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Without referring to a multitude of historical considerations, which cannot be concealed from the knowledge of European statesmen, who judge the questions of the Southern Americas philosophically and impartially; we will appeal to the positive part, so that, on the completion of this Report, we ourselves may be able to judge with as much certitude and justice as possible, the questions which will form the subject of negotiation between the Government and the Regal Commissioners.

The history of the debt contracted in London, is the history of an inexperienced debtor who is ever anxious to pay, but is always harassed and short of funds; and that of a prudent creditor who is ready to enter into arrangement, but is at times discontented and outrageous when he has lost all hopes of a solid and definitive settlement.

We will make an extract of this negotiation with as much conciseness as possible. 1

1

By virtue of a decree of the General Congress dated the 1st May 1823, the Mexican Government authorized Don Francisco de Borja Migoni to contract a loan.

Notwithstanding the credit which the Mexican Republic possessed at that period, the loan was effected in the following manner:

First Loan of dollars.

16.000,000 of

Migoni issued in the London market 16,000 bonds of £100 and £150 for the total value of £3,200.000, which, at five dollars, amounts to.....

16,000.000

The house of Goldschmidt & Co. bought this paper at 50 per cent, which consequently produced..

8,000.000

Mexico lost in negotiating this loan....

$

8,000.000

The bonds issued by Migoni, and sold, as we have stated, for one half of their value, bore an interest of 5 per cent, per annum, that is

(1) Whoever may desire to be fully instructed in the particulars relating to the English debt, can consult the following documents, which, although scarce, are to be found in print, and possess an official character.

"Liquidacion de la deuda esterior de la República Mexicana hasta 1841, por D. Lúcas Alaman.” "Memoria sobre la deuda esterior de la República Mexicana, desde su creacion hasta fines de 1847, por D. Tomás Murphi. Paris.”

"Dictámen de la comision de crédito público de la cámara de diputados sobre el arreglo de la deuda inglesa."

"Informe con que el secretario

relativo á la emision de bonos he

dil cuenta en junta de ministros, acerca del negocio

to say, 10 per cent; supposing that a Bond of the value of £100 was purchased in £50.

For the repayment of this loan all the revenues in general of Mexico were mortgaged, and in particular an especial contribution, (which eventually was not established), the produce of which might reach the sum of 600.000 dollars annually, this being the amount of interest, payable half-yearly. This contract, which contains a multitude of conditions, was approved of by the Supreme Executive Power, in a decree of the 14th May 1824; mortgaging for the payment of the interest, and the amortization of the loan, one third part of the products of the maritime Custom-houses in the Gulf of Mexico, in consequence of the special contribution not taking effect.

The Mexican Government disposed of the net proceeds of the said Loan by drawing Bills of Exchange on London and by receiving the remainder in silver bars and doubloons. According to the statement of Sr. Alaman, which, as we have shown in the note, bears an official character, the emission of the sixteen millions in Bonds pro duced to the Government in hard cash the sum of £1,139.660, or 5.698,300 dollars. The remainder, to the completion of the sum produced by the Loan, was immediately employed in paying the first dividends and in effecting some amortizations. Although we treat of distant dates, we will endeavor to form a general statement, presenting at first sight, the sacrifices suffered by Mexico to pay her creditors, notwithstanding the continual disturbances and the consequent diminution of the revenue.

2

In the month of February 1856, the house of Goldschmidt & Co. suspended payment; consequently, the Government adopted measures to liquidate the accounts in London, and subsequently commissioned Sr. D. Sebastian Camacho for that purpose. After various and disagreeable debates with that house, a composition of all the pending transactions was entered into, conceding thereto as great a reduction as the bad state of their affairs exacted. In this manner the first financial operation terminated, which, as explained, cost about 68 per cent.

In the year 1823, the house of Messrs. Manning & Marshall existed in this capital, which firm enjoyed the best and most highly merited reputation. Authorized by a decree of the 27th August 1823, the Government contracted with them another Loan, to raise which they commissioned the house of Barclay, Richardson & Co., of Lon

don, who were the really interested parties in effecting the business, as an agreement had previously been made with them.

The new Loan was made in the following manner: 24,000 Bonds for £3,200.000 were issued, which at 5

dollars amounts to...

$

16,000.000

This paper was sold in the London Market at 86, and produced

13,880.000

Showing a loss in the realization, of...........$

2,120.000

Of the net proceeds of 13.880,000 dollars which resulted from the sale of the Bonds, a considerable sum was appropriated to redeem the Migoni Loan, a further amount to pay the first dividends, commissions, and charges, and the remainder was delivered to the Mexican Government, partly in money, and partly in armament, vessels; and military clothing. According to the official statement of Mr. Alaman, the Government only received, out of this second Loan,, in money and effects, the sum of £1.218,918 or 6.094,590 dollars. In short, for the round sum of 11.800,000 dollars which the Republic received, it owes at the present moment above 62.000.000 dollars.

