Mr. Plumb to Mr. Seward.
Sir: With my dispatch No. 78, of the 14th ultimo, I transmitted to the department the official report of a public sale held by this government, at which, with funds taken from the agents of the English and Spanish convention bondholders, and a further sum from the national treasury, bonds of those two debts were bought up by this government at a depreciated value.
I have now to transmit copy and translation of an official order directing another similar public auction to be held with a certain sum of money assigned from the national treasury, and also copy and translation of the officially published result, in which, as before, the difference between the par of the said bonds and the depreciated price at which they are now bought up by the government, is set down as gain to the national treasury.
The public bonds of this government are depreciated because the interest upon them has not been paid for years. If there are funds at its disposal, it would seem that they should be first applied towards the payment of interest, and until that is paid cannot rightfully be used for the purchase of the depreciated principal.
But, aside from this question of morality and public good faith, there is a question of sound policy involved in these transactions.
Every dollar this government can raise, and more, is now required, and will be for some time to come, in the work, very far from being completed, of re-establishing and maintaining public order.
Until very great changes shall be introduced into its revenue system, commerce relieved of the present restrictions that retard it, and public order more firmly established, the means of this government will, in my judgment, be greatly inadequate to the mere expenses of its existence, and those more pressing demands which every government must liquidate in full.
If there are any funds after meeting these primal necessities, it would seem that such funds should then be applied, in the first instance, under the peculiar circumstances of the present case, to the payment of the claims of citizens of the United States.
As a general system, it appears necessary that all of the obligations of this government, both foreign and domestic, should be called in and revised, and then consolidated in one or two sole debts. The great effort then should be to regularly and promptly pay the interest thereon. In this way alone can the credit of this government ever be raised.
The use now of funds to buy in at a depreciated rate its own public securities, upon which the interest has been unpaid for years, appears to be a proceeding not only useless in itself, for, if let alone, the amount applied would not in twenty years effect the purpose, and now does not even equal the accruing interest, but also at variance with every dictate of sound policy and public good faith, and peculiarly unjust towards citizens of the United States, whose claims have been waived for a time as a means of special relief to Mexico.
I have the honor to be, very respectfully, your obedient servant,
Hon. William H. Seward, Secretary of State, Washington, D. C.