160 



covers, it states no price, nor fixes a sum limiting its 

 value as does the paper peso; in the second case not 

 all warrants are used for money-raising purposes. 

 Even supposing they were used to the utmost extent 

 for credit purposes, then the advances on such would 

 not exceed 500 million pesos, that is to say out of the 

 paper money issued they would still not absorb all the 

 700 millions of paper pesos which now remain locked 

 up in the banks, nor would discounts to twice this sum, 

 to the total value of the whole crop, seriously add to the 

 bankers' pre-occupations, since the banks annually dis- 

 count more than the total value of our cereals without, 

 difficulty . 



That the circulation of 500 millions of paper pesos 

 would, logically, adversely affect prices is not proved. 

 At present, the greater part of this sum is put into cir- 

 culation annually during harvesting, without any par- 

 ticular consequences being noticeable. 



The nature of warrants (they only circulate while 

 there is wheat or grain to warrant), effectively pre- 

 vents them from assuming the character of a fictitious 

 emission of State paper money, or of any form of 

 value-bearing paper, without effective guarantee. They 

 do not lend themselves to speculative finance due to the 

 ephemeral nature of the security; as the grain leaves 

 the stores the warrants are withdrawn automatically 

 from circulation. What combination could keep them 

 in existence once the wheat had been removed from the 

 elevators is hard to conceive, since no business man: 

 would allow goods to be withdrawn from his deposit 

 without first demanding the return of the documents by 

 which he pledges their existence in his power, and make 

 himself responsible in their absence. 



The customary return issued by the authorities of" 

 the wheat and other cereals exported, with the figures 

 giving that stored in the elevators, and that consumed 

 internally, would in itself exercise efficient control. 

 The daily returns of the gold in the "Caja de Conver- 

 sion ' ' may serve as an analogy ; although it must be re- 

 membered that warrants issued to cover the cereals 

 stored, do not serve like the gold in the "Caja de Con- 

 version'' for the issue of paper money. 



BANKS FAVOUR DISCOUNTS ON WARRANTS.. 



I do not find it possible to attribute any greater- 

 dangers from warrants being used as a basis for loans., 

 than other lands have been exposed to. As credit rais- 



