AKCKNTINK UKITItUC. 



its of private banks and 2 per cent. on their 'c- 

 p"Mt-; 7 PIT crni. (in the profits of all undcrtak- 

 ipported liy foreign capital, railroads and 

 nve/.ing companies exceptcd ; and a lax of 

 Jii per cent, on the interest of cvdulaa. The last- 

 named tax was proposed by the provincial gov- 

 erninent in lieu of a con version scheme which the 

 n and native holders of cedulas would not 

 accept. The taxing of pftvate banks would have 

 the effect of giving the Government the use of 

 cash for current needs, even if it drove the for- 

 eign I'anks out of business, since people would 

 then lie compelled to deposit in the state banks. 

 Tin- foreign, and especially the English, bankers 

 were popularly blamed for precipitating the 

 financial catastrophe. The foreign bank man- 

 agers resisted the special tax on deposits. To 

 the tax on the profits of foreign enterprises, which 

 affected American insurance com panics, the Unit- 

 ed States objected on the ground that it was a 

 violation of international obligations. 



Deposits withdrawn from the Provincial Bank 

 of Buenos Ayres left "it on March 5 with no 

 money in its vaults. Determined to save the 

 state banks, Dr. Pellegrini applied to the foreign 

 banks, but they refused assistance. The Minis- 

 ter of Finance then proposed a new emission of 

 paper money, two dollars to be issued against a 

 gold reserve of one dollar. This suggestion and 

 the knowledge of the critical condition of the 

 banks caused gold, which had fluctuated between 

 250 and 300, to leap to 387. It was no longer 

 officially quoted in terms of paper money. On 

 Nov. 24, 1890, when it had risen to 345 and bull 

 speculators offered 350, the Bolsa or hall of ex- 

 change was broken up by the crowd and the 

 police closed its doors. After they were again 

 opened for business the Government decreed that 

 quotations should henceforth be posted, accord- 

 ing to the plan adopted in Chili and Brazil, in 

 shillings, francs, or marks, at the rates of foreign 

 exchange. The dangers of trifling further with 

 the currency were so apparent that bankers, 

 capitalists, and merchants proposed the alterna- 

 tive plan of an internal loan, which the Govern- 

 ment willingly accepted. To prevent the formal 

 failure of the Provincial Bank, the 6th of March 

 and the succeeding day were declared public 

 holidays, and the suspension was prolonged by 

 new decrees till the 14th. The private banks 

 came to the assistance of the Government on the 

 condition that the taxes on foreign capital should 

 be removed. The proposed new loan of $100,- 

 000,000, bearing 6 per cent, interest, with 2 per 

 cent, sinking fund, was offered at 75. The 

 friends of the late Government denounced the 

 plan and called for a fresh issue of bank notes. 

 Consequently only $41,000,000 was subscribed, 

 $23,000,000 by Argentinians and $18,000,000 by 

 the foreign banking houses. The suspension of 

 payments of the Provincial Hank and the Na- 

 tional Bank was ordered till 'ho 1st of June, the 

 Government assuming their liabilities, depositors 

 being allowed the option of taking internal bonds 

 for their deposits. The ministers elaborated a 

 plan for the fusion of them both into a new in- 

 stitution to be called the Bank of the Republic. 

 The Government stopped work on harbor im- 

 provements and state railroad construction in 

 consequence of its financial difficulties. Interest 

 was defaulted on cedulas of which the coupons 



wero payable on April 1. Congress was <: 

 on May !l with a message from President Pelle- 

 grini, giving reasons against a new issue of paper, 

 and recommending a silver instead of a gold 

 basis for the currency, (iov. Costa, of Buenos 

 Ayres, having refused to accede to the proposed 

 fusion of the two state banks, the Government, 

 brought in a bill for the creation of a new na- 

 tional bank with a capital of $50,000,000, of 

 which $30,000,000 should be in paper and $20,- 

 000,000 in gold. Authority was asked to assume 

 the notes of provincial banks on their giving up 

 their guarantee bonds and specie reserves. 



The indefinite extension on June 1 of the sus- 

 pension of the state banks was the cause of a 

 panic, and this gave occasion for a concerted run 

 on the private banks. Gold leaped up to 450. 

 The Bank of Italy paid $13,000,000 over its 

 counter in two days, and then closed its doors. 

 The French Bank of the River Plate, the new 

 Italian Bank, the Commercial Bank, and the 

 Spanish Bank suspended. The London and 

 River Plate Bank had drawn from Rio de Ja- 

 neiro and Montevideo reserves sufficient to meet 

 all demands. On June 11 both houses of Con- 

 gress passed over the President's veto a bill 

 granting a moratorium or general suspension of 

 all debts and obligations to pay money on de- 

 mand or at fixed dates, with the exception of 

 taxes, for six months. Two days later the period 

 was reduced to three months, and on Aug. 12 

 the moratorium was repealed, after the Senate 

 had voted a bill creating the new Bank of the 

 Argentine Nation to liquidate the old National 

 Bank and take over its .privileges, for which pur- 

 pose a new issue of $50,000,000 was authorized. 

 The redemption of the coupons on National cedu- 

 las was postponed for a year. An agreement 

 was made with the European creditors through 

 a number of their representatives, called the 

 Rothschild committee, whereby the Argentine 

 Government is relieved from the immediate pay- 

 ment of the debt charges falling due in the next 

 three years, the interest being funded and added 

 to the principal of the debt, which will increase 

 the annual interest by $4.000,000 when the pay- 

 ment of interest is resumed. A proposal to issue 

 $45,000,000 of forced paper currency for the 

 foundation of the National Argentine Bank was 

 agreed to by the House of Deputies, but on Oct. 

 14 the bill was defeated in the Senate. 



Political Disturbances. The friends of the 

 deposed Administration, who were disposed to 

 lay the blame for the financial distress upon Eu- 

 ropean financiers, and who charged the President 

 and the Union Civica with accepting extortion- 

 ate terms and truckling to the foreign creditors, 

 still formed an active political organization, and 

 were very numerous in Cordova and the dis- 

 tricts that had supported the late President (VI- 

 man. The question as to who should succeed 

 Dr. Pellegrini in the presidency agitated the 

 country, as the elections were to* be held in the 

 following year. Gen. Roca and the other leaders 

 of the t'nion Civica fixed on (Jen. Mitre as their 

 candidate, and he came from Europe in March. 

 1891. to plan the canvass and advise with the 

 men in power on the political and financial situa- 

 tion. Political disturbances had already broken 

 out. On Feb. 14 a conspiracy was discovered in 

 the city of Buenos Ayres which was said to have 



