The Washington herald., 1920-03-30
Neglect to Establish Sound
Monetary System Finds Chile
Handicapped in Foreign Trade
ny JAMES n. COLLINS.
ARTICLE LxxyI.

ny JAMES II. COLLINS.
ARTICLE LxxVI.
Santiago. Chile. March 2s.-Turn
to the atlas and look at the dia-
gram showing the profile OF the
Andes.
Scratch out 'ProfiIe of the Andes
and write instead Curve OF the
Chilean Peso. 1sss-1s2o" and you
will have an indispensable docu-
ment for doing business with Chile,
whether II be selling. buying or in
vestment.
The Chilean paper peso. Familiarity
known as the "chileno." comes
pretty near being the most restless
money In the world. Following
your mountain profile from left 10
right, the high peaks represent the
years from 1900 to 1905, when it
was often near its par value OF jG
cents in our money. but since then
Iit has tobogganed down onto the
pampas and stayed there, averaging
about 1S cents its value at this
writing. f'S~fa. 1
When you are selling goods.to I
Chilean customer, it works this
way:
If the shipment reached valpa-
raiso in June. 1918. and was valued
at $1,000. your customer could have
bought a draft in that amount for
roundly 5000 pesos. By June, 1919,
he would have had to pay 400
pesos and today 5,400.
II you are buying Chilean wool
or copper, turning the dollar into
the peso involves the same tiuctua-
tions.
Foreign Capital Held on.
When it comes to investment. the
inquietude of the peso has un-
doubtedly kept Chile on short ra-
tions of foreign capital the last
twenty years. For If you had $10.-
900 and went to Chile when the
peso was feeling well and turned
your money into 10000 "chilenos
and doubled il by honest effort and
turned your profits back into dol
lars when the peso was sick. you
might have exactly the $4,000 with
which you started. And, of course,
such fluctuations would affect prof
its and dividends IL you invetsed in
the stock of a Chilean enterprise
and stayed home.
Selling a bill of goods to the
Chileans may involve a side trans
action in exchange at their end.
When you quote them a price of,
say, $1,000 for an automobile de-
livered in Valparaiso three months
hence, they will go into the stock
exchange and buy that sum in Chill
1n1i Nxh a
arrives. Otherwise all
the profit to be made by selling the
car to a customer may have disap-
peared-though there is also the
possibility that it may have
doubled! With exchange fiuctuat-
ing as much as ten points in a sin
gle day. it is easy to understand
why speculation in the "chileno" Is
the biggest item of business on the
Santiago stock exchange.
Chile sound Mt Bottom.
Chile is a sound country at bot.
tom, with great wealth in nitrates,
a large gold reserve, and has always
been honest in paying her debts.
But for one reason or another dur
ing the last forty years she has
postponed the job of providing her
self with sound money. Back in the
seventies began a series of crop
failures, panics and other business
troubles, including a war and a rev.
which led to the repeated
issue of paper money. At the same
time Chile promised herself to be
and save gold out of her
revenue. and take up this fiat cur
rency, and several times got a nest
NA .to IT,
while the Chilean con-
gress drafted conversion laws and
discussed them. But something has
always happened to postpone con-,
version. Congress is still just upon
the verge of passing law which
Will peg the peso within the narrow
margin of gold points-around Is
cents in our money-and conse-
everybody in Chile with
money, goods or credit, is specu-
lating on what he thinks will hap
pen to exchange.
This is not q matter of dry bank
Ing technique. 1t involves the ev-
eryday welfare of many Chileans,
besides being q heated political
question. Moreover. it is important
In the new basis upon which We are
selling goods to the Chileans.
Most Of the things Chile sells to
other countries. such as nitrate. cop
per, wool and wheat, are produced
by big corporations and landowners.
When they make a sale they are
paid in the stable currency of other
Then they turn around
and buy unstable Chilean pesos for
the payroll. shrewdly choosing the
time when the pesos are cheapest.
Fhis cuts their labor costs. and also
the purchasing power of the wages
paid the Woodworking Chilean "ro.
TO-" or peasant. IL Is also an adj
vantage in paying mortgage inter-
est and money. and an advantage, 10
The merchant who. through fiuctua-