No. 68.
Mr. Osborn to Mr. Evarts.

No. 30.]

Sir: The Congress which convened in regular session in June last has finally adjourned. Following the passage of the necessary appropriation bills, on the 16th of this month the members abandoned their seats and left for their customary summer resorts, but the decree of the executive by which the session was closed was not issued until the 22d.

The financial situation and the questions affecting the civil powers of the Roman Church have claimed the attention of Congress throughout its session, and have occupied nearly all of its time. The church question was introduced early in the session in the shape of a bill to throw open the public cemeteries to the burial of protestants, and its discussion, has caused great excitement. The power of the church is by no means insignificant; and such as it was, with all its force, was brought to bear, and for a time at least the passage of the bill has been prevented.

It originated in the house of deputies, or lower house, and after being [Page 84] discussed at great length finally passed that body by a large majority. But the friends of the measure have not been so successful in the Senate. Those competent to know, assure me that the higher branch of Congress is very evenly divided on the question. I apprehend that both sides are fearful of the result of a vote; at all events the bill has been allowed to quietly rest there without action. By some it is believed, and perhaps with good reason too, that the depressed financial condition of the country, and the extreme anxiety of the government to devise some means by which to extricate itself from its embarrassments, have had more or less to do with the indisposition of the more conservative branch of Congress to permit this disturbing question to be brought forward at present.

The financial situation presents a very difficult problem to the wise men of Chili. A combination of causes, among which I may mention as prominent, the low price of coffee, and a comparative failure, for several years, of the wheat-crop, has contributed to make the condition of this country, in a financial view, quite the reverse of flattering. Business is, comparatively prostrated, and failures among the banks and mercantile houses are becoming quite common. This depression has necessarily led to a curtailment of expenses on the part of the people, and the imports have, of course, been correspondingly decreased. And here is one of the immediate causes for the present very annoying situation of the government.

The public revenues are derived, in the main, from duties on imports, and as these have gradually decreased, in a corresponding degree has the revenue fallen short of the estimates. The deficiency the past year was nearly $3,000,000, and it is announced authoritatively that this year it cannot be less than $2,000,000. To provide for these deficiencies, and to so reorganize the financial system as to make the revenues sufficient to meet the demands upon the treasury, are the problems which are just now perplexing the government.

At the opening of Congress the President urged upon that body the necessity for a general reduction of expenses in all the various branches of the government, and much time was spent during the session, in discussing the various propositions which were presented having that end in view. Something was accomplished in the direction indicated, bu not sufficient, by a considerable, to meet the necessities of the hourt The deficiency in 1876 was about $2,000,000, and Congress then, after spending much time in discussing the situation, and finally advancing the duties on imports to an extent which was deemed necessary to produce the needed revenues for the future, provided for the immediate wants of the government by authorizing the President to negotiate a loan. Bonds were issued and sold, and the difficulties were for the moment bridged over

But it appears that the legislation of that year has utterly failed to accomplish the purpose for which it was intended, and the revenues, instead of being increased, have been absolutely reduced. At the close of the late session, after all methods had been discussed, there seemed to be no way out of the dilemma, except by a repetition of the action of the previous year, and therefore Congress, among its last acts, authorized the President to borrow, on the credit of the government, three and a half millions more. To this add the acknowledged fact that the deficiencies for this year cannot be less than two millions notwithstanding the earnest efforts which have been made to avert such a result, and you will understand why the problem seems so difficult.

The determination to preserve the credit of the government is everywhere [Page 85] manifest, but just how to do it does not clearly appear to those who have the interest of the public in charge. At the suggestion of the President, a short time prior to the adjournment of Congress, a law was passed providing for the creation of an extraordinary commission, to which was referred this troublesome question. The commission is now engaged in the consideration of the subject, and it is announced that it will be ready to report to a special session of Congress which, it is understood, will be convened about the last of April.

Meanwhile, the means by which the threatened evils are to be averted and the credit of the government placed upon a sound financial basis, continues to be the all-absorbing topic of discussion in the public prints and in business circles.

I have, &c.,