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of the business world, of giving prestige to the establish-
ment, and surrounding it with the atmosphere of respect
and confidence which was necessary to its success. Thus in
spite of its official origin the bank was able to find support
in public opinion, and to render important services to industry
and commerce.

A study of the accounts of this establishment, during the



years 1904-1908, reveals u steady and prosperous progress,
which has incontestably placed the Bank of the Nation at
the head of all similar institutions.

A glance at the following table will prove this. It
contains the balances of the three principal accounts, upon
the 31st of December of the five years from 1904 to 1908


Bills in Hand.

Uveraratts in
Current Accounts.


1904 ...

... £8,486,326



1905 ...

... 11,842,611



190G ...

... 13,364,585



1907 ...

... 16,502,621



1908 ...

... 19,049,708



We see from these figures that in five years the business
done has increased by more than 10| millions of pounds; the
overdrafts in current accounts by nearly £300,000 (in four
years, 1905-1908), and the deposits by more than £8,000,000.

The Bank of the Nation has one hundred and ten branch
establishments scattered all over the Argentine, and their
number is continually increasing. Here are the figures
relating to the three principal accounts in these branch
establishments during the same period : —


Bills in Hand.

Overdrafts on
Current Accounts.






















We find here, among the branch establishments, an in-
crease of over £6,000,000 in the bills in hand ; nearly
£740,000 in the overdrafts on current accounts; and over
£5,000,000 on the deposits.

These exceedingly satisfactory results have been obtained
by the National Bank by means of a nominal capital of
£9,680,000. We use the phrase "nominal capital" with
intention, for although this sum figures on the balance-sheets
of the bank, we must remember that in this capital are
included State bonds, which would have furnished, had they
been negotiated, an available sum of £3,212,000 in paper-
money, and tliat the net profits of the year 1908 are also


included, amounting to £644,036 in paper, which by law
must go to increase the " Capital and Reserve Funds." The
two accounts, after the deduction of the sums accruing to
them as profit, amount respectively to £9,697,946 in paper-
money and £1,303,248 in gold. It follow's from this that if
the Banco del Nacion, instead of being an official institution,
were an ordinary bank, it would have been able to pay its
shareholders a dividend of 10 per cent, upon its paid-up

The data we have just given prove abundantly that the
Bank of the Nation has been directed by a hand as firm as
it is prudent, and there is every reason to suppose that it
will continue in the future to serve public and private
interests as well as it does to-day. The forecast we pre-
dicted in the first edition of this book will have proved mis-
taken ; a forecast based upon the authoritative opinion of
an eminent Argentine statesman, who affirmed that the
official banks " bore within them the germs of the moral and
financial ruin of the country." He even added that one
should never " incorporate a bank with the political adminis-
tration of a State, because sooner or later it will be used as
a political weapon."

We must here pay our respects to the memory of Dr
Ramon Santamarina, a former president of the Administra-
tive Council of this establishment, whose premature death
was a great loss to the bank and to the country. It is,
indeed, to his intelligent and circumspect management of
affairs that we owe a great measure of the happy results

The Bank of the Province of Buenos Ayres. — There is in
the Argentine another important financial house : the Banco
de la Provincia de Buenos-Aires, which has lately re-arisen
from its ashes, by the aid of the Banco del Comercio His-
j^ano- Americano. This also was a victim of all kinds of
abuses, committed to its detriment, by the administrations
which successively directed it.

The bank was reorganised in June 1906, with a capital
of £1,760,000, of which sum half was furnished by the
Government of the Province and half by the shareholders,
with the proviso that this capital might be increased to


£4,400,000, which was done at the end of 1908. According
to the business done by this bank from 1906 up to the
present time, we may predict for it a great future, provided
that its presidents, learning from the past, guard it resolutely
from the influence of political struggles and the demoralising
factions from which it has suffered in the past. The new
establishment enjoys all the prerogatives, exemptions and
privileges which were accorded to the old bank ; it is the
obligatory receptacle in which are deposited, gratuitously,
the funds of the provincial administrations and the courts.

