that the two debts of Mississippi are arranged for. Hopeless without it and among the difficulties are the non-recognition of the Southern Confederacy by the United States and by European nations, the probabilities of war between the North and South, the fact that the entire income of the South depends almost upon one staple; that the condition of their exchanges is such that any money advanced would take the form of a direct shipment of gold coin thus reducing the bullion in the Bank of England and prolonging the rate of discount at 7 per cent. per annum.
Slavery. - There are armies of annuitants who would not lend a sixpence on the slaves on principle; anyhow the rate would have to be very high because at all times the Southern sixes were only equal to Northern fives under the best circumstances. But the greatest difficulty is repudiation. Apparently it would seem to be unfortunate that you, the principal exponent and defender of repudiation, should have been chosen as the head of the Southern Confederacy. I regard it in quite another light. One word from you showing the necessity for retracing the steps of Mississippi would have more effect than a volume from any other man. Remember there is more joy over one error repaired than over myriads to ---. If you have not the courage to do this then your position is a mistake. To-morrow I will send you much valuable information foreshadowing a solution to your difficulties.
I remain, yours, very truly,
[Inclosure Numbers 3.]
7 LOTHBURY, EAST CHELSEA, LONDON, April 27, 1861.
JEFFERSON DAVIS, President of the Southern Confederacy.
SIR: According to the promise contained in my former letters I will give to you the outline of a compromise for both debts of Mississippi drawn from my experience in these matters. The first step is to obtain power from the legislature to the executive to make satisfactory arrangements with her bondholders within the means of the State. The question is not how much does Mississippi owe but how much can she pay? What is the maximum annually she hopes to set aside for redeeming her credit? What is the miminum she can guarantee? Above all things let her acknowledge as a debt the whole of the principal and the whole of the arrears of interest and make one common homogenous debt of it, and then the sum the State can pay annually; whether it is large or small let it be equally divided over the whole debt. The system is to call a public meeting of the bondholders, obtain their consent to the acceptance of an arrangement on any basis proposed, appoijt a representative or a committee to settle the details and immediately after the issue of the new bonds the Stock Exchange of London is open to the negotiation of any new loan or industrial enterprise of the State.
Among the very large number of the compromises which I have effected as one of the committee of Spanish-American bondholders I have never failed in convincing the creditors that they ought to accept the offer, provided that first of all I was myself convinced of the justive of the compromise. I have always been an advocate where the debt is very large and the revenue small that a fixed percentage of the total receipts should be set aside and taken by the creditors in full each year for the interest of that year. This prevents any great accumulation of unpaid arrears against the State, and also induces the creditors to benefit the State if in any way in their power. Any proposition should be accompanied by statistics showing the position of the State for the past