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Doc. No. 75. 



eirculation, and ought to ha\re been sold at seventy or upwards, the sur- 

 phis for the repubhc and the loss for the house; they were only sold at 

 sixty-eight, it \yas said, and the private obligations circulated at seventy. 

 The same house spoke to the government about the sale and the loss of 

 two per cent., offering to discount from the commission in case it was 

 declared to be on account of the republic. In the mean time the house 

 of Barclay &< Co. became bankrupt, and Mr. Zebadua, minister there of 

 the republic, put the affair, on his authority, in the hands of Messrs. Reid, 

 Irving, <fe Co., who, in virtue of it, supplied the money for the payment 

 of the dividends of the first of August, 1827 and 1828, taking as col- 

 Jatteral security the mortgage of the bonds that were deposited in their 

 house, to the amount of cJ'44,000. It was then that Messrs. Barclay 

 presented their account to Mr. Garcia Grenados, especially commis- 

 sioned for this business, which was not approved of by the government 

 of the republic, because it was not in conformity with the one made out 

 by the Minister of Finance, from the entries made. Thus the affair 

 remained till 1838, when Mr. Chatfield, British consul, Avho has always 

 been hostile to Nicaragua, addressed a claim in the name of the creditors, 

 authorized, as he said, by the Minister for Foreign Affairs. The republic 

 was then unfortunately in the most terrible crisis of the transition which 

 was just taking place. The federal pact had been declared broken by 

 the States, to reform the constitution of 1824, defended by the President, 

 Morazan, who resided at San Salvador, a short time before elected into a 

 federal district. There existed no longer any bond of union between the 

 States, and each one remained as a free and independent State, without 

 any restrictions beyond those established in the pact they engaged to cele- 

 brate. Costa Rica, which had always been the most pacific, experienced 

 several revolutions, which gave rise to the dictature of ('astello, who con- 

 stituted that State, separating it from the others of the Union, but always 

 endeavoring to preserve with them relations of friendship and good under- 

 standing. Nicaragua and Honduras declared war to San Salvador, and 

 Guatemala and the Altos (which formed already a State) were troubled 

 by the Carrera faction. These were the circumstances Mr. Chatfield had 

 waited for, to establish his relations. The States answered Mr. Chatfield 

 that the affair concerned them all, and that they would come to an agree- 

 ment to settle it. For this purpose they determined to organize a conven- 

 tion of States, whose meeting was to take place at Santa Rosa, in the 

 territory of Honduras. The war in San Salvador prevented this meeting 

 until the 19th of March, 1840, when the President, Morazan, was defeated 

 at Guatemala, which action decided the political question: thus the Car- 

 rera faction triumphed forever, and found sympathy with the governments 

 of the other States. After the re establishment of peace, they again thought 

 of the convention to meet at Sonsonate, but this again was frustrated by 

 some differences arising among the States. At last, by an agreement come 

 to between the States of Honduras, San Salvador and Nicaragua, the city 

 of Chinandega (in the latter State) was fixed upon. The meeting took 

 place in 1842, and the governments of Guatemala and Costa Rica were in- 

 vited to send their representatives; but this could not take place on account 

 of some difficulties which the first opposed to sending its delegates, and 

 a revolution made by Morazan in the second, which created an alarm 

 in the others. The convention, nevertheless, formed on the 19th of July 

 of the same year^ already called a confederation; in which was stipulated 



