The Sun.
London, England, 1842-11-19 00:00:00

TIIE SUN, LONDON, SATURDAY EVENING, NOVEMBER 19, 1842.

without any payment whatever, by the party who
owes it ; in another event by a payment of
17,500/. for five years ; either of which modes of pay-
ment must,be admitted to possess the merits of singu-
lar novelty and remarkable convenience to the debtor.
13ut are they equally convenient to the creditor ? We
• have only to look at their effect upon the Bondholders
of 1836, in order to be convinced that they are not. In
the first place, according to this plan, the Bondholders
would for the present receive no part of their capi-
tal or arrears of dividends. In the second place,
if the Brazilian Government kept np the sinking fund
to the amount agreed of 5 per cent. per annum, the
redemption of the bonds of 1836, which ought to take
place altogether and immediately, would be effected
by driblets during a period of about 14 years. If
the Brazilian Government did not keep un the
sinking fund, the redemption would be effected
at a rate so much slower still, that it would
last about 30 years, and the only mode by which
the Bondholders could arrive at a more speedy.
settlement of their claim would be by availing them-
selves of the option of accepting, at the end of the
first five years, 1211. ss. of Brazilian stock in exchange
for a 1001. bond of 1836, including the present ar-
rears of dividends thereon, or, in other words, of
taking 1211. ss. Brazilian stock in lieu of 111.1. ss.
in money, or at the erroaemsly high price of more
than 91 per cent.
" Whether I have, in every respect, quite correctly
understood the effects of a scheme so complex as
is involved in the first proposal of the Government, I
will not venture positively to assert. But thus much
at least is clear, that this scheme is so intricate, and
would be so uncertain in its operation, that it is so
contrary to the spirit of the contract of 1836, that it
proposes to purchase such enormous pecuniary ad-
vantages to the Government by imposing such severe
sacrifices upon the Bondholders; and lastly, that it
would protract for so long a period the final liquida-
tion of the claims of those who have been greatly in-
convenienced and injured by past delays, that I can
have no hesitation on the part of the Bondholders
et-horn I have consulted, not only in declining this pro-
posal, but also in stating that I should decline any
other proposal founded on a similar basis.
" I proceed, therefore, to consider the second propos
sition, which is so far satisfactory to the Bondholders,
as it appears to them to be grounded upon the only
principle which is correct and consistent with the con -
tract of .836, the principle, namely, that the bonds to
be received from Brazil ought to be applied at once,
as far as they will go, towards the discharge of what
is due for capital and arrears of dividends on the bonds
of that year, and that the deficiency should be supplied
by Portugal. But in applying that principle, the hold-
ers think that the proposal involves errors so grave
and obvious, that it is only necessary to point
them out, in order that the Government itself
may be anxious to correct them. It is suggested that
the 632,000/. bonds to be received from Brazil should
be accepted by the Bondholders as worth 622,702/.
that is to say, at the price of 85 per cent. ; and
that for the balance (which even according to this
mode of calculation would remain due) of the
principal and interest, Portuguese Converted bonde
should be issued to an equal nominal amount—or, in
other words, that the Bondholders should accept
Portuguese bonds at the price of 100 per cent. Now,
in your letter of the 12th of October last, you de-
scribed the terms proposed by the Convention of the
22d of July for the payment of the Brazilian Debt as
'so unreasonable,' that the Portuguese
.Government
had hesitated to ratify the Convention, a remark which
(as you were yourself a party to the former Convene
tion fixing the amount of the debt) of course applies
to the mode of payment proposed, a payment in Bra-
zilian bonds, taken at 85 per cent„ but of which the
market value is about 56. It does then appear not a little
singular that although in speaking of Brazil, your
