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tered into by the representatives of both Peru and Bolivia on the 11th instant, looking towards the unification of the two republics into one, with a full constitution for the new republic, subject, however, to a plébiscite; all of which Mr. Piérola highly indorses, and advises its ratification.

Minister Christiancy will forward copies of the documents relating thereto, and will no doubt also report upon its merits and the probability of its adoption as far as Peru is concerned. Inasmuch as Bolivian advices are entirely silent upon the snbject, it is impossible to say whether the people of that country, or even its present government, will agree to this confederation, and I cannot intelligently report thereon until I shall have reached La Paz and examined into the matter thoroughly.

I am notified that the steamer Alaska las finished coaling and will leare for Mollendo to-morrow, so I shall be enabled to reach La Paz by the 1st proximo, where I expect President Campero to be at the same time, and so be able to deliver my credentials to him in person, instead of to the president of the council of ministers, the secretary general of state, or lately the first vice-president, under which different titles different persons have been in power in Bolivia since the flight of President Daza, and the absence from the seat of government of the Pro. visional President General Campero. I have, &c.,


No. 69.

Mr. Adams to Mr. Erarts.

No. 22.


La Paz, August 5, 1880. (Received October 5.) SIR: Since my last dispatch (No. 13) concerning the political situatiou of Bolivia, nothing of importance has occurred. Congress is still in session, doing nothing apparently, but said to be engaged in secret sessions to deliberate upon the question of peace or further prosecution of the war.

Two weeks ago the question of peace was not even discussed openly; now two of our journals here propose the necessary preliminaries looking towards an armistice, and within a few days the two most prominent members of the cabinet, Mr. Carillo, of state and foreign attairs, and Mr. Salinas, of war, have been mentioned as favoring such a policy.

Arica, the Peruvian port lately captured by the Chilians, has been opened to Bolivian commerce, but such commerce has been interdicted by the government at the demand of Peru, and in consequence it is now rumored that Chilian troops will shortly move towards this city or Puno, Pern, the latter the only place by which communication is kept open between the allies.

Should this prove true, and it is likely, as the sentiment of Chili demands some action, either place could be occupied by a small force, and then indeed all intercourse between Peru and Bolivia would necessarily

It is already said that the government here will abandon La Paz and retire to Oruro, and private advices have been received from Tacna that such movement may take place very shortly.


The war party here consoles itself with late news from Lima, stating that several ironclads with war material of all kinds, purchased in the United States, have arrived or will shortly arrive, and will change the aspect of the war materially, and this slim hope keeps off utter despondency.

I rather look forward to an early invasion of Bolivia, and as La Paz will naturally be the object of the enemy's attack, I shall probably have my hands full in protecting property and persons in that event.

Everything, however, is uncertain, and a day may change the whole aspect of affairs. I have, &c.,



No. 70.

Dr. Hilliaril to Jlr. Evarts.

No. 107.)

UNITED STATES LEGATION, Rio de Janeiro, June 16, 1879. (Received July 28, 1879.) SIR: I have in previous dispatches given an account of the discussion of the electoral reform bill in the Chamber of Deputies, and stated that the bill had been ordered to a second reading. All amendments offered by those who, while friendly to the government, opposed some features of that important measure, were voted down.

The bill, with the provisions originally contained in it as described in my previous dispatches, has passed the Chamber of Deputies by a large majority. It is now before the Senate, and it will undergo thorough discussion in that body. The conservative majority is so large in the Senate that the fate of the bill is regarded as doubtful. Still, as the measure is really conservative in its structure, and must be so in its influence, it may pass that body, notwithstanding the fact that it is brought forward by a liberal ministry. Baron de Cotegipe, a member of the late ministry, a man of great ability and a statesman of courage, is the leader of the conservative party in the Senate. It is understood that the conservative senators recently met at the residence of Baron de Cotegipe to confer as to the proper course to be puusued in regard to the electoral reform bill.

