We see from these figures that in five years the business done has increased by more than 10¹⁄₂ 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:—

We find here, among the branch establishments, an increase 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 that 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 follows 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 shares.

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 predicted in the first edition of this book will have proved mistaken; 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 administration 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 Administrative 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 obtained.

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 Hispano-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 preponderance 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 displayed by this bank, and the progress realised since its re-establishment.

Here, for example, are the amounts of the deposit accounts as taken upon the 31st of December of each year, from 1906 to 1908 inclusive, as well as the bills in hand and the overdrafts on current accounts.

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

In the latter year the net profits reached 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 Hypothécaires). 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 Provinciale, 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 remaining 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 3¹⁄₂ per cent., and a proportional amortisation of ¹⁄₂ per cent. An arrangement 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 affairs very like that already in existence, and yielding excellent results, in the case of the Bank of the Province of Buenos Ayres.

The great official 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 cedulas 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:

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 difficulties 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 operations 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 acres. In this total the Province of Buenos Ayres was represented by £16,880,000; that of Santa Fé by £3,240,000; that of Córdoba 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 the proprietor is perfect as to possession, 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 terms may be renewed upon expiration. The term of ten years in the case of mortgages does not affect the Banco Hypotecario National, nor the Banque Hypothécaire de Buenos Ayres, nor the Banque Hypothécaire de la Capitale, in virtue of the special laws which created these institutions.

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 composed 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 following.

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 transactions.

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 company 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 admirable organisation, the means of repairing its own errors and of remaining the faithful regulator of prices and values.

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 $173,000,000 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 (£616,000,000), respectively.[92]

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 rapidly fell, 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 transactions in gold amounted to $774,000,000 paper money, corresponding to $66,800,000 of gold negotiated; while in 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 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 effected on the Bourse, since an examination of the situation shows us that the Argentine has never known a period of more obvious prosperity.

Having explained the new phase upon which the Buenos Ayres Bourse has entered, we must now consider its organisation and its usages, and the regulations under which it operates.

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 particular, the number of shareholders is unlimited, and varies from time to time. In 1886 there were 2959; in 1891, 4901; in 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 development 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 legally constituted bodies.

The functions of the stockbroker can only be fulfilled by persons previously authorised by the Council Chamber, after they have accomplished certain formalities, and have proved whether they have attained their legal majority, have experience of business, and have enjoyed a good reputation, all of which must be guaranteed by three men of business of known responsibility. The number of such brokers is not limited, and may be increased or decreased according to circumstances. In 1905, for instance, their number was 385. They are not obliged to give security nor to make any deposit as guarantee before practising; they have merely to pay a small monthly subscription.

The regulations of the Bourse contain severe provisions against brokers who infringe any of the numerous prohibitions affecting them; such as accepting orders from clients whose identity has not been proved; from persons known to be insolvent, or from incapable persons; or acting as intermediary in negotiations where there is reason to suspect that the parties involved are not proceeding seriously. Brokers who infringe these rules or others—who do not, for example, meet their engagements—are suspended by the Council Chamber of the Exchange.

All operations must be declared in an audible voice by the stockbroker to the recorder (annotator), in order that the latter may inscribe them upon the blackboard. The vendor and the buyer must then exchange memoranda, in order that the transaction shall be definitely confirmed and made valid. All transactions effected on exchange[93] during official hours are copied, with the prices, from the blackboard into the Journal of Sales; these latter being also published in the Boletin de la Bolsa de Comercio; or, as we should say, the Stock Exchange Bulletin. The settlement of all transactions concluded is effected through the Council Chamber, with the aid of the Bureau de Liquidation, or Settlement Office, under the supervision of an official liquidator, appointed at a general meeting of the brokers, who charges a percentage on the settlements which he effects.[94]

Such are the principal rules of the organic charter which regulates the operations of the Stock Exchange of Buenos Ayres, and such is its method of operation. Let us now examine the total amount of its operations during the period 1895-1908, and how they may be analysed:—

Of this total an amount of 8724 millions of piastres, or 76·2 per cent., applies to metallic operations, which kept speculation alive until the monetary law of 1899 once and for all arrested the varying values of paper money. If this law had had no other effect, this result alone would have justified it as wholly beneficial to the interests of the nation.

