Office of the Historian

Mr. Neill to Mr. Hay.

Legation of the United States,
Lima, Peru, March 10, 1902.
No. 580.]

Sir: Referring to my No. 564, of January 18 last, regarding the demonetization of 500,000 Peruvian silver soles, I have the honor to transmit herewith copies and translation of an arrangement entered into by the Peruvian minister of finance and the banks of Lima for the carrying out of the resolution of January 17 last and as authorized by a supreme decree of March 6, 1902.

I have, etc.,

Richard R. Neill.
[Inclosure.—Translation.]

Demonetization.

The silver soles which by virtue of the following act and decree the Banco del Peru y Londres engaged to deliver for the purpose of converting into bars, which operation is to commence at the mint to-morrow, are already deposited in the vaults of the said institution.

The minister of finance, acting as chairman, the manager of the finance department, the president of the Lima Chamber of Commerce, and the managers of the Peru and London, the Italian, the International, and the Popular banks, respectively, met on the 1st of March, 1902, in Lima, when the minister stated that the Government wished to know if the banks maintained their offer to carry out the demonetization of 500,000 silver soles, in fulfillment of the gold-standard law. After a lengthy discussion, in which the bank managers were disposed to cooperate with the Government in the carrying out of the desired object, the following resolutions were passed:

1.
The Italian, the International, and the Popular banks, respectively, will deposit in the Peru and London Bank the number of silver soles that each one may find [Page 896] convenient to contribute toward the operation proposed, and what may be found wanting to complete the sum of” 500,000 soles the Peru and London Bank will add.
2.
The Peru and London Bank will deliver at the national mint the said sum of 500,000 soles to be converted into ingots.
3.
The Peru and London Bank will forward the said bars to its London agents that they may be sold at the best possible price obtainable for the Government account, free from all expense, excepting the agent’s commission of one-half per cent, which is the customary commission for transactions of this nature.
4.
After the selling of the bars the agents of the Bank of Peru and London shall remit the sum obtained, in pounds sterling, to the Lima office, and immediately on receipt of the same by the Bank of Peru and London at Lima, it shall place them at the Government’s disposal. The Government will refund such part as each bank shall have contributed toward the demonetization, either in pounds sterling at 10 soles to the pound or in entire silver soles, at the election of each of the contributing banks.
5.
As soon as the ingots are sold the Peru and London Bank’s agents shall telegraph to the Lima office the net yield obtained, and as soon as the loss be known the Government will order the payment of the same by the National Revenue Collecting Company to the Bank of Peru and London.
6.
The said payment shall be made by quarterly installments of 30,000 soles or £3,000, at the Government’s option, on account of the quarterly profits resulting to the benefit of the Government on the settling of the accounts with the National Revenue Collecting Company, the first amortization to occur on the 30th of next June.
7.
The amount the National Revenue Collecting Company pay to the Peru and London Bank on loss account shall draw 8 per cent interest per annum, the amount being proportionately reduced as the extinction of the debt contracted on the 3d of the present month of March until its total cancellation.
8.
That part of the 500,000 soles repaid by the Government to the banks in pounds sterling, or be it the product of the sale of the 500,000 soles reduced to bars and sold in London, will be exempt from the payment of interest.
9.
The Peru and London Bank engages to deliver to the other banks, free of commission charges, their respective parts, both of the gold obtained from the sales and also that received from the National Revenue Collecting Company.
10.
The minister of finance, manager of the finance department, the president of the Lima Chamber of Commerce, and the bank managers all admit the necessity of directing their efforts in such manner as shall bring about the most speedy, complete, and regular circulation of gold possible.

Ward.

Heráclidés Pérez.

M. Candamo.

For the Peru and London Bank:
J. Paván, Managing Director.

For the Italian Bank:
Juan S. Figari, Manager.

For the International Bank of Peru:
Alfredo Benavides, Manager.

For the Popular Bank of Peru:
A. Garcia y Lastres, Manager.

Lima, March 6, 1902.

Whereas the foregoing act:

In execution of the resolution of January 17 last for the demonetization of 500,000 soles, and 100,000 having already been smelted down, in conformity with the ministerial resolutions of February 5 and 13, it is resolved to approve and carry out the agreement made by the minister of this branch of the Government and the managers of the Peru and London, the Italian, the International of Peru, and the Popular banks, the president of the Lima Chamber of Commerce being also present, to effect the demonetization ordered on January 17 last, it being understood that the present smelting down is to be of 400,000 soles.

Let this be registered, made known, published, and placed in the archives.

[The rubric of His Excellency.]

Ward.