I do not know that the report as to the result of the “ caucus” is authentic, but it is stated that it is proposed by some of the leading conservative senators to meet the measure submitted to them by the liberal ministry in the boldest way; that is, to incorporate in it the amendment offered in the Chamber of Deputies by Mr. Saldanho Maromho inaking non-Catholics and naturalized Brazilians eligible to office. This would place the conservative leaders far in advance of the liberal ministry upon the most important political question in this empire. Compared with all other issues of the day, the question of the eligibilidade of nonCatholics and naturalized Brazilians to office is transcendently the greatest. It is impossible to ignore the elements of power that are inherent in the proposition that to-day, in the pressure of the great reforms effected by the civilization of the nineteenth century, all the barriers

that exclude certain classes of the people from participation in the government of the empire because of their religious opinions, or the place of their nativity, should be removed in such a country as Brazil.

If, therefore, the leaders of the conservative party possess the requisite foresight and courage to adopt this great principle of modern free government, they will achieve a splendid triumph, and open their way to the seats of influence and power. Such an amendment adopted by the Senate would vindicate that body from the reproach that it blocks the way of progress in the empire of Brazil.

Vor would this course on the part of the conservatives be without a precedent to guide and to sanction it. But a few years since, the late Mr. Zacarias de Goes Vasconcellos, a great liberal leader, retired from the ministry upon some question affecting his dignity and touching his sensibilities, when Visconde do Rio Branco came into power and brought forward a bill for the gradual abolition of slavery, which became a law in September, 1871. This great measure, so beneficent, and so much in harinouy with the advancing civilization of the world, was really a liberal idea, and ought to have been adopted by the statesmen who represented that party, but it was strenuously opposed by Mr. Zacarias de Goes Vasconcellos as inopportune, and the wise and statesmanlike policy of the premier, Visconde do Rio Branco, prevailed.

Some years previous to this, the Emperor, a statesman of noble impulses and large views, had led the way to this important measure by emancipating his own slaves.

I have, &c.,


No. 71.

Jr, llillinudd to Jr. Erarts.

No. 11:3.

UNITED STATES LEGATION, Rio de Janeiro, August 2, 1879. (Received Aug. 27, 1879.) SIR: The present liberal minister came into power on the 5th of January, 1878, and found the government in a state of serious financial embarrassment, the treasury exhausted, and the estimated revenue for the ensuing six months of the tiscal year already disposed of.

Funds for immediate and pressing demands were required, and it was not desirable to attempt to negotiate a foreign loan which must be effected, if at all, under great disadvantages.

The government, as a last resource, decided to make an issue of $30,000,000 of paper currency. Of this amount $20,000,000 were put in circulation, but the minister of finance, observing the disastrous effeets of this scheme, felt that it must seriously impair the public credit. He therefore took occasion to announce that he would not use the rethaining $10,000,000.

Another measure was adopted by the new ministry authorizing the issue of $20,000,000 of government bonds bearing an interest of six per Pentum, whjoh was put on this market by a syndicate in the latter part of the year 1878. The measure was successful, and it was a temporary relief to the government.

Meanwhile the budget came up for discussion before the new Chamber


of Deputies, and after some delay it passed that body and is now be. fore the Senate.

The new minister of finance found that the budget could not be matured in time to enable him to meet the actual demands upon the treasury. He therefore applied to the Chambers to authorize the law of October 20, 1877 (budget law of 1876–77) to continue in operation until December 31, 1879.

The Chamber of Deputies passed the resolution, thus continuing in force the existing law, which was about to expire. Supplementary credits were also voted for the several departments. The resolution then came up in the Senate, where it encountered opposition. Baron de Cotegipe, the leader of the conservatives in that body, proposed to limit the authority of the existing law to two months after the expira tion of the fiscal year, but Mr. Affonso Celso, minister of finance, made such a statement of the actual demands upon the government that the Senate passed the measure as it came from the Chamber of Deputies, and concurred in the vote of supplementary credits for the use of the depart. ments. The minister of finance was also authorized, by a vote taken the same day, June 20, 1879, to contract a loan of 50 contos of reis (about $25,000,000) for the following purposes :

1st. To consolidate the floating debt, consisting in great part of treasury bills, to the amount of $11,000,000.

2d. To liquidate the budget of 1878–79, in which are included the deficits of previous years.

This new loan is of 50 contos of reis ($25,000,000), bearing 45 per cent. interest per annum, payable in gold, or in currency at the rate of exchange on the day of payment.

