,000000 UNITED States
CURRENCY to be offered to the pubic.
Sl3O,OOO,OOO Capital
II ia proposed to capitalize the newly
created Banco de la Republica at sl3o,,,
900 900 gold, the money to be PROVIDED
by the sum of S30,000,000 which forms
the government conversion fund; and
by bond for s99,000,000 gold which
the national government shall deliver
to the Banco de la Republica. It IS
planned to cancel this bond by taking
80 per cent of the net profits OF the
Banco de la Nacion and of the banco
Hipotecario Nacional.
The condition of Argentine govern
ment finances and the need OF new
financing are indicated as follows in the
statement made to the Argentine Con,
gress in connection with the proposed
measures:
"The annals of Argentine finance
record no situation analogous to that
presented by the national treasury on
October u. 1916. There weighed upon
the public finances an enormous float
ing debt, contracted at short currency,
under exacting terms, and with no as
surance whatever regarding its renewal,
since renewal does not depend solely
upon the will of the lending bankers,
but also upon the internal and external
modification sustained by market SUD-
iected to the variations which the abnor-
NAL happenings throughout the whole
world to-day impose. A few days after
the date mentioned liabilities for $780,
100000, national currency, fell due.
Sources of income which had not
actually become exhausted exhibited a
considerable falling off. Credit with
the local banks had been used almost
to excess by the reiterated demand OF
former governments. The overdraft
which the law accords in the Banco de
la Nacion was exhausted, and there
were no other resources available for
the payment of the administration ex-
penses than the inadequate returns OF
general revenue.
Heavy Liabilities Abroad
"To this state of affairs must be
added liabilities abroad, the fulfilment
of which could not be deferred with
out evident prejudice to the credit Of
the nation. The executive power, ap-
preciating the necessity of consolidat-
ing this enormous floating debt with
out loss of time, entered into negotia-
tions to obtain an external loan which
would permit it TO avert the danger
involved by the indefinite prolongation
of such a state Of affairs. In spite of
the abnormal conditions then affecting
the money market, these negotiations
we're entirely successful. Important
groups of American bankers presented
offers which were extremely favorable,
as regards rate of interest and price Of
issue alike. the proposals comprising
not only the consolidation of the then
existing deot, but also providing the
funds necessary for initiatives of pub
lie interest which the executive power
was then promoting. But reasons Of
the moment did not permit the bank
ers to sign ad referendum contracts as
was habitual IN normal times, and i'm
mediate legislative authorization, in
dispensable for the validity of the
undertakings entered into was required.
For these reasons the executive power
applied in due course 70 the Congress
for sanction Of law which would en-
power il to contract a loan for the
sum of $3.50, 100000 gold, or its equiya-
lent in national currency. Delay in
the sanction of this law caused the
negotiations of the executive power TO
fall through. An aggravation of world
happenings then modified the situation
of the money market, impeding the
carrying out of the negotiations.
confronted with the situation, the
executive power was obliged anew to
devote its consideration to the several
questions relating to the state of the
national finances, as also to the ques-
ton of the internal economy, which is
so closely related TO them. The re-
sources by means of which in normal
times budget deficits are balanced and
the extraordinary expenditure demand
ed by public necessities is met are well
known. The science Of finance and in
variable practice show US the only
sources 20 which resort can be had
since the taxes and the normal rev.
enues ought only to be applied to de-
fraying the ordinary expenses Of the
administration. In our country external
loans have always with very rare ex-
ceptions) provided the sums required
for the public finances.
Need Not Initiate Currency
"The figures TO which the external
consolidated debt has to-day attained
il dicate clearly the use and the abuse
which previous governments made of
.his resnrt Tie same cannot be said