paper-money, it is, more than any other institution, liable to exceed its functions; but it bears within itself, in its admirable organisation, the means of repairing its own errors and of remaining the faithful regulator of prices and values.
The most eloquent commentary upon the importance of the operations effected by the Bourse de Commerce is the simple enumeration of their value at various periods, for we then realise the enormous development which they have achieved in a period relatively short. In 1886 the total of the business done was $173,000,000 paper, £34,600,000 face value; in 1887 it was $254,000,000 (£50,800,000); in 1888 $432,000,000 (£86,400,000); in 1889 $469,000,000 (£93,800,000). The total value of all business effected, liquidated or not, cash or credit, during the years 1890 and 1891, amounted to $18,000,000,000 (£1,584,000,000) and $7,000,000,000 (£616,000,000), respectively.[92]
[92] The values before 1900 are face values, as the actual value of the piastre note fluctuated. They must not be taken as actual values any more than in the case of Indian rupees.—[Trans.]
These figures, in their simplicity, cover the history of an interesting period of the financial life of the country. The wave of speculation which turned all men’s heads began to rise as early as 1887, and in 1891 was at its greatest height; it then crumbled into foam, having shattered the most deeply-rooted of banking houses, compromised the national credit, changed brilliant illusions into melancholy realities, and sown desolation and ruin in many a home. After the catastrophe the total value of business done rapidly fell, and we see it falling violently from one year to another—from the $18,000,000,000 of 1890 through the $3,376,000,000 of 1895, to the $835,000,000 of 1900; a year which experienced a condition of affairs which was destined to produce a beneficent influence upon the economic life of the country.
In this total of $835,000,000 of paper-money we find that transactions in gold amounted to $774,000,000 paper money, corresponding to $66,800,000 of gold negotiated; while in 1899, the whole business done in the Bourse still amounted to the respectable sum of $1,295,000,000 paper, of which $1,234,000,000 represented operations in gold. From one
year to another the total sum of the business transacted in the Bourse had diminished by $460,000,000 (paper).
The principal cause of this notable decrease was the “law of monetary conversion.”
This law, which has been in force since 1890, fixed the value of 44 centavos, or $44 gold, for the future conversion of paper-money, and enacted that the Caisse de Conversion should receive the gold and deliver paper, and vice versa, at this same rate: a rate equivalent to 227·27 per cent. The effect of this reform was thus, if not to destroy, at least very largely to limit unbridled speculation, which made itself especially felt in the value of the paper piastre.
Speculation in gold being suppressed, the volume of business transacted on the Bourse de Commerce of Buenos Ayres grew gradually less and less, falling finally, in 1904, to $37,312,000 paper, of which $19,968 stood for gold.
After 1904 the total sum of these operations was still further reduced, the figures for 1908 being incredibly low. Thus the total, which in 1905 had attained £45,400,000, rose to £57,800,000 in 1906, fell in 1907 to £16,880,000, and in 1908 to £12,560,000. To-day the activity of speculators is concentrated upon operations in mortgage bonds and the shares of various companies; each class of operations amounting to some £5,000,000. These figures show that the Bourse de Commerce loses from day to day some part of its importance as the regulating centre of mercantile transactions; but it would be an error to measure the economic vitality of the Republic by the amount of business effected on the Bourse, since an examination of the situation shows us that the Argentine has never known a period of more obvious prosperity.