Examiner had asked, by cable, his views on the silver question in Mexico, and that he had sent by mail in answer some tables and other data bearing on that subject. When, some time later, Mr. Lewis made a similar request, the President answered him that, these questions being agitated in the political canvas in the United States, in which he thought it would not be proper for him to take a part, he declined giving his views. This was the extent of his communication with the Fournal, but from such data the telegram was made up, which I suppose was substantially correct.

When it was stated by the public press, in the middle of 1897, that Mexico was going to adopt the gold standard, I asked President Diaz, at the request of prominent men of this country, whether this was the case, and in a letter from him dated at the City of Mexico on August 11, 1897, he answered me that for the time being he did not intend to recommend that measure, as Mexico was waiting for the result of the adoption of the gold standard in other countries before deciding whether or not to make that move.

The Silver Question Became the Leading Political Question in the United States.-Soon after the publication of my article in the North American Review, the silver question became the leading question in the United States, on account of the National Democratic Convention, which met at Chicago on the 7th of July, 1896, having accepted a plank in its platform in favor of the free and unlimited coinage of silver at the ratio of 16 to 1; while the National Republican Convention, which had met at St. Louis a few days before declared in favor of the gold standard.

The silver question became, therefore, the leading question of both parties in the presidential election of 1896, and in their canvass the spokesmen of both mentioned Mexico as an instance supporting their respective views; some of the Democratic orators tried to show that the prosperity of Mexico was due solely to the silver standard, and some of the Republicans to demonstrate that the many disadvantages under which we labor in Mexico, as compared with the United States, were due to the same standard.

Newspaper Agents Sent to Mexico to Study the Silver Question.Some of the leading newspapers of this country sent special representatives to Mexico for the purpose of studying on the spot the effect of the silver standard in that country, and although these were men of unquestionable general ability, they were at a disadvantage amidst strange conditions, and among a people with whose language, history, and genius they were unfamiliar; notwithstanding which they expected in two or three weeks' stay in the country to arrive at sound or useful conclusions on the social and economical questions in all their aspects which they had been sent to study. Many went there, besides,

already prejudiced in favor of some particular view, and none remained there long enough to form just opinions on those complex questions. The result, as was natural to expect, was that each side made a great many mistakes and that the good name of Mexico suffered a great deal for that reason.

The unsatisfactory result of the missions referred to was increased by the fact that such agents, in some cases, were sent to Mexico to seek for facts in support of conclusions which were irrevocably formed, so that their minds were open to only one set of facts and observations, and in the published accounts of some of these investigations one is not impressed by their sense of relevancy to the facts observed or to the questions under discussion.

The same thing happened in their case as in that of my paper, that Mexico was presented by both sides as supporting their respective theories, that is, the silver men exaggerated the advantages of the silver standard, as they are developed in Mexico, and considered that standard as the sole cause of the prosperity of that country; while the gold men exaggerated the disadvantages of the silver standard and pointed out the many lines in which Mexico is far behind the United States, attributing these drawbacks to the silver standard.

It was stated in this country, and with great effect, that anybody going to Mexico could buy with an American silver dollar one dollar's worth of goods, or pay for a dinner of that price, and have besides one Mexican dollar returned in exchange. While this statement may be in some respects substantially correct, as a matter of fact it was not so. It may have happened only once or twice, and for a very few days each time, since the depreciation of silver began, that the Mexican dollar has been worth exactly 50 cents in gold, when exchanged for gold or sold for the silver bullion contained in the same. The price until recently, and not considering the last great fall of that metal, was generally from 53 to 58 cents and sometimes higher, and therefore it would not be possible to pay with an American dollar, worth from $1.85 to $1.90 in Mexican money, for the value of one Mexican dollar and have another Mexican dollar returned in exchange, although that operation might have been made on two or three days during all that time when the price of the silver bullion in the Mexican dollar was exactly 50 cents. The keepers of restaurants, shops, etc., are not informed about the price of silver in London, which varies almost every day, and they would not attempt to exchange a foreign coin for the exact market price of the bullion contained in the same, running the risk of losing by the operation. If anybody should offer in Mexico a United States silver dollar in payment of one dollar's worth of goods, the shopkeeper very likely would not receive the coin, because he would not be aware of its value; or, if he received it, knowing that it

was worth more than a Mexican dollar, he would not give in exchange the full value of the gold dollar at the price of silver bullion on that day for fear of losing money. But, of course, any one having a United States silver dollar could go to an exchange office, have it exchanged for, say 190 cents, pay for his breakfast or his goods the value of 100 Mexican cents, and have 90 cents in change left; and so far the statement may be substantially correct. In the paper published by the North American Review, and which follows this introduction, I explained why this happens, namely, that the United States silver dollar is the representative of a gold dollar, while the Mexican dollar is not redeemed in gold.

Comments on the Silver Standard in Mexico.-It would be unfair to consider the silver standard of Mexico as the only factor in the progress of that country. Its present prosperity is due principally to the building of a system of railways which makes transportation easy and comparatively cheap, to the complete peace that has prevailed there for twenty years, to the investment of foreign capital, and more especially to the unlimited natural resources of the country. The silver standard has been, too, a factor in the prosperity of Mexico, because without sufficient circulation we could not have developed our resources to the extent that we have done, as is shown by the advantages which have accrued to Mexico on account of that standard as stated in the accompanying paper; but that progress is not due solely to the silver standard, as was alleged by some of the orators and newspaper writers favoring the free coinage of silver.' The other side made a similar mistake in attributing to the silver standard all the disadvantages

'The following extract from a book published in 1897 by the Mexican Central Railway Company Bureau of Information, under Mr. A. V. Temple, entitled Facts and Figures About Mexico, fully confirms these views, as well as those expressed in other portions of this paper :

64

Causes of Prosperity.-While Mexico's prosperity is unquestionably due to a large number of causes, prominent among which are the suppression of disorder, the extension of railroads, and the liberal policy of the government towards foreign capitalists and emigrants, it is very evident that her industrial growth has been powerfully stimulated by the existing monetary standard.