The most delicate point in this conjunction, namely, the
manner in which the administration of the bank should be
conducted, has been so determined as to assure the pre-
ponderance of the private interests of the shareholders of
the bank over the official interests of the Government. The
administration of the bank is confided to a council, composed
of a president appointed by the Government of the Province
of Buenos Ayres, and twelve directors, four of whom are
nominated by the Government and eight by the private
shareholders ; an arrangement which constitutes an excellent
guarantee of proper management.

From the balance-sheets of the last three years, and the
figures contained in the reports of the directing board, or
Council of Administration, we may judge the activity dis-
played by this bank, and the progress realised since its

Here, for example, are the amounts of the deposit
accounts as taken upon the 31st of December of each year,
from 190(i to 1908 inclusive, as well as the bills in hand and
the overdrafts on current accounts.



Overdrafts on


Paper.* Gold.

in Hand.

Current Accounts.


£4,610,309 .£179,431




4,920,561 396,108




5,716,441 409,690



The extensive business done by this bank, which is
evident from the preceding figures, has produced consider-
able profits, which amounted to £109,298 in 1906; £220,551
in 1907 ; and £246,884 in 1908.

* Actual value in gold.


In the latter year the net profits readied an average of
14<'02 per cent, of the total capital. This flourishing state of
affairs allowed of the payment to the shareholders of a dividend
of 9'5 per cent, in 1907 and 10 per cent, in 1908, without
prejudice to the reserve funds, which amount to £73,920.

Money-lending or Mortgage Banks (Banques Uypothe-
caires). There are two great official institutions of this
kind in the Argentine : the Mortgage Bank National is
progressing in a normal manner; the other, the Mortgage
Bank of the Province of Buenos Ayres, is painfully achieving
the process of liquidation.

We must explain that this institution, which worked
for a number of years with average regularity, collapsed
violently in 1890, on account of the scandalous abuses
committed by the management in the matter of loans, and
the pernicious introduction of electoral politics into the
conduct of business. This is one of the most lamentable
pages of the administrative and financial history of the
Argentine during the last few years.

After numerous efforts had been made at various times
with a view to making an arrangement between the bank
and its creditors by means of an exchange of its bonds of
mortgage for new bonds of the Rente Provinciate, a
satisfactory agreement was at length arranged, which put
an end to the irregular situation of the bank, in a manner
as advantageous for the creditors as for the Province.

According to the report drawn up by the representative of
the Government, the liabilities of the bank amounted, on
30th June 1906, to £19,725,636; and to set against this
colossal debt the bank possessed the assets, largely precarious,
represented by 503 loans on mortgage, of which the principal
amounted to £1,967,704, while unpaid or overdue interest
accounted for £6,568,440 ; or a nominal total of £8,536,140.

The assets also comprised certain other items, amounting
to a total of £2,186,184.

Some of these assets had a real value and could be
considered as capable of realisation. Among these were :
the money in the bank, the bank premises, the mortgages,
and the special accounts with the Provincial Government;
these items constituted the best class of assets. The re-


maining assets were more precarious, and their investigation
gave rise to serious criticisms.

Two classes of assets, for example, which were apparently
of considerable importance — those relating to hypothecary
credit and to personal shares — were far from representing
the value which was shown on the balance-sheet.

Taking into account the probabilities of the realisation
of certain classes of assets, in case of need, a liability of
£19,725,636 was opposed by assets equivalent to £6,242,039,
leaving a deficit of £13,583,595. In other words, the assets
represented only 31 per cent, of the liabilities.

The Government's representative, having analysed the
effective revenue at the disposal of the Province, and allowing
for the probable progress by which it might benefit in the
immediate future, declared that the Public Treasury could
not put aside more than £308,000 for the purpose of
guaranteeing the dividends on the shares of the Bank ; but
that this sum would probably be increased by £44,000 during
the next five years, and by £48,400 at the end of ten years ;
thus assuring the creditors of an interest of 3| per cent.,
and a proportional amortisation of | per cent. An arrange-
ment on this basis was proposed to the creditors of the
Bank at a general meeting, held at la Plata in November
1906, and was accepted.

