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TRANSLATION OF THE LETTER OF MR. GELLY,

REFERRED TO BY THE CLAIMANTS AS APPLYING THE
DECREE TO THE COMPANY'S ENTERPRISE.

RIO DE JANEIRO, December 15, 1848. MY DEAR SIR: Your letter written from Asuncion under date of September 1st, and in which you make me some propositions in regard to the establishment of a school of practical agriculture in Paraguay, only came to my hand in this city, which will account for my not answering it before now. I have read attentively your project of establishing a school of practical agriculture in Paraguay, and the conditions under which you propose to make this establishment. I have no hesitation whatever in assuring you that the Supreme Government of the Republic will see the realization of this design with much pleasure, and that it will grant you all the protection and favor requisite for its prosperity. President Lopez, without precipitating the improvements of his country, desires, evidently, to promote them. It is my opinion that he will concede, with much pleasure, the four leagues of land which you ask in perpetuo, and that he will exempt the establishment of the school from all taxes and imposts, such as the tithes. It appears to me, that President Lopez will entirely abolish this impost as soon as the actual circumstances of the country are changed; the President knows that the impost of tithes is prejudicial and anti-economical as regards agriculturists and graziers, and only continues it temporarily. I presume that the school of agriculture which you propose to establish, would receive the

young scholars of the country under such a regulation as would give the government of the Republic a voice with the director of the school. The proposition which you made to obtain an exclusive privilege or monopoly of some branches

you

can not be admitted by President Lopez; because, having issued the decree of 20th May, 1845, (a copy of which you have in regard to premiums and privileges to be granted to the inventors and introducers of machines, or even new means of bettering and facilitating production, it would neither be just nor possible to make an exception in your favor. In the said decree President Lopez has resolved all questions which could arise in regard to privileges and premiums. If you

introduce into the country machines or new means of industry which the country does not now possess, this decree gives you the monopoly for ten years, at least, and do not require a special concession.

You have visited the country twice, the first time as an especial agent of the Government of the United States, the second time as an explorer. You have enjoyed the sympathy and the estimation of the generality of the inhabitants of the whole country. You know, personally, the most distinguished members of all classes; you have been able to observe and judge all persons, and the advantages which the different productions of the country offer. Nothing is lacking to you, therefore, to direct with certainty and good success any kind of enterprise and speculation in Paraguay. In this country living is easy, commodious, and cheap; the population is numerous, moral, submissive, and industrious; hands cost but little, and the means of communication are facile. Paraguay will attract many speculators and working men as soon as the country shall be better known.

I have regretted much, that that timid and irresolute conduct of Mr. Buchanan has allowed the best opportunity of establishing good and close relations between the United States and Paraguay to pass away. I should be very content if I should see the Government of the United States forsake that timid policy which, up to the present time it has pursued in regard to Paraguay. If the independence of Paraguay, which now counts thirty-six years, which is so justified by the nature of things, and which has been recognised by all the Argentine Governments anterior to that of Señor Rosas, should be recognised by the United States, they could not only establish important relations, but such an act would contribute much to the establishment of peace in this part of the world.

The government of Paraguay has not sent a diplomatic mission to the United States, firstly, because you know that

in the actual condition of Paraguay we have nobody who could accept a diplomatic mission; and secondly, because, even if we had such a man, we should not send a mission whilst we remained in doubt as to its ultimate success.

In regard to the questions you put to me, I have no difficulty in expressing frankly my opinions in writing. You ask me, first, if in my opinion, it is convenient to establish, at this time, a manufacturing or commercial company in Paraguay ? I doubt whether you could establish manufactories in Paraguay, in the extensive signification of that term, but we should expect, with good reason, great advantages from any kind of agricultural or commercial establishment. The country consumes much cotton goods, and even some woolen, but a manufactory to obtain these products would be very costly. However, the making of sugar on the banks of the Upper Parana in the department of San Cosme, or on the Upper Paraguay, near the the towns of Conception, Salvador, and San Carlos, or in the neighborhood of the capital, would be very productive. The distillation of rum or ardent spirits from sugar cane would be equally useful. The article of tobacco, of so much consumption now in Europe, could compete with and rival that of Havana. The cotton, which is very good, would be equally productive, as also the extraction of vegetable oils.

Secondly. What, in my opinion, is the best branch of manufactories? With respect to manufactories, I have already manifested my opinion. All the branches which I have mentioned in my previous reply promise advantages ; without doubt, the working of the iron mines, would, in my opinion, be the most advantageous.

Lastly, you ask me, if, in the case of the formation of a company, I would take part in it, and with what amount ? Without doubt, I would take part in whatever company you may form, but I cannot say to exactly what amount. I am not rich, and the share which my fortune would allow me to take would be very small. I regard my countrymen in the same case as myself, but I am persuaded that they would all take such share as their fortunes would warrant.

If the government of the United States should recognize the independence of Paraguay, and employ effectually its good offices to arrange amicably the questions pending between Paraguay and Buenos Ayres, the United States would not only acquire a great and entirely American influence, but would greatly neutralize all European influence. If the United States should continue to look with indifference upon these countries, the European Powers, which have already commenced to meddle in American questions, will have time to form relations and establish their influence. If, with the new President to be elected, the policy of the United States in reference to Paraguay should be changed, I would have particular satisfaction in seeing you charged with a diplomatic mission to Paraguay.

I wish you a happy journey, and request that you will write to me, addressing your letters care of Mr. Carter, No. 65 Rue de Oruidor, in case I should be absent. I am your sincere friend and servant,

JUAN A. GELLY. To ED. A. HOPKINS, Esq.

P.S. I send you herewith a copy of the report of Mr. Joseph Graham.

APPENDIX.

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