When silver and gold, as valued in the world's commodities, parted company, and Mexican dollars (which were being exported to Europe) were sold for a less price as measured in the currency of the gold standard countries, a rise in the price of all imported articles began in Mexico. From this time dates the development of Mexico's cotton and woollen industries, as well as the increase in the exportation of articles other than precious metals. The demand and the margin of profit for home-made goods increased as Mexican dollars depreciated. The native manufacturer enlarged his operations, introduced improved machinery, and began to compete successfully with many grades of imported goods.

The consumer now purchases from the Mexican manufacturer at the same price in silver as when silver was at par with gold, instead of being exported to Europe, as

under which we labor in Mexico. It is true, that we have not yet attained the same degree of civilization, wealth, and industrial and mercantile prosperity that this country has, but that is because we have difficult problems to solve which are well known here. We have been without means of communication for centuries; we have a heterogeneous population, most of which is, so far, entirely uneducated; and above all, we have been contending with long and disastrous civil

formerly. Many millions of dollars have thus been kept at home and added to the capital of the country.

Cotton mills have been constructed in all parts of the republic. The acreage of cotton is constantly increasing, but the native crop is not yet sufficient to supply the demand, and large quantities of cotton are imported from the United States.

The history of the woollen trade has been almost identical with that of cotton. The Mexican manufacturer of woollens produces now a very good article, although he cannot yet compete with the finer fabrics of France and England. In former years there was a considerable exportation of wool to the United States; now there is a considerable importation of it from the United States into Mexico.

While it is true that the Mexican dollar, as measured in francs, marks, or pounds sterling, has decreased in value nearly 50 per cent., it is also true that prices of almost every class of foreign goods have also decreased 50 per cent. A suit of clothes made from the finest quality of imported goods costs only the same number of Mexican silver dollars to-day that it cost twenty-five years ago.

Note also the effect on real estate. Coffee plantations have risen in value from $75 or $80 an acre, the price when gold was at par with silver, to from $200 to $800 an The annual profits of these plantations have risen from $10 or $15 an acre to from $50 to $150 an acre. Similar advances are true also in sugar and tobacco haciendas.

acre.

The premium on gold has been the cause of immense internal improvements throughout the country. The capital kept at home has been invested in irrigation schemes, in improving large tracts of fallow land, and in other enterprises of a like character. The premium has also brought much foreign capital here, which has been invested in various branches of industry, particularly in the production of articles for exportation.

The foreign investor doubles his capital when he brings it to Mexico. He gets the advantage of cheap and docile labor for silver, and sells his exported product for gold.

This great stimulation to all industrial enterprises, the building of railroads, the establishment of factories, and the cultivation of thousands of acres of land-all these have had a notable effect upon the people. The great demand for labor has benefited them immensely, and has promoted peace and prosperity throughout the country.

The resources and opportunities of Mexico have only been recently revealed to her own people, as well as to foreigners. It is much easier now than it ever was before to get capital here at a relatively low rate of interest for any legitimate enterprise, because, first, there is more money in the country than when we were importing so largely; and because, second, the business man is willing, under present conditions, to take risks which would be considered too great in an era of low prices and a contracted currency.

The native producer has prospered under silver at the expense of the foreign merchant and of the importer. Silver in Mexico has stimulated exports and contracted imports."

wars, from which this country has been almost altogether free-and these factors are the real causes of our present economic conditions.

The low Mexican wages were also attributed to our silver standard. To be sure the wages that we pay our laborers are not quite as high as those paid to similar laborers in this country, but that is not due to the silver standard, as has already been stated, since wages were no higher when silver and gold were at par at the ratio of 16 to 1, but, on the contrary, have since increased, and I have no doubt they will continue to increase in the future. In a paper entitled "Labor and Wages in Mexico," which appears in this book (pages 495-543), I have dealt fully with this subject and I have also tried to explain the condition of our wage-earning classes (pages 528-531).

Pessimists who have visited Mexico or studied its present conditions predict that our prosperity is not of a permanent character, as they think that it will be followed by a tremendous crash, similar to that which took place not long ago in Australia and later in the Argentine Republic, because they think that investments in Mexico have been overdone, and that when the time comes to liquidate our indebtedness and we have to pay them in gold, we will not be able to do so, and then we shall be in the same condition as those countries after the crash. I do not entertain any such view of the situation. I think investments in Mexico so far have been prudently made, and they are sure to bring a reasonable interest, even if paid in gold. Of course it would have been better if we could have accomplished the development of our country with our own means and without using any foreign money; but there was not capital enough in Mexico to do so, and besides, the Mexicans had no experience and therefore no confidence in large collective enterprises, and would not invest their money in them. The problem for us was therefore to decide whether we would continue in the unsettled conditions of stagnation, poverty, and danger in which we had been for many years, and not owe anything abroad, or whether we should build railways, enlarge our mining interests, build our manufactories, and extend our agricultural productions with the aid of foreign capital. The United States afforded a very encouraging example to us, for this country has really been developed by European capital, and yet nobody doubts the wisdom of that policy. Besides, the Mexican people are getting richer by the development of their country with the assistance of foreign capital, and in the course of time they will be able to buy their own securities now in foreign markets, and in that way save the interest or tribute which now they pay to Europe and to the United States, just as this country has done under similar circumstances.

I hope that if in the future the example of Mexico is again brought into the internal politics of this country, the information embraced in