Mr. Hay to Mr. Combs.

No. 104.]

Sir: Referring to your dispatch No. 131, of January 11 last, expressings your views regarding the effect of the decree issued on [Page 348]December 22 last by the President of Guatemala legalizing the payment in silver or bank notes, etc., of gold debts demanded judicially, I inclose herewith a copy of a letter from the Secretary of the Treasury, expressing his views of the decree.

I also inclose a copy of a letter from Messrs. G. Amsinck & Co., calling the Department’s attention to the decree.

The Department would be pleased to know whether there is anything in the correspondence inclosed herewith that tends to modify your views as expressed in your No. 131.

I am, etc.,

John Hay.
[Inclosure 1.]

Mr. Shaw to Mr. Hay.

My Dear Mr. Secretary: Replying to your letter of March 9, inclosing a copy of a dispatch from the United States minister at Guatemala, and a copy of a decree issued by the President of Guatemala, in regard to the relative value of the currency of that country, and asking an expression of my views on the decree, I have the honor to report; The decree is in the following language:

  • Article 1. When any sum in gold is demanded judicially, the debtors can cancel their credits in silver or bank notes, or of the Comite Bancario, as provided for in the decree already cited, and at the exchange that gold has in relation to silver.
  • Art. 2. The exchange may be either that fixed upon by experts, or the current rate at the banks.”

If I interpret the decree correctly, it simply provides that decrees of courts, payable in gold by the terms of the decree, can nevertheless be paid in silver at the market value of silver as fixed by experts or by the banks. If this interpretation be correct, this Government is certainly in no position to protest.

* * * * * * *

Very truly, yours,

L. M. Shaw.
[Inclosure 2.]

Messrs. Amsinck & Co. to Mr. Hay.

Sir: We herewith take the liberty of inclosing a copy of the decree (639)a as it was published on January 7 last in the “Guatemalteco,” the official organ of the Government of Guatemala.

When in 1899 the Government of Guatemala issued the decree No. 595, it established that all debts contracted in silver could be paid in paper money. Now it argues that whereas the paper money has taken the place of silver, all debts contracted in gold, if settled through intervention of the courts shall be paid at the same exchange existing between silver and gold—about 2½ pesos silver to $1 American gold—whilst at the present rate of exchange it would cost about 15 pesos to buy $1 American gold. Consequently the Guatemala law gives a debtor the right to settle obligations contracted in American gold at the rate of about 2½ to 1 instead of at about 15 to 1.

Shortly after this law was passed it was intimated that in some way it would be modified. However, so far no changes have been made. We understand that in consequence the German Government has already vigorously protested, whereas the others have so far remained silent.

As our firm has large commercial interests in Guatemala we hereby beg to ask you, if in the event of a dispute the United States Government would [Page 349]uphold American firms residing in the United States in their claims, or whether it would admit them to be compelled to accept, at the same ratio of silver to gold, the inferior paper money in settlement of obligations contracted bona fide in gold?

Thanking you beforehand for any information which you may give us on this subject, we are,

G. Amsinck & Co.
  1. Printed, ante.