[Inclosure 5 in No. 74.] General Schenck to Earl Granville. LEGATION OF THE UNITED STATES, MY LORD: I received last night, between 9 and 10 o'clock, your note informing me that you had lost no time in laying before the Cabinet the telegraphic dispatch from Mr. Fish, which I communicated to you yesterday, informing you of the result of the deliberations of the Senate on the draught Article, submitted for their advice by the President of the United States. You remark that in communicating that dispatch to you I inquired whether any possible interpretation could be given to the proposed Article in the form in which the Senate have modified it, taking all its parts together, which would prevent taking before the Arbitrators, to be considered by them in making their award, that part of the claim called "direct claims" in the Case, which relates to the cost of pursuit and capture of cruisers; and you state that you must, on behalf of Her Majesty's Government, decline to answer that question as to the effect of the Article as altered by the Senate, or to state what possible construction it may bear. I will here only interpose, as to that question, to say that the point was brought to your Lordship's attention, in connection with the delivery to you of the Article as the Senate had proposed to amend it, because I desired by the inquiry to remind you that, whatever might become the form in which the article might ultimately be adopted, it could not be intended to open any question in relation to claims to the introduction of which Her Majesty's Govornment had never objected, "notwithstanding the doubt how far those claims, though mentioned during the conferences as direct claims, came within the proper scope of arbitration." I quote the language of your Lordship's note to me of the 20th of March last. The Government of the United States is of opinion that the language of the Senate cannot be interpreted to exclude those claims; but I am now instructed to say that the Article, in whatever form adopted, as to the proceeding before the Arbitrators at Geneva, must be understood to prevent only the presentation of the claims enumerated in the second contention of Her Majesty's Government. Your Lordship in this note proceeds to inform me that Her Majesty's Government are of opinion that the definition, as expressed in the Senate amendment, of the principle which both Governments are prepared to adopt for the future is so vague that it is impossible to state to what it is or is not applicable, and they believe that it would only lead to future misunderstandings. That Her Majesty's Government prefer the Article as they had draughted it, but have no objection to accept the Article in the form proposed by the Senate, with the substitution of the words "of a like nature" for the words "for remote or indirect losses," and the substitution of the words “such want of due diligence on the part of a neutral" for the words "the failure to observe neutral obligations." The Article would then run thus: "And whereas both Governments adopt for the future the principle that claims of a like nature should not be admitted as the result of such a want of due diligence on the part of a neutral, so far as to declare that it will hereafter guide the conduct of both Governments in their relations with each other." I hastened last night to telegraph the full substance of all this communication to Mr. Fish. I am as yet without any answer to that telegram, and without instruction or information as to the disposition of my Government to entertain or consider the changes which Her Majesty's Government propose to the Senate's amendment. But I am not prepared to believe that the modification can be assented to by the President. Such change of language would alter the whole character of the agreement. I cannot permit to pass unquestioned the expression of the opinion of Her Majesty's Government as to the vagueness of the definition of the principle which both Governments are prepared to adopt, and of the impossibility of stating to what it is or is not applicable, although in replying I may but in effect repeat what I said to you in an interview of the 10th of this month, and of which I gave you a memorandum in writing. What the United States has all along proposed as the ground on which the two Goyernments might safely, honorably, and consistently meet, is the establishment of a rule, to be the law or contract in the future between them, declaring that neither of them shall demand compensation from the other for remote or indirect losses arising out of, or being the result of, failure in the observance of neutral obligations. This rule should be the expression of a principle to be applied to cases as they may arise; and ought not to consist in a reference to cases or circumstances which may or may not ever occur, and be limited to those instances, without application to other cases in which the damage done or alleged may be equally or further removed from the act of which it is assumed to be the result. They do not see that there is vagueness in such a rule or difficulty in its application to facts, beyond what may be said of any other principle embodied in statute or treaty law. Consider, my Lord, what is the history of that difference between our two Governments which has led to the negotiation for a supplemental Treaty Article. The United States have put forward in their Case at Geneva, for the consideration of the Arbitrators, certain claims, to which the British Government objects. Great Britain founds her objection to those claims not merely on her interpretation of the Treaty, according to which she insists they are inadmissible, but also on the ground that such claims are, from their very character and nature, such as ought not to be presented; "that such claims," to use the emphatic language of your Lordship, "are wholly beyond the reasonable scope of any treaty of arbitration whatever, and that to submit them for decision by the Tribunal would be a measure fraught with pernicious consequences to the interests of all nations and to the future peace of the world." That Her Majesty's Government "cannot see that it would be advantageous to either country