to Mr. Evarts.
Lima, Peru, August 27, 1877. (Received September 20.)
Sir: I have the honor to refer you to my dispatch No. 167, of June 19, in relation to the finances of this country.
The government made several attempts to arrange finance, and had various interviews with the directors of the associated banks, without coming to any agreement. Matters were daily growing worse, and much excitement was caused by the refusal of storekeepers and commercial houses to receive the bills known as the “Meiggs Mission,” issued by the Public Works Company of Peru.
In my dispatch No. 128, of February 5, I refer to this company; also in dispatch No. 108, of November 21, I inclosed copies of Mr. Meiggs’s proposition to finish the roads. The proposal was accepted, and he commenced operations on the three roads referred to; also to work on the great tunnel to drain the Cerro del Pasco; all these works to be carried on by what is called the “Public Works Company” of Peru.
The government advanced bonds, and on the strength of them, by depositing the bonds with the tribunal of commerce, the company made an issue of notes as above referred to. The commercial houses, by refusing to take them, checked Mr. Meiggs’s operations, and he directed a note with a proposition to the government, which was accepted by a decree of the 17th instant. I inclose copy of Mr. Meiggs’s proposition and the decree, from the South Pacific Times of Callao.
This had the effect of creating an excitement in the money market. Exchange on London went from 22d. per sol to 18d.; American gold from 130 per cent, premium to 160 per cent. Now the decree is looked at in a more favorable light, and exchange to day is 20d. per sol and gold 140 per cent. The feeling is that if the government carries out in good faith the decree, financial affairs will be on a more stable basis, but to my view it is hardly possible, as there is one great drawback—expenditures are more than the ways and means; the outgo heavier than the income—and until economy is practiced on one, and the other improved, no paper decrees will equalize the difference.
All of the leading retail houses here in Lima held a meeting in reference to the decree, approving of it, and passed resolutions to ask the government to allow the free exportation of coined silver, now prohibited, and to prohibit the exportation of silver in bars, now paying three per cent, export duty. As silver coin is continually leaving the country and [Page 713] is the coin of the country by law, the merchants argue that, if it had free egress, much would be reimported, and if bars were coined, some of it would remain in the country.
I refer to my dispatch No. 108, of November 21, for information on coinage.
I am, &c.,