Papers Relating to Foreign Affairs, Accompanying the Annual Message of the President to the Third Session of the Fortieth Congress
Mr. Plumb to Mr. Seward.
Sir: As a matter of further informational transmit to the department herewith translation of correspondence that has taken place between this government and the representatives here of the creditors under the Spanish convention debt. While the action taken by the Mexican government with reference to this debt is the same as that with regard to the English convention debt referred to in my dispatch No. 65, of the 13th ultimo, the correspondence now transmitted sets forth more fully the nature of the obligations asserted to exist by the creditors, under those conventions.
I have the honor to be, very respectfully, your obedient servant,
Hon. William H. Seward, Secretary of State, Washington, D. C.
Department of Treasury and Public Credit.–Section 2.
It has reached the knowledge of the President of the republic that there exists in your possession $38,000 proceeding from the Spanish convention, and which you propose to distribute. By his order you are prohibited from carrying into effect such distribution, [Page 418]and you are directed to hold the said sum at the disposition of the supreme government until it shall think proper to otherwise order.
Independence, liberty, and reform! Mexico, October 22, 1867.
For the minister,
Mr. Miguel Buch, Present.
The undersigned, members of the permanent committee of the fund of the Spanish convention, before your excellency respectfully set forth:
That Mr. Miguel Buch has had the honor of receiving, and has passed to us, the note dated the 22d instant, in which you have been pleased to state that it has reached the knowledge of the President that there exists in the possession of the agent $38,000 proceeding from the Spanish convention, which it is proposed to distribute; and it is required that such distribution shall be suspended, and that the said sum shall be placed at the disposition of the supreme government. We have to believe that the said supreme disposition has been obtained by means of false or erroneous information. It is our duty to rectify the same, and for that purpose it will be permitted to us to state some antecedents of this affair, and to refer to the true facts as they have occurred.
By articles 3 and 4 of the convention, adjusted between the governments of Mexico and Spain on the 12th of November, 1853, ratified by the former government on the 22d of the same month, and by the latter on the 30th of May, 1854, the supreme government obliges itself to pay to the Spanish creditors the credits which they represented, allowing an interest of three per cent. per annum, payable half yearly, from the 14th of August, 1852, as stipulated in the convention of the 14th of November, 1851, and allowing also five per cent. per annum for the redemption of the principal. To cover these two sums the supreme government assigned eight per cent. of the product of the duties of importation caused in the custom-houses established in the ports of the republic. It was also stipulated that the general treasury should pay the said eight per cent., delivering its amount in drafts to the agents named by the creditors, without the necessity of any further orders, the one then given being sufficient, and of which a copy was passed to the representative of her Catholic Majesty that it form part of the convention. In virtue of this contract a general meeting of the creditors, presided over by the minister of her Catholic Majesty, established regulations, of which we inclose a copy, for the direction and administration of the fund; and some time afterwards Mr. Buch was appointed to discharge, the duties of agents and the undersigned as member, of the permanent committee. This appointment was made in November, 1860, and it is therefore not true that the agent has been appointed by the government of the empire, as mistakingly or maliciously has been stated to the minister of treasury.
As stipulated in the convention, the agent and the permanent committee have limited themselves, in the years that have passed, solely by the receiving of the eight per cent. of the products of the maritime custom-houses, without making any innovation upon the terms of the convention, and without entering into any contract with the government of the empire.
The $34,184 86 which exist are the remainder of the sums received, which, it is proper to remark, have not been distributed, both because a part consists in drafts which, it has not been possible to collect, and because the amount is not sufficient to cover the one per cent. due on account of the sixteenth dividend, which coupon has been cut from the bonds and is held in the safe of the agency.
From what has been stated it will be seen that the said sum belongs in full property to the creditors, that it has been received by their agent in part payment of what is due to them from the nation, and that in consequence it does not belong to the treasury, as has been maliciously denounced to the department under your worthy charge. We are aware that the denouncer complains that the committee and the agent do not distribute the funds of the convention equally among the creditors. Such complaint, however, is without foundation, and only has for its object to obtain undue preferences, as it will be easy to demonstrate.
Convinced that the means that have been employed by the party interested, to obtain advantages to the prejudice of the majority of the creditors, will not exercise any influence in the just mind of the President, or in the integrity and intelligence of yourself, we beg you to have the goodness to entreat him to consent to withdraw the supreme order of the 22d instant.
In concluding this statement we have to make known to you that in the archives of the committee there exist paid coupons to the amount of over $1,000,000, which we have held, and are at the disposal of the constitutional government, trusting that it [Page 419]will be pleased to give its orders that they may be delivered in the general treasury in conformity with the convention. Wherefore we beg that you will be pleased to direct in conformity with what we have asked, in which we will receive favor and justice.
The Citizen Minister of Treasury.
Department of Treasury and Public Credit.–Section 2.
