No. 275.
Mr. Walker to Mr. Bayard.

No. 88.]

Sir: I have the honor to inform you that President Nñnez, who temporarily relinquished executive functions about two months ago, returned to the capital yesterday and resumed control of the Government.

It is not thought that there will be any disturbance of public order, all parties being, seemingly, willing to await the result of the elections for members of Congress, which take place in April, to be followed by its assembling in July.

The financial condition of the country, in the mean time, is deplorable, and constantly growing worse. The income from custom-house duties and from internal taxation being barely sufficient to meet the current expenses of the Government, all payments on account of the large indebtedness arising out of the attempted revolution of two years ago, are being met by issues of what are called rales, that is, by orders on the treasury payable at the rate of 6 per cent, annually, out of the proceeds of the custom-house receipts for that year. When these receipts are insufficient to meet outstanding vales, holders, in excess of the 6 per cent, of that year, are paid out of the next year’s revenue in the same proportion.

As these vales can not be used in ordinary commercial transactions, holders are forced to sell them to the “Banco Nacional,” a Government institution. It is now paying 55 per cent, of their face value in its own notes. So that the small percentage of the unfunded national debt now being settled, when reduced to American currency amounts to about 30 per cent, only of its recognized value.

Of the foreign bonded debt since 1880 not a cent has been paid. It is said that a committee of the English bond holders will shortly arrive here, with authority to make some arrangement with the Government, but the treasury of the country is bankrupt and its future resources so discounted that it is difficult to see how any arrangement which would be satisfactory to the holders of bonds is possible.

I have, etc.,

John G. Walker.