Evening star., 1920-05-29
BUSINESS LIFE IN
MEXICAN REPUBLIC.
Country Is on Gold Basis,
Has Small Debt and
Great Resources.

At the present time business life in
Mexico is a curious affair. The coun-
try is on an absolute gold basis-that
is, practically no paper money and no
subsidiary coinage is in circulation.
The smallest gold piece is so cents
| and these pieces are few in number
and difficult to handle. The two-dollar
gold piece is the real unit of money,
| and any changing of this into small
er denominations is done by means OF
postage stamps, street car tickets and
| any other substitute for cash which
| the public can be induced to accept.
The result is, of course. chaotic con-
| d1tion so far as the carrying on OF
business is concerned. Various issues
of paper money have been put out by
the Carranza treasury authorities, but
| repeated populations have taught all
Mexicans to beware of paper money,
and nothing but hard cash is now
! current. The silver content of the
/ subsidiary coinage was so large In
| Mexico that Greshams law came into
operation comparatively early in the
price rise which silver experienced
and. as a result of its value as bullion
being greater than it's value as a cir
culating medium, silver money en-
| tirely disappeared from Mexico.
Mexico might have triumphed over
| economic laws had been allowed to
| take their course, but the leaders OF
the outgoing administration have in
| sisted on an attempt to put into ef-
feet mass Of socialistic and poorly
| devised measures which rendered
! abortive the plans of the country's
business leaders. The greatest need
7, has been banking system in which
| the people would have confidence. but
| every plan for such a system has been
vetoed by Carranza. With natural re,
| sources of unparalleled value ana
with every necessity at hand for a
/ quick and happy development of their
| country, the lack of governm entail
| and business machinery has been SO
! great that Mexico has not only failed
| years but has actually fallen back
| ward
Needs Financial System.
1t is to be hoped that one of the hrst
| acts of the new leaders in Mexico Will
! be to establish financial system !or
| their country by means OF Wnlcn
business will be made possible ana the
| development of the country hasteneo.
| The problems that will confront Mex
| ico's legislators in devising none
| tary system for their country Will oe
| far different from those now racing
| the legislative assemblies of Europe.
Nearly every country in the "oIlu 10
| seeking a way 10 tiO0uSS
| confidence and true value into huse
amounts Of paper money issued curing
| the war and since the armistice. NO
such problem faces Mexico; II Is on
sound metallic basis, and the proDleH
! now waiting to be soiveo Is ntore
The massage of the law creating the
| federal reserve system:
The United States had large STOCK
of gold. plenty for the needs OF the
country, but it lacked the means o.
mobilizing it in times Of emergency ano
had no machinery for issuing a sunlcien. eh.
amount of currency against II LOT tne
"a irving on Of the nations business
MEXICO. likewise. has plenty OF goo,
hut the country is not able to get luii
value for it because business at tnis
time is limited to TRANSACTIONS WniCh
are actually settled in metal CredlI is,
to a large extent. non-exfstenI Whne
this remains so, business anu ".s,ss
ment must proceed with hating steps
hut when a sound banking system Is
once Introduced and the confidence OF the
neople again secured the possiointles OF
prowth for this rich nation are bound
less. t
No Reuudiation There. ell
White discussing the subject Of bank-
inp II is we'll to remember that no Tor
eign bank has ever been troubled IN
Mexico and tnat no lHueulouHceo iA1o
ever been repudiated by a Mexican gov
ernment. Interest has been passed. II Y
true. but the intention to pay IN fuii
when circumstances allow has always
heen expressed. and there is little doubt
In the minds Of all students and friends
Of Mexico but that that promise Will
be met to the last penny. Mexicos
riches are so widespread and SO easily
reached. once a stable government is es-
tablished, that the taxing power WIZ pe
more than enough to wipe out all present
outstanding Indebtedness in surpris-
ingly short time.
Mexico's Debt Small.
The total foreign debt of Mexico is
less than half a billion dollars. Com
pared to the value of the country's re-
sources this sum is small. indeed The
description given Mexico by Hum.
boldt. the naturalist, when he called
1t "a beggar sitting on bag Of gold,
has become a classic. but 1t is far
truer today than in Humboldts time.
because resources unsupported then
have since been discovered that make
Mexico a veritable treasure house.
Next to banking machinery that will
allow the resumption Of ordinary mer-
camille affairs and that will make 1t
FINANCIAL.