I relate the transactions in the manner in which they have transpired. To use the words of a celebrated author,—Truth is the best diplomacy,-and on this occasion, more than on any other, the truth, which always succeeds in making its way in the world, has already been, and will be in the course of time, the best and most certain defence of the Republic.

The disorder produced in the public archives, occasioned by the revolution, and the continual changes of the employés, has rendered this work extremely difficult, and prevents its being presented in so complete a form as might be desired; but I can positively assert that its bases are supported by official documents, (which will be printed in an Appendix), and that with the greatest care and most scrupulous efforts, I have endeavored to render myself worthy of the confidence shown me by the Constitutional President of the Republic, Don Benito Juarez, and the Minister of Foreign Relations, Don Manuel Doblado, on intrusting me with such an important and delicate commission.

Mexico, March 10th 1862.

call. Payno.

DEBT CONTRACTED IN LONDON.

HISTORICAL EXTRACT.

In the year 1810 Mexico proclaimed her Independence. The war continued until 1821, when General Iturbide consummated the work commenced by the curate D. Miguel Hidalgo. England was one of the first European nations that recognized the Mexican Government, and entered into friendly and commercial relations therewith. The ports of the Gulf and those of the Pacific, were visited by a large number of British vessels; and mining speculations were undertaken on a large scale by English companies, abundantly provided with money and credit.

In the first place, a war of eleven years and the administrative inexperience of some of the functionaries who came into power, caused, (either from a want of care, or from absolute necessity), the destruction of the schemes that previously formed the system of the Spanish administration, which produced annually from sixteen to eighteen millions of dollars. Tribute; monopolies; excessive taxes; commerce solely carried on through the ports of Veracruz and Tampico; saleable or renounceable government situations; duties on lances 1 and titles of nobility;-Were these by chance to be permitted

1

(1) Duty paid in lieu of military services.-Trl,

Deficit of the Independent

Mexico.

after the Independence was made? Was it not indispensable to open the ports to the commerce of the world; to establish tariffs, and destroy imposts which were not only incompatible with, but were contrary to the new political system? Would not any other nation have done the same? Would it not have been their duty to have done so? But it is our purpose to be impartial, and we have already said that it arose partly from necessity and partly from inexperience. The imposts being suppressed or modified, as we have stated, and Government of at the same time Government, being straitened for the want of sufficient resources, wherewith to pay the numerous army which had fought for the Independence, and in order to repair the evils of an eleven years war, found itself immediately with a deficit of 2.000,000 dollars. A more minute idea on this point may be gathered from the Report presented to Congress by D. Rafael Perez Maldonado, who was Minister of Finance in the year 1822. This deficit, and moreover, the desire to acquire credit, and to enter as an independent nation into the management of transactions of great magnitude, together with the mistaken idea entertained by influential individuals, that England would take a direct interest in our political af. fairs, when once we became their debtors, was the cause of soliciting a loan from London, insteated of forming an administrative system, and of procuring resources from the country itself.

English sympathies for the

In fact, England for many years back had shown the greatest Independence. sympathies for the emancipation and aggrandizement of the Spanish Colonies. From the years 1792 to 1794, Pitt conceived a project by which the expelled Jesuits, who resided in Italy, should return to America and promote a movement in favor of independence. Don Francisco Miranda, a native of Caraccas, and who afterwards went to Venezuela, protected by Brissot, was the agent of the Prime Minister for all these important steps in English diplomacy. Afterwards, in 1822, when, by the death of Lord Londonderry, the celebrated Canning was Minister of Foreign Affairs, the sympathies of the English Cabinet towards the new nations that had gained their independence, were so manifest and so marked, that it may be asser

(1) On the 5th October 1851, the taxes which consisted of 16 per cent, were reduced to 6 and to 8 per cent. Duties on native spiritual liquors were suppressed; as also those on convoy, and the ten per cent on house rents; in a word, all the extraordinary imposts which had been decreed by the Spanish government to sustain the war. Thus the national income for the year 1822 was estimated in rafaction more than 9.000,000 dollars, whilst the expenditure reached about 12.000,000.

ted they influenced every affair between Europe and these countries, whose political life commenced full of glory and hope.

Loans effected in London for the Spanish

publics.

