The Argentine Conversion Law was passed in 1899 and abrogated in 1901-2 by Congress (in consequence of the anticipation of possible war with Chile, over the frontier question, the payment by the Nation of Provincial debts and the closing of Argentine ports because of an outbreak of bubonic plague).
Therefore the present solid financial status of the Argentine Republic dates from only twelve, or, on the most liberal reckoning, fifteen years ago.
Uruguay’s first surplus (of $453,110) accrued in 1905-6; though an increased surplus has figured in each Uruguayan National Budget since that date.
| Equivalent Values. | |||
|---|---|---|---|
| Argentine | $1, gold | = | 3s. 11½d. |
| ” | $1, paper | = | 1s. 8¾d. |
| Uruguayan | $1 | = | 4s. 3⅟₁₆d. ($1·3½ cents U.S.A.). |
| £1 | = | $5·05 gold, Argentine. | |
| £1 | = | $11·45 paper, Argentine. | |
| £1 | = | $4·70, Uruguayan. | |
THE ARGENTINE MONETARY SYSTEM
Is controlled by the Conversion law, above referred to, which fixed a ratio between the value of the paper and gold currencies and made these interchangeable at that ratio until the time should be judged to have arrived for the substitution of metallic coinage for paper.
The law was passed as the only available though drastic remedy for the state of financial chaos, nothing less, in which Argentina found herself for some years after the crisis of 1891. For the coming of this chaos Argentines blame the European Bankers who, at least, looked on whilst the country floundered into it. For this view they have considerable reason. The Bankers were men of great experience in Finance; of which the Argentines of that day had little or none. Argentina relied on the men who had taken her Finances in hand for the development of her vast natural resources. She awoke to find herself in a financial condition which would have spelt a century of ruin to any less nature-favoured land. And it was an Argentine, Señor Ricardo Pillado, now Director-General of the Division of Commerce and Industry in the Ministry of Agriculture, who devised the Law which, though it in effect involved a partial repudiation of the country’s liabilities, at any rate made possible the financial renaissance on which her present great prosperity was founded.
As has been seen, the Conversion Law said that a paper dollar should be equivalent to 44 cents gold and that conversely a gold dollar should be worth 2·27 paper dollars. This ratio was supposed to have been fixed by taking the average ratio of value between paper and gold over a certain period immediately prior to the passing of the Law.
This basis is now believed to have been fictitious, it being found that, had such an average of values been struck, a paper dollar would have become the equivalent to something much more like 60 cents gold. So that in fact a repudiation of 40 cents liability on every paper dollar in circulation was made to become one of 56 cents.