The decree of July 19, authorizing the minister of finance to effect this operation, establishes that the minimum shall be 96 per cent. The bonds have coupons attached for the payment of the interest. Interest is to be counted from the 1st of October next, and payable every three months upon presentation of the coupons. Redemption shall be made semi-annually, at par, by lot or purchase, according to the condition of the market. The payments shall be made, at the will of the holder of the bonds, in Rio de Janeiro, Pará, Rio Grande do Sul, or San Fanlo. or in London, Paris, or Lisbon. The bonds are to enjoy all the rights and privileges belonging to other bonds in circulation. In the subscription for these bonds a payment must be made of 10 per cent. of their nomi. nal value, and any sum besides which the subscriber may choose. The other payments are to be made as follows: September 22, 16 per cent.; October 20, 20 per cent. ; November 20, 15 per cent. ; December 22, 20 per cent. ; January 21, 1880, 15 per cent.

The loan has met great success; it is understood that the amount has already been more than subscribed for. A syndicate of three native banks and one Brazilian capitalist guaranteed the taking of 35 contos ($17,500,000) at a fraction below the minimum price marked by the gov. ernment circular, announcing the loan before the circular was published; so that really the public had only some 15 contos (87,500,000) to take.

The success of the loan was thus assured from the first, and reflects great credit on the present minister of finance, Mr. Affonso Celso. Subscriptions were undoubtedly checked at first by doubts as to the interpretation of certain parts of the circular; but these have been cleared away by explicit declarations of the minister of finance. At present rate of exchange a gold loan at 96 per cent. is about equal to a 6 per cent. bond of the old type, and much superior as a security, being payable to bearer with coupons attached, and redeemable after a fixel


term, like our five-twenties. The result of the subscription for the loan has not yet been officially announced.

Another important financial operation has just been effected by the government and presents some remarkable features. A Senhor Pecego, having received a railroad concession from the imperial government, has been for a long time endeavoring to raise money in England to construct bis road. He could do nothing in London.

He transferred his operations to a new field; he went over to Paris, and a combination of banking associations decided to look into the scheme. To that end they sent out here a representative, Monsieur de La Hande, with an engineer, to examine the projected line of railway, and empowered their agent to treat with the imperial government.

After surveying the situation, the representative of the French capital. ists said to the government, “You want money at once.” This arrested attention, and after a free conference it was understood that instead of advancing money to the scheme, as the construction proceeded, the capitalists would hand over to the government the entire amount estimated for the work (upon which the government had guaranteed 7 per cent.) in one lump.

The government accepted this advance in the way of a deposit as a bank sometimes does, paying 7 per cent. interest on the fund intrusted to their keeping The railroad is estimated to cost somewhere about 11,000 contos $5,500,000), and a great consideration with the French capitalists in making the arrangement is that this is regarded as the initial of several similar financial arrangements in which they are to be interested. The prospective advantages are, therefore, very great. The French negotia. tors are understood to represent a large amount of capital. Of course this arrangement indicates great confidence in the ability of the imperial government to pay in future, and it is at the same time a splendid proof of perfect trust in its good faith. It is well entitled to this confidence, for the whole spirit of the government, of which the Emperor is a noble illustration, is earnest in its purpose to meet all its obligations.

As to Brazilian finances, I propose to conclude this dispatch with an authentic statement giving a condensed summary of the debt of the government, taken from a recent report made to the Chamber of Deputies by the minister of finance. The public debt is stated as follows:

Foreign debt (par of 27d.).

158, 283, 555 Internal debt

363, 569, 700 Internal debt anterior to 18:27

336, 734 Emancipation fund...

5, 136, 217 Loan from orphans' fund.

16, 478, 705 Private loans....

700,000 E-tates of deceased and alisentees.

2, 632, 487 Savinys deposits

12, 924, 942 Monte do Soccorro deposits.

740, 447 Miscellaneous deposits..

8,799, 796 Treasury bills

20, 255, 900 Paper currency

189, 258, 354 Total milreis....

779, 116, 837 Og at par of exchange..

LRA, 327, 733 This discloses an increase over the official report of December last of £3,756,000. The total amount of paper currency issued within the last Fear is £1,900,000, and government o per cent. bonds £1,500,000.

The total public debt of Brazil in 1870 was £39,000,000 aud in 1876 £78.880,000. Such is the financial condition of Brazil to-day.



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