Interest rates went down in Uruguay this year. Last year, at the height of the Tupamaro crisis, you could borrow money at 60 percent. The interest, payable in advance, was immediately deducted from the loan; so that, having borrowed a million pesos, you left the bank with 400,000. And that was good business, with the peso losing half its value against the dollar during the year, and with inflation running at 92 percent.
Now it is a little less frenzied. The Tupamaros—there were about 5,000 of them, mainly townspeople from impoverished middle-class families—have been destroyed. The army—essentially rural, lower-middle-class—is in control and rules by decree. Interest rates have dropped to around 42 percent, with the taxes; and inflation this year has been kept down to 60 percent. “Prices here don’t rise every day,” the businessman said. “They also rise every night.”
Yet until the other day, they tell you in Uruguay, road workers could be seen grilling their lunchtime steaks in the open air; and the Uruguay peso was known as the peso oro, the golden peso. In 1953 there were three pesos to the United States dollar; today there are 975.
My father bought a house in 1953 with a 6 percent loan from the Mortgage Bank. At the end, in 1968, he was still paying 30 pesos a month on his mortgage. [Thirty pesos: twelve cents.] That may be funny to, you. For us it is a tragedy. Our Parliament refused to revalue mortgage repayments—the politicians didn’t want to lose votes. So everybody had his house as a gift. But they condemned the future generations.
The law has now been changed. Interest rates, like salaries, are tied to the cost-of-living index; and the Mortgage Bank these days offers depositors 56 percent—7 percent true interest, 49 percent the inflationary “adjustment.”
Mr. Palatnik, the advertising man who handles the Mortgage Bank campaign, has also been engaged by the military government to help calm the country down. And, to the disgust and alarm of left and extreme right, Mr. Palatnik doesn’t appear to be failing. He hasn’t so far made himself or the government absurd. Again and again on television, in the commercial breaks in the Argentine soap operas, after the talk of government plans, hope comes in the form of a challenge: Tenga confianza en el país, y póngale el hombro al Uruguay. Literally: “Have faith in the country, and put your shoulder to Uruguay.”
But in Uruguay these days it is hard not to offend. New Dawn, the weekly newspaper of a new right-wing youth group (“Family, Tradition, Property”), published a strong attack on Mr. Palatnik, with a distinctly anti-Semitic cartoon. Mr. Palatnik, who is middleaged, challenged the editor to a duel. He sent his padrinos to the New Dawn office, but the challenge wasn’t accepted. The New Dawn group isn’t important; but, like many businessmen in Montevideo, Mr. Palatnik now carries a gun.