The Mexican debt., October 10, 1866

The Mexican debt.

October has come and the holders of Mexican bonds are asking if their arrearages are to be paid.

The empress Charlotte’s late visit to Paris; the interviews of that young, intelligent and courageous sovereign, evidently on a secret mission; the last exaggerated accounts from Mexico, from United States correspondents, without doubt, have excited all sorts of suspicions.

These questions are put:

Is the French government responsible for the principal and interest of the Mexican bonds? What is the extent and character of that responsibility? We have already said what we think of the duties of France towards Mexico; we will now examine its financial responsibility for the loans negotiated by the state.

In the first place, we must consider the origin of these loans, the part our government took in their issue, and the use made of the sums realized.

As regards the use of the funds, we will borrow from an article of A. Cochut in the Temps, which is known not to favor the Mexican expedition. Maximilian accepted the empire by the treaty of Miramar. In one of its clauses it says: France shall be paid the expenses of the expedition, for all private claims, and the war shall be carried on by the forces of the new empire with those of the allies.

By virtue of that clause the Mexican government negotiated a loan of 16,762,000 francs, in six per cents., at 63 francs, in 1864; 6,600,000 of this went into the treasury for indemnities. The rest was raised in London and Paris, and amounted to 102,000,000.

In 1865 there was a second loan, 500,000 bonds at 340 francs, giving a total of 170,000,000, both loans yielding 272,000,000; expenses to be deducted 26,000,000, leaving a net profit of 246,000,000.

The was sum used in this way: For reimbursing the principal in fifty years, 34,000,000 francs; interest, premium, &c., 54,000,000 francs; the old Mexican debt paid in London, 22,000,000 francs; to the government, for war expenses, &c., 102,000,000; making the entire sum realized on both the loans, 212,000,000 francs. Of this Mexico got only 34 millions, with the 22 millions paid to London.

Thus France made one hundred and two millions out of the Mexican loan.

The 6,600,000 in the treasury of the ’64 loan were exchanged, in 1865, for 174,000 bonds of the second loan, and 60,000 of them were recently sold. This seems to be assuming a responsibility for the loan.

According to Cochut, then, there are yet 114,000 bonds in the treasury unsold; 47,000 reserved to pay French claims, leaving 83,000 to the credit of the Mexican commission. 756,000 bonds, making the sum of 192,000,000, have been put into the French treasury by individuals, to pay the expenses of the expedition. It seems to us that the French government ought to be responsible for the people’s money used by it for the Mexican expedition.

Now, if the Mexican empire fails, the French creditors lose, and the government ought to pay them. We do not hesitate to say, then, that we are in justice bound for the Mexican bonds to French creditors. If Mexico cannot pay, France must; that is the short of it.

Let us look into the Moniteurs of the 11th and 12th April, 1865. Here we find the report of Mr. Costa encouraging the new monarchy, and the minister of state repeats it to the public; but he takes care to add: “It is not a question of responsibility for the Mexican loan.” It is plain the French government is not legally responsible for the loan. But the bondholders reason after this fashion:

The government authorized the loan, and employed its officers to negotiate it; it formed a Mexican finance commission to act for its interests; a minister of finance was sent to the emperor Maximilian; the useless bonds of the first loan were exchanged for good ones; it paid the troops in Mexico with our money; old Mexican debts were paid in London with our money; for these reasons the French government is responsible for the Mexican loans.

We will speak plainly.

We cannot deny that Mr. Costa’s report, the support of the plan before the legislature, the authorization of the government, the Mexican commission, had a certain influence on the sale of the bonds; but the twelve per cent, interest and the prizes had a greater. The government ought not and will not deny its responsibility in this affair; but to charge the French people with the entire burden of those loans would be too much.

The fact is this:

France favored the issue of the loans, hoping to establish a new nation as the result of its expedition. It used a large portion of the money raised to pay the expenses of the expedition and put down Juarez. It took part in the loan, and is certainly liable as far as the advantages it derived from it.

If the bondholders have not the law on their side, at least they can rely upon the honesty and justice of France in all her transactions.