No. 512.
Mr. Thomas to Mr. Fish.

No. 77.]

Sir: I have assumed that the inclosed copy of a decree of the President of Peru will be interesting to the Secretary of State. This paper prescribes rules and regulations for the government of the banks of Peru which are not to be found in the laws by which these institutions are established. A proclamation of this character, if issued by the President of the United States, would surprise the public. It is otherwise in this country. The President of Peru issues proclamations intending to have the laws of Congress executed, and issues other proclamations to provide for what the President considers omissions in existing laws and these executive decrees are considered equally obligatory by [Page 797] the community. In this instance I am of the opinion that this recognized power of the President is wisely exercised. In forbidding ttye circulation, after certain days named, of bank-notes of a less denomination than four soles, the President has given proof of his knowledge ot a well known law of currency generally in a community wherein a paper circulation of face-values equivalent to the coins of the country is by law authorized; in such cases coin will disappear, and paper will become the existing currency. Seeing this, President Pardo has wisely required the banks to withdraw from circulation and destroy all these notes of less denomination than four soles each, that the channels in which small notes now circulate may be filled with specie.

In those articles of this decree which require that the banks shall deposit in the mint, as a guarantee for the notes they may issue, 70 per cent, of their face-value in treasury-bonds or bonds of the internal consolidated debt of Peru, and have always on deposit in their vaults 30 per cent, of the face-value of their notes in circulation in gold or silver coin or silver in bars, the. President’wisely provides for a sale of Peruvian bonds, at 92 cents to the dollar, to the amount of six millions, ($6,000,000,) a sum now indispensable to the government, and takes precautions against a flood of unredeemable bank-paper, which this community has now good cause to apprehend. In all this I am led to believe that President Pardo gives evidence of that sagacity, patriotism, and firmness which assures for Peru good government during his presidential term.

I am, &c,


The government and the hanks.—Important government decree

[From the South Pacifie Times, December 20, 1873.]

Manuel Pardo, constitutional President of the republic, considering—

That the government ought to fix the conditions under which bank-notes payable to bearer of the banks of issue should be received in the public offices, offering only the credit of the state to the banks which may be established and carry oh their operations in conformity with the regulations and conditions it may determine—


