A notice of this extensive and rising country would be incomplete without some allusion to its financial condition, and in order to illustrate this more clearly I must revert to the year 1824, when the first loan of a million sterling was raised in London, to assist the young republic in meeting the expenses incurred during the War of Independence. That the money thus obtained was more or less squandered, and did not find its way into legitimate channels, is probable enough; nevertheless the liability was always admitted by the existing Governments, although interest had ceased to be paid on the loan for upwards of twenty years and the original stock was almost worthless.

At the period I allude to the revenue and resources of the country were small, and during the reign of Rozas they were entirely under his private direction, and the national means spent according to his will. In fact, what is now known as the Argentine Republic had no existence until after the downfall of Rozas in 1852, Buenos Ayres up to that period exercising sovereign control. A heavy internal debt, represented by paper money, had also generally reduced the value of the dollar (originally worth about four shillings) to two pence, and there appeared little chance of the English bondholders ever obtaining again the money lent in 1824, through the agency of Messrs. Baring Brothers and Co.

But on the downfall of Rozas, a new era dawned upon the republic. Many illustrious citizens, who had been obliged to expatriate themselves in order to save their lives, returned to Buenos Ayres, and the principles of constitutional government were again infused into the body politic, subject, however, to many vicissitudes, which, for a time, retarded internal progress, and prevented the real resources of the country from being profitably utilised. So soon as these difficulties were overcome the question of its indebtedness forced itself upon the Executive and Legislative powers, who wisely decided that their first great financial effort should be to come to some understanding with their English creditors.

At the same time a movement was set on foot by the bondholders themselves, and a Committee was formed in London, under the auspices of Messrs. Baring Brothers and Co., comprising some of the largest bondholders. Negotiations were entered into with the Buenos Ayres Government, who evinced every disposition to meet the matter fairly; and eventually, in the year 1857, an arrangement was come to by which the original debt in full, with its accumulated interest, was consolidated, and interest agreed to be paid thereon; and this arrangement has been most faithfully adhered to up to the present hour. The decree in which this honourable recognition of a great principle is contained is dated the 12th December, 1857, and is signed by the Governor Filipe Llavallol and Norberto de la Riestra the then Minister of Finance. I insert a copy of the document itself:—

The Government of the State of Buenos Ayres, in virtue of the authorisation conferred upon it by the law of the 28th of October last, has made the following arrangement with Mr. George E. White, representative of Messrs. Baring Brothers and Co., agents of the loan contracted in London in 1824 for settlement of the said debt, viz.:—

Art. 1st.—To meet the payment of the interest upon the original bonds the Government of Buenos Ayres engages to remit to the Loan in London in

And from and after 1860, inclusive, besides the above-mentioned sum of £60,000, it will also remit annually the sum of £5,000 as a redemption fund. This sum, together with the interest of the shares redeemed, or that may be redeemed, shall be employed, one half each six months, in the purchase or redemption of the new bonds of this class till the whole of them have been redeemed. The funds corresponding to the stipulated remittances shall be placed in London, one half before the 30th of June, and the other half before the 31st of December in each year.

Art. 2nd.—The sums appropriated to the redemption shall be employed by the agents of the London Loan in the purchase of bonds in the market at the current price so long as that is less than par; but should the price of the bonds exceed par, the funds to be redeemed by the redemption fund shall be determined by lot, in presence of the principal agent or representative of the State of Buenos Ayres existing in London.

The bonds drawn by lot shall be published in the Gazette, or two of the London journals, stating the day on which payment will be made at par, and from which date they will cease to bear interest.

The bonds purchased or redeemed by the redemption fund, with their corresponding future dividends of interest, shall be cancelled in presence of the principal agent or representative of the State of Buenos Ayres in London, and immediately deposited in the Bank of England, publishing their numbers in the Gazette, or in two of the principal London journals.

Art. 3rd.—The holders of the original bonds shall receive a new list of debentures for their future dividends, with a copy annexed to it of the two preceding articles, beginning with the debenture for the dividend that falls due on the 12th of January, 1861.

Art. 4th.—For the interest due upon the original bonds up to this date, and for those that fall due to the end of 1858, amounting to the sum of £1,641,000, the Government of Buenos Ayres shall emit new bonds to bear interest at the following rates, viz:—

Art. 5th.—From 1861 to 1865 inclusive, one per cent. per annum. From 1866 to 1870 inclusive, two per cent., and from and after 1871, three per cent. The first half-yearly dividend upon these new bonds shall fall due on the 12th July, 1871, and subsequently on the 12th January and 12th July of each year, on which days the half-yearly instalments or dividends due shall be paid in London. All the guarantees accorded to the original bonds shall be extensive to these new bonds.

