MEXICO: Silver Standard

He has not been President of Mexico for six years, but heavy-jawed Plutarco Elias Calles is still The Jefe (Boss), the strongest man in Mexico. Last week Boss Calles rode high in his saddle. In an effort to end the country’s financial difficulties he had himself mada President of the Bank of Mexico, became what Hermann Schmitz is in Germany: the country’s “money tsar.”

First act of Tsar Calles was to abolish the gold standard for Mexico, make the silver peso the only legal tender. Managing Director Alberto Mascarenas of the Bank of Mexico followed with the announcement that the entire issue of Mexico’s gold notes would be withdrawn from circulation and burned.

Cheap silver (it sold last week at 27⅞¢ an ounce in Manhattan) is the basis of Mexico’s money troubles. She must collect her taxes in silver, pay her foreign bills in gold. The Calles effort was to save all the gold possible for the government.

Mexican businessmen were more concerned than Wall Street, where the news was not a complete surprise. Many banks in Vera Cruz refused to do business; exchanges were at a standstill; U. S. dollars were scarce. Normally quoted at two gold pesos, dollars skyrocketed to 2.75, 2.90, 3 and 3.30 silver pesos.