The conquest of the desert and the reduc tion of the Indian tribes was followed by great prosperity, enriching the government by the possession of millions of square miles of ex cellent ground for pasture. These most val uable regions were divided among the military who had made the campaign of the desert, and government politicians. The increase of immi gration, which was now about 100,000 a year, in most part northern Spaniards and northern Italians, attracted by the advertisements of free lands and the advantages offered by the gov ernment, and the investments of foreign capi tal in railroad companies and public improve ments in the cities of La Plata and Buenos Aires, inflated considerably the price of land in the hands of the military and government leaders. In less than one year it doubled in price. The national government continued to ask for loans from the Bank of London, and again obtained $20,000,000, gold, at 6 per cent interest, for the construction of the port at Buenos Aires. In 1886 another loan was made of $42,000,000, gold, at 80 per cent rate and at 5 per cent interest, to unify diverse loans for public works.
In these conditions the military, in great part made up of half-breeds and quadroons, en riched by the gain of their desert conquests, and by the prodigality with which the London bankers loaned money to the government, out shone the old, cultured and quiet well-to-do people of Buenos Aires and other centres. The latter were descendants of the patriots of the War of Independence, and of the exiled patri cians, yet they were overshadowed by the new military plutocracy, who had no thought but ostentation, and were destitute of all idea of duty, civic and social. They simply centred in Buenos Aires to enjoy life in pseudo-Pari sian style.
In 1886 the government, hindered by the difficulty of obtaining more loans in London, abolished the law of "conversion," and began again to issue millions of fiat money, thus giv ing a chance to stock jobbing and producing an extreme instability of currency, which in 1889 had a relation of five pesos to one gold dollar. At that time the fiat money reached the sum of $80,200,000. The London bankers had not only been beguiled into loaning money to the national government, but had also made loans to provincial and municipal governments to the extent of $80,000,000 in gold, which was largely embezzled by the intermediaries in Europe and the retainers of the authorities of those centres.
Recent History.— In the Pan-American Congress held at Washington in 1889, the Ar gentine representatives, fearing the interpreta tion Mr. Blaine gave to the Monroe Doctrine, "America for the Americans," would be ratified by the Congress, declared as the Argentine sen timent, for Humanity," expressing the Argentine inheritance of blood and of in terests through the mixtures of the Spanish, English, French and Italian races, and its independence of the rest of the American continent outside of its own boundaries.
Argentina now had more than $500,000,000 English capital invested in the country and more than a half a million Italian citizens. Political and administrative corruption, how ever, seemed to know no bounds. Fiat money reached $197,000,000, making the national dollar less than 30 cents, gold, and the credit of the country was compromised in loans of more than $300,000,000, gold, covered by mortgages on its inalienable property and interests, which amounted to more than 40 per cent of its esti mated wealth.
The inaction of public opinion and the lack of any party of opposition moved the young men of the universities and those in active bus iness to form a protesting party —"The Na tional Civic Union,"— which in a few months after its founding conspired with some of the chiefs and officials of the army and navy, and incited mutinies and mobs which drove the President,' in 1890, to resign his position. The Vice-President, Dr. Pellegrini, a man of great energy and capacity, but lacking political tact, remained in office and partly quelled the provin cial revolutions. Meanwhile, the personalist leaders, reviving the traditions of the old parties, Federal and Unitary, separated the ele ments which formed the young party of the Civic Union.
The national government had to ask delay from the European banks, and finally the Na tional Bank with the Provincial Bank of Buenos Aires failed. The Argentine credit was completely ldst, immigration ceased as well as the coming in of foreign capital; public service became uncertain. Money was wanted to prosecute public improvements and educa tion. The country found itself exhausted, and again threatened by Chile, which had recently come out of a cruel civil war, the only one in its history, and had been cleverly militarized under the direction of German officials. Now Chile wanted the boundaries on the Andean frontier to be made at once. As the interests of English and Italians were great in Argen tina the danger of war opened again an oppor tunity for credit to improve the national de fense, and thegovernment spent more than $100,000,000, gold, in forming a modern navy, making strategic lines and military posts, and purchasing military supplies. During this time agriculture and stock-raising prospered and in a few years doubled the exportation.