147 



-nmehow bound up with gold reserves, from which 

 depends its value. That nothing should be done to 

 disturb the security on which our present paper emis 

 <ions are based is perfectly sound argument, since they 

 ;ur accepted on this basis, (400 millions of gold gua- 

 rantee 1100 millions paper) but it is at the same time 

 <iually true that if gold is to form our sole security 

 for paper money, then either we shall have to restrict 

 emission in the future or confine our trade to certain 

 limits; needless to say this latter is absolutely unthink- 

 able- At present with the foreign trade, we 6nd that the 

 nominal circulation of paper money is equal in value 

 to the total export trade (approximately $1200 millions 

 paper iri|n.) : then, either with the extension of foreign 

 trade which is predicted by every zealous patriot, we 

 shall have to obtain a stock of gold of fabulous dimen- 

 sions (present stock nearly 500 million pesos gold) or 

 find some other means of security for more paper mo- 

 ney. More State paper money it is hard to imagine. 

 We have already the greatest nominal circulation 

 of paper money per capita in the world ( nearly $150 

 mjn. per capita), yet as a matter of fact we have a 

 paper emission constantly circulating nearly twenty 

 times greater than the commonplace legally authorised 

 note, and this curiously without any formula, without 

 -any <4 Caja de Conversion" to guarantee it, without 

 ,any security whatever other than faith in the man 

 who puts his name at the bottom of the note; I refer 

 to the circulation of cheques which, now annually ex- 

 -ceeds $25,000 million pesos paper (1917, 18,000 mil- 

 lions mlii.) ; besides this there are, without exactly 

 jcoming under the classification of money circulating, 

 pagares passing from hand to hand to the value an- 

 nually of thousands of millions. 



When we really examine the basis of security for 

 the paper money, moneda nacional, emitted for cir- 

 culation, we find that if gold is the primary source of 

 its origin, it certainly is not the basis on which it ac- 

 - tually circulates : the returns for bank discounts state 

 that over $1750 millions in paper pesos are lent out 

 -on the strength of more paper, on trade documents 

 annually . 



\ 

 CIRCULATION AND SECURITY. 



\ 



Nor, indeed, when we look into what money we 

 have in our banks are we more re-assured over our 

 ity, even with the gold in the Ca.ja de Conversion, 



