The Sun.
London, England, 1846-10-22 00:00:00

THE MEXICAN BONDHOLDERS

(From the Times.)
At last the long expected communication from Mr.
Murphy, which was to set at rest all the uneasiness
created by Senor Gomez Ferias' dispatch in the minds of
the bondholders, has made its appearance. The second
enclosed document, which is the most important one, is
of formidable length, and wo cannot abstain from a wish
that brevity had been rather more consulted ; but, so
great is the anxiety of the creditors on this suhject, and
so curious is the position in which the Mexican debt has
been placed since the arrival of Senor Gomez Farias,
that we cannot do otherwise than give it entire. At pre-
sent we publish it without comment, since it is of itself
quite sufficient for our readeri' digestion, but we have no
doubt, that when it has been considered over a little, it
will be found a fruitful source of controversy :
"TO G. li. ROBINSON, ESQ., CHAIRMAN OF THE COM-

MITTEE OF SPANISH AMERICAN BONDHOLDERS.
" Sir,—ln compliance with the intention expressed in
the letter I had the honour to address to you on the 16th
inst., I now beg to enclose two documents, Nos. 1 and 2.
" The first is a copy, at full length, of the commurnea-
Lion addressed to me from Mexico, and of which an ex-
tract only was published in the Times of the 16th, ac-
companied by a letter signed B. Gomez Farias.' I
think it right that the committee and the bondholders
should have before them the whole of that doeument, so
that they may be able to appreciate the reasons for the
resolutions adopted as therein set forth in reference to
the late conversion.
" Document No. 2 is a copy of my answer to that
communication. This answer, I trust, as I said before,
will place matters in their true light, be found satisfac-
tory to the bondholders, and justify my conduct through-
out this .business.

" Allow me to add that;- alihough the resolutions on
the conversion have been taken on receipt of my letters
of the Ist of July, yet the whole particulars of that con-
version were forwarded by me to the Government on
the Ist of June, and, had there been any objection on
the part of the Government en,, existing, I ought to
have received communrd*.-.. -to lila 'effect by the
packet before last. To judge from letters which I have
received from a member of the Government under
which the matter originated, it would have been fully
approved of.
" I have the honour, to be, Sir, your obedient, servant,
" T. MURPHY.
" London, October 19, 1846."

(Translated from the Spanish.)
" MINISTRY OF HACIENDA.
" Most Excellent Sir,—l have made a communica-
tion to the Most Excellent Senor General-in-Chief of
the Republican Army, charged with the supreme go-
vernment of the nation, of your Excellency's note of
the Ist of July last, and, after having carefully con-
sidered it conjointly with the dispatch relative thereto,
he has given me Instructions to inform your Excel -
lency in reply that he cannot nor ought he to consent
to the conversion of the foreign debt of the republic
lately contracted in that city, creating for that pur-
pose a new consolidation fund of 10,241,6501. sterling.
The Government, authorised by the law of the 26th of
April of last year to liquidate and settle the foreign debt,
was exclusively occupied with the settlement of that
known under the names of Deferred' and Debentures,'
as appears by the dispatch relating to the matter. It
was proposed immediately to withdraw the same, giving
to it a new form, by which the nation, apportioning to
itself the greatest reduction possible, might easily fulfil
its obligations, and re-establish by these means its credit.
After various operations effected for this purpose, and
of which your Excellency is well aware, it was settled
that the abatement which should be solicited should be
that of 60 per cent., and that, in order to obtain it, there
should be tendered to the holders of the bonds of the
before-mentioned debt, Deferred and Debentures, the
special guarantee of the best revenues of the republic,
such as 20 per cent. of the import duties at Vera Cruz
and Tampico, those on the exportation of specie from
the Custom-houses on the Pacific, and the monopoly of
tobacco. Thus it is that, grounded on these bases, he
issued the decree of the sth of March last, in which he
created a new consolidated fund of 4,650,000 Z sterling
for the conversion of the before-mentioned debt, and of
which, in due course, an authenticated copy was for-
warded to your Excellency, in order that it might serve
for your Government in the operations which this busi-
ness would demand, subsequently fully authorising you,
in order to remove the obstacles which might present
themselves in the attainment of his said ideas upon the
bases aforesaid.
" Your Excellency has, notwithstanding, taken no no-
tice of the principal point of the before-mentioned de-
cree, in consenting to an arrangement that prejudices
very considerably the interests of the republic, and places
it in such a position as to render it incapable of making
good its promises, provided it should allow it to pass
without annulling it.
" Because, by the decree referred to, of the sth of
March, the Government ordered the creation of a new
consolidated fund of 4,650,000/. sterling, which should
produce an interest of five per cent. per annumy and your
Excellency, without any authority, has made it extend
to 10,241,650/., stipulating for the payment of the reve-
nue due up_on this sum ever), six months, and the remit-
amortisation of the capital. ar rom consuTtmg e
credit of the nation, your Excellency places it in a posi-
tion inevitably to ruin it, for if it has found a difficulty
in fulfilling the arrangement entered into with regard to
the Active Debt, which is the half of the new fund cre-
ated by your Excellency, how can the obligations lately
entered into for the whole be complied with, without
leaving the republic without resources to meet its most
absolute necessities ?
" Furthermore, the before indicated special securities
having been offered as an indemnification to the bond-
holders who might accede to the abatement of 60 per
cent., by what authority has your Excellency reduced it
to 10 per cent, with respect to the Active Debt, of which
arrangement no mention is made in the aforesaid de-
cree, but merely of the dividends due upon it up to this
time ; and to 40 per cent. as regards that of the Deferred
and Debentures ? Is this regulating yourself by your
aforesaid instructions, in which it is set forth that bonds
of the Deferred Debt and Debentures would be received
at the rate of 2501. for 1001. of the new consolidated
fund ?
" Your Excellency makes a calculation in your com-
munication of the Ist of June, showing that, with the
abatement of the 10 per cent. effected upon the Active
Debt, and of the 40 per cent. upon the Deferred Debt
and Debentures, is obtained that of 50 per cent. that was
desired upon the latter. But, if this be so, it appears
that upon the Active we have not obtained any abate-
ment ; whereas we have injured ourselves by granting
to the holders thereof the special securities which have
been tendered solely to those of the others for the afore-
said abatement of 60 per cent., settled as the permanent
basis for the conversion of the debt into the new con-
solidated fund, and not of 50 per cent., as your Excel-
lency indicates.
" Therefore, if the transaction was not agreed to in
accordance with the terms of the decree before-men-
tioned of the sth of March, your Excellency ought to
have communicated it to the Government, to have pro-
posed to it the fresh project that had occurred to you, to
have awaited its determination, and not to have pro-
ceeded to realise it instanter, prejudicing in a most ex-
traordinary manner the interests of the nation—a condi-
tion that was imposed upon you in the ample powers that
toweregranted b
youut
notto to subvertcarryout them.t heintentions of the
decree aforesaid,
" Therefore and forasmuch as the holders of bonds of
our foreign debt were aware, froth the aforesaid decree,
published in due course at London, how far your Excel-
lency's powers extended upon this subject, and ought
consequently to impute to themselves the losses which
may be incurred by them from such a transaction, from
not having acted with the precaution which is generally
made use of in matters of this description, the Most
Excellent Senor General-in-Chief, charged for the time
being with the government of the nation, hereby de-
clares—
" 1. That he annuls the aforesaid conversion of our
debt, effected in the consolidated fund of 10,241,650 L
sterling, making your Excellency responsible for the in-
juries and losses that may arise to the republic from that
operation.
"2. That it is immediately to be thus made known to
the public through the press of that city, in order that
the bondholders of the converted stock referred to may
obtain the old bonds that they may have delivered in
for conversion as aforesaid, and return those which they
may have received in lieu of them of the consolidated
• fund.
" 3. That it is likewise to be made known to the bond-
holders of our foreign debt, through the medium of the
press, that the Government of the Republic intends to
open through other agents a fresh negotiation, by which
the nation, making another equitable arrangement, may
fulfil punctually that which it may contract.
" 4. That your Excellency, being relieved by the Go-
vernment of the Republic from all trust and commission
you may have received from it, do deliver to the Secretary
of the Legation in that city the archives belonging
thereto, and whatsoever papers there may be in your
possession relative to the special commissions that it may
have intrusted to your Excellency.
" I communicate the same to your Excellency by,
supreme command for your information, and for the pur-
poses consequent thereon.
God and liberty.
VALENTIN GOMEZ F ARIAS.
" Mexico, 28th of August, 1846.
" The Most Excellent Senor Don Thomas Murphy,
" Minister Plenipotentiary to her Britannic Majesty."