In the quotations of the above period mortgage bonds hold the second place; they represent about 5 per cent.

Being dominated by the spirit of speculation, which expended itself principally, indeed almost exclusively, upon monetary transactions, the Bourse had no time to devote itself to more legitimate business. Thus the public funds represented only some 3 per cent. of this total; then came shares and debentures of various companies; and last of all banking shares, the amount of these being insignificant.

The nominal value of all the securities which were quoted on the Buenos Ayres Bourse in 1907 amounted to $554,791,932 paper and $127,763,525 gold, or an actual total of £74,374,395, and an analysis gives the following results:—

These two totals together are equal to a sum of £74,374,395.

In the first edition of this book we gave a summary of the nominal value of all the stocks quoted on the Buenos Ayres Stock Exchange in 1904; the sum amounted to 462 millions paper and 38 millions gold, or a total of £52,256,000; so that in three years these figures had increased by 93 millions paper and 70 millions gold, or over £22,000,000.

It is permissible to hope that in the course of time the Buenos Ayres Exchange will attain a far greater development, and that it will even exercise some steadying influence on the prices of the public funds. To-day their real market is in London, Paris, or Berlin, so that the credit of the country is affected by the disturbing events of European markets, while the Buenos Ayres market is devoid of any compensating effect.

However, it may be observed that when a country begins to grow rich and to have more assets at its disposal, the public funds placed abroad show a tendency towards repatriation. We have seen this in the case of Italy and Austria, which had an important foreign debt in France, and have considerably reduced it during these last ten years of economic progress.

It will certainly be the same in the case of the Argentine when, thanks to a series of good harvests, its available or fluid assets have increased beyond what is absolutely necessary for the development of agriculture. Investments will be made not only in land or in live stock, but money will be invested in stocks and shares as well, and notably in the Government stock of the country.

As a symptom of this tendency, we may mention that interest on the foreign debt, the coupons for which have hitherto been payable abroad only, is now payable in the Argentine as well, in order to facilitate the purchase of this stock in the Republic as a staple investment. The internal debt is also the object of more extensive operations, now that the seventeen loans which constituted the old debt have been unified, and now that a special call is to be made upon the internal credit of the county with a view to undertaking vast public works. To enlarge the market for this Government stock the authorities have just decided that its coupons shall be payable on the principal foreign markets.

Finally, in the course of time the market for industrial stock, bank stock, and railway shares will gradually become less restricted, in proportion as the public fortune becomes more extensively subdivided, instead of being concentrated, as it is at present, in a comparatively small number of hands. The only thing that may compromise this future is the excessive speculation which we find, unhappily only too often, in a country where gambling is a dominant instinct. This excess, with its natural sequelæ in the form of financial crises, might end by driving all serious clients from the Bourse, and in destroying the excellent elements which Buenos Ayres possesses for the creation of an important financial market.

Limited Companies.—In the vast progressive movement which increases in force yearly throughout the Argentine Republic, the Bourse of Buenos Ayres has yet another part to play: that is, to facilitate the formation of collectivities of capital under the form of joint-stock companies, since the spirit of enterprise exhibits itself by preference under this form. Collective effort is to-day more and more replacing individual effort; the Argentine must therefore learn how to employ this weapon of associated capital in order to promote new undertakings, and, by popularising movable values or securities by the help of the Bourse, to raise up new resources to the country’s profit.

Our study of the chief manifestations of Argentine life and its commercial machinery would thus be incomplete if we did not give some account of the public companies of the Argentine, the legal formalities demanded of them upon their formation, their mechanism, and the vicissitudes through which they have passed at various interesting periods of Argentine history.

