instructed to present to them, but I felt sure Her Majesty's Government, determined though they were to obtain from Mexico the satisfaction that had been so long denied them, would prefer doing so by ordinary means to employing force.

In order, therefore, to obtain what was required, I did not. hesitate to adopt a line of conduct which, by being somewhat more palatable to the susceptible Mexicans, would not in reality interfere with the requirements of Her Majesty's Government.

Your Lordship will have seen that, even under these circumstances, it was only after the greatest trouble I obtained the outline of a Convention that was embodied in my despatch of the 28th ultimo above alluded to. Since that time my difficulties have greatly increased.

I nevertheless continued my negotiations with this Government through the medium of their Minister for Foreign Affairs, with whom I consented to treat unofficially at the Legation; and it will now be my duty to lay before your Lordship the results which have been arrived at.

First of all comes the reduction of the tariff. I had informed Señor Zamacona that unless the Government consented to a bonâ fide reduction, it would be useless for us to think of negotiating a Convention having for its basis the old system of duties; that Her Majesty's Government insisted upon this point, and that it would be far better for his Government to yield with a good grace than eventually to be forced into compliance with our demands.

This in the eyes of the Minister for Foreign Affairs seemed an insurmountable difficulty, for, said he, Congress will be certain to throw out any Bill that carries with it even the semblance of foreign interference. This I know to be too true, and I therefore proposed that the reduction should come apparently from Congress itself, as a voluntary act resulting from the Report of the Mixed Commission which some time back had been named for examining into the state of the present tariff.

This idea struck Señor Zamacona as a good one, and he promised to do his best to have it carried out fresh obstacles, however, soon presented themselves; while intrigues of every kind were being practised to prevent Congress sanctioning any reformation whatever in the tariff.

Luckily at this moment the Finance Department was offered to a person of considerable merit, socially and politically, Señor Gonzales Echeverria, who had just returned from Europe for the purpose of settling his affairs in the country previous to leaving it for good.

When, however, Señor Echeverria looked into the state of his

department, he found everything in such hopeless confusion that he refused to undertake the charge. I was then asked to see him as a last hope; during our interview I was so much struck with his good common sense, and with the clear notion he had formed of his country's condition, that I tried to persuade him to accept office; at first he refused, telling me that it was too late to do any good, and that he was convinced nothing but foreign intervention could now save Mexico, but I am happy to say that I at least got him to consent to my request.

His acceptance of office, added to my carefully abstaining from menacing Congress in any way, and to Señor Zamacona's untiring exertions, seem to have produced the desired effect, for when the Tariff Commission a few days ago presented to Congress their proposed reform, it was duly taken into consideration, and though not accepted as it stood, was not de facto rejected.

According to the existing tariff, goods, besides paying high import duties, were compelled to satisfy endless additional duties after leaving the Custom-House, and before coming into the market. The Commission, therefore, proposed a reduction of 50 per cent. on the import duties, and a further reduction, though not of an equal amount, on the additional duties.

I at once, upon this plan of reform becoming known, called a meeting of the British merchants here, in order to obtain their opinion in the matter. They one and all owned that the reduction was very much in favour of trade generally, but Mr. Whitehead, agent for the London bondholders, considered that as the assignments due to the body he represented came out of the import duties, and as those duties were to be diminished by one-half, whereas the additional duties, which were not taxed with assignments, were not reduced in the same proportion, he would be the loser, inasmuch as it would require the introduction of double the amount of goods annually to enable Government to pay the bondholders their assigned quota of import duties, and that such an event could hardly be expected with the additional duties at so high a figure.

I explained that so long as Mexico by reducing her tariff really benefited trade, we had no right to insist upon her effectually crippling herself for the sake of being able actually to square the balance-sheet of the bondholder, or fix the exact ticket to be placed on each separate piece of shirting that came into the country.

Congress, however, threw out the proposal for a reduction of 50 per cent., and passed a law, copy of which I beg to inclose herewith, by which Government was authorized to reform the tariff upon a basis of 40 per cent. reduction on the import duties, and to reduce

the additional duties by about 42 per cent., making a clear reduction on all duties to which foreign goods are liable, of somewhat more than 41 per cent.

This plan was preferable to the first for many reasons: though it was not quite so beneficial for trade generally, yet it affected pretty equally both the bondholder and the merchant, and had the immense advantage of taking the tariff reform out of the hands of Congress, and placing it under the sole control of Government.

When Señor Zamacona asked me if I would consent to the system of reduction on the above basis, I told him I could have no objection to it, if Government would add a clause clearly specifying that neither as regarding import, export, or additional duties, would any change whatever be allowed without at least 6 months' notice being given.

Here a fresh dispute arose, as it appeared to the Minister for Foreign Affairs that my request implied a doubt as to the honesty of his Government. I insisted, however, upon this clause as a sine quá non. Had I not done so, the Government might at any moment have added to their list of additional duties upon the plea of necessity, and so entirely annulled the advantages of the new tariff system.

