No. 670.
Mr. Caldwell to Mr. Fish.

No. 19.]

Sir: Since my dispatch No. 16, March 16, the most important public event has been the passage, on March 27, of a law authorizing the President to cause the issue of legal-tender notes in sufficient amount to pay all the internal debts, amounting to about twenty-four million dollars. This law is the project of the President himself. It provides that, on due notification, all holders of the public debt shall bring in their interest-bearing bonds and receive in payment therefor this irredeemable paper, which bears no interest. If any one shall neglect for one year to convert his bonds into this paper, his claims shall be diregarded until all other obligations of the government are discharged. The result of the passage of this law (which has not yet been carried into effect) has been to destroy what little business there was and to aggravate the situation to an intolerable extent. The paper money of the government which was already in circulation—less than a million of dollars—at once fell to a discount of from ten to twenty per cent., and, if the law is rigidly enforced, the paper will have merely a nominal value.

The most of this debt is in the hands of foreigners, the Italians alone holding more than seven millions. It is very much divided, the most of it being held in small sums by laborers and small dealers.

The income of many families has been derived wholly from the interest on this debt; and now that the payment of interest has ceased, and there is threat end loss of most, if not all, of the principal, there is already much distress, which must greatly increase. Business is at a standstill, and many laborers are leaving the country for Brazil. The status of most of this debt was peculiar. It was not to be paid out of the general revenue, but special rents were set apart for its amortization. It was therefore a debt with a mortgage.

Before the project had become law, the foreigners of various nationalities besought their representatives to endeavor to prevent the accomplishment of so great injustice by timely representation and protest. The feature of the proposed law which compelled the bondholder to give up his title on the receipt of worthless paper seemed to me an attack on the right of property, and in this sense I signed the protest, a translation of which is inclosed.

This protest is signed by every foreign representative resident in the capital. I had no design to interfere, in the slightest degree, in the internal affairs of this government, but thought this attack on the property and rights of American citizens deserved a protest.

I trust my action will meet with the approval of the Department.

Very respectfully,

[Page 1361]
[Inclosure 1 in No. 19.—Translation.]

Protest of the diplomatic and consular corps.

Mr. Minister: The undersigned have the honor to direct themselves to your excellency to communicate:

That several days ago many very respectable foreigners, holders of the titles of the various internal debts of the Oriental Republic of Uruguay, addressed themselves to the honorable legislative houses of the nation, begging them to refuse their sanction to every project presented, or to be presented, that, under whatever form, might tend to alter the terms established in solemn public compact, in which are now discharged the service of the aforesaid debts, and praying that they be preserved as they now exist, in accordance with justice and true public convenience.

So clear, so just, so irrefutable are the arguments of right in which the petitioners founded their request, that there was more than a rational motive for thinking that they would be heard with interest and taken into consideration. But, contrary to what was to be expected, the petition of our fellow-citizens has been disregarded to such an extent as, in our opinion, to be completely neglected and ignored, which implies, though silently, a full and plain denial of justice; then it was they took the resolution to approach the undersigned, who are the official protectors and safeguards of their interests, presenting to the diplomatic and consular corps accredited to this republic an exposition analogous to that which they had directed to the honorable . chambers, and in which are reproduced the reasons by which are evidenced their legitimate and perfect right to oppose, demand, and protest against all change which is sought to be introduced in the service of the aforesaid debts, and which may injure, wholly or in part, honestly and dearly acquired, in benefit of the credit of the state solemnly guaranteed. Also, the undersigned have been compelled to hear, and could not neglect to attend to, the well-founded observations of their fellow-citizens in regard to the danger which, according to them, menaces them, that the state, in creating a new paper money, would make the effect of the law retroactive in respect to transactions between private parties previous to the date of its promulgation.

In consequence, the undersigned solemnly protest before your excellency against the alteration in the service of the above-mentioned debts, in the form in which it is proposed, and against the retroaction applied to the payment by agreement between private parties, and announce to your excellency that they hold the government of the republic responsible for the consequences that may arise in case the projects referred to, be put in execution.

The undersigned avail themselves of this opportunity, &c.

To his excellency the minister of foreign relations.

Signed by the representatives of Brazil, United States, Spain, Italy, Argentine Republic, France, Great Britain, German Empire, Denmark, Belgium, The Low Countries, Sweden and Norway, Switzerland.