(Translation.)
" MEXICAN LEGATION CIRCA DE SA MAJESTE BRITAN

NIQUE.

" London, Oct. 17, 1846.
4, Excellent Sir,—BY the last packet I received a dis-
patch from the Financo Department (of which dispatch
Senor Don Benito Gomez Farias, who came by the same
packet, delivered to me a copy), in which I am instructed
to publish in the newspapers of this capital certain mea-
sures, having for their object to annul the last conver-
sion of the Mexican debt. For the reasons which I
proceed to explain, it had appeared to me absolutely ne-
cessary to suspend the execution of these instructions.
Nothing has been done here but what is in strict accor
dance with the spirit, meaning, object, intent, and pur-
pose of the decree of the sth i
of March last, and the in-
structions which accompanied t, combined with the

contract entered into by the :Mexican Government
with Messrs Manniug and Mackintosh in Mexico. This
I have proved in my dispatches of the Ist of June and
the Ist of July to that departmont, of which I herewith
transmit copies; but, for the sake of affording still more
ample evidence of the truth of what I have stated, I will
now furnish a palpable demonstration.
" Before the decree of the sth of March was issued,
the Mexican foreign debt, created through the house of
Lizardi, and recognised in the decre of the 15th of De-
cember, 1843, was composed of the following items:-
Ist, ... £5,391,650 of Active Bonds.
2d, ... 4,624,000 of Deferred Bonds.
3d, ... 499,096 of Debentures.
4th, ... 419,3731 of overdue Dividends.
" The decree of the sth of March set forth—' That a
new consolidated stock be ereated for 4,650,000 L, and
that out of it there be taken a sufficient amount to re-
deem the Deferred Bonds and Debentures at 40 per cent.,
and the overdue dividends at par;' and the contract with
Messrs. Manning and Mackintosh was to this effect, viz.,
That the surplus of the new stock of 4,650,0001. which
remained after having effected the redemption set forth
in the decree of the sth of March shall be delivered to
the agents of the said house, who have bought it.'
" Thus, then, by this operation, the 2d, 3d, and 4th
items of the four which constituted the Mexican foreign
debt, created through Lizardi, as above-mentioned, dis-
appear, and in lieu thereof, a new stock of 4,650,0001.
is substituted, which, added to the first item, that is to
say, to the 5,591,6501. of Active Bonds, produces for
total of the Mexican debt the sum of 10,241,6501.
" Such in reference to the amount of the debt would
have been the practical result of the decree of the sth
of March, if the creditors had accepted it is its primi-
tive form.

"But, this not having been the case, I then took the
following view:—

" That a new consolidated stock be created for
10,241,650/., and, with it, withdraw from public circu-
lation not only the Deferred Bonds, Debentures, and
over• due Dividends of Lizardi, but also the Active Bonds;
and thus, as regards the total amount of the debt, the
same point which the Government proposed to itself in
the decree of the sth of March will be arrived at. As to
what relates to the prices at which these distinct obli-
gations are to be redeemed, this is a proper subject of
agreement between the bondholders and the agents of
the house of Manning and Mackintosh, because those
gentlemen having purchased the surplus which should
remain of the 4,650,000/. of new stock, treated of in the
aforesaid decree, after effecting the redemption therein
prescribed, the only thing which interests and is im-
portant to the Government is that in the result of the
operation the Mexican foreign debt does not exceed the
sum of 10,241,6501., which is that recognised by the de-
cree of the sth of March.'

" This I accordingly proposed, and I proposed it in
virtue of the full powers which were conferred upon me
in the instructions which I received from the Finance
Department, dated the 7th of March, to remove what-
ever obstacle might oppose itself to the execution of the
decree of the sth of March, on the basis of converting
the Deferred Bonds and Debentures at 40 per cent.
" But where lay the importance of this basis for the
Government? Was it in the per centage? No ; be-
cause this question interested alone Messrs. Manning
and Mackintosh. Was it in the redemption of the De-
ferred Bonds and Debentures solely, leaving the Active
Bonds of Lizardi in circulation? Yes, if the intention
of the authors of the decree of the sth of March was,
first, to make a profitable operation with the Deferred
Bonds and Debentures, and then, at a later period, to
attack the Active Bonds. But such views could not be
attributed to the highly honourable men with whom the
business originated and was brought to a conclusion, for,
on the contrary, the whole tenour of their communica-
tions and instructions to me prove that their principal
object was to attend to the credit of the republic abroad
by settling the foreign debt on a permanent and final
footing. It is evident, therefore, that it was immaterial
whether in such a settlement the Active Bonds of Lizardi
should remain in circulation or not; the real importance
of the case consisted in this, that, whatever the arrange-
ment might be, the foreign debt should not exceed a
total sum of 10,241,6501., that being the precise amount
it was the object of the decree of the sth of March to
create; and, as I have not done anything else, there can
be no doubt that it was fully within my powers to pro-
pose what I did, and, my proposals having been ac-
cepted by the creditors, the said decree was fully and
punctually complied with in reference to the amount of
the debt ; because it is not to be denied that the spirit
and principle of this decree were not to redeem this or
that paper of Lizardi at such or such per cent., but to
consolidate a debt which should not pass 10,241,6501.
" I pass on to the question of interest. It has been
already explained that if the decree had been accepted
by the creditors in its primitive form, the Mexican debt
would have been composed of the following items:—
" 1. Active Bonds of Lizardi
" 2. New Consolidated Stock

" X 10,241,6t,0

" For the payment of the interest and redemption of
the capital of the first item, the decree of the sth of
March assigned 20 per cent. of the Custom-house duties
of Vera Crus and Tampico, and the export duties on
glygritcan the ports of the Pacific; and for the payment
item, the same decree assigned the monthly sum of
117,708 dollars from the tobacco revenue. Now, I ask,
is not this precisely the same thing as to assign for the
payment of interest and redemption of the total capital
of 10,241,6501. the identical 20 per cent. from the Vera
Cruz and Tampico Custom-houses, the export duties on
silver by the Pacific ports, and the 117,708 dollars
monthly from the tobacco revenue?
" This is what I have actually done as regards in-
terest, and consequently it remains perfectly demon-
strated that in this part also the decree of the sth of
March has been rigourously carried into effect, with this
important advantage, however, for the Government, that
whereas by the said decree of the sth of March the in-
terest on 5,591,650/. of Active Bonds was to take date
from the month of April this year, and that on the
4,650,0001. of the new stock from June, by what I have
done, the interest on the whole 10,241,6501. will not
commence until the month of July, which produces a
difference in favour of Mexico of a sum of 445,810 dol-
lars, as I have very clearly shown in my dispatch of the
Ist of July.
" It now remains to speak of the redemption fund :
" For the redemption of the new consolidated stock of
4,650,0001. the decree of the sth of March assigned the
annual sum of 250,000 dollars from the tobacco revenue,
and for that of the capital of 5,591,6501. of Active
Bonds ; his Excellency the Minister for Foreign Affairs,
in his confidential dispatch No. 8, of the 7th of March,
calculated that the 20 per cent. from Vera Cruz and
Tampico, and the export duties on silver by the Pacific,
would leave an annual sum of 162,087 i dollars.
" The committee of bondholders, before proposing to
them the arrangement contained in the decree of the sth
of March, that is to say, previous to the meeting of the
18th of May, required that this last amount should be
raised to 250,000 dollars (securing the difference on the
tobacco revenue), so as to make it equal to that which
had been assigned to the redemption of the new consoli-
dated stock in the aforesaid decree. In consequence of
this requirement I immediately consulted my powers,
and saw by them I was authorised to remove whatever
difficulty might oppose itself to the carrying into execu-
tion the said decree. The disparity which existed be-
tween what was arranged for the redemption fund of the
4,650,000/. of the new stock, and that which was calcu-
lated upon for the redemption of the 5,591,6501. of
Active Bonds, was a difficulty offered by the committee
of bondholders ' • consequently it was within my power
and clearly my duty to make the concession required of
me, and I did so. This is the pure logical deduction
which, in this matter, justifies my conduct in a legal
point of view, there not being in the power so vested in
me by the official communication of the 7th of March,
before mentioned, the restriction alluded to in the com-
munication now:under:reply. But if the matter be viewed
under moral considerations—if it be considered that the I,
requirement of the committee involved no more than
a sum of 87,912 k dollars, an amount quite insig-
nificant as compared with the advantage resulting from
the operation to the nation, and which, as shown in my
dispatch of the Ist of July amounts to upwards of
11,000,000 dollars—it it be borne in mind that these
87,9121 dollars were dedicated towards the redemption
of a debt which was incurring annual interest of great
amount—if it be remembered that the amount saved in
interest compensates for fully five years the annual dis-
bursement of this sum—and, finally, if the justice in-
trinsically involved in what was asked from Mexico be
regarded—namely, to place all the bondholders on an
equal footing ;—if all this be held in mind, it will be
seen that had I opposed Myself to the concession de-
manded of me, if indeed would have been to fail in my
duty, and to misunderstand my instructions. In truth,
if those instructions did not authorise a thing so compa-
ratively trivial, it would be very difficult to say what was
their object. And mark! this money, as just stated, is
for redemption—that is to say, for the only object which
in reality interests Mexico in a loan. To the bond-
holders it is amply sufficient that the interest be strictly
and punctually paid ; therefore, if circumstances had
prevented the remission of that sum for redemption, pro-
vided adequate remittances were made for dividends, the
obligations of Government would have been sufficiently
fulfilled to have prevented any heavy disappointment to
them. There is no doubt whatever that. I could inavirtue
of my powers consent to the requirement of the com-
mittee. Well, then, if the redemption fund of the new
stock was by the decree of the sth of March 250,000
dollars, and that of the Active Bonds (with the acklitior,
of the 87,9121 dollars) other 250,000 dollars, is it, rot
clear that the redemption fund of the total e.ebt of
10,241,6501. was twice 250,000 dollars, that is to say,
500,000 dollars? Yet this, awl no more, is wnat I have
consented to in this nkatio,

" By way, thens etsUmmary,—
" The decree of the sth of March ereattAl a debt of
10,241,6504 This same debt, and no more, I have
created.
" The decree assigned for payment of interest and re-
demption of one part of the eupital of 10.241,6501. the
20 per cent. from the Custom-houses of Vera Cruz and
Tampico, and the export duties on silver from the Pa-
cific; and to the payment of interest and redemption of
the other part of the taid capital 117,708 dollars monthly
from the tobacco revenue. I have assigned to the pay-
ment of interest and redemption of the total capital of
10,241,650/., the same 20 pev cent. of the Vgra Cruz And

Tampico Custom-houses, the same export duties on
silver from the Pacific, and the same 117,708 dollars
monthly from the tobacco revenue, with the advantage
to the Government in reference to the period at which
the interest should commence, as already explained.
" Finally, my instructions authorise me to consent to
the augmentation of the redemption fund of the Active
Bonds to 250,000 dollars per annum, secured on the to-
bacco revenue (the only point which is not strictly
within the limits of the decree of the sth of March), but
this augmentation, as it has been already seen, did not
exceed the sum of 87,000 dollars per annum, and was
compensated for to a certain extent by the advantage
secured on the interest account. Before leaving this
point, it is well worthy of remark that the dispatch of
the Minister of Foreign Affairs, to which I have before
alluded, owing to an error in underrating the annual in-
terest of the Active Debt by 97,914 dollars, actually
states the amount left free for the redemption fund
of the Active Stock at 260,000 dollars; so that, in
point of fact, I did not provide a larger redemption fund
for the whole debt than was clearly contemplated by
the Government. It is therefore clearly and absolutely
proved that the arrangement adopted by the creditors,
and carried into execution, is nothing else but the same
decree of the sth of March in another form (securing the
advantage already alluded to relative to interest, and also
that very important one, of having in circulation but one
class of paper); and that, as well for adopting such new
form as fcr the augmentation of the redemption fund, I
was fully and amply authorised. That I, then, have not
ip any way transgressed the powers I held from the
former Government, and that the conversion of the
Mexican debt has been accomplished in strict accordance
both in fact and principle with the decree of the sth of
March, is a thing beyond controversy. Such being the
case on one hand, and it being also unquestionable on the
other, that no Government, legitimate or not, can destroy
the acts of the preceding:Government involving contracts
or agreements; that the conversion is really and iecon-
testably of transcendent advantage to the nation; that it
is now consummated, the greater part of the Lizardi
paper having been already converted and cancelled; that
to restore that paper again and recal the new bonds is
now a physical impossibility, even although the right of
doing so existed; that the creditors of the nation cannot
be made the sport of our constantly recurring revolutions
and changes; that, even had I exceeded my powers, this
would have been a matter for which I should be per-
sonally answerable to my Government, but could not set
aside the rights of the bondholders, especially as there is
no correctness in what is alleged in the dispatch I am
replying to—namely, that by the publication of the de-
cree of the sth of March they knew the extent of my
powers, because those were comprised in a separate do-
cument, which has never been published ; that these
things all tend to lower my country more and more in
the estimation of the world ;—for all these grave and
well-founded reasons I had deemed it necessary, as
stated at the commencement of this dispatch, to abstain
from publishing the measures which have been adopted
with a view to annul the conversion, in order that by so
doing an opportunity might be afforded to the Finance
Department for a further and more attentive considera-
tion of the subject, which would no doubt lead to a re-
vocation of measures adopted in my opinion too precipi-
tately. But as another party, to whom by a most strange
proceeding a copy has been furnished of the communi-
cations addressed to me as the Minister of Mexico, has,
without any known official character, caused the same
to be published, I, who have an unsullied character to
maintain, especially in a country where I have resided so
long, and where I have received se many marks of dis-
tinction,—l, who am unjustly accused of having trans-
gressed my powers, of having set aside the cardinal
points of the decree of the sth of March, and of having
consented to an arrangement which considerably preju-
dices the interests of the republic, whereas its effect is tt
reduce the foreign debt by nearly five millions, the in-
terior debt by full five millions more, and to give to
Mexico 1,600,000 dollars in money,—l shall, although
with deep reluctance, publish this very communication
which I now address to the Finance Department, because
such a course is what justice andmy own rights demand.
" I do not dwell on the contents in general of the com-
munications I am replying to, but I shall make a few
short observations theron. Neither in my dispatch of
the Ist of June, nor anywhere else, have I made those
calculations about a reduction of 50 per cent. which are
gratuitously attributed to me. The calculations to be
made, as much on the decree of the sth of March as on
the arrangements actually accepted by the bondholders
and with reference to the amount of Lizardi's debt, are
of a very different description.
" Those calculations would, in either case, show a re-
duction of 27 and a fraction per cent. As I said before,
my powers did net contain the restriction mentioned in
that dispatch under reply. So far from the object of
the former Government being to introduce restrictions, it
was their view to enable me to settle the business at once,
so as to avoid the necessity of my sending it back a
third time to Mexico, as I had dune on two previous
occasions, in consequence of my fear of doing what
perhaps I might not be strictly authorised to do.
" I shall make one more observation on this business.
The removal of a Minister Plenipotentiary is not an at-
tribute of the Department of Finance. I cannot, there-
fore, see the object of mixing up this measure with the
others concerning the conversion.
take the liberty of giving aCtvice to ttlose v7llO 'slay b us
the head of the Government of my country. Let this
extravagant measure be revoked, and let the engage-
ments entered into with the creditors be fulfilled, inas-
much, at least, as may be within human possibility under
existing circumstances. Thus, and by a similar conduct
in all the other affairs of the republic, a proof will be
given to the world that the object of the last revolution
is really and sincerely to enter upon a new ordor of
things which would be regular, just, decorous, and
worthy of respect.
" Let this be assiduously and uprightly sought for—
there are elements in the country which will make the
task easy, but it might be a bad beginning if the rulers
suffer themselves to be deceived and influenced by false
representations and perfidious counsels.
" I have the honour to be, &c.,
" THOMAS MURPHY."