December 17, 1878

                                                                                                                           Washington, DC





In answer to the resolution of the Senate of the 5th instant, requesting the transmission to the Senate of “any information which may have been received by the Departments concerning postal and commercial intercourse between the United States and South American countries, together with any recommendations desirable to be submitted of measures to be adopted for facilitating and improving such intercourse,” I transmit herewith reports from the Secretary of State and the Postmaster-General, with accompanying papers.


The external commerce of the United States has for many years been the subject of solicitude, because of the outward drain of the precious metals it has caused.  For fully twenty years previous to 1877, the shipment of gold was constant and heavy, so heavy during the entire period of the suspension of specie payments as to preclude the hope of resumption safely during its continuance.  In 1876, however, vigorous efforts were made by enterprising citizens of the country, and have since been continued, to extend our general commerce with foreign lands, especially in manufactured articles, and these efforts have been attended with very marked success.


The importation of manufactured goods was at the same time reduced in an equal degree, and the result has been an extraordinary reversal of the conditions so long prevailing, and a complete cessation of the outward drain of gold.  The official statement of the values represented in foreign commerce will show the unprecedented magnitude to which the movement has attained, and the protection thus secured to the public interests at the time when commercial security has been indispensable.


The agencies through which this change has been effected must be maintained and strengthened, if the future is to be made secure.  A return to excessive imports, or to a material decline in the export trade, would render possible a return to the former condition of adverse balances, with the inevitable outward drain of gold as a necessary consequence.  Every element of aid to the introduction of the products of our soil and manufactures into new markets should be made available.  At present, such is the favor in which many of the products of the United States are held, that they obtain a remunerative distribution, notwithstanding positive differences of cost resulting from our defective shipping, and the imperfection of our arrangements in every respect, in comparison with those of our competitors, for conducting trade with foreign markets.


If we have equal commercial facilities, we need not fear competition anywhere.


The laws have now directed a resumption of financial equality with other Nations, and have ordered a return to the basis of coin values.  It is of the greatest importance that the commercial condition now fortunately attained shall be made permanent, and that our rapidly increasing export trade shall not be allowed to suffer for want of the ordinary means of communication with other countries. 


The accompanying reports contain a valuable and instructive summary of information with respect to our commercial interests in South America, where an inviting field for the enterprise of our people is presented.  They are transmitted with the assurance that any measures that may be enacted in furtherance of these important interests will meet with my cordial approval.              


R.B. HAYES             






December 17, 1878

Washington, DC




The Secretary of State, to whom was referred the resolution of the Senate of the 5th instant, requesting the President to transmit to the Senate “any information which may have been received by the Departments concerning postal and commercial intercourse between the United States and South American countries, together with any recommendations desirable to be adopted for facilitating and improving such intercourse,” has the honor to lay before the President copies of dispatches from the diplomatic agents of the United States accredited to the Governments of South America touching the subject-matter of the resolution; and also, as coming within the purview thereof, copies of a report and its annexes, presented to this Department by Mr. J.W. Fralick, upon his return from an extended journey through the leading State of South America, all of which papers are specified in the subjoined list. 


With reference to the request of the Senate for “any recommendations desirable to be submitted of measures to be adopted for facilitating and improving” postal and commercial intercourse, the Secretary of State, without entering into an extended discussion of the very important and interesting topics suggested by the papers submitted, respectfully calls attention to certain manifest conclusions which all these reports tend to support.


I. It seems to be very evident that the provision of regular steam postal communication, by aid from government, has been the forerunner of the commercial predominance of Great Britain in the great marts of Central and South America, both on the Pacific and Atlantic coasts of the continent.  It is no less apparent that the efforts of other European nations, Germany, France, and Italy, to share in this profitable trade have been successful in proportion with their adoption of regular steam postal communication with the several markets whose trade they sought. 


