Mexican obligations., August 23
Mexican obligations.
The question of the strange and exceptional situation of the holders of Mexican obligations was not caused by the probable abdication of the emperor Maximilian, but was the order of the day in the government councils, as is known from semi-official sources. On the 2d of July last, when six thousand breathless spectators were waiting for the drawing of the great Mexican lottery, one of the attendants remarked to Mr. Germiny that the holders of the obligations were not in despair at the depreciation of their titles, because they relied upon the government of the Emperor to secure them; and Mr. de Germiny answered him in a way to confirm him in that hope.
The serious difficulty of to-day was foreseen, and warnings to those in power were not spared.
Last year, when the obligations were issued with a quasi official display, the attitude assumed by the government was remarked by everybody. These demonstrations inspired capitalists with confidence, in case of failure, to ask a guarantee, and the determination was expressed with energy before the legislative body. If the loan succeeds, said Ernest Picard, it is because the subscribers see the government behind it, in its strength, majesty, and responsibility. The Times, that did not encourage the Mexican delusion, had the same opinion, and expatiated upon it urgently. After analyzing the debates of the legislative body that destroyed the loan, shortly before it was negotiated, we said:
“Suppose the one hundred and fifty millions of revenue expected by Mr. Corta are not realized in the distracted country of Mexico, and that the provisions for the annual payments are in arrears, you will see the subscribers hurrying to the counter in Mont Thabor street, with the Moniteur of the 11th and 12th of April in their hands, and the speeches of Mr. Corta and Mr. Rouher republished in every paper.
“Can we understand how the French government piteously assumes neutrality, which it has a right to do, after insuring the investment as good? You may be assured that such is the reasoning now in many families. The expectation that the imperial government will not suffer Maximilian’s signature to be protested, whatever may happen, is the great encouragement to the loan.”
It is undoubtedly true that the imperial government did not bind itself; a civil tribunal could not force it to give security. Yet it often happens that a defendant is exonerated by the judge when there is no written evidence against him. But would a government hold to such a judgment? Let us bring up facts.
In April, 1864, Maximilian took possession of the throne erected for him; and, according to tradition, his first act of sovereignty was the negotiation of a loan. It was to yield 10 per cent. It was started in Paris and London by two rich and experienced houses of Europe. The French government set an example of confidence by accepting its titles up to fifty-four millions, to be drawn to its credit. Yet for all that the loan failed. The director of the Credit Mobilier said in his report for 1865: “We have omitted no sacrifice to better the condition of our customers, but we regret to confess that our efforts have caused us a considerable loss.” Such is the Mexican credit, left to itself, with an interest of 10 percent. Only a part of it was sold, and the French treasury kept the Mexican loan, just so much waste-paper, in the hands of Mr. Fould.
One year passed. Mexico is so pressed for money that military operations suffer. The emperor Maximilian has no credit; so the French government has to choose one of three things: either to give up the expedition and recall its troops, or invest the credit of Fiance for the benefit of Mexico, or to call for a Mexican loan publicly, and thus give it a moral patronage that would make its success certain.
The last plan was adopted, as the most simple and less expensive. The government was confident of its success, and so was a majority of the legislative body, as its acts prove. The objections of a few well-informed men were thought to arise from obstinate opposition. The conditions of the loan together with the lottery amounted to about 12 per cent., which is not a high rate for Spanish American countries. The loan was advertised. Ten days before the opening of the public subscription a serious debate took place in the Corps Legislatif upon Mexican affairs. Mr. Corta, the deputy who was sent to Mexico by the government to examine affairs, was invited to speak. He gave a flattering account of the resources of the country, and the brilliant prospects of the monarchy. The opposition expressed some doubts. The minister of state followed, with a pretty picture of immense immigration, banks, joint stock and steamship companies, factories, gold, silver, iron, and coal mines, oil wells—to be discovered and worked. “As to the finances,” said the minister, “has not the report of the Hon. Mr. Corta convinced the House of the abundant resources of the country?” And the House answered, “Yes! yes!”
The minister’s confidence was so great it ran over in these terms:
“You may rest assured, gentlemen, that the great ability of the emperor Maximilian will insure prosperity to the finances of the Mexican empire, and undoubted security to those who in trust him with their money.” [Cries of “Good!” “Good!” in the House.]
True, Mr. Rouher took care to add: “It is not now a question of responsibility of the French government. France does not interfere—nor does she guarantee the Mexican loan, directly or indirectly.” Could he say aught else? It would have been very imprudent in him. A single word intimating French guarantee would have raised the obligations instantly from 340 to 1,000 francs. But we must no; forget that the government desired the success of the loan without direct responsibility.
