No. 205.
Mr. Bassett to Mr. Fish.

No. 166.]

Sir: In my No. 160, of November 6 ultimo, an epitome is given of the financial measures taken by this government, in its efforts to effect a withdrawal from circulation of its wretched paper money now in use. Since the date of that dispatch strong measures have been taken in this regard, and the government has given evidence that it is determined, even at the risk of its own immediate standing with the masses, to free the republic from the disgraceful currency notes with which it is flooded. The chief difficulty in the way of the proposed reform, as stated in my said No. 160, would, it was thought, be the finding of a sufficient amount of specie with which to replace the present circulating medium, even at the low rate of three hundred paper dollars to one dollar specie, which has been fixed by the government. But I am informed by Mr. Boyer Bazelais, president of the chamber of deputies, and in some sense the author of the project, that the loans negotiated with four merchants here and the amount said to be in the Caisse de Réserve, will together place the government in possession of about one million of dollars with which to begin the proposed withdrawal. It should be remarked that the loans from the merchants alluded to were made upon short time, and upon other terms quite favorable to the lenders.

Starting with this basis of one million of dollars, and acting in accordance with the powers conferred upon him by the corps legislatif, the president issued on the 29th ultimo a decree, declaring that, after a delay of four months from the 15th of December instant, the paper currency shall cease entirely to be a legal tender in this republic, and that the bills of the denomination of twenty dollars being extensively counterfeited, are and remain definitely demonetized from the 15th instant, and must from that date cease to circulate as money in the republic. The aim of this decree is to force the holders of the paper money to bring it forward for redemption within the time specified.

It is thought that the twenty-dollar notes, which are under the decree, to be at once withdrawn from circulation, constitute about two-thirds of all the paper money of the republic, and it is still feared that the shock which was anticipated from their sudden withdrawal may result in popular tumults in different parts of the country.

Although in this action of the government it might require only some indiscretion on the part of the government officials or some appeal to popular passions to stir up violent demonstrations among the people, although confusion has already been created in commercial circles, and a check has been put upon ordinary business transactions, and although murmurings and discontent begin to come to us from all parts of the country, my impression is that overt acts of popular violence may be avoided if the government will promptly and fairly redeem its pledges to the people to give them specie for their paper gourdes.

I am, sir,