The constitution of public companies is subjected by the Commercial Code to rigid formalities, in accordance with the most advanced principles of universal legislation upon such matters, in order to assure their proper operation as well as the interests of the shareholders.

The indispensable conditions of the formation of such companies are the following: the number of associates must not be more than ten; the capital of the venture, or its first issue, must not be less than 20 per cent. of the total, and must be entirely paid up; the shareholders must contribute 10 per cent. of the capital actually subscribed, a sum which must be deposited in an official or private bank; the company must be constituted for a fixed term, and must be authorised by the Government, which cannot refuse its authorisation if the functions, organisation, and articles of the company are in conformity with the code, and if its object is not contrary to the public interests.

To gain the right to publish the prospectus appealing to possible shareholders, the company must also conform to the following rules: it must indicate the date of the provisional formation of the company, must mention the place where the charter of the company was drawn up and registered, and what journals have published the articles and the Governmental authorisation; it must give details of the object of the company, its capital, the number of shares, and the conditions of subscription and payment; it must explain the exceptional advantages claimed by the founders of the company, and convoke the subscribers to a general meeting, which must take place within three months, at which the company shall be definitively constituted.

The law formally forbids the founders of limited companies to reserve any sum or advantage whatever, in the form of shares, debentures, or founders’ shares, in exchange for concessions gratuitously granted by the Government. It concedes them a maximum of 10 per cent. of the capital, or 10 per cent. of the realised and liquid profits during a term which must not exceed ten years.

The founders or administrators of any company are responsible, jointly and severally and without any limit, for all that has been done in the name of the company up to the time of its definitive constitution, without appeal against the latter, if it take place.

If the company be finally constituted, the expenses and the consequences of all proceedings undertaken to that end by the founders will be charged against the exclusive account of these latter, nor will they have any resort or recourse to appeal against the subscribers.

In the case of limited companies which are not legally constituted, the founders, administrators and representatives are, conjointly and severally and without limit, required to restore any sums they may have received for shares issued, and also to pay the debts of administration and the losses that may be incurred by third parties by the failure to fulfil obligations contracted in the name of the company.

Once a limited company is constituted, its administrators contract no common or personal responsibility for the engagements of the company, but they are responsible, personally and conjointly, to the company and to third parties, for the failure of execution or the improper employment of their mandate, and also for the violation of laws, regulations, and statutes.

All companies are obliged to appoint at least once a year a censor chosen by the general meeting, who directly represents the shareholders, and who supervises the proper conduct of the company, and the accomplishment of the legal formalities which concern it.

The Commercial Code contains many other enactments which tend to ensure the correct and legal constitution, as well as the proper conduct, of limited companies: but those we have cited will suffice to show that the law-maker has striven to use the utmost foresight, with the object of guaranteeing the interests and the capital confided to such companies.

Despite this prudence and foresight, we are forced to recognise that the institution of such companies, which constitutes a powerful economic lever when they are correctly administered and established with a view to commercial and industrial utility, is at present discredited on account of the abuses committed in its name at the time of the great crisis of 1890.

The institution of limited companies is so intimately connected with the financial disasters of that period that its history is to a certain extent the history of speculation, and it has suffered all the vicissitudes of speculation.

In 1882, when Buenos Ayres was federalised and became the permanent capital of the Republic; when public tranquillity was confirmed, with the conviction that it would be long before it was disturbed; when the public expenditure was increased, thanks to the employment of credit and the issue of paper currency; when, in short, the prospect of universal prosperity had awakened energy and initiative; there began to pass through the country a light breeze of speculation, which was soon to become a tempest; and the limited company, which until that time had existed in a modest, inconspicuous degree, quickly assumed a greater importance, with a more definite, more concrete form.

