Mr. Hay to Mr. Combs.

No. 105.]

Sir: Referring to instruction No. 104, of the 21st instant, inclosing copies of letters from the Secretary of the Treasury and Messrs. G. Amsinck & Co. respecting the recent decree of the President of Guatemala legalizing the payment in silver or bank notes, etc., of gold debts demanded judicially, I inclose herewith for your information a copy of a letter from the Secretary of the Treasury expressing his views of the decree in the light of the statements made in the letter of Messrs. Amsinck & Co.

The letter of the Secretary of the Treasury is in reply to the Department’s letter to him inclosing a copy of Messrs. Amsinck & Co.’s letter and asking whether the statements of that firm tended to modify the views expressed in his letter of the 12th instant.

If the facts are as stated in Messrs. Amsinck & Co.’s letter, you will make earnest remonstrance against the application of said decree to debts due American citizens.

I am, etc.,

John Hay.

Mr. Shaw to Mr. Hay.

My Dear Mr. Secretary: Referring to your letter of March 21, inclosing copy of letter from Messrs. G. Amsinck & Co. relative to the decree of the President of Guatemala legalizing the payment of gold obligations in silver or bank notes, I beg to say: This letter presents an entirely different question than I had supposed was involved. It was perhaps my own fault that I assumed that the current paper money was at par with silver. The decree authorizes the payment in bank notes “at the exchange that gold has in relation to silver.” It follows that if bank notes were at par with silver there could be no serious objection, but if, as appears from the letter of Amsinck & Co., the ratio between gold and silver is about 2½ to 1 and between gold and paper 15 to 1 the decree virtually makes paper money legal tender at par with silver, while its market value is much below. I think this Government should most earnestly protest against such manifest injustice to American merchants.

Yours, very truly,

L. M. Shaw.