  • Article 1. The administrators or receivers of either public, fiscal, or municipal revenues, or of those belonging to the charity or school boards, will not receive any other notes than those issued by the banks expressly authorized by the government to issue them according to the dispositions of this decree.
  • Art. 2. No banks of issue can be established with a smaller capital than 100,000 soles, the half of which must be paid up in cash; nor can it issue a quantity of notes payable to the bearer, whose value exceeds that of the capital subscribed, nor issue notes whose value is less than that of four soles. The notes actually in circulation for a less sum than two soles will be called in and paid by the banks before the 1st of June of the ensuing year, and those of two soles before the 31st of December of the same year.
  • Art. 3. The banks of issue will publish a monthly balance-sheet of debit and credit, and in the said balance-sheet there will be clearly stated the amount of coin and precious metals existing in their establishments, and the amount of the notes in actual circulation. These monthly balance-sheets must also state, along with the name of the bank, the amount of issue for which the bank has been authorized.
  • Art. 4. From the 1st of June next the President and members of the chamber of commerce in Lima, alternately with the commercial deputies from the departments, will audit the balance of the bank monthly, audits exactness, but only with regard to the money on hand and the circulation of notes, and they will authorize the said balance with their signatures.
  • Art. 5. The banks of issue will deposit in the mint, as a guarantee for the notes they emit, a sum either in treasury bonds or in those of the internal consolidated debt, or of [Page 798] one or the other, in the proportion which the government may fix, the nominal value of 70 per cent, of the issue of notes for which each hank may he authorized.
  • Art. 6. This deposit will be made by the existing banks in the following proportions: three-fourths in treasury bonds and one-fourth in bonds of the internal consolidated debt; and it must be made within the term of nine months, each bank depositing the corresponding bonds in the following manner: Fifteen per cent, of the authorized issue deposited in bonds before the 10th of January; 10 per cent, before the 10th of the months of February, March, and April; and 6 per cent, before the same date on the subsequent months, until the deposit is completed.
  • Art. 7. The new banks of issue which maybe established must make this deposit at one time, in order to be authorized to issue, and before its commencement.
  • Art. 8. From the 1st of January, 1875, the banks of issue must open a special cash account in their establishments, independent of the cash account of their daily operations, to be entitled “deposit of circulation.” Each bank will have constantly in deposit in its coffers gold, coined silver, or silver bars, whose value shall be equal to the difference between the quantity of notes in actual circulation and the nominal value of the bonds deposited by the bank as a guarantee for the said notes.
  • Art. 9. This cash-box will be in the custody of a director of the bank, who shall be specially appointed by the directory, and the said director will be most careful that no money be taken out of it but in exchange for an equal sum of notes withdrawn from circulation; and again that they should Viot be taken out of the said safe without an equal sum in gold or silver having been returned to the deposit.
  • Art. 10. The holders of the notes will be considered as the owners of the deposited bonds, and of the funds belonging to the account “deposit of circulation” for the sums necessary to pay back in coin the notes they possess. They may make good their claims on the foregoing securities, in case the banks should not comply with their obligation to pay their notes at sight, and in current money.
  • Art. 11. The treasury bonds deposited by the banks will be received in the mint under the charge of a committee composed of the director of the mint, of the president of the chamber of commerce, and placed in a safe having three keys, one to remain in the possession of each of these functionaries.
  • Art. 12. Each bank will present to the said committee the notes of the authorized issue, in order that they may be stamped with a seal which will state that they are of the circulation authorized by the Government, and the series, numbers, and amount of the stamped notes will be kept in a separate book, and the accounts, together with the respective declarations signed by the members of the committee, will be made public.
  • Art. 13. The committee spoken of in the preceding article will meet at any time when called upon by the managing directors of a bank to authorize the destruction of old notes, and to stamp those which are to take their place.
  • Art. 14. If, at any time, a bank should propose to diminish the amount of the issue for which it has been authorized, it will make known its intention to the government, who will order the return, by the committee, to the bank which solicits it, the bonds corresponding to the value of the stamped bills which shall be destroyed before the committee itself. If a bank should wish to augment its issue, it will ask permission from the Government, and under its inspection will make good the required deposit at one time, just as if it were a new bank.
  • Art. 15. The committee with whom are deposited the responsible values of the banks will give in favor of each one or more certificates, not transferable, in which the series, numbers, and amount of the values deposited will be stated.
  • Art. 16. The same committee will calculate the interest which the certificates of each bank will gain every three months, and will at once order the custom-house of Callao to remit to each bank, monthly, the sum necessary to cover in the three months the interests on the certificates of deposits belonging to each bank.
  • Art. 17. The provisional receipts which may be given to the custom-house by the banks will be sent by the former to the comptroller’s office, who will make with them the tri-monthly payments of the interest corresponding to the bonds represented by the certificates of the banks. The said payment will be on the certificates, and the provisional receipts which may have been given will be returned.
  • Art. 18. The managers and directors of the banks already established, or which may hereafter be established, will state in writing to the finance minister, and in accordance with the annexed form, the quantity of notes for which they ask authorization, stating at the same time the date of the establishment of the association they represent, the subscribed capital, and the portion already paid up.
  • Art. 19. The issues of the existing banks will be authorized as soon as their managers or directors may desire, ten months being given for the stamping of the notes, after which none which are not so stamped will be received in the treasury.
  • Art. 20. From the 2d of January next, both in Lima and Callao, and from the 31st of the same month in the other departments, there will not be received in any office, whether they be public or fiscal, municipal, or belonging to the school and charity boards, bank-notes which are not authorized by this supreme decree, and the cashiers [Page 799] or administrators who may receive them will he removed from their posts by the authorities on whom they depend.
  • Art. 22. The banks existing at present in the departments will make the solicitude mentioned in the nineteenth article to the prefect of the department, who will at once authorize the issue asked for according to this decree, informing the finance ministry. The banks which may afterward be organized in the departments will also ask for the authorization of the supreme government.
  • Art. 23. It is understood that the term allowed for the deposit of bonds by the departmental banks will be extended thirty days beyond that fixed for those of Lima; the deposit will be made in the form and at the places fixed by this decree, without making any distinction between those of Lima or those of the departments.

The minister of state in charge of the portfolio of finance and commerce is charged with the carrying out of this decree, causing it also to be published and circulated.

  • Camilo N. Carrillo.

Mode of requesting authorization.

Your Excellency: (Name of managers,) directors of the bank (name of bank) established (name of place) by a public document drawn up (date) with a capital of the amount of (nominal capital) has been collected, ask from your excellency authorization to issue a quantity of bank-notes, payable to bearer, according to the dispositions and enjoying the privileges conceded by the decree of the 18th of December, 1870.


——— ———

Decree of Secretary of Treasury Carrillo.

In compliance with the clauses of the law of the 29th of April of the current year, it is hereby resolved—

A special issue will be made of treasury bonds for the sum of s6,000,000 on the conditions set forth in the following articles.
The bonds of this issue will be of 10,000, of 1,000, and of 100 soles, divided in series, numbered and issued to bearer.
The bonds will be registered in the audit office and bear the rubric of the finance minister, and the signatures of the director of the audit office and of the chief of the section of credit.
The bonds will gain interest at the rate of 8 per cent, per annum, payable every three months, on the 31st of March, the 30th of June, the 30th of September, and the 31st of December in each year.
The bonds will bear date January 2, 1873, and will be redeemed at par, either in part or entirely, from the 2d of January to the 30th of June, 1876, but in the mean time they will be considered as current money, and as such will be received in the public offices, according to the dispositions of the law which creates them.
The treasury bonds of this issue are intended to constitute a guarantee-deposit of the banks of issue, and will be sold by the treasury of Lima at 92 per cent.

Let this be registered, communicated, and published.

By the President: