The South American Republics. Thomas Cleland Dawson
gave place to a mad fever of speculation. Congress passed a national banking act, and under its provisions banks of issue were established in nearly every province. The paper circulation almost quadrupled and the premium on gold doubled. The Federal government followed the example set by the provinces and municipalities, and burdened the country with an indebtedness which has mortgaged the future of the country for years to come. Between 1885 and 1891 the foreign debt was increased nearly threefold.
During 1887 and 1888 few apprehensions of the inevitable result of the inflation seem to have been entertained. Up to the very day of the crash of 1889 the government cheerfully continued to borrow, to plan magnificent public improvements, and to build expensive railways. The public speculated confidently in the mortgage scrip issued through the provincial mortgage banks. Early in 1889 the government began to have difficulty in meeting some of the enormous obligations which it had undertaken. Conservative people became apprehensive; the independent press raised a warning voice. A ministerial crisis was followed by a panic in the Exchange. The new Secretary of the Treasury, in an effort to prevent further depreciation of the currency, diverted the redemption fund held by the government for bank issues. The currency dropped with sickening rapidity; the bubble companies collapsed; the public realised that many of the banks were unable to meet their obligations.
At this crisis public alarm and indignation found a vent in the formation of a revolutionary society, called the Civic Union, which was pledged to overthrow President Celman. On July 26, 1890, disturbances began and there was a little fighting in the streets. Police and troops, however, put no spirit into their efforts to suppress the rioters. The President's best friends urged him to resign, and Congress passed a formal memorial to that effect. There was nothing for him to do but to obey the manifest wish of the people; he handed in his resignation and the Vice-President, Dr. Carlos Pellegrini, peacefully succeeded him.
The situation went from bad to worse; in 1891 the currency dropped to twenty-three cents on the dollar, the banks failed, and the laws for collection of debts were suspended for two months. The most which Dr. Pellegrini could hope to do was to hold things together until the general election should be held fifteen months later. No human wisdom could devise measures that would give immediate prosperity, and the public would be satisfied with nothing less. Dr. Pellegrini had to wait until later years for a proper appreciation of his labours. The other two great national figures were General Roca and General Mitre. The first had the prestige of his strong and successful administration; he enjoyed the confidence of the army, and he was the head of the great Nationalist party which was especially powerful in the provinces. General Mitre, the most eminent citizen of Buenos Aires, and in a way the living embodiment of the previous forty years of national history, had inevitably been selected as chief of the Civic Union. He had therefore led the movement through which the public opinion of the capital had overthrown Celman.
Mitre and Roca had co-operated in securing a peaceful transfer of the government from Celman to Pellegrini. Roca was inclined to favour Mitre for the presidency, but it soon became evident that the latter could not control the more radical members of the Civic Union, and that his candidacy would not reconcile all parties. February 19, 1891, an attempt to assassinate Roca was perpetrated in the streets of Buenos Aires. The spirit of mutiny grew alarmingly, and a state of siege was proclaimed; the Civic Union split into warring camps; trouble broke out in Cordoba, and successful revolutions overthrew the legal state governments in Catamarca and Santiago del Estero. Mitre and Roca formally withdrew from active political life in the hope that this might placate the dissident politicians.
The candidate fixed upon by the wing of Nationals who adhered to Roca, and the moderates of the Civic Union led by Mitre, was Doctor Luiz Saenz Peña, ex-Justice of the Supreme Court. The Pellegrini government gave him its earnest support, and charges were made by the Radicals that their votes would be forcibly suppressed in the election of October, 1891. They determined to anticipate violence with violence, but, on the eve of the election in October, 1891, their leaders were imprisoned and a state of siege declared. Saenz Peña was elected, but the Radicals began to intrigue to obtain control of the provincial governments, which would enable them to force his resignation or his compliance with their wishes. Serious trouble broke out early in 1892 in the province of Corrientes, with which the Buenos Aires radicals openly sympathised. The new President quickly cut loose from the Roca wing of the Nationalist party and allied himself closely with the moderate Civic Unionists, now usually called "Mitristas." The President's own son, who had been a candidate against him, headed the faction of the Nationalist party that had renounced Roca's leadership. Revolutionary movements against the governors who belonged to the Roca faction began in several provinces. In February there were armed protests in Santa Fé against a new wheat tax; a revolt broke out in Catamarca in April; by July the Saenz Peña administration was in the gravest difficulties. San Luiz and Santa Fé rebelled, and in August Salta and Tucuman followed. It was manifest that the President was not strong enough to hold down the selfish factions who saw in the general dissatisfaction and financial distress only an opportunity to get into office by force of arms.
Congress remained neutral until it became evident that no accommodation could be reached between the President and his opponents, and that the latter would press on to overthrowing the government and probably precipitate a serious civil war. In this crisis, however, the majority agreed to laws which authorised armed Federal intervention in the troubles in San Luiz and Santa Fé. But in September the national troops themselves showed symptoms of mutiny and by this time most of the provinces were convulsed by revolutionary movements which the central government was manifestly not strong enough to suppress or control.
On September 25th, General Roca took command of the army; the most dangerous radical leaders in Buenos Aires were thrown into prison; and on October 1st he captured Rosario, the second city of the Republic, and the chief place in Santa Fé, which for months had been in the hands of revolutionists. This was a beginning of the end of the troubles that menaced public order. Six million dollars had been expended by the government in fruitless marchings to and fro of troops, but no serious harm had been done. The scene of the contest between the ambitious factions was transferred to Congress, the Cabinet, and the Press. Throughout 1893 and 1894 the President struggled with his factional and financial difficulties, and gradually lost control of Congress and prestige in the country.
Meanwhile, commercial liquidation was proceeding normally and, as always, painfully. The great Provincial Mortgage Bank, through the agency of which a vast amount of the land scrip had been issued in the Celman days, was granted a moratorium for five years. Other actual bankruptcies were legally admitted and enforced. The mortgage scrip payable in gold was replaced by currency obligations. The government had proved unequal to the task of balancing its own receipts and expenses. Taxes were increased until rebellion seemed imminent, but expenditures still outran them. The deficits mounted in spite of the efforts toward economy and the returning prosperity of the business world. The boundary dispute with Chile had assumed a threatening aspect; war seemed imminent, and the military and naval estimates were largely increased. In January, 1895, President Saenz Peña called an extra session of Congress to vote supplies for the expected war with Chile and to consider the financial proposals of the government. Congress demanded that political grievances should be redressed. The President had been persecuting the army officers who had been implicated in the revolutionary disturbances, and a vast majority of Congress insisted that a complete amnesty be granted to all political offenders. When the President refused, the Cabinet resigned in a body and Congress and the opposition brought every pressure to bear. It was soon evident that Congress must win, and on January 22, 1895, the President resigned.
The Vice-President, Doctor Uriburu, succeeded for the unexpired period of three years, during which little progress was made toward a settlement of the nation's financial difficulties. Symptoms of renewed extravagance appeared. In 1897, the issuance of $10,000,000 of mortgage scrip was authorised, and the city of Buenos Aires received permission to borrow $5,000,000. Work on the great docks of Buenos Aires, costing $35,000,000, was pushed to completion, and in February the paper dollars dropped back to 33 cents, while the deficit for the year was over $20,000,000.