The new Republics availed themselves of these favorable circumstances, which made both easy and feasible any transaction in the American Re London Market, which is the centre of wealth and commerce of the entire universe; and in succession Mexico, Chili, Peru, Buenos Ayres, Brazil, Equador, New Granada, Venezuela, and Guatemala, raised loans on the London Exchange for a more or less amount, and with greater or lesser difficulties; so that by the year 1840 the debt which these countries contracted with the holders of Spanish American bonds amounted to the enormous sum of 175,000.000 dollars, which was composed of the primitive capital, the capitalized interest, and of the cost of the agencies and difficulties experienced in making the various arrangements and conversion.

With the exception of the Peruvian four-and-a-half per cent Stock raised by Messrs Murrieta & Co. to redeem the former loans, and pay the interest thereon, (who ceded the produce of the Guano Islands, as well as the Chilian Loan), all the rest of the Republics have always been compelled to make great sacrifices, without ever being able to raise their credit; because the constant civil wars and the consequent disorganization of their revenues have prevented them from carrying out the arrangements made, undoubtedly with the best good faith, and with the best intentions to fulfil them.

Nevertheless, in 1840, Sr. C. Wyllie, who, in his letter addressed to the Chairman of the Committee of Bondholders, deplores the indifference and neglect with which Lord Palmerston treated the interests of English Capitalists who were compromised by the loans made to the American Republics, makes a signal exception to that of Mexico.' He says: "The foregoing observations ought not to be applied to all the Spanish-American Republics; Mexico forms a very honorable exception, as I said at a public meeting of the Columbian Bondholders, held on the 28th. July. Between individuals, the most efficacious mode of teaching is by example, and we ought to possess the fundamental hope that the same thing happens between nations. I proceed, then, to show what Mexico has done; and trust her sister southern republics may follow her honorable example.""

(1) A letter to G. R. Robinson Esq., Chairman of the Committee of Spanish-American bondholders in London. A H. Bailly & Co., Cornhill.

(2) Mr. Wyllie wrote a very interesting work on the revenues of Mexico, which Sr. D. Ignacio Trigueros had translated into Spanish. Mr. Wyllie has never allowed an opportunity to pass without speaking of Mexico in the most just and honorable terms, and it is but right to tender him this testimony of gratitude.

A well known individual in the Foreign Office of England assured me that the Spanish-American Republics gave more trouble than Europe and the East Indies together.

This can be easily understood. All these countries were subjugated and governed in the same manner for a period of three centuries; they succeeded in gaining their independence at the cost of immense sacrifices; all of them, in fact, have endeavored, if I may so express myself, to pass over time and space, and place themselves on a level with those nations which have struggled for a thousand years, to arrive at that degree of culture and civilization in which we now behold them.

From California to Tierra del Fuego we find the same strife between ancient and modern ideas; the same exaggerations in opposite principles; the same contention among brothers and members of the same family; the same sanguinary civil wars, and as the inevitable fruit of such discord, the same administrative disorganization; and consequently a want of faith in the fulfilment of the agreements inconsiderately entered into with foreigners, some of whom have been prudent and accessible,--as may generally be said of the Bondholders,— whilst others, avaricious, and exacting speculators, have not pardoned any step to give constant false information to the European press, to the cabinets, and even to the Sovereigns themselves, with the sole object of making a rapid fortune by exaggerated claims.'

Let it be said once for all. America with only forty years of life, cannot be like Europe with more than a thousand years of an independent and self-governing existence. Time alone can effect great changes in society.

(1) Of the amounts claimed by various French Subjects in 1838, the Mexican Government paid 3,000,000 francs in conformity with art. 1. of the Convention of the 9th. March 1839. The French Government found some of the Claims so absurd, so exaggerated, and so unjustifiable that they were either rejected or their payment suspended. In consequence of this, there still exists, I believe, or, at least, there existed only a few years since, an overplus of 600,000 francs, deposited in the Savings Bank.

We will cite another case. In conformity with the Guadalupe Hidalgo Treaty, the Treasury of the United States of the North was intrusted with the payment of all Claims which the United States Citizens had against Mexico up to that date; the commission named to adjust these Claims rejected more than one half of them. Gardiner claimed an enormous sum for damages occasioned by the Mexican authorities, in a mine which he alleged to be his property. It was proved that the mine never existed, and that Gardiner was an impostor. Gardiner committed suicide in prison, fearing that a heavy punishment would be inflicted upon him at he conclusion of the prosecution. Can it be forgotten how Gardiner and his Agents talked tagainst Mexico before the truth was investigated?