mortgaged for most of what it is worth at present, and whether for many years the people, if honest and self-sacrificing and willing to pay their foreign debts, could pay more than a portion of the interest they have engaged to pay. The foreign debt altogether (cedulas and railway capital included) must be about £200,000,000 nominal, if not more, on which £l2,000,000 of interest is annually due; but the exports altogether are only about £20,000,000 a year, and almost the whole of this amount must be exported to buy necessary food, liquors, clothing, furniture, and articles of luxury which a community of shepherds and flockmasters has to import from abroad. There is little surplus left with which to pay foreigners interest. Looking at the matter another way, we cannot put the capital of the whole community, of rather less than 4,000,000 in numbers, at more than about £300,000,000, the tax on real property only indicating a value of about £80,000,000 for that asset, according to the Government valuation itself. Much of the money invested in Argentine securities has thus, in fact, been lost for good. There can be no development of resources for years to suffice for defraying more than a portion of the debt interest. It is this condition of things, which is not realized in the City, that makes the outlook unpromising. Distrust must continue to spread as the hopelessness of the Argentine deficit becomes more and more apparent.
The condition of the Argentine paper money, which aggravates the difficulty of recovery, is peculiar. The proposal of the Argentine committee for dealing with it, viz. to require the purchase and cancellation of $15,000,000 (£3,000,000) annually, was altogether futile. The quantity of paper supposed to be out is £50,000,000 nominal, a truly gigantic sum for less than 4,000,000 of people, and upon this the cancellation of £3,000,000 annually would have no appreciable effect for some years. To deal with this inconvertible paper at all a large funding operation is necessary, and such an operation is impossible in the present state of Argentine credit. To restore inconvertible paper to par value when the premium on gold is 200 per cent. is also a most delicate operation, requiring the consideration of the equities of debts contracted at different stages of the depreciation; and the London committee does not seem to have looked at this aspect of the matter at all. Altogether the Argentine quagmire may engulf a great deal more than it has yet done, and if so, the spreading discredit must help to check business.
There has been much talk meanwhile respecting a speech delivered by the Chancellor of the Exchequer at Leeds, criticizing the action of the banks in not keeping adequate reserves, and suggesting, as a means of adding to the available gold reserve of the country at the centre, an issue of £l notes, subject to the condition that the whole or a large portion of the sovereigns to be displaced from circulation by the issue should be held as an extra reserve. It would be out of place to do more than notice at present the fact of these suggestions having been made, and the additional fact that the banks, it is understood, have so far yielded to the pressure put upon them as to consent to publish
