No. 136.
Mr. Dichman to Mr. Evarts.

No. 103.]

Sir: In continuation of the concluding part of my dispatch No. 99, of June 19, 1879, I beg to add the following:

An examination of the contract made in 1874 between the Colombian Government and the holders of the foreign debt, discloses the provision, that if Colombia should fail to-make four quarterly payments of the interest as agreed upon in said contract, then by the fact of the failure of such payments the contract of 1861, concerning the foreign debt, is revived, and this last contract contains an express pledge of all the gains or profits which Colombia may derive from the Panama Railroad. In my judgment, therefore, the Colombian Government can only pledge its interest in the Panama Eailroad, rent or subsidy, in the negotiation of a new loan, contingent upon a fulfillment of the obligations towards the holders of the foreign debt.

The interest on this debt at 4¾ per cent. per annum (the principal of the debt is between $9,000,000 and $10,000,000) is now three months in arrears, and the contingency of its not being paid is not an impossibility.

Injustice to the Colombian Government, however, I deem it right to state that it has always made great efforts to comply with its obligations under the contract of 1874, and that I cannot learn of any party in this country which is in favor of taking any steps looking toward repudiation.

It may be that neither the contents of this dispatch, nor those of my No. 99 are of a nature to invite the attention of the Department. In that case I beg that the two dispatches may be looked upon merely as an evidence of my desire to keep the Department fully informed of everything that takes place with this government, and to place the Department in a position to answer any inquiries which might possibly be made by parties interested.

I am, &c.,