Mr. Picard still had his doubts. He said “Subscribers lost 20 per cent. on the first loan, and now you talk of a second!” Mr. Rouher answered, “You are interested in this loan, and when the holders read your speech to-morrow, if they believe what you say, they most assuredly will not hasten up with their money. * * * These distrusts, these irresponsible criticisms that cause alarm, are impotent and empty, and persons will he right in paying no attention to them.” [This was received with much applause.]
This loan is issued by the discount bank, and the public knows the establishment, bound by its charter, could open no subscription of that kind without the special authority of the minister of finance; and the receivers general of France are authorized by the minister to receive subscriptions. The care of the funds collected and the payment of the interest are intrusted to a committee of Mexican finances, established in Paris, and presided over by Count Germiny, nominated by the French government, who is a senator, former minister of finance, and ex-governor of the Bank of France. A state counsellor and eminent statesman, Mr. Langlais, issent to Mexico to put the financial affairs of Maximilian in order; while the instalments due from subscribers are being paid in, confidence is encouraged by semimonthly applause in the Moniteur, repeated by other papers. Did a government ever before take so much trouble to help a negotiation in which it had no interest?
But this is not all. The French treasury held a credit of fifty-four millions of the first loan. It was necessary to realize that sum in order to free the floating debt, which increased the sum. This was not easy. Mexican credit had fallen so much that the revenue of the first emission, yielding more than 12 percent, at that time, was not salable. The conversion of these rents into obligations with remaims and lotteries was effected, and on that occasion Mr. Fould hurried to transform his unprofitable rents into obligations, so as to clear his portfolio. In his report of the 20th December, 1865, to the Emperor, he declares he has realized the rents he held, but at some loss. Do you suppose the minister would have thrown new Mexican obligations into market last year unless he believed them good? It seems to us of great importance to enlighten the public in regard to the funds raised for Mexico. We have some information on the subject, from good authority, which we will give.
One of the principal clauses in the treaty of Miramar was the emission of a loan to be divided into two portions, one to indemnify France for expenses already incurred and private claims to be made out; the other to furnish the sinews of war. The loan of 1864 was issued in 6 per cent. rents, delivered at 63. The French treasury received rent titles amounting to 6,600,000 francs, to pay its indemnities and claims, and locked them in its portfolio. Of the portion offered to the public only 10,162,000 francs of the 6 per cents were negotiated in London and Paris—the rich profits of which were in round numbers 102,000,000 francs. The second issue, in 1865, of 500,000 obligations, at 340 francs, yielded 170,000,000. Total amount of both, 272,000,000. The expenses of both were 26,000,000, which leaves a net profit of 246,000,000 delivered to the committee of Mexican finances.
Now what has been done with this two hundred and forty-six millions? In the first place thirty-four millions were taken to form a capital of two series of obligations, due in fifty years, and that sum is safe in the bank of deposits and consignments. A sum of fifty-four millions has been reserved for the payment of all expenses of the first loan for two years, and one year of the second, and will be used accordingly. At the time of the first loan there was a large arrearage on the old Mexican debt due to England, and its creditors would have caused the loan to fail if some provision a had not been made for their satisfaction; so Maximilian’s agents deducted 22,000,000 from the sums raised in Paris to pay the London creditors. It is known that the treaty of Miramar authorized the French government to raise considerable sums, mentioned in our budgets, to pay the expenses of the war. These amounted to 102,000,000. On adding these various sums we find they amount to 212,000,000. By this reckoning, what remains to the credit of Maximilian out of 246,000,000 of the two loans? Only 34,000,000, including the 22,000,000 paid for him in London. The preceding estimate does not comprise 6,600,000 six percents of the first issue, delivered to the French government in 1864. Last year, when the six per cents were converted into obligations, the French treasury secured 174,000 obligations of the second series, estimated at 56,000,000. Out of these only 60,000 have been recently sold. Now if these obligations have been thrown into market when the solvency of the Mexican empire is doubtful, is it not reasonable to suppose the government would insure them in some way or other?
If our information is correct, there yet remain in the French treasury 114,000 Mexican obligations unrealized; 47,000 for indemnities to French subjects, and about 83,000 of the unconverted rents of the first issue, still in the hands of the Mexican committee. At this rate, there are 756,000 classified obligations in public circulation, and they are dispersed among more than 300,000 families.
Now if these obscure bondholders are not indemnified, they will have the honor of contributing 102,000,000 to the support of the French army in Mexico; and in the end the French creditors in Mexico and English creditors in London will be paid by a new and long list of creditors in Paris. We are now only repeating what these bondholders say, and their complaints are certainly worthy of being heard.
On the other hand, we know very well what the tax-payers will say, and we will soon give them a chance to speak. We must confess that this is the most complicated and interesting case of conscience we have ever met with, and we are not ashamed to say we are not casuist enough to solve it.