Art. 6th.—The Government of Buenos Ayres engages to remit to the agents of the loan in London the funds necessary for meeting the payment of the interest assigned to these new bonds, and moreover, from and after 1871, the sum of £8,205, or, say the 200th part of the total amount of the said bonds, as a redemption fund for them. This sum together with the interest of the bonds that have been redeemed shall be employed in equal proportion every six months in the purchase or redemption of these new bonds, till the whole of them have been redeemed. Accordingly the sums that must be remitted to meet the interest and redemption fund shall be as follows, viz., from 1861 to 1865 inclusive, £24,615, annually; from 1866 to 1870 inclusive, £41,025; and from and after 1871, the sum of £47,435; the Government engaging to place these funds in London, one-half before the 30th June, and the other half before the 31st December of each year. The Government reserves to itself the right of employing in the redemption of these new bonds, over and above the sum stipulated, any further sums the Legislature may appropriate to this purpose.

Art. 7th.—The sums applicable to the redemption fund, as also the others that may be destined to this purpose, shall be employed by the agents of the loan in London, to the purchase of these new bonds in the market, at the current price, always that this is less than par; but in case the price of these bonds should come to exceed par, the bonds that are to be redeemed shall be determined by lot, and those that are drawn by lot, as also those purchased in the market shall be published in the journals, paid and cancelled on the respective debentures in the manner and form established in the second Article in respect to the six per cent. bonds.

Art. 8th.—The new bonds shall be denominated Three Per Cent. Buenos Ayrean Bonds, shall be signed in the name of the State, by the Minister of Finance in Buenos Ayres, and shall be emitted through the medium of Messrs. Baring Brothers and Co., of London, by whom they shall be countersigned.

Art. 9th.—The payments stipulated in the present convention are specially assigned upon the products of the rents of the public lands of the State, excepting those belonging to the Municipalities, and in case of deficiency this shall be made up from the general rents of the State, or from the special resources created by the Legislature for the purpose.

The conduct of Buenos Ayres statesmen in respect to the obligations referred to was fully appreciated in this country, and the bonds gradually rose up to par value, holding even during the great monetary crisis a good position; nor must it be lost sight of that, although the original debt was incurred for the benefit of the entire Confederation, yet the Province of Buenos Ayres alone took upon itself the sole responsibility; and, up to the present confederation with the other Argentine provinces, always paid the interest out of its provincial resources.

Subsequent to the settlement of the English debt, what is known as the National Government was formed, and the internal debt of the entire provinces has been consolidated into a national stock, bearing interest at 6 per cent., which is punctually paid, and the stock, from being worth 30 to 40 a few years back, has latterly risen to 55, subject, of course, to fluctuations generally caused by speculation on the Bolsa of Buenos Ayres, where, for a long period, gambling in paper money was the chief business, until a wise measure of Governor Alsina, in establishing an Exchange Office, and fixing a paper value for gold, put a stop to this element of financial and social disturbance.

As already mentioned, there is a provincial revenue and a national revenue, as well as expenditure; that of Buenos Ayres being the most important, from its great commercial wealth. Until recently, the only bonds known here were those of Buenos Ayres. Now we have what are called Argentine bonds, lately issued on the security of the National Government; and in order to show the nature of this latter security, as well as the progressive state of the national revenue, I cannot do better than quote the following figures, issued by their able representative Minister, his Excellency Don Norberto de la Riestra, in a circular dated 1st June last, at the time he was negotiating this important transaction:—

it having produced in the first eight months of the year $8,981,430.

as follows:—

as follows:—

The surplus revenue over ordinary expenditure is applied to defray the extraordinary war expenses.

The above revenue is distinct and independent of the private revenues, both State and Municipal, of the different Provinces of the Republic, which are raised for local purposes.

The Public Debt of the Republic at this time is as follows:—

External.—Old Buenos Ayres Debt (London Loan of 1824) now in charge of the nation, say:—

Internal.—

There is besides a floating debt in Treasury Bills to a moderate amount, which is being rapidly cancelled.

I think this statement, combined with the facts I have elsewhere given from personal experience and observation, as to the rapidly extending commerce of the Argentine Confederation, will fully bear out the favourable impression that is now gaining ground in England, and in Europe generally, as to the bona fide security presented by Argentine bonds; and I must say that, looking back to the conscientious course pursued by the Government, no country in the world deserves more to enjoy the confidence of British capitalists.

It will be seen from Senor Riestra's statement that the only foreign debt of the Argentine Republic is that due to English bondholders. Her internal debt is due chiefly to her own citizens, who are safe to be paid both principal and interest; nor has any act of repudiation, or compromise ever stained the character of the Argentine people. The pursuance of this praiseworthy conduct has been followed by the investment of British capital in promoting railways and other industrial enterprises. Indeed, look around in whatever direction we may, it is difficult to find a more pleasing illustration of the maxim, that “honesty is the best policy,” than that exhibited by the Argentine Republic.