II. These papers show, also, that the enterprise and sagacity (P. 2)  thus shown by European nations have actually reversed the advantage which our geographical position gives us in relation to this extensive commerce of the American hemisphere.  The commercial correspondence of our merchants with the trading points on the east and west coasts crosses the Atlantic twice to make a postal connection in a circuit of trade which has its beginning and its end on our own continent.  The statistics of our limited trade under this extraordinary disadvantage, show that the growing preference for our products in these South American markets insists upon being gratified, even at the cost of a circuit of importation which carries our merchandise to Europe and incorporates it as a contribution to the volume and the profits of European South American trade.  No stronger demonstration of the tendency of commerce to follow in the train of postal communication can be conceived than this vast and expensive circuit of importation resorted to in default of direct opportunities between the countries of demand and supply. 


III. It would seem from these reports that the merchants and the communities, no less than the Governments, of these countries strongly desire an enlargement of direct trade with the United States.  With all the advantages of foreign commerce supplied by the existing European arrangements for its prosecution, these markets perceive that this unnatural circuit, when the resources of the United States could supply a direct trade in its place, must be at the expense of the party subjected to the system and the profit of the party which administers and controls it.  Everywhere there is shown a great desire to expand their trade with the United States, and even the least prosperous exchequers of these Governments are ready to be opened to share in the expenses of steam postal communications, of whose value in promoting foreign commerce their own experience furnished irrefragable proof.


IV. While many less immediate and less simple measures, (P.3) about which judgments may not readily concur, may properly be canvassed by our people, now eager for a restoration and extension of foreign commerce, upon this one simple and first step of direct, regular, and frequent steam postal communication between the United States and the principal commercial ports of Central and South America there would seem to be no room for doubt.


If this be so, it is obviously the dictate of interest and duty, on the part of the Government, to promote by every just and appropriate means the attainment of this first and principal agency for the desired expansion of our foreign commerce.  It is difficult to understand how this commencement and development of an ocean postal system, to be a forerunner of the expected trade, can be wholly trusted to the mere interests of mercantile combinations. 


The Governments of the foreign States with which this commerce is to be opened are ready to take their part  in the public expense of this postal communication with us, and the participation or non-participation by the United States in this public expense seems to be the turning-point in the acceptance or rejection of the reciprocal trade now proffered us.







List of papers.




                                                1.  Mr. Osborn to Mr. Evarts, No. 169, Buenos Aires, November 18, 1877.

                                                2.  The same to the same, No. 192, Buenos Aires, June 20, 1878.




                                                3. Mr. Hilliard to Mr. Evarts, No. 5, Rio de Janeiro, November 6, 1877 (P. 4)

                                                4. The same to the same, No. 6, Rio de Janeiro, November 14, 1877.

                                                5.  The same to the same, No. 18, Rio de Janeiro, May 23, 1878.

                                                6.  The same to the same, No. 22, Rio de Janeiro, June 7, 1878.




                                                7.   Mr. Osborn to Mr. Evarts, No. 18, Santiago, November 2, 1877.

                                                8.  The same to the same, No. 33, Santiago, March 1, 1878.

                                                9.  The same to the same, No. 60, Santiago, September 27, 1878.

                                                10. The same to the same, No. 65, Santiago, October 24, 1878.




                                                11.  Mr. Dichman to Mr. Evarts, No. 10, October 17, 1878.

                                                12.  The same to the same, No. 18, Bogota, November 7, 1878.




                                                13.  Mr. Gibbs to Mr. Evarts, No. 238, Lima, April 10, 1878.

                                                14.  The same to the same, No. 244, Lima, April 26, 1878.

                                                15.  The same  to the same, No. 257, Lima, June 25, 1878.

                                                16.  The same to the same, No. 284, Lima, November 13, 1878.




                                                17.  Mr. Baker to Mr. Evarts, No. 54, Caracas, October 12, 1878.




18. Mr. Fralick to Mr. Evarts, Philadelphia, Pa., December 7, 1878, with accompaniments.


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