debtor, you considered this mole of payment unrea-
sonable, you should now desire to force upon us, your
creditors, without any loss on your part, the same
Unreasonable mode of payment so far as respects a
portion of our demand. But this is not all. For
Portugal, improving upon the plan (which when
practised by Brazil it complained of) of forcing
creditors to accept in payment stock at an exorbitant
price, desires that after taking for part of our demand
Brazilian stock worth about 56 or 85 per cent.,we should
receive, for what, even according to this mode of cal-
culation, would still remain due to us, Portuguese
stock, really wosth 33 per cent. at the price of 100.
Now, Sir, if you, observing the caution of diplomatic
language, have .yourself declared to be unreasonable
the first part of their proposal, when made to you by
Brazil, what term do you expect British creditors, who
are in the habit of speaking plainly, to apply—what
term would you yourself apply to the last ?
" But let me put the plan suggested in another
point of view, which will perhaps make its real na-
ture more obvious still. There is now, as already no-
ticed, due to each holder of a Portuguese bond,
of 1836, 1111. ss. On the Brazilian bonds being
divided, every such holder would receive, as you
remark, about 105/. of Brazilian stock ; and if this
be reckoned at the present market price of 56
(and the present market price is the only one at
which it can be reckoned, by men who deal in
facts and figures, and not in fancies), it would
be worth about 58/. 16s. This sum being deducted
from 111/. ss. would leave a deficiency of 521. 9s. due
to the holder, and which ought at once to be paid by
does the Government
of this debt ? Nothing,
propt e Go se vteor ngmi
veen
itn. Alici
uni dd a et vi
ohna t
absolutely nothing, but 221. 10s., Portuguese. Con-
verted stock, which at the present market price
of 33 per cent. is worth about 71. lez. Thus,
then, it is proposed to liquidate a debt of 521.'95.,
with stock worth about 71. 10s., or, in other
words, by a payment of rather less than three
shillings in the pound. I am sure, Sir, that the
Government will at once perceive that if at the
very moment when it is expressing, and I doubt not
sincerely, its desire to discharge its obligations to the
best of its abilities, the Bondholders accepted for so
much of their debt as their special security is insuf-
ficient to cover, a payment of less than three shillings
in the pound, they would thereby be proclaiming
to the world their conviction, that such a payment
is all that is to be expected on debts due
from your Government, and not specially secured, arid
would thus act in a manner at once inconsistent with
any due regard to their own interest, and deeply in
jurious to the credit of Portugal.
"For the reason above stated, I am under the necessity
of declining, on behalf of the Bondholders, for whom I
am acting, the second proposal as well as the first.
"And here I believe that I might, without im-
propriety, stop. For I have fully explained the
grounds of our objections; the Government would, I
think, have no difficulty (as I have no doubt it would
be desirous), to frame a fresh proposition which
might better conciliate with its own interests the
rights of the
.Bondholders. I think, however, that
time may be saved by my at once suggesting a scheme
such as the holders whom I have consulted would
be disposed to accede • to. In forming this
scheme, we have acted upon the belief, that
on the one hand the Government feels how
essential it is to the credit of Portugal
(the loss of which could ill be compensated
by any immediate pecuniary advantage) to pay its
debt in full, (and this would not be done, nor would
it be considered by the public to have been done, if
we were compelied to take in payment stock at more
than its market value,) but that, on the other hand, it
would be inconvenient, with reference to the present
means of Portugal, immediately to discharge the
whole of that portion of war demand which would not
be covered by the Brazilian debt, and that the Go-
vernment would therefore prefer to discharge a part
of it by instalments.
" With these views I suggest the following
" PLAN OF LIQUIDATION.