It cannot be believed that either great benefits or important advantages could arise to the Mexican Government from operations of this description; but, without any necessity to call attention to the fact, it is at once obvious that those who derived a decided benefit therefrom, were not the original Bondholders who purchased bonds in order to secure a certain income, but were the agents and speculators who bought and sold,-repurchased and resold the Bonds on the Exchange, which diminished or increased in value according to the payments of the dividends, or as the frequent amortizations were effected.

The house of Barclay failed, and, according to the official statement which accompannies the Report of the Commissioners of the National Credit from the Chamber of Deputies, dated 1st April 1850, the Mexican Government lost 1.519,644 dollars; which amount is still due to the Republic, without a possibility up to the present moment of recovering even a fractional part from either of the partners of the extinct contracting house.

The bankruptcy of the house of Barclay caused a complete confusion in the payment of the dividends, and the Mexican Government was suddenly deprived of an amount exceeding

which it had deposited in that house at the time of its fail

Payment of four dividends.

Capitalization

of dividends.

one-sixth part

Not until September 1831 were the financial transactions again organized in London, when Messrs. Baring, Brothers were appointed agents, who paid four dividends out of the specie remittances made by the Government, and supplied from their private funds, on account of the Mexican Treasury, any sums that were deficient.

As the remittances were insufficient to cover the sum owed for interest, a project was suggested to capitalize the same, which met with various difficulties, that were subsequently overcome by an arrangement made between Messrs. Manuel Eduardo Gorostiza and Separationof Baring, Brothers on the one part, and the Committee of Bondholders of Vera Cruz on the other part, with the object of capitalizing the interest unpaid from the 1st October 1827, to the 1st April 1831; reserving in future one-sixth part of the revenue arising from the custom-houses of Vera Cruz and Tampico, and remitting the products to England for the payment of the half-yearly dividends.

of the product

and Tampico.

Capitalised bonds.

This arrangement, which was highly satisfactory to the Bondholders, was sanctioned by the decrees of the General Congress, dated 2nd October 1830, and 20th May 1831.1

The dividend which became due on the 1st. July 1831, was paid in hard cash to the Bondholders; 16.000 dollars of which was ad vanced by the house of Baring, who were afterwards repaid by the following remittances from the maritime custom-houses.

The interest on the five per cent Loan [the Migoni Loan] was capitalised at the rate of 624 per cent, and the interest of the six per cent [the Barclay Loan] was capitalised at the rate of 75 per cent.

To cover, therefore, at this rate, all the Coupons which had fallen due, Mr. Gorostiza signed the requisite number of Bonds, and delivered them into the house of Baring, who issued:

4.813 Bonds at 5 per cent, letters E. & F.. ..... £
7.080

6

635.950

G. & H.....

939.850

Therefore there remained to be issued, in consequence of the in

(1) These decrees, as well as those referred to in the body of this Report, will be found in the Appendix.

(2) Between the statements of Mr. Alaman and Mr. Murphy, there exists a difference of £ 4.767; and although I have endeavored to clear up this discrepancy by examining other documents, I have been unable to as certain the cause. I believe that the statement of Mr. Murphy is the true one.

terested parties not having presented their Bonds, from the loss of Bonds, and other contingencies which always occur, about £ 4.800; but, as may be perceived, the Mexican Debt increased by this capitalization, by commissions, charges, &c., to the round sum of 6,000.000 dollars. This emission of Bonds was called Capitalization, to distinguish them from those which were afterwards issued by the house of Lizardi.

Messrs. Baring & Co. afterwards resigned the Agency, liquidated their accounts, and finally rendered very useful services to Mexico, without remaining indebted a single cent; a result very different to that which previously occurred with the house of Goldschmidt & Barclay.

Resignation of the house of

Baring, and ap

pointment of Li-
zardi to
gency.

end the A

Amount due by Mexico at

The Agency devolved on the house of Messrs. F. de Lizardi & Co., and although the maritime custom houses did not omit making specie remittances by the packets, they were never sufficient to cover the interest on the debt, which consequently increased, as we have stated, by the capitalised Bonds. The arithmetical result was, that the end of 1837. with an additional charge of interest annually, and by the preceding operations, at the end of 1837, Mexico stood indebted to the Bondholders in the sum of 46,239,720 dollars.

pecuniary sacri

and its conformity and harBondholders.

From what has been stated, not a shadow of bad faith or, much Good faith and less, any deception on the part of Mexico, can be pointed out by the most partial individual, or by her most exasperated enemy; but, on the mony with the contrary, she has shown a manifest desire, and the greatest and most constant exertions to comply with her obligations, even at the expense of immense losses and sacrifices. The Bondholders were persuaded of this fact, and acceded, as we have seen, to every arrangement and combination that was proposed in conformity with the customary suggestions of creditors in general; they had no motive for displeasure nor complaint with the Mexican Governinent, notwithstanding the changes of the Executive Power, which has been so exaggerated by the Spanish ambassador Sr. Pacheco,

Although this is well known, nevertheless, it is our duty to recur to it occassionally; because it is of importance under existing cir

cumstances.

The Government of Her Britannic Majesty dinot participate directly nor indirectly in the two Loans which London on account of the Mexican Republic, n time has it interfered in any of the arrangements. questions which have occurred, have been transact