The companies floated in 1882 and in the three following years were not very numerous, and their capital was insignificant as compared with the capital of those that followed: yet a very marked impulse towards progress was already perceptible, as much in numbers as in capital. Thus the sum of 10 million piastres, the amount of the nominal capital declared by the limited companies in 1882, rose to nearly 13 millions in 1885.

But as the fever of speculation and affairs grew higher and ever higher, thanks to the aid of the credit too liberally granted by the banks, whether mortgage or money-lending banks or otherwise, and as at the same time all the paper thrown upon the market was immediately absorbed, to the great profit of those who issued it, the limited company followed the upward march, although this movement did not always correspond with the idea of progress. Thus we see with surprise that from 13 millions of piastres (paper) in 1885, the capital of the companies rises to 34 millions in 1886, to 95 millions in 1887, to 196 millions in 1888, and in 1889 to 378 millions; and in these two latter years the fever has reached the period of greatest danger.

In 1890 the economic-financial crisis, long delayed by artificial means, burst over the country with terrible force, and a revolution broke out simultaneously. Under the weight of this double disaster the banking houses tottered on their foundations, soon to fall in ruin; credit, personal or secured, vanished absolutely; the paper currency, already depreciated, fell to a still lower value; industry and commerce were arrested in their progress, and the whirligig of speculation, which had so far gone merrily but giddily round, came to an abrupt standstill. As a natural reaction, the formation of companies, which speculation had stimulated to excess, was stricken with an almost complete paralysis; so that we see the capital of these companies, which in 1889 had risen to 378 millions of piastres, fall in 1890 to 190 millions, and finally, in 1891, to the modest sum of 13 millions.

These, rapidly denoted, are the salient lines of a sketch of the vicissitudes of speculation and the affairs of the capital during the last ten years; a picture which begins with the rosy tints of hope and illusion, and ends in the sombre colours of bankruptcy and ruin.

The branches of trade and industry which are most largely represented by the limited company form another question of interest. It is certainly very difficult to discover the true social idea which these companies pursue at flotation, for behind pompous titles which seem to express a true national progress, such as the construction of harbours, the foundation of colonies, the building or management of railways or tramways, the opening up of new districts by means of canals, etc., there lurks, only too often, a mere scheme of speculation in shares or land. Judging, however, by the actual operations effected by these companies during the course of their existence, we can class them according to the object declared at the time of flotation, and at the same time give the statistics of their capital.

The capital of all the companies floated since 1882 amounts to 950 millions of piastres (paper), or £83,600,000. Of this sum £14,320,000 was frankly intended to promote speculation in land; £13,200,000 was applied to railways (including the purchase of the railways of the Province of Buenos Ayres); £12,144,000 to insurance (a form of employing capital much in vogue at the time), and £12,056,000 to banking affairs, which in some cases were only the mask of speculations in stock and in land.

To make our sketch complete we ought to give, instead of the nominal capital declared by these companies, the capital actually paid up; as we know that it is not every company that has at its disposal the sum mentioned in its articles, but that many have to be content with the payment of one or two instalments, while others cannot even find subscribers. Knowing these data, and being cognisant of the present condition of the companies, we should then be able to estimate the amount of loss which they have inflicted upon the country.

Unfortunately this investigation is impossible, for lack of information, and we can only state that millions of pounds of private fortunes were lost or stolen in the limited companies of the period.

After the crisis of 1890 there was, as there was bound to be, a great mental reaction; especially in matters relating to the institution of the limited company; and the latter was so discredited that for several years not a penny could be obtained for investment in undertakings of the kind.

But it was not possible that such an important element of economic progress should be entirely suppressed on account of the abuses committed in its name. Very slowly it came into favour once more; but thanks to the lessons of experience the new companies were concerned in the foundation of undertakings of genuine industrial and commercial value. Thus the companies floated in 1902, 1903, and 1904 represented a nominal capital of $803,979,000 paper (£70,950,352 actual value), and those founded from 1905 to 1908 (inclusive) had a nominal capital of £72,573,445, which may be analysed as follows:—