Baron TOLOAS said, the positiiin in which they
at present stood had not been touched upon. In
1836 a negotiation was entered into, at London, for
the payment to Portugal of the Brazilian Bonds.
That negociation was to have been ratified in
a given time, but after the lapse of five years
they found themselves in precisely the same
position as in 1837. The question between the Bond-
holders and the Portuguese Government appeared to
him to be how they could best obtain the ratification
of the treaty between the Brazilian and Portuguese
Governments, unless Sir 1.- L. Goldsmid would gua-
rantee the carrying out of his plans, as the Portuguese
Government might delay for another five years.
The CHAIRMAN said he had the highest opinion of
the honesty of the Portuguese Government, and he did
not believe they would in any way act dishonourably.
After a very long conversation,
Mr. THORNTON said he thought the best plan would
be to call a public meeting at the London Tavern,
and he should therefore propose that a meeting be held
next week.

Baron TOLGAS seconded the motion, which was
lost, no one supporting it.
It was then agreed that the letter read by the Chair-
man should be sent forthwith, and the meeting sepa-
rated.

" Ist Article—That the 732,0001. bonds to be re-
ceived from Brazil shall be immediately divided
among the holders of the 700,0001. bonds of 1836,
which would give to each holder of a 100/. bond
about 105/. Brazilian stock.
" 2d Article—That this stock shall be taken at the
present market price of 56 per cent., yielding, as the
value of the 105/. stock, 581. 16s. in money, which
sum being deducted from the 111/. ss. now due to
each holder of a 100/. bond, would leave 52/. 9s. as
the balance due to him.
"3d Article—Thatone-halfofthisbalance 0f52/. 9s.
shall be at once discharged by the delivery of a suffi-
cient amount of Portuguese Converted bonds, autho-
rised by the decree of 2d November, 1840, and va-
lued at the present market price of 33 per cent.
"4th and last Article—That the remaining half of
the above-mentioned balance of 52/. 9s. shall be paid
by four equal instahnents of 6/. 11s. each, on the Ist
of December, 1843,
1844, 1845, and 1846; each
such instalment to be discharged by the delivery of a
sufficient amount of Portuguese bonds of the descrip-
tion before referred to, and valued at what may then
be the market price of the day.
" It now only remains for me to remark, -that I be-
lieve this plan to be well calculated to reconcile the
that I trust, therefoe it will receive the assent of the
interests of Portugal
Government. and of the Bondholders, and

" The advisers of her Most Faithful Majesty must,
I and welfare of Portwrah that this long protracted
maaltntesrurse; deeply feel how important it is to the honour
should be settlel at oncP, and upon a satisfac-
tory basis, more especially as they have through the
Portuguese =Minister at this Court, and with a view to
expediting that settlement, requested and obtained
the support of Great Britain (a support usually re-
served for the claims of British subjects) in aid of the
demands of Portu,
1-fal against Brazil, and have thus in
,
the _strongest manner directed to this question the
attention of the British Government.
" I have the honour to be, dear Sir,
" Yours faithfully, . .
(Signed) " J. L. GOLDSMTD.
" To the Conseiller De Paiva Pereira da Se
He hardly knew that it Was necessary, after the ex-

pression, of sentiments by the gentlemen whom he
represented, to say many words ; but he would just
call the attention of the Bondholders to the nature of
their position. The principal holders were original,
holders, and therefore the loss to them would be very
severe, because their loss would be to the extent of
Jill. ss. 11d. There was another party who had
been driven by circumstances, and the want of money,
to sell their stock ; to them he could afford no relief,
because they sold at a sacrifice. But the party who
purchased that stock did not feel this loss so severely,
because they had purchased with the pros-
pect of a small profit. Any of these par-
ties he would most willingly represent as much as
any other. He had taken a great deal of trouble to
ascertain the "sentiments of the holders of bonds
I throughout the country, and from all he had received
communications entrusting him with their claims.
He thought the assurance of the Ministers of Por-
tugal was strong and conclusive, and that it.would be
honourably adhered to.—(Hear, bear.) It was there-
fore with no little surprise, that Ile had received the
communication which had been read. He was quite
sure that the suggestion did not emanate from the
Portuguese Government, but from some person in
this country. He had known of one in-
stance, and he spoke advisedly of a plan
having been forwarded from this country to
Portugal, but which had. not been acted upon. lie
should send his proposition, backed by the consent of
nearly the whole of the Bondholders, the number of
the bonds being sent with it, which would show that
he was the bona fide representative of the Bond-
holders therein. If any persons entertained a dif-
ferent view of the case he would pledge himself faith-
fully to represent his views to the Government of
Portugal.—(Hear, hear.)
Mr. RAMSBOTTOM wished the names of the parties
who had entrusted their claims to the chairman, but
it was objected to by the meeting.
The CHAIRMAN then inquired if any gentleman
present wished to subscribe to the proposition which
had been read. He had already the names of persons
holding nearly GOO,OOO/. of the 700,0001.
Mr. SAMUEL SAMUEL 3, and several other gentle-
men, who represented large Ben lholders, said they
would leave the matter entirely in the hands of the
Chairman.