53 per cent., finally, in 1889, it proceeded by leaps and bounds; 50 per cent. in January, it was 53 per cent. a month later; in March it was 55 per cent., rising to 120 per cent. in September and October, and 130 per cent. in November and December, despite the empirical measures of alleviation adopted, amid violent disputes, by the Minister of Finance.
Thus the Republic entered on the year 1890; a year of grave political and financial disaster. On the one hand was the revolutionary movement, prepared by the connivance of part of the army and the navy; on the other hand, the crushing depreciation of paper, ending in an absolute catastrophe which affected both public and private fortunes.
In the month of April of that year the premium increased to 215 per cent.; that is, 100 piastres in gold were equivalent to 315 in paper. In July, when the revolution broke out, it stood at 217 per cent. In November the Government which replaced that which had been attacked by the insurgents prohibited the quotation of gold. Nevertheless, the premium rose to 225 per cent, and remained at that figure until December.
We must remember that, in spite of the downfall of paper, the economic vitality of the Republic had suffered no serious blow; no war had broken out, no international complication had occurred; there was, in short, no organic cause to which the premium could be attributed. Certainly, the commercial balance was unfavourable; but that phenomenon has not the significance generally attributed to it. The true causes of this crushing state of affairs were exclusively of a financial and administrative nature. It was the inevitable result of the manner in which paper money had been issued to serve the needs of the Government, and to feed the furnace of speculation. One cannot forget that at the end of 1886 the total issue of paper amounted to $80,251,380; that in less than two years it was nearly doubled, amounting to $147,503,911; while in 1890 the paper currency reached the figure of $196,882,500. But this situation, painful as it was, could not be suddenly changed for the better; other causes of a like nature were about to intensify it. The new President, who came into power after the revolutionary outbreak found himself forced, by various circumstances,
to increase the existing circulation of paper. The new issues amounted to $150,000,000.
As was only to be expected, such an issue on the back of the existing paper currency, which exceeded $196,000,000, could only produce a disastrous fall in paper. Its depreciation touched the lowest point in the history of the Argentine, or of any other country during the second half of the nineteenth century; the blackboard of the Stock Exchange showed an exchange value of 464 per cent. or a premium of 364 per cent., in the third week of October 1891. This was the record of monetary depreciation.
After 1892 the monthly quotation of gold, in relation to paper, oscillated between 359 and 290 in 1893; 433 and 307 in 1894; 377 and 311 in 1895; 352 and 266 in 1896; 317 and 274 in 1897.
We see from these figures that these conditions are abnormal, extraordinary; and yet, owing to their long duration, they are almost part of the normal life of the Republic. It is therefore a matter of interest to study the causes of such phenomena, in order to decide whether they are inherent in the period of transformation through which the country is passing, in which case it would be idle to attempt any reform at present, or whether they can be controlled or checked by the employment of means counselled by science and confirmed by experience.
According to the judgment of certain persons who have devoted themselves to the study of economic questions, the causes which, in the Republic, produce the double standard, are of a permanent character, proper to the period of formation through which the country is passing. It is even said that so long as Argentina has not a capital of her own with which to float herself in the full tide of affairs—such a capital as is the result of years or centuries of prosperity—so long will she be a debtor among the nations, and the system of the double currency must continue.
We ourselves are of opinion that the causes which have produced, and now maintain the inconversion of the fiduciary currency, are of a very different character to those implied by the above judgment; and that if we consider the economic state of the country at the moment when the