We must add that at the present time the Provincial
Government is considering a scheme designed to infuse new
life into the Mortgage Bank. This system consists of
founding a limited company in which both public and
private interests would be represented ; a state of afiairs
very like that already in existence, and yielding excellent
results, in the case of the Bank of the Province of Buenos

The great ofiicial establishment for loans on mortgage in
the Argentine is the Banco Hipotecario Nacional. This
bank grants loans upon real estate in the capital, provinces,
and national territories. It issues cedulas which bear an
interest of 5 to 6 per cent., with an amortisation
rate of 1 to 4 per cent., which are quoted at about
par on the market, so that the holder, after the deduction
of expenses and commissions, obtains a satisfactory interest.


The value of cednlas in circulation at the end of 1908
amounted to £11,871,108 in paper (actual value) and
£1,876,530 in gold, respectively.

In addition to these official establishments, there are
various private companies, founded by means of foreign
capital, which issue loans on real estate in the capital of
the Republic and on land in some of the Provinces.

According to our information, these companies
employ a capital of nearly £15,000,000, divided as
follows :

Argentine Railway Loan Co., Ltd £827,600

River Plate Trust Loan and Agency Co. 2,705,422

SociettI de Credit Foncier de Santa Fe 511,120

Mortgage Co. of the River Plate 1,907,717

River Plate and Gal. Investment Trust Co 501,000

Dutch Mortgage Trust of the Rio de la Plata 286,1!»4

Argentine Mortgage and Agricultural Co. ... ... 80,000

The Standard 541,488

Credit Foncier Argentine 3,016,340

Compagnie Pastorale Beige Sud.-Americaine 1.350,102

Societe Hypothecaire Beige-Argentine ... ... 1,583,130

Banque Hypothecaire Franco-. Vrgentinc ... ... 1,487,160

Societe Rurale de Bahia Blanca ... ... ... 3,960


High as these figures are, however, they represent only
a portion of the foreign capital employed in this class of
transactions, for considerable sums are advanced by private
persons who wish to obtain the high interest obtainable.

These companies lend only gold, that they may escape
the fluctuations of the paper-money market, and usually
limit their operations to dealing with properties in the
capital or in the Province of Buenos Ayres, doing business
with the rest of the country only in a very limited degree.
Although Argentine legislation is extremely advanced in the
matter of loans and mortgages, the lender fears, in the case
of certain provinces, to encounter diiEculties in practice, or
delays of legal procedure in the case of foreclosing. The
interest on mortgages, which during the year 1908 was
maintained at about 9 per cent., is to-day showing a tendency
to fall, on account of the abundance of money in the Buenos
Ayres market ; the rate is now as low as 8 per cent.


It is in the capital of the Argentine that mortgage opera-
tions are most active. During the decade 1889-1908 the
amount of loans upon property reached the sum of £37,241,000.
This amount was lent upon 40,996 properties ; and of this
total £7,603,000 was lent in 1908 alone. The mortgages
effected upon rural properties, throughout the entire Republic,
for the years 1903 to 1907 inclusive, amounted to £37,920,000, ,
and the mortgaged property amounted to nearly 80,000,000 i
acres. In this total the Province of Buenos Ayres was ^
represented by £16,880,000 ; that of Santa Fe by £3,240,000 ;
that of Cordoba by £6,240,000.

The Argentine Republic possesses one of the most perfect
systems of mortgage in existence among modern nations.
To prove this statement we need only explain that the
Argentine laws do not recognise secret mortgages ; nor do they
admit any privileges in favour of married women or minors
in respect of special mortgages. Neither does such a thing
exist as a general mortgage, nor are there any privileges
taking precedence over the right of the mortgagee.

