SOME EXPERIENCES UNDER PAPER MONEY 401
correspondingly low. But there is nothing to show in what manner
and to what extent the prices of exported goods and the rates of
exchange would have eventually adjusted themselves if borrowing
had gone on in the same way for many years. The experiment did
not last at all long enough to verify the conclusions concerning
ultimate effects. We are reduced, as so often, to fragmentary
substantiation, to the necessity of piecing together scanty and
scattered bits of evidence, to general presumption and inference.
Similar in some respects, different in others, was the experience
of Argentina under a paper money régime. It was similar in that
there was international borrowing on a great scale, followed by
sudden cessation of the borrowings. It was different in that
the Argentine paper money, far from being stable, fluctuated
greatly in volume.
The period which is of interest for the present purpose runs from
1880 to 1900. The Argentine borrowing took place during the
first decade, and especially during the years just before 1890. The
abrupt cessation of borrowing came in 1890, and in the second
decade there was no borrowing at all; on the contrary, nothing
but payment of interest on old loans. As in the case of the United
States, the loans were made by British bankers and investors,
chiefly for railway construction. The Baring crisis of November,
1890 (the Barings had been the banking house mainly concerned),
brought the operations to a sudden halt; that crisis has the same
position in the Argentine episode as has the crisis of 1873 in that
of the United States. In both countries there was a culmina-
tion of speculation, with sharp revulsion to a period first of depres-
sion and standstill, then of gradual recovery.
Further, the relation between the imports and exports of Argen-
tina in 1880-1900 shows a close parallel to that which appeared in
the United States in 1869-79. Imports greatly exceeded exports
until 1890; thereafter exports exceeded imports. The overturn
was as sudden and as complete in the one case as in the other.
! The suspension of the Barings came in November, 1890; in the Argentine the
rTisSisS was at its worst in the spring of 1801.
