Mr. Finch to Mr. Hay.

No. 740.]

Sir: I inclose copy of a communication from United States Consul Hopley, of Montevideo, dated March 12, 1904, relating to the commercial, financial, and industrial condition in and about this capital created by the pending revolution.

In this connection I will add that the Government continues to assert its belief that the insurrection will soon be suppressed and on its own terms, unconditional surrender. The revolutionary leaders say they will not disband their forces until the Government meets them on a peace basis which at least will stipulate for full pardon and satisfactory assurances of a free ballot and an honest count.

Respectfully,

William R. Finch.
[Inclosure.]

Mr. Hopley to Mr. Finch.

Sir: I have the honor to report in answer to your request for information as to the effect of the present revolution on this country in my consular jurisdiction, that it has been of serious damage.

The calling out of the national guard in January last took from business occupation a large number of the young and active men of the country. The second call in February, enlisting the departmental guard, although not yet enforced, warns a large body of business men that they may be called upon to bear arms at any time. The national guard, already in the field, has taken men from the stores and workshops, leaving nearly every place of business crippled. Added to this, the Government has had need of horses, and these hare been taken, leaving all carriers in a crippled condition for the transaction of their business.

The result has been that there is no industry or business that has not been more or less crippled by the continuance of the revolution.

In the rural districts business is more at a standstill than in this city, as both armies have seized all available horses and the products of the country can not be brought from the estancias to the railroads; men have fled from their farms to avoid going into the army of the Government or have joined the revolutionists or been enlisted in the Government army.

The revolution occurring when it did left much of the crops unharvested, and at least one half of the present harvest is lost. Ships arriving here the past month with lumber expecting to return with hides are forced to leave empty for the States or for other ports.

The impressment system into the army has had the effect that hundreds of the best young men have sought safety in other countries, and as a result the best of these will secure desirable positions and never return.

The cost of the war is probably one and a half millions per month, but the loss in products, in necessary and unnecessary destruction of property, far exceeds this, and the loss to the future of this country in again showing its unsettled condition, and the active young business men who have left it never to return is incalculable.

The banks are surfeited with money. Many persons have drawn out sums for safety, but many more have deposited, and very, very few risks will a banker regard as safe. As a result money is idle. Of three of the largest banks interviewed all said cash on hand exceeded by 50 per cent what it should be and what it was at this time last year.

Much of the business done here is done by foreigners. All these complain [Page 851]of the serious effect of the war on business and are anxious for any termination of the struggle, and anxious for a peaceful government of this country, whether by either of the local parties or by any foreign power. The native population are equally anxious for a speedy termination of the trouble, and rather than have the existing condition of affairs continue would probably not object to Argentina or Brazil insisting on some permanent settlement, the majority of the Colorados (Government) being friendly to Brazil, the majority of the Blancos (revolutionists) being friendly to Argentina.

During the ten weeks the trouble has lasted the Government has, in my opinion, been very careful in protecting the interests of the subjects of foreign countries. But in a business way they suffer, as does everyone else.

I am, etc.,

John E. Hopley.