The mortgage, like every action which affects or modifies
the right of the proprietor over immovable property, must
be signed before a notary and registered by the Conservator
of Mortgages. Before drawing up the deed, the notary
must, as in the case of sales, demand a certificate stating
whether the property is or is not free from charges.
Although the right of tlie proprietor is perfect as to posses-
sion, the law tends to give property a certain degree of
mobility ; thus for this reason the term of a sale with power
of redemption is three years, the term of a lease ten years,
and that of the registration of a mortgage ten years ; but all
these terras may be renewed upon expiration. The term of
ten years in the case of mortgages does not affect the Banco
Hypotecario Nacional, nor the Bangue Hypothecaire de
Buenos Ayres, nor the Banque Hypothecaire de la Capitale,
in virtue of the special laws which created these in-

The Bourse or Exchange. — The first Commercial Exchange
or Bourse, or let us rather say the first institution to fulfil
the functions of an exchange or Bourse, for we cannot give
that name to the market which formerly existed in Buenos


Ayres, was inaugurated in 1810 under the name of the
Chamber of Commerce — Sala de Comercio. It was com-
posed exclusively of members of the English colony,
and offered them, besides the usual advantages of such
establishments, the attraction of a well-furnished library.

The documents available do not tell us how long this
institution lasted, nor whether at a later period it opened its
doors to the Argentine element nor whether, being finally
transformed, it served as a basis for the organisation of the
exchange as it is to-day. The only thing certain is that in
July 1834 the first members of the association met in the
Via San Martin, there to establish the Bourse, of which
the inauguration took place on the 1st of December

Before this date there was a financial group known as
the " Sociedad Particular de Corredores," which was known as
the Camuati, and which busied itself with mercantile trans-

The Bourse retained its original premises until the year
1862, when it was installed in another building in the same
street, at present occupied by the Caisse de Conversion, or
Bank of Exchange.

Some years later, the premises being too small, it was
proposed to build other and far larger premises, sufficient to
meet the ever-increasing demands of the institution. In 1881
an extraordinary general meeting was held, with a view to
forming a company to undertake the construction of premises
to house the " Sociedad Bolsa de Comercio." But the corn-
el pany was not formed until 1883, when it acquired the site on
which the Bourse now stands ; and its official inauguration
took place two years later.

Since then the Commercial Exchange has enjoyed a
period of continued prosperity ; it is to-day the first
commercial centre of Latin America. It exercises a great
influence over the commercial and economic life of the
Republic. It is the sole establishment of its kind, having
judicial powers, open to all mercantile transactions, and
establishing, under the stress of supply and demand, the
prices of the products of labour or commerce. Having the
power of fixing the value of merchandise by quotations of


paper-money, it is, more than any other institution, liable to
exceed its functions ; but it bears within itself, in its admir
able organisation, the means of repairing its own errors \
and of remaining the faithful regulator of prices and

The most eloquent commentary upon the importance of
the operations effected by the Bourse de Commerce is the
simple enumeration of their value at various periods, for we
then realise the enormous development which they have
achieved in a period relatively short. In 1886 the total of
the business done was |1 73,000,000 paper, £34,600,000 face
value ; in 1887 it was $254,000,000 (£50,800,000) ; in 1888
$432,000,000 (£86,400,000) ; in 1889 $469,000,000 (£93,800,000).
The total value of all business effected, liquidated or not,
cash or credit, during the years 1890 and 1891, amounted
to $18,000,000,000 (£1,584,000,000) and $7,000,000,000 li
(£616,000,000), respectively.*

These figures, in their simplicity, cover the history of an
interesting period of the financial life of the country. The
wave of speculation which turned all men's heads began to
rise as early as 1887, and in 1891 was at its greatest height;
it then crumbled into foam, having shattered the most deeply-
rooted of banking houses, compromised the national credit,
changed brilliant illusions into melancholy realities, and sown
desolation and ruin in many a home. After the catastrophe
the total value of business done rapidlyjfell, and we see it
falling violently from one year to another — from the
$18,000,000,000 of 1890 through the $3,376,000,000 of 1895,
to the $835,000,000 of 1900; a year which experienced a
condition of affairs which was destined to produce a beneficent
influence upon the economic life of the country. • \

