Synthesized answer
The existence of a "great floating debt" resulting from omitted "small obligations" fundamentally alters the true severity of Mexico's financial situation by indicating that the stated 5,000,000 peso monthly deficit does not represent the full extent of the government's financial obligations [1]. This floating debt is increasing daily and is a consequence of not considering all government obligations as urgent [1].
This uncounted debt, along with other potential expenses, suggests that the real deficit may exceed the initially stated amount [1]. Future challenges might include having to address claims for damages caused by the revolution and potentially renewing payments on the public exterior debt once the deficit is met, though these responsibilities are currently being deferred [2]. The passages do not provide a precise figure for the total amount of this floating debt, nor do they fully detail all future challenges beyond those mentioned in relation to claims and external debt payments.
Synthesized from the book passages below. Chat with the book on Feynman for follow-up.
From the book
000,000 pesos to be exclusively destined to cover the deficit appearing in the national budgets until they are adjusted. The text of the important bill to which we refer, and which will soon go before Congress, states as follows: "The Congress of the Union has been already informed by the Executive that the budgets of the federation at present show a monthly deficit of about 5,000,000 pesos. "To make up this figure we took into account only the normal expenses of administration, omitting the great number of small obligations of the Government which were not considered urgent, but which in any…
necessitating constant expenses, the supposition that the real deficit will exceed the amount above is not exaggerated. "In order to arrest the gravity of the foregoing considerations it is sufficient to state others in respect to the future which makes a favourable solution of the financial problems appear less remote. "On the one hand for some time the Government has not believed the time has come to pay divers claims which may be presented on account of damages caused by the revolution, although it is now studying the particular way to recognise and liquidate them, and in due time will…
he second loan which Mr. Carranza seeks amounts to 50,000,000 pesos to be used to rebuild and reconstruct the railroads. The third loan, for which the authority of the National Congress is asked, is for 100,000,000 pesos to establish a "bank of issue." Something of the financial crisis facing Mexico may be gathered from these brief figures: In May, 1916, the estimated revenue of the Constitutionalist Government was four million pesos, about two million dollars a month. Fourteen months later the estimated revenue was 107,000,000 pesos annually, but the budget called for an expenditure of…
vernment and the requirements of business are so enormous that money must be had, no matter what measures are necessary. There are some Mexicans who declare that the banks will be reimbursed; but the time when this will be possible depends upon how soon the government obtains foreign financial aid. Mexico has endeavoured to obtain, through agents, a loan from New York bankers or from the United States Government. Early in August, 1917, a report reached Mexico City that the United States would veto a loan if the bankers floated it. On August twentieth the White House announced that, in the…
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…
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 Executive expresses a strong preference for an 'interior' loan but anticipates potential justification for a 'foreign' one. What specific economic, political, or nationalistic reasons might drive this preference, and what does this reveal about the Executive's strategic priorities for Mexico?
- 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?