The Sun.
London, England, 1842-11-18 00:00:00

owes it ; .in another . event .by a payment .cf
17,5001. 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.
But 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 keptrip 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 up 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. ofßrazilian Stock inexchange
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 1111. ‘';'„
in money, or at the erroneously • 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 pericd 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
whom 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 propo-
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 1836, 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 thent. It is suggested that
the 632,000/. bonds to be received from Brazil should
be accepted by the Bondholders as w0rth.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 bonds
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 Convert
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 mode of payment unrea.7
2onable, you should now desire to force npon 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 worth 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 1051. 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 52/. 9s. due
to the holder, and which ought at once to be paid by
the Government. And what does the Government
propose to give in liquidation of this debt ? Nothing,.
absolutely nothing, but 22/. 10s., Portuguese Con-.
verted Stock, which at 'the present market price
of 33 per cent. is worth. about 71..10x. Thus,
then, it is proposed to liquidate a debt of 52/. 95.,
with stcck 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 13roclaiming
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, and
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 its 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 our 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.
'lst Article--That the 732,000/. Bonds to be re-
ceived from Brazil shall be immediately divided
tosl
itua/ch.
market
eedkß.
oagTzsi
among
the holders of the 700,000/. Bonds of 1836,
presenti,a‘
value
hlock.
2uild6ilet.
,o‘iNf‘Oini
ve
eleirkles6ehsna.
tl.l
in money,
yielding,tioank ee
yn: awa tsh
thetichhe
actsntetotioosiceiftsiaocch holder of a 100/. Bond
1.
sum being deducted from the 1111. ss. now due to
each holder of a 100/. Bond, would leave 621. 98. as
the balance due to him.

3d Article—That one-half of this balance of 521.95.
shall be at once discharged by the delivery of a suffi-
cient amuunt 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 instalments of 6/.lls. 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
interests of Portugal .and of the Bondholders,- and
that I trust, therefore,' it will receive the assent of the
Government. .

The advisers of her Most Faithful •Majesty must, I
am sure, deeply feel how important' it is to the honour.
and welfare of Portugal, that this long protracted
matter should be settled at once, 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• Portugal against Brazil, and have thus in
the strongest manner directed to this question the
attention of the British Government. .. I

I have the honour to be, dear Sir,
Yours faithfully,
(Signed) J. L. GOLDSMID.
To the Conseiller De Paiva Pereira da Sa.

He hardly knew that it was necessary, after the ex-
pression of sentiments by' the • gentlemen whom he