The citizen President has well-founded motives for considering insubsistent the treaties which united Mexico with the powers who disowned the republican government of this country, and recognized the so-called imperial government which the French intervention pretended to establish, it being those powers who by such conduct broke said treaties.
As among those treaties figures the Spanish convention, it is in the same case as any of the others, and must, in consequence, be considered as insubsistent. The government, however, does not for this deny the obligation of the national treasury to pay the legitimate and recognized titles of this extinguished convention. All that it denies is that such obligation retains an international character, and that the terms of payment stipulated in a no longer existing arrangement should subsist.
In virtue of the liberty which it now has to fix these terms as may appear best, it has considered it convenient to determine that the redemption of the titles of the extinguished Spanish convention be proceeded with by public auctions. The first of these auctions will be held with the fund of $34,184 86, which is in the possession of yourselves or of Mr. Buch, being the balance of the sums received from the eight per cent, of the products of the maritime custom-houses, and which you will deliver immediately into the general treasury.
The subsequent auctions will be held with the funds which will be opportunely designated, there being only and exclusively admissible for this redemption the titles of the extinguished Spanish convention recognized as legitimate by the republican government, which protested against the Mon-Almonte treaty, and preferring for the redemption of those titles which are tendered by the most favorable bidder, i. e., those that are offered at the lowest price.
As in the, communication which, on the 29th of October last, you addressed to this department, and to which the present serves as reply, you stated that in the archives which are under your charge there exist paid coupons to the value of more than a million of dollars, you will be pleased to deliver the same into the general treasury, together with the respective accounts of the principal and interest of the extinguished Spanish convention.
By direction of the President I communicate the same to you for your intelligence and the consequent ends.
Messrs. Jose Maria de Bassoco, Raymundo Mora, and Casimiro Collado.
Citizen Minister: At 12 o’clock to-day has been delivered to us the supreme order you have been pleased to address to us under date of the 21st instant, requiring of us that the agency of the Spanish convention deliver into the general treasury the $34,184 86, now on hand in cash and in drafts.
As such disposition is of grave importance to our constituents, we have not the authority to decide in the case, and it is indispensable to convoke a general meeting of the parties interested, in order to inform them of the said supreme order.
We therefore pray you to be pleased to suspend the execution of the said disposition, [Page 420]in order to afford us a proper time to call and hold a meeting of the creditors, as is our duty.
In the same we will receive favor and justice.
Mexico, December 24, 1867.
The Citizen Minister of Treasury.
Department of Treasury and Public Credit.–Section 2.
I have given an aecount to the President of your petition of the 24th instant, in which you ask the suspension of the execution of the order of the 21st instant with reference to the delivery into the general treasury of the funds and liquidations belonging to the extinguished Spanish convention.
The President, in view of said petition, has directed me to say to you that, for the reasons expressed in the said order, the supreme government is resolved that what was therein determined must be complied with, and he expects that you, on your part, will be pleased to give due acquiescence in what pertains to you.
By his order I communicate the same to you for the consequent ends.
To Messrs. J. M. Bassoco, R. Mora, and C. Collado.
In compliance with what we had the honor to state to the minister of the treasury in our memorial of the 24th of December last, and with what our regulations prescribe, we have called a general meeting of the creditors of the Spanish convention, in order to inform them of the resolution taken by the President, and they have unanimously agreed in authorizing us to employ all legal means for the purpose of demonstrating the justice that sustains us, at the same time with all respect to the supreme orders. As one of the means that is proper is that of representation, we may be permitted to set forth some reasons in defense of the interests committed to our charge.
His excellency the minister, in the supreme order of the 21st of December last, has been pleased to state that the President has well-founded motives for considering as insubsistent the treaties that unite Mexico with the powers who, after having recognized the government of the republic, recognized also the imperial government attempted to be established by the French intervention, it being those powers who broke the treaties, among which figures the Spanish convention.
It does not belong to us to discuss the conduct observed by our government in entering into relations with the imperial authorities, and much less to attempt to define the effects that this act may have produced, but we think we can assume that the Spanish convention of the 12th of November, 1853, ratified on the 30th of May, 1854, subsists and should be complied with.
It is well known that among the writers upon international law the question has been discussed whether the rule, that war puts an end to all treaties between the contracting powers, has not some exceptions, and the greater number agree that there are cases of exception, and even cite some examples.
We believe that there has not been war between Spain and Mexico, but only a suspension of relations, which we indulged the hope would be of short duration. But whether there may have been a state of war between the one nation and the other, or a suspension of relations that may be assumed to put an end to treaties, properly so-called as those of friendship, alliance, or commerce, which relate to general and permanent interests, the same cannot be the case with conventions like the Spanish, which only relate to the interests of private individuals, and which, if adjusted between the two governments of Spain and of Mexico, was only to assure more firmly what was stipulated with reference to such interests. The obligation contracted between the [Page 421]parties celebrating the convention did not remain dependent or subject to the political occurrences that might take place. The convention is nothing more than a contract between the government of the republic and that of her Catholic Majesty, by which the former performed an act of justice by assigning a part of the product of her maritime custom-houses during a term of years for the payment of the sums due to Spanish subjects, and the latter agreed that its subjects should accept the delay in payment in consideration of said assignment.
If the convention was at an end, the creditors would recover immediately the unquestionable right of asking the payment in full of their credits, as the arrangement would be at an end by which they agreed to wait and to accept annual payments. We make use of this circumstance to demonstrate the justice with which we claim that the convention is still in force, and that we do not in any manner admit that it has been terminated.
It must have been so understood by his excellency the minister, and for this reason, without doubt, in the said supreme order he was pleased to state that the republic recognizes the obligation of paying the sums due to the Spanish creditors, but that a sum would be assigned for the purchase of said credits at public auction. We believe, however, that the purchase of credits at public auction is legal only when it is so stipulated between creditor and debtor; but if the latter imposes the same by force he does not comply with his obligations, but pays less than what he owes, injures a right legitimately acquired, and attacks that of property in violation of the principles set forth in all of the constitutions which have ruled in this country from that of 1812 to that of 1857, and in all foreign legislation Which have laid down the principle of the inviolability of private property. No law authorizes the debtor to fix the mode of payment of his obligation after the same have once been admitted and recognized.
In the present case, although the supreme government merits all respect and due consideration, it has the character of a contracting party, as the state in the matter oi contracts individualizes itself and is subject to the civil law.
It is also equally certain that the public auction of credits can only take place when it is so agreed, and that in article 7 of the Spanish convention it is stipulated that of the eight per cent, assigned in article 3, there shall be paid first the three per cent. of interest accrued, and the remaining five per cent. shall be applied to the redemption of the capital, making this by public auction to the best bidder, and fixing as a minimum price the rate of one hundred dollars in coin for one hundred and thirty dollars in bonds.
In the present case, no auction for the redemption of capital could be proceeded with, because there remains unpaid the interest of more than seven years.
To the reasons already set forth we believe it convenient to add a fact, which should receive the respectable attention of the President and incline his just mind to direct the revocation of the said supreme order of the 21st of December, 1867.
By articles 3 and 4 of the convention of 1853, the Mexican government engaged to pay to the Spanish creditors three. per cent. annually of interest, and five per cent. of redemption of the consolidated capital, assigning, for the purpose of meeting this obligation, eight per cent. of the duties of importation collected in the ports of the republic, and authorizing the agent of the convention to receive directly from the customhouses the sum so assigned.
It was also stipulated that if the said eight per cent. should not be sufficient for the payment of the interest and redemption of principal, the general treasury, without the necessity of any further order, should annually cover the deficit with the first drafts received from the maritime custom-houses.
According to this stipulation there should to-day be covered all of the interest, and some of the principal redeemed. But neither has the interest been covered, nor has a single dollar of the capital been redeemed, nor has the general treasury covered any of the deficit.
Notwithstanding this, the creditors have not said a single word, nor have they addressed the slightest complaint to the government of the republic for the non-compliance with the stipulation of article 4, but they have taken into consideration the difficult circumstances in which the country has been placed, and have kept silent, to the prejudice of their interests.
The thirty thousand dollars and upwards that in coin and drafts exist in the agency, and that it has been ordered shall be returned, are applicable to the sixteenth coupon, which fell due in the month of February of 1860, and which debt is therefore of the epoch of the government of the republic.
The circumstance that our government held regulations with that of the empire should not operate to the prejudice of the creditors, who neither directly nor indirectly had any part in said relations, nor in the intervention. In receiving from the customhouses the eight per cent, which the government of the republic assigned them, they exercised only a legitimate right, disposing of money which belonged to them in full property. By such act they have not committed any fault whatever, nor can they [Page 422]merit the penalty of returning the $34,184 86 applicable to the payment of overdue interest.
For the reasons that have been expressed, we have again to solicit that you will be pleased to appeal to the President to accord that the said order of the 21st of December may be revoked.
If, as we trust may not be the case, its revocation be denied, the committee and the agent believe it to be their imperative duty to protest before the supreme government, with all due respect, that in making the delivery of the $34,184 86, which, in money some time collected, and in drafts awaiting payment, they hold, destined to the payment of coupons due more than seven years back, they make such delivery under compulsion and pressure of the supreme authority.
The Chief Clerk of the Department of Treasury.
Department of Treasury and Public Credit.–Section 2.
The citizen President having been informed of the farther petition addressed by you to the supreme government, under date of the 2d instant, asking the revocation of the order of the 21st of December last, which directed you to deliver into the general treasury of the nation the existing funds pertaining to the extinguished Spanish convention, basing said petition upon various reasons, has directed that it be stated to you, in reply, that, it having been determined to proceed with the resolution taken in this affair by the council of ministers, what you solicit in your said petition cannot be admitted.
I have the honor to communicate the same to you for your information.
Messrs. José Maria de Bassoco, Raymundo Mora, Casimiro Collado, and Miguel Buch.