No. 670.
Mr. Caldwell to Mr. Fish.
Legation of
the United States,
Montevideo, April 16, 1875.
(Received May 21.)
No. 19.]
Sir: Since my dispatch No. 16, March 16, the most
important public event has been the passage, on March 27, of a law
authorizing the President to cause the issue of legal-tender notes in
sufficient amount to pay all the internal debts, amounting to about
twenty-four million dollars. This law is the project of the President
himself. It provides that, on due notification, all holders of the public
debt shall bring in their interest-bearing bonds and receive in payment
therefor this irredeemable paper, which bears no interest. If any one shall
neglect for one year to convert his bonds into this paper, his claims shall
be diregarded until all other obligations of the government are discharged.
The result of the passage of this law (which has not yet been carried into
effect) has been to destroy what little business there was and to aggravate
the situation to an intolerable extent. The paper money of the government
which was already in circulation—less than a million of dollars—at once fell
to a discount of from ten to twenty per cent., and, if the law is rigidly
enforced, the paper will have merely a nominal value.
The most of this debt is in the hands of foreigners, the Italians alone
holding more than seven millions. It is very much divided, the most of it
being held in small sums by laborers and small dealers.
The income of many families has been derived wholly from the interest on this
debt; and now that the payment of interest has ceased, and there is threat
end loss of most, if not all, of the principal, there is already much
distress, which must greatly increase. Business is at a standstill, and many
laborers are leaving the country for Brazil. The status of most of this debt
was peculiar. It was not to be paid out of the general revenue, but special
rents were set apart for its amortization. It was therefore a debt with a
mortgage.
Before the project had become law, the foreigners of various nationalities
besought their representatives to endeavor to prevent the accomplishment of
so great injustice by timely representation and protest. The feature of the
proposed law which compelled the bondholder to give up his title on the
receipt of worthless paper seemed to me an attack on the right of property,
and in this sense I signed the protest, a translation of which is
inclosed.
This protest is signed by every foreign representative resident in the
capital. I had no design to interfere, in the slightest degree, in the
internal affairs of this government, but thought this attack on the property
and rights of American citizens deserved a protest.
I trust my action will meet with the approval of the Department.
Very respectfully,
[Page 1361]
[Inclosure 1 in No.
19.—Translation.]
Protest of the diplomatic and consular
corps.
Montevideo, March 22,
1875.
Mr. Minister: The undersigned have the honor to
direct themselves to your excellency to communicate:
That several days ago many very respectable foreigners, holders of the
titles of the various internal debts of the Oriental Republic of
Uruguay, addressed themselves to the honorable legislative houses of the
nation, begging them to refuse their sanction to every project
presented, or to be presented, that, under whatever form, might tend to
alter the terms established in solemn public compact, in which are now
discharged the service of the aforesaid debts, and praying that they be
preserved as they now exist, in accordance with justice and true public
convenience.
So clear, so just, so irrefutable are the arguments of right in which the
petitioners founded their request, that there was more than a rational
motive for thinking that they would be heard with interest and taken
into consideration. But, contrary to what was to be expected, the
petition of our fellow-citizens has been disregarded to such an extent
as, in our opinion, to be completely neglected and ignored, which
implies, though silently, a full and plain denial of justice; then it
was they took the resolution to approach the undersigned, who are the
official protectors and safeguards of their interests, presenting to the
diplomatic and consular corps accredited to this republic an exposition
analogous to that which they had directed to the honorable . chambers,
and in which are reproduced the reasons by which are evidenced their
legitimate and perfect right to oppose, demand, and protest against all
change which is sought to be introduced in the service of the aforesaid
debts, and which may injure, wholly or in part, honestly and dearly
acquired, in benefit of the credit of the state solemnly guaranteed.
Also, the undersigned have been compelled to hear, and could not neglect
to attend to, the well-founded observations of their fellow-citizens in
regard to the danger which, according to them, menaces them, that the
state, in creating a new paper money, would make the effect of the law
retroactive in respect to transactions between private parties previous
to the date of its promulgation.
In consequence, the undersigned solemnly protest before your excellency
against the alteration in the service of the above-mentioned debts, in
the form in which it is proposed, and against the retroaction applied to
the payment by agreement between private parties, and announce to your
excellency that they hold the government of the republic responsible for
the consequences that may arise in case the projects referred to, be put
in execution.
The undersigned avail themselves of this opportunity, &c.
To his excellency the minister of foreign relations.
Signed by the representatives of Brazil, United States, Spain, Italy,
Argentine Republic, France, Great Britain, German Empire, Denmark,
Belgium, The Low Countries, Sweden and Norway, Switzerland.