Besides the above clause, I have obtained a further one, providing for the tariff coming into operation within 4 months of its publication. The Government wanted it to come into operation 2 months after date, while the merchants required 6 months' law, so that I had no alternative but to take a period between the two.

This, my Lord, is the outline of the proposed new tariff'; it will not be possible to have the tariff itself worked out in detail for this mail, and I can therefore merely give your Lordship an idea of the result that will be produced, by inclosing a comparative statement of duties payable on a supposed cargo under the old and new systems; by which it will be seen that a cargo of merchandize which is now liable to 100,000 dollars import duties, and to 81,000 dollars additional duties, would, under the new system, if honestly carried out, be subject to 60,000 dollars import duties, and 46,500 dollars additional duties; thus paying 106,500 dollars for all duties, instead of 181,000 dollars, this being equivalent, as I stated above, to a reduction on the whole duties paid by foreign merchandize, of somewhat more than 41 per cent.

The tariff question being thus satisfactorily disposed of, I set to work again on the proposed Convention, but I found, as I anticipated, that in the interval, fresh difficulties had sprung up, and that it would be absolutely necessary to modify the plan that we had originally proposed. This was a matter of comparative indifference to me, provided I obtained the essential points necessary to be secured.

I will not weary your Lordship by giving a detailed account of daily interviews with Señor Zamacona, in which as soon as one difficulty was got rid of another sprung up, and this in endless succession, until finally, on the 21st instant, I succeeded in persuading Señor Zamacona to sign with me a Convention, copy of which I have herewith the honour to inclose.

In Article I, the long-disputed question of the payment of those sums of money robbed from the conducta and the British Legation is at length satisfactorily settled, by an extra assignment corresponding to 10 per cent. of the import duties to be taken out of that portion of the additional duties commonly known under the denomination of "mejoras materiales."

In Article II, 6 per cent. on the 660,000 dollars stolen from the Legation, and 12 per cent. on the money still due from the conducta robbery, is secured by an assignment on the same fund, to date from the time the money was taken.

In Article III, all Treaties, Conventions, and Agreements heretofore concluded between the two High Contracting Parties are declared to be binding in their totality on both parties, and the Supreme Decrees of the 14th of October, 1850, and the 23rd of January, 1857, are likewise to remain in full force and vigour in all that concerns the London bondholders.

Article IV settles the manner of payment of such sums of money owing to the London bondholders and the Convention bondholders as were in the hands of the Custom-House authorities at the time all payments were suspended by the Law of the 17th of July, together with 6 per cent. interest thereon.

Article V secures the interests of the French Convention and the arrears due on other claims, as arranged by Admiral Penaud : after the payment of which the quota belonging to the British Convention bondholders shall be augmented, as before agreed on, by 2 per cent. additional.

Article VI gives the British Consuls and bondholders' agents at all the ports in the Republic the real bona fide powers of interventors, without outraging the national feelings as would have been done by the means proposed in the ultimatum.

Article VII secures the due and punctual payment to the bondholders of their proper share of the duties to be paid on every cargo arriving in a manner never before obtained, thereby saving the immense loss inflicted on them by the irregular way in which these payments have hitherto been made to them.

Article VIII settles the date from which the several assignments above alluded to shall commence.

Article IX frees the Mexican Government from the respon

sibilities of a debtor, from the time these several assignments are paid to the agents of the bondholders at the several ports.

Article X stipulates that in all concerning either the appointment of interventors with fuller powers, or the payment of assignments such as those above alluded to, no advantage shall hereafter be accorded to any foreign nation that is not by the same act also accorded to Her Majesty's Government.

Such, my Lord, is the Convention that was duly signed and sealed on the 21st instant by Señor Zamacona and myself, after the exchange of a couple of notes, copies of which I have the honour herewith to inclose.

The object of these communications was, on his part, to secure the passing of the Convention through Congress, as by the tone of them it would appear that the Government had been acting from a spirit of justice, instead of being under the undue pressure of menaces from this Legation. Ou mine, it was to aid him in this laudable effort, as well also as to secure an official declaration from this Government, binding them to the reduction of the tariff which I had in reality made the basis of my operations.

I conceive that by the arrangement above detailed I had secured all the real objects we had in view, and that with the great advantage of obtaining them by means of persuasion instead of by the employment of force.

That a display of such force would have been temporarily necessary to carry it out, I think probable; but that once made, and the determination of Her Majesty's Government not to be trifled with thus exemplified, all would have gone on smoothly, and we should thus have obtained all we required.

How the arrangement I had thus concluded has been nullified by Congress having thrown out the Convention by a large majority, must form the subject of a separate despatch, in which I will detail all that has taken place here since its rejection.

Had it been ratified by that body, I should have made it the foundation for a final settlement with this Government of all pend. ing claims, as well as for obtaining compensation for the relatives of such British subjects as have been murdered here up to the present time with impunity. Such an arrangement I could, I doubt not, have made during the presence in these waters of a powerful English squadron, but now the obstinacy of the Legislature has destroyed my combinations, and reduces the settlement of these questions to the future employment of brute force.

Earl Russell.

C. LENNOX WYKE.