No. 14.
Mr. Hanna to Mr. Bayard.

No. 168.]

Sir: Some of the railroads heretofore guarantied by this Government begin to develop serious complications. These concessions, having been granted on approximate estimates of cost of construction and value of earnings, impose upon the grantees certain obligations, the neglect of which now threatens to give them trouble.

The most of these concessions were given to English syndicates, with directories existing in London, and out of sight of their obligations here. The result seems to have been, they have given more attention to the [Page 16] collection of their coupons than the careful and enterprising operations of their investments contemplated in their undertakings. The Government complains they are not operating their roads properly, that they do not sufficiently keep up their road way and track, their equipment, etc., so as to render them of public and profitable utility, rather than a charge on the national treasury.

The whole subject was brought to the attention of Congress in the President’s opening message, as appears in inclosure 1 where he quite forcibly admonished all such derelict companies they must operate their charters according to contracts, or their expected profits would be made to supply their omissions.

This message has been especially communicated to the home office of the British Government by Hon. John Jenner, chargé d’affaires, in absence of Mr. Packenham, minister, and has resulted in notices issued by Lord Salisbury to the secretaries of the various companies to put themselves right.

The position of the Argentine Government, as said before, is that these guarantied roads must increase their receipts to the fullest possible standard of prudent management, or that the guaranties may be withdrawn or the amounts covered by them be applied to betterments.

The English Government is disposed to require its subjects to keep faith with this Government.

The letter of the Marquis of Salisbury to the secretaries of the Argentine railways is lofty in spirit and worthy of commendation.

I have, etc.,

Bayless W. Hanna.
[Inclosure 1 in No. 168.—Extract.]

President’s message.

Careful examination of the figures furnished by the railways demonstrates that there is not a single railway which recognizes its true duty towards the public, and that renders services to the country equivalent to those reckoned upon by the authorities in granting the concessions. The railway traffic might be doubled, and even trebled, in parts; it might be considerably increased so as to give larger returns, thus facilitating a reduction in the tariffs and diminishing the pressure on the public treasury in respect to permanent lines.

The guarantied lines are in honor bound to make every effort to increase their receipts, and their failing in this respect would justify the Government in withdrawing the guaranty, and I fail to see who could criticise this proceeding, even by invoking the rights of the share-holders or bond-holders of a railroad whose administration is content to draw the entire guarantied interest at the end of each quarter, while it suffers the traffic to languish or cease altogether, and the road and the rolling stock to perish.

[Inclosure 2 in No. 168.—Extract.]

From Lord Salisbury; circular.

Under date 28th ultimo, the London foreign office issued the following letter to the secretaries of Argentine railways:

Sir: The Marquis of Salisbury considers it to be expedient, in view of the public interests concerned, to bring to the knowledge of the directors of your company certain statements with respect to the alleged defective management of railways in the Argentine Republic, which have been reported by Her Majesty’s chargé d’affaires at Buenos Ayres. Mr. Jenner reports that this subject was dwelt upon at some length in the last message of the Argentine Republic, and I am directed by Lord Salisbury to transmit, for the information of the directors, the accompanying extracts of a dispatch containing the statement above referred to.

“I am, etc.,

James Ferguson.”