No. 323.
Mr. Thomas to Mr. Fish.
Lima, Peru , October 21, 1872. (Received November 18.)
Sir: Nothing has occurred concerning public affairs in Peru since that hideous and abhorrent termination of the insurrection of Gutierrez, to disturb the prevailing opinion of this city, which teaches me to believe that there will be no further attempt to overthrow the constitutional authorities of this republic, during the passing presidential term, which is to terminate on the 2d of August, 1876.
The legislature and executive branches of this government appear to be in perfect accord, and they have to all appearance the entire confidence of the people; judging from the proceedings of Congress and the tone of the public press, there is a very general acquiescence in the financial policy of the President, as outlined in his messages to Congress. This policy contemplates careful avoidance of all public debts, until the numerous railroads now being constructed in Peru are completed, and proposes to adhere scrupulously and faithfully to certain promises and engagements heretofore entered into, under which all money accruing to the Peruvian government from the sale of its guano, is pledged to a particular class of public creditors.
The determination to abstain from diverting the guano fund for the payment of the current expenses of the government, creates a necessity for resorting to increased taxation, as a means to supply a deficiency in the annual income, and the President proposes to resort for this purpose to indirect in preference to direct taxation.
As this deficiency does not exceed 8,500,000 soles, I perceive no reason to doubt the adoption by Congress of the measure proposed, and the acquiescence therein of the people of Peru. This will, however, in my judgment, only postpone a serious crisis in the financial affairs of this republic.
Four years hence, the railroads now in progress will have been in all probability completed. Within the same period of time, the guano deposits, if they be not exhausted, will be so much reduced in quantity that the value of the balance on hand can be readily reckoned. And if it is [Page 746] then discovered that the commercial importance of these railroads has been largely overrated, a very grave crisis in the financial affairs of this country will be impending. I would not be understood as intimating any opinion as to the probable income to be derived from the railroads in progress, for I have not sufficient data to justify a judgment in the premises. I propose to collect and communicate to the Secretary of State full and minute information on the subject. Nevertheless, with the limited information I now have of the condition of this country, I may venture to predict grave and disastrous complications, if in the sequel it becomes necessary to resort to a system of burdensome taxation in support of the public credit of Peru. Although Peru is undoubtedly immensely rich in latent resources, I fear very much that at least eight-tenths of its population would not be (the other two-tenths unquestionably would be) willing to sustain at any sacrifice the nation’s honor until these resources could be developed.
I have had frequent occasion, since my arrival in this deeply interesting country, to doubt the wisdom of that policy in Congress which forced the retirement of the commissioners of the United States from the congress which, forty-five years ago, assembled first at Panama, and afterward at Tacubaya. It seemed to me when that congress was proposed, and I believe now, that, without involving the great republic I have the honor to represent in entangling alliances, such a convocation as that of Panama could have aided essentially the suffering cause of civilization and humanity in Mexico, Central America, and all other republics of this hemisphere. And I doubt if, within the next half century, much progress will be made toward permanent peace and prosperity in Peru or the countries referred to, unless the enlightened and faithful few who are living within the jurisdiction of these states, and are overwhelmed by numbers, can have the inestimable countenance and encouragement which the Government of the United States alone can give.
I have, &c.,