Synthesized answer
Based solely on the provided passages, the Executive’s preference for an interior loan is driven by a desire to follow “the same tendencies which prompted the Revolution to avoid any exterior debt” [1]. This reveals a strong nationalistic and political priority to avoid foreign financial entanglements, as the Executive will “make all sorts of efforts to carry out the financial transaction within the territory of the Republic” [1].
The passages indicate that the Executive would only turn to a foreign loan if “convinced of the impossibility of obtaining an interior loan” [1][2]. In that case, he believes his conduct “will be justified in consideration that the object he seeks is to definitely reorganise by peaceful means the finances and national public payments” [2]. This reveals that the Executive’s strategic priority is the stabilization of Mexico’s finances and budgets, even if it means temporarily setting aside the revolutionary tendency to avoid foreign debt [2][3].
The passages do not provide specific economic reasons for the preference, such as interest rates or terms. The primary reasons given are political and nationalistic (following the Revolution’s tendencies), while…
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From the book
markets which, as one of the many effects of the war, have lost all stability and it may be said change from day to day. "Therefore, the Executive deems prudent to ask at once the Congress of the Union to grant him necessary powers to take all preliminary steps which will permit him to fix in the proper time these terms and possible conditions of the loan, the nature of the guarantees that will try to be established so far as possible on the basis that it shall not impose a charge upon public taxes, the class of contracts which should be entered into with the holders of former obligations…
public and will not apply to foreign countries until he is convinced of the impossibility of obtaining an interior loan. "If this impossibility shall oblige him to disobey the tendencies indicated, he believes in advance that his conduct will be justified in consideration that the object he seeks is to definitely reorganise by peaceful means the finances and national public payments. "In view of the foregoing, the Executive hopes that the national representation will see fit to give its approval to the bill hereto annexed. Mexico City, July 7, 1917. V. Carranza (Rubrica)." BILL PROPOSED "The…
the day in which the discrepancy, which is now one of the most serious difficulties of the Government, shall disappear. "As the indispensable bases for these objects can be realised in the effective liquidation of the present deficit, since its existence would indefinitely retire the equilibrium desired, the Executive believes the time has come when it is necessary to obtain a loan exclusively destined to fill such objects, and hopes that the National Congress, sharing with him the conviction that such a means is the only effective way to meet this important emergency, will at once grant…
n be cut down so that it will not be "dangerous" and new bonds can be issued to replace bonds held in foreign countries. The other view of the financial situation, which I found the predominant one, is that the present government cannot continue without the aid of foreign capital. This would seem to be the belief of President Carranza, too, inasmuch as he asked the federal Congress for authority to raise 300,000,000 pesos, that is, $150,000,000. On July 7th, 1917, El Universal printed the following message which President Carranza sent to the Chamber of Deputies: "To the Secretaries of the…
00,000 pesos to be exclusively destined to cover the deficits met in the national budgets until they are adjusted. "Art. 2nd.—The Executive is empowered to contract the loan referred to in the foregoing article either in the Republic or in foreign countries in the form of an operation over a long period, or by obligations of the Treasury redeemable or convertible in a brief term according to the greater or lesser difficulty encountered in obtaining the funds. "He is also empowered to stipulate the conditions of interest, the type of interest, the form of amortization, the guarantee, and all…
More questions about this book
- If you were explaining Mexico's immediate financial crisis and the proposed solution to someone unfamiliar with economics, how would you describe the problem of the "monthly deficit" and the 150,000,000 peso loan in simple, everyday terms?
- The text mentions a 'great floating debt' resulting from omitted 'small obligations.' How does the existence of this uncounted debt fundamentally alter the true severity of Mexico's financial situation beyond the stated 5,000,000 peso monthly deficit, and what future challenges might it create?
- The text lists 'high cost of living,' 'raising wages of public employes,' and 'work of pacification' as factors exacerbating the deficit. How might these seemingly disparate issues be interconnected, and what do they collectively suggest about the underlying instability or challenges Mexico faced in 1917?
- Given the multiple contributing factors to the deficit, including unacknowledged floating debt and ongoing pacification expenses, to what extent does the proposed 150,000,000 peso loan appear to be a comprehensive and sustainable solution, or merely a temporary fix? What critical information would you still need to assess its long-term viability?