The Minister for Foreign Affairs to the Minister of France in Mexico

Sir: I have placed before the council of ministers, to be the subject of special consideration, the project of settlement of French claims which you sent me with your despatch of 28th September. Two questions have been successively discussed, that of the amount of our indemnity, and that of the mode of payment which it allows.

When the government of the Emperor decided upon settling in gross the claims of its subjects, Marshal Bazaine was requested to ask the Mexican government to remit to us for this object a sum of fifty millions of francs in bends of the second Mexican loan, which will be added to the twelve millions of bonds of the loan of 1864, already placed in our hands, in execution of the convention of Miramar. What we ask, then, is about the sum which the French commissioners, instructed by you at a later date to study the question, indicated to you as necessary equitably to indemnify our countrymen, say 12,754,366 piastres. The convention you signed with Mr. Cesar fixes forty millions of francs only as payable in bonds of the Mexican rents at par, and with this will be compounded the twelve millions already in our hands as the whole amount of indemnities allowed to our subjects. There is, therefore, a wide difference between the amount you have accepted and what we deem we have the right to claim; but after having carefully weighed the motives which induced you to make it the basis of the arrangement to be brought about, the government of the Emperor has approved your resolution. His majesty the emperor Maximilian having shown himself ready on the one part to adopt this amount of forty millions of francs, and your personal investigations permitting us to think on the other pait that it would in strictness suffice to indemnify our countrymen, it has seemed more in accordance with their true interest to hasten a solution by making deduction to a certain extent from our legitimate demands, than still to delay, in detaining them, the settlements they have so long waited for.

In accepting the amount of indemnity fixed upon in your project of convention, we cannot, however, acquiesce in the mode of payment which is therein stipulated. It in fact presents a difficulty to the Mexican government how to disencumber itself according to the mode prescribed by the project of convention. By the terms thereof, the 23,560,000 francs which remain due to us at par, with the 12,000,000 of francs already in our hands, and representing at par 16,440,000 francs, our indemnity of 40,000,000 francs, these 23,560,000 francs should be paid to us in bonds of the first loan at par, by the Mexican commission of finance instituted at Paris. But the following circumstances render the literal execution of this clause impracticable at this day: Whilst, in fact, the French treasury, using the privilege accorded at the time of the second Mexican loan, was converting the bonds of the first loan remitted in virtue of the convention of Miramar, either for its own account or for the French claiming indemnities, into obligations analogous to those emitted 1865, and then negotiated them, the commission of finances of Mexico was availing of the same opportunity to put also on its side, with the balance of the bonds of the loan of 1864 which remained disposable. At this time, then, the commission no longer has in its possession any bonds of the first loan which it can employ in the manner intended by the project of convention. The Mexican government should at once take this into account, for it has been officially advised of the operation effected. It must, therefore, substitute a new combination for that which the convention contains, as the measure of conversion of bonds of the first loan, determined in the beginning by the commissioners of the Mexican government, is optional. It is more than probable that the 500,000 bonds of the second series will not be delivered in full, considering that a certain number of holders of six percent, bonds of 1864 will not avail of the option which is given them. The minister of finance estimates that there will remain in consequence without settled employment a number of new bonds, more than sufficient to meet the engagements which the Mexican government may contract with us. It is, consequently, in bonds of this second series, and no longer, as the convention prescribes, in bonds of the first loan, that there will be a way of remitting to us 23,560,000 francs, specified in Article 4, and I request you to ask, in this state of things, the despatch to the commission of Mexican finance at Paris of the orders necessary that it may carry out for us, so far as to meet the above sum, the remainder of the new bonds, the existence of which is anticipated.

Accept, &c.