In this total of $835,000,000 of paper-money we find that 1 1
transactions in gold amounted to $774,000,000 paper money, jjj
corresponding to $66,800,000 of gold negotiated ; while in 1 1
1899, the whole business done in the Bourse still amounted '
to the respectable sum of $1,295,000,000 paper, of which
$1,234,000,000 represented operations in gold. From one

* The values before 1900 are face values, as the actual value of the piastre
note fluctuated. They must not be taken as actual values any, more than in ,
the case of Indian rupees. — [Trans.] ii



year to another the total sum of the business transacted in
the Bourse had diminished by |460,000,000 (paper).

The principal cause of this notable decrease was the " law
of monetary conversion."

This law, which has been in force since 1890, fixed the
value of 44 centavos, or |-44 gold, for the future conversion
of paper-money, and enacted that the Caisse de Conversion
should receive the gold and deliver paper, and vice versa, at
this same rate: a rate equivalent to 227*27 per cent. The
effect of this reform was thus, if not to destroy, at least very
largely to limit unbridled speculation, which made itself
especially felt in the value of the paper piastre.

Speculation in gold being suppressed, the volume of
business transacted on the Bourse de Commerce of Buenos
Ayres grew gradually less and less, falling finally, in 1904,
to $37,312,000 paper, of which |19,968 stood for gold.

After 1904 the total sum of these operations was still
further reduced, the figures for 1908 being incredibly low.
Thus the total, which in 1905 had attained £45,400,000, rose
to £57,800,000 in 1906, fell in 1907 to £16,880,000, and in
1908 to £12,560,000. To-day the activity of speculators is
concentrated upon operations in mortgage bonds and the
shares of various companies ; each class of operations
amounting to some £5,000,000. These figures show that the
Bourse de Commerce loses from day to day some part of its
importance as the regulating centre of mercantile transactions;
but it would be an error to measure the economic vitality of
the Republic by the amount of business efifected on the
Bourse, since an examination of the situation shows us that
the Argentine has never known a period of more obvious

Having explained the new phase upon which the Buenos
Ayres Bourse has entered, we must now consider its organisa-
tion and its usages, and the regulations under which it

In the first place we must remark that the Bourse is not
an official institution, but a private establishment, founded
and supported by a limited liability company, the "Bolso de
^' Comercio," which is recognised as a judicial body.


In contrast to other Exchanges, and that of New York in j '
particular, the number of shareholders is unlimited, and varies .) ^
from time to time. In 1886 there were 2959; in 1891,4901; in i lio"'
May 1905, 3709. To become a member of the Bourse one must ' ' *"•'
be presented by two shareholders, admitted by the Council
Chamber or Committee {Chambre Syndicate), and must pay
a moderate entrance fee, as well as an annual subscription.

According to its rules, the object of the Bourse de
Commerce is to " offer a place of meeting to these members,
where they may discuss and effect all manner of lawful
business ; and to facilitate and negotiate all commercial
operations by giving them security and legality." It also
undertakes to represent commerce and production in general
before the authorities of the country, or before private
undertakings ; it supports petitions relative to their interests,
in order that laws about to be proposed, or those which are
being adopted, shall be equitable and shall favour the develop-
ment of commercial transactions. Its object is both to ensure
the unity of commercial usages, and in case of need to take the
initiative in all questions of economics which may affect
commerce in general.

The management of the Bourse is effected by the Council ^
Chamber — the Chambre Syndical de la Bourse, which is
entrusted with the general and official representation of the
institution. It is this authority which permits or refuses the
official quotation of all stocks, shares, loans, etc., issued
according to the laws of the country of their origin and by ; j t^
legally constituted bodies, ' ' ij

The functions of the stockbroker can only be fulfilled \ «»
by persons previously authorised by the Council Chamber, •; 18
after they have accomplished certain formalities, and have

Online LibraryAlberto B MartínezThe Argentine in the twentieth century [microform] → online text (page 24 of 33)