1883 and 1888.-Proposals were made to carry out the Unification of the Internal and External Debts in these years, but proved abortive, owing, in the first instance, to the Government refusing to provide the necessary funds for the expenses of the operation, and, in the second instance, to Congress requiring that the loss on Exchange should be provided out of the sum allowed for the expenses of the Debt Service.

1892-3.—The Government, in consequence of a revolution, temporarily suspended the service of the External Debt. The remittances were resumed in June, 1893. For the Coupons Nos. 24 and 25, due February and August, 1893, the Council issued Certificates redeemable at par by half-yearly drawings. The final amortisation of these Certificates took place in August, 1897.

1896.-Congress authorised the issue of a Loan in Europe for Bols. 50,000,000, the proceeds to be devoted to the liquidation of the Railway Guarantees in arrear, the compounding of the obligation to pay the same in the future, the acquisition of some of the Railways, if deemed desirable, and the completion of the Central Railway. This Loan, bearing 5 per cent. interest and I per cent. sinking fund, was issued at 80 per cent. by the Disconto Gesellschaft of Berlin. Drawn Bonds and Coupons to be received at par in payment of Customs duties. The Loan was secured by a sufficient number of units of the National Revenue to cover the annual service, amounting to Bols. 3,000,000, and it was stipulated that no new Loan might be contracted to which equal or greater rights were conceded without the amortisation of this Loan having previously been effected. Under a Decree of 16th May, 1896, 11.12 units of the Customs Revenue were assigned to the service of this Loan. The same Decree renewed the assignment in favour of the 1881 Loan mentioned above.

A Law was also passed for the conversion and consolidation of the various Internal Debts by the issue of Bols. 65,000,000 of Bonds, bearing 6 per cent. interest and I per cent. Sinking Fund. Interest to be paid monthly in Venezuela and in Europe.

1897.-The Government failed to remit the funds required for the payment of the Coupon due February 15th, 1898, on the External Debt of 1881, and of that due June 30th, 1898, on the Five per Cent. Loan of 1896.

1898. The Government proposed to pay off the arrears on the Debt in Bonds of a Nine per Cent. Loan, secured on the Salt Monopoly. This proposal was not proceeded with, as far as the External Debt was concerned.

1899.- A Law was passed for the payment of the arrears in Bonds of a Three per Cent. Loan, with 2 per cent. amortisation, secured on the general revenues and certain special taxes. This proposal was declined by the Bondholders' Committee. In December the Disconto Gesellschaft paid 36 per cent on account of the June, 1898, Coupon of the 1896 Loan.

1900.-Five-sixths of the February, 1898, Coupon of the 1881 Loan was paid in March with funds received at irregular intervals between July, 1897, and March, 1899. In December the Disconto Gesellschaft paid the balance of the June, 1898, Coupon of the 1896 Loan, and in the same month the Government resumed remittances at the rate of one-half of the full monthly instalments in respect of both Loans.

1901.-The balance of the February, and one-half of the August, 1898, Coupons of the 1881 Loan were paid in July. In December the Disconto Gesellschaft paid 56 per cent. of the December, 1898, Coupon of the 1896 Loan, and a like percentage on the Bonds drawn on 31st December, 1898, the Sinking Fund having been in suspense since that date.

All remittances on the part of the Government ceased in August.

1902-3.-In order to obtain redress for various outrages committed on their subjects by the Venezuelan Government, the Governments of Great Britain and Germany blockaded the Venezuelan ports. Protocols were signed at Washington providing for the settlement of these and of other claims for loss and damage preferred by individuals and industrial companies. The Government of Venezuela at the same time undertook to settle its External Debts.

REPORT.

Although no actual arrangement of the Venezuelan External Debt has as yet been effected, negotiations, in which the Council and Committee have been associated, have been proceeding for a considerable time past between the Banque de Paris et des Pays-Bas and the Venezuelan Government with a view to bringing about a general Unification of the External liabilities of the Republic, including the claims recognised under the Washington Protocols. In June last the Bank and the Representative of the Government arrived at an agreement as to the main bases of the proposed settlement. Nothing has, however, up to the present been settled concerning the rate of conversion to be offered to the different classes of creditors, and the acceptability of the project, of course, largely depends upon a satisfactory arrangement being made with regard to this vital point. In addition to this there are many conflicting interests to be reconciled and many difficulties to be overcome, so that the Council are not at the present moment in a position to make any definite announcement on the subject. In view of the advantages which the proposed Unification undoubtedly offers, the Committee have felt it preferable to submit to some delay in the hope that the scheme may eventually become an accomplished fact, rather than attempt to make a separate settlement of the English Loan. It is, at any rate, satisfactory to note that by entering upon these negotiations the Venezuelan Government has shown a serious intention of fulfilling the stipulations of Article VI. of the Washington Protocols.

In connection with these Protocols it may be observed that some misconception appears to have existed as to the real nature of the case submitted to the International Court of Arbitration at the Hague. The question before the Court in no way affected the interests of the Bondholders, being merely a point of International Law as to whether England, Germany, and Italy were entitled to preferential treatment over other Powers, which took no part in the blockade, with regard to the liquidation of their "second rank" claims. The award of the Hague Tribunal, which was given in February last, was favourable to the three Powers named, and the assignment of 30 per cent. of the Customs Receipts at La Guayra and Puerto Cabello is consequently being applied in the first place to the liquidation of the English, German, and Italian claims. With regard to the “second rank" claims, the Council regret that they have been unable to obtain any official information as to the total amounts originally claimed by each nation, as to the sums awarded by the Mixed Commissions at Carácas, or as to the claims still outstanding and unadjudicated.

THE PRESIDENT'S MESSAGE.

President Castro presented his Message to Congress on the 20th February, 1904.

Only the salient points of this somewhat lengthy document can be mentioned here. After dealing with numerous matters of purely local interest, the President referred in detail to the question of foreign relations, and, under this head, spoke of the Washington Protocols, the Mixed Com

missions at Carácas, and the case before the Hague Tribunal, which was then still undecided, but he made no mention of the settlement of the External Debt.

The President stated that in conformity with the stipulations of the Protocols, a sum of Bols. 2,031,023 had been at once paid over in satisfaction of the immediate claims of Great Britain, Germany and Italy, and, on the award of the Hague Tribunal becoming known, the claimants would be entitled to receive a considerable sum in respect of claims recognised by the Mixed Commissions. The Commissions had begun their labours on the 30th June, 1903, and, with the exception of three which were still sitting, had all completed their tasks. The total amount of the French, Spanish, Dutch, Swedish, Belgian, and Mexican claims presented for adjudication was Bols. 50,559,366.11, of which Bols. 20,928,466.93 had been recognised by the Commissions, the notable difference between the sum claimed and that allotted being a proof that once more attempts had been made to reap profit from the disturbed state of the country. After pointing out that the institution of the Mixed Commissions rested upon no legal grounds and that the Venezuelan Government was obliged by the force of circumstances to adopt this method of dealing with the foreign claims, the President observed that the Government had been absolutely compelled to protest against the awards given in respect of the Mexican claim and that of the Carácas Waterworks Company. The award in the latter case being in direct opposition to the stipulations of the Protocol and contrary to the principles of equity, its acceptance would have implied

The award was given on the 22nd February.