Mr. Vilas to Mr. Blaine.

No. 278.]

Sir: The financial system of this country is so complicated and the official information regarding it so contradictory that it is extremely difficult to make an exact statement of the public debt of the Argentine Republic.

I send, however, certain tables taken from the recently published report of Mr. Pedro Agote, president of the national public credit department of this Government, made by him for use in the Paris Exhibition, which furnish the most complete and reliable exposition obtainable of the origin, condition, and amount of the active public debt of this country at the end of 1888. By far the greater part thereof is payable in gold and represents foreign capital, irrespective of classification as “home” and “foreign.”

From this I take the following statement of the debt on December 31. 1888:

National debt $336,341,442
Provincial 213,682,252
Municipality Buenos Ayres debt 24,044,752
Total December 31, 1888. 574,068,446

A comparison of this amount with the amount of debt at the end of 1886, also taken from Mr. Agote’s work, shows an increase of nearly 100 per cent. in two years as follows:

Debt December 31, 1888 $574,068,446
Debt December 31, 1886 296,821,379
Increase 277,247,067

The chief factor in the growth of the indebtedness, according to the same authority, is the free banking law of November, 1887, since on this head alone the nation had issued at the end of 1888, $137,544,782, in 4 per cent, gold bonds, and nearly all the provincial loans since 1886 have been contracted to start so-called free banks.

Under this law the nation issues gold bonds to the amount of issue allowed each bank, 85 per cent, of the par value of which is paid in gold by the bank, and inconvertible notes are delivered by the controlling department to the bank for issue to the amount of the par value of the bonds, which bonds are deposited with and held by the public credit office as guaranty for the respective note issues; and the law further provides that all gold paid therefor by the banks shall be held by the nation for two years from January 1, 1888, then to be applied to the extinguishment of the foreign debt, especially such as bears most heavily on the treasury. Notwithstanding this last provision, in November, 1888, $7,000,000 of this gold fund were used to take up the so called hard-dollar bonds, and during the last few months twenty-one millions more were sold through the national bank to the market, to arrest the depreciation of the forced paper currency. In view of these facts, it is evident that to the above amount of the national obligation should be added a considerable portion, at least, of the note issue remaining uncovered by public funds.

To ascertain the total indebtedness of the nation there should be considered, also: First, the obligation represented by the government guaranty [Page 18] of the mortgage bonds, or cedulas, issued by the national and provincial hypothecary banks, the issue of which is estimated at this date at $500,000,000 paper money. Second, the railway and other government guaranties.

The above amounts have been much increased since January 1, 1889, the issue of gold bonds under the banking law since then amounting to about $13,000,000, implying also a corresponding increase of the paper issue.

I am, etc.,

Henry L. Vilas.
[Inclosure in No. 278.]

Amounts of inconvertible notes issued under free bank law of November, 1887, in the Argentine Republic.

Amounts inscribed:
National Bank $41,333,333
Buenos Ayres Provincial Bank 34,436,280
Santa Fé Provincial Bank 5,000,000
Cordoba Provincial Bank 4,000,000
Enter Rios Provincial Bank 3,000,000
Tucuman Provincial Bank 400,000
Do 400,000
Salta Provincial Bank 125,000
Santiago Estero Provincial Bank 2,070,000
Deutsche Uebersee Provincial Bank 1,000,000
Cordoba Bank 4,000,000
Buenos Ayres Bank 500,000
Mendoza Bank 3,000,000
La Rioja Bank 1,045,000
Salta Bank 4,813,706
Fresh issues granted:
Buenos Ayres Provincial Bank 15,563,720
Enter Rios Provincial Bank 5,500,000
Cordoba Provincial Bank 6,784,935
San Juan Provincial Bank 1,658,000
San Luis Provincial Bank 602,658
Catamarca Provincial Bank 1,193,240
Corrientes Provincial Bank 2,119,000
Total 137,544,872

Note.—The above total is said to have been increased by $13,000,000 since January 1, 1889, making about $150,000,000 at date September 18, 1889.