9. BANKING AND FINANCE. The first important operation of credit made by Argentina was a loan negotiated with Messrs. Baring Bros. & Co., of London, in the year 1823, bearing interest at the rate of 6 per cent and per cent amortization, issued at 90 per cent. Shortly after this operation, internal political troubles caused the suspension of in terest; and not until many years after, during the administration of President Mitre, did the republic resume the service on its debt. Eventually the stockholders of the bonds re ceived their full capital and interest in new bonds. During the years 1883 to 1885 many of the Argentine provinces issued loans in order to assist in establishing national banks under a special national law. A number of these provinces negotiated their loans in Europe, principal with French bankers. Unfortu nately, owing to the crisis in 1890, the provinces suspended service of interest on these loans, the country suffering at the same time a great crisis; and although the national government, during the presidency of Dr. Pellegrini, who is remembered as an able statesman, endeavored to continue the service in cash, it could not do so. At that time Dr. Victorino de la Plaza (subsequently President of the republic) trans mitted to Buenos Aires sound financial views prevailing in London, and by his counsel the funding loan was issued to pay service in bonds instead of cash for five years. Before the ex piration of that time the country renewed the normal service in cash of its entire debt. Soon afterward the national government decided, in the interest of the credit of the country, to make arrangements to assume the loans created by the provinces, giving national bonds in ex change for the provincial bonds; and thus loans issued by the different provinces, as we have mentioned above, were withdrawn. The same thing was done with the railway guar anties, under national laws, for the con struction and equipment of lines. In conse quence of the financial crisis of 1890, these guaranties were not punctually paid, and it was decided to treat this question in a radical way by computing the value of each guaranty and giving to the railway 4 per cent national bonds.
Fifty million dollars assigned to this purpose are known as national railway bonds. The credit of the Argentine Republic, thus com pletely re-established, has been maintained dur ing a long period without an interruption, not withstanding the difficult moments experienced in the years 1914-16 over all the world in con sequence of the European War. It is but just and right to mention in this connection the able manner in which the President, Dr. de la Plaza, controlled the finances of the country.
Aid Extended by British and American Nearly all the loans made by the Argentine Republic were issued under the auspices of Messrs. Baring Bros. & Co., who have been the friends and bankers of the coun try from the beginning, and have won the respect and the sympathy of all the Argentine people. Many of the principal loans of the republic were issued solely for the construc tion of railways, water and drainage, port works, and other improvements, all of which belong to the national government and earn enough to pay the service.
American bankers have had until quite re cently little direct negotiation with Argentina. Messrs. J. S. Morgan & Co.. of London, issued a loan jointly with Messrs. Baring Bros. & Co., in 1886-87; again, but on this occasion unaided, issued the funding loan of 1890; and also or ganized and retained a large interest in one of the railway companies, the Argentine Great Western Railway, now known as the Pacific Railways. The only direct loan contracted with American bankers was one for $10,000,000 made by the province of Buenos Aires in 1882 with Messrs. Morton, Bliss & Co., who took the whole amount. This loan, according to the state ment in Don Pedro Agote's book on finance, was the first Argentine loan issued at par, and was brought out in the London market. The same firm, afterwards the Morton Trust Co., now the Guaranty Trust Co., of New York, has maintained intelligent interest in and con tinued its friendly relations and financial con nections with Argentina. Compare the memo randum on the finances of Argentina submitted by Dr. Samuel Hale Pearson, in Proceedings of the First Pan-American Financial Confer ence (Washington 1915).