Evening star., 1939-06-28
Mexicans Fear Ruin
kU. 5. Quits Buying
hation's 5 Silver
Body Blow to Trade
Between Countries
Also Indicated
BY JOSEPH H. BAIRD.

BY JOSEPH H. BAIRD.
The Mexican government, it was
learned today, is making anxious
inquiries of Washington regarding
the prospective stoppage of foreign
silver purchases, which Mexicans
fear would have a disastrous effect
on their national economy.
Pending final disposition of the
question, in legislation now headed
for conference between the House
and Senate, the Bank of Mexico
and private banks in Mexico City
have suspended dealings in foreign
. exchange.
, The Bank of Mexico has decided
to suspend temporarily its participa-
ton in foreign exchange in order
to conserve intact its metallic reserve
until it is decided if the American
Government will be able to continue
buying foreign silver" the bank
explained officially yesterday.
=. American experts, meanwhile,
estimated the closing of the United
States market to Mexican silver
as provided in the monetary bill
passed by the Senate Monday
would seriously reduce purchases of
this country's exports in the Nation
to the South Mexico normally buys
about IS per cent of its imported
goods from the United States.
Richberg and Hull Confer.
Donald R. Richberg, counsel for
the American oil companies, whose
properties were coniScated recently
by the Mexican government, con-
ferred late yesterday with Secre-
tary of State Hull. State Depart
ment officials would not comment
on the conference, but it was under
stood Mr. Richberg sought informa-
ton on the possible effects of the
silver legislation on a settlement
OF the oil question.
Administration officials were ready
to admit that if the Senate bill with
the Townsend amendment, forbid
ding further purchase of foreign
silver by the Treasury, is accepted
by the House conferees and be-
comes law, it would deal i'body
blow to Mexican finance, to United
States Mexican trade and to Amer
leans with investments in Mexican
silver mines.
Statistics clearly show there is
ample reason for the Mexican gov
ernment to fear a financial catas-
trophe if the Townsend amendment
becomes law. Mexico produces ap-
\ proximately 40 per cent of the
worlds silver and sells virtually all
of it to the United States, having no
other foreign market of Importance
When the Silver Purchase Act
was passed in 1884 Mexico's national
revenue was 244.O0O,00 pesos. With
in three years (by 1887, the latest
period for which statistics are
readily available) the states income
had increased to 333 900 900 pesos, or
by approximately one-third.
Taxes paid by silver-producing
companies are, according to author
tiles here, the Mevxican govern
ments principal source of income,
aside from customs revenues.
Until recently. some 95 per cent Of
all Mexican mines were operated by
foreign companies According to the
Commerce Department census of
American investments abroad as of
1890. United States investments in
Mexican mines were valued at about
s230000,000
Observers here believe the clos
ing of the American market to Mex
lean silver and the economic de-
preston which may follow in that
country, may result in considerable
political unrest.
Deliberate Blow. Some Say.
Advices from Mexico indicate
some uninformed persons there have
interpreted the Senate's action as a
deliberate blow at Mexico because
of the slowness Of the Cardenas ad-
ministration to satisfy the claims OF
American oil companies for their
confscated properties. While ad-
ministration officials recognize the
untruthfulness of this charge and
attribute the action of the silver
bloc" solely to desire to boost the
market for Americana produced sill
yer, nevertheless there is some worry
about the impression produced IN
Mexico.
Indeed, the possibility is foreseen
that if Mexico goes irto an acute de-
preston as a result of the closed
market for its silver, some politicians
there may charge President Car
denas with responsibility for this
condition as a result of his alleged
bungling of relations with the
United States.
There is some apprehension in
diplomatic circles here. too, over the
effect of the silver legislation on
German and, japanese penetration
In Mexico. Both countries now have
hundreds of agents at work in Mexi-
co attempting to gain control OF
the country's trade. They are &C
lively promoting anti-Amerlcan
propaganda Some officials are ask
ing: Will the silver legislation place
new weapons in the hands of these
agents for their fight against the
rot