to render the obligations of neutrality so onerous as they would become if claims of this nature were to be treated as proper subjects of international arbitration." What is that nature of the claims in question which makes them so objectionable to Her Majesty's Government? They are indirect, remote, consequential. Will you, then, unite with us, asks the Government of the United States, in an agreement founded upon that principle for which you contend, and as broad as the principle itself, "that claims for remote or indirect losses should not be admitted as the result of failure to observe neutral obligations;" and will you unite with us in a declaration that this principle " will hereafter guide the conduct of both Governments in their relations to cach other?" Can Great Britain continue to reply that while she desires to make such a rule, a rule consistent with the position she has taken against the whole class of remote or indirect claims, against a neutral, she must persist in confining it in terms to only such peculiar descriptions of that class of indirect claims as happen now to be the subject of contention between her and the United States, and which particular kind of claims may never have existence again? Will it not seem, if this be the limit of the agreement, that the object is not to affirm and vindicate an important principle, but only to find an expedient for excluding from consideration, or extinguishing altogether, certain matters which are unfortunately now a present cause of controversy? I have the honor to be, with the highest consideration, my Lord, your Lordship's most obedient servant, ROBT. C. SCHENCK. [Inclosure 6 in No. 74.] Earl Granville to General Schenck. FOREIGN OFFICE, London, May 28, 1872. SIR: In reply to the inquiry contained in your letter of this day, respecting the limitation placed upon the immediate exercise by Sir Edward Thornton of the general full power to sign treaties with which he is provided, I have the honor to acquaint you that while we are far from asserting that the form of Article proposed by Her Majesty's Government is not capable of further improvement upon sufficient cause being shown, Sir Edward Thornton has no instructions to use his full powers, except in accordance with the arrangement we have proposed. I have the honor to be, sir, your most obedient, humble servant, GRANVILLE. [Inclosure 7 in No. 74.] Earl Granville to General Schenck. FOREIGN OFFICE, London May 28, 1872. SIR: I have to acknowledge the receipt of the letter which you have done me the honor to address to me, in reply to my letter of yesterday, in which I informed you that I had laid before the Cabinet the telegraphic dispatch from Mr. Fish, stating the result of the deliberations of the Senate on the draught Article submitted by the President for their advice. As you acquainted me to-day that you had not received any reply from Mr. Fish to your communication of my letter, I think it better to defer till I hear from you the view taken of my letter by Mr. Fish, before replying to the observations contained in your letter. I have the honor to be, with the highest consideration, sir, your most obedient, humble servant, GRANVILLE. [Inclosure 8 in No. 74.] Earl Granville to General Schenck. FOREIGN OFFICE, London, May 28, 1872. SIR: I think it desirable at once to address to you the following observations, in addition to what is stated in my letter of yesterday : Her Majesty's Government proposed an Article on the suggestion of the American Government. That Article has been amended by the Senate. Her Majesty's Government are not able to find for it, as amended, any means or standard of interpretation. The words appear to include the willful misconduct of a neutral as well as a failure from want of due diligence. They cannot suppose this to be the meaning of the American Government. Her Majesty's Government hold all the claims made by the United States for losses which were the direct results of the acts of vessels mentioned in the Treaty, to be claims for "indirect losses as the result of the failure to observe neutral obligations.' Her Majesty's Government hold many of the claims for the losses above mentioned to be claims for losses which are 46 29 remote as well as "indirect," while "resulting from a failure to observe neutral obligations." Her Majesty's Government are unable to signify an assent to a form of Article of which they cannot for themselves discover the scope, and with respect to which, owing probably to the difficulty of telegraphic communication, they have not been apprised of the meaning which the American Government attaches to it, or of the reasons which have led to its being proposed. If the Government of the United States think it desirable to give the information which Her Majesty's Government wish to receive on these points, and also think that for that purpose some adjournment of the time of meeting of the Arbitrators of Ge-. neva should take place, Her Majesty's Government would be ready to agree to any suitable proposal for that purpose, which they presume could only be done by a short treaty between the two Governments. I have the honor to be, with the highest consideration, sir, your most obedient, humble servant. GRANVILLE. [Inclosure 9 in No. 74.] General Schenck to Earl Granville. LEGATION OF THE UNITED STATES, MY LORD: I received at 8 o'clock this evening your note of this date, in which you say you think it desirable to address to me, as you therein proceed to do, some observations in addition to what is stated in your letter of yesterday. I shall hasten to-night to communicate the whole of this note by telegraph to my Government. I have the honor to be, with the highest consideration, my Lord, your Lordship's. most obedient servant, ROBT. C. SCHENCK. No. 75. General Schenck to Mr. Fish. [Telegram.] LONDON, May 31, 1872. (Received 7.35 a. m.) At 2.45 this morning Lord Granville sends me the following, dated 30th : [Earl Granville to General Schenck.] SIR: I am unable to admit the accuracy of the description which Mr. Fish has given in the telegraphic message which you have communicated to me to-day of the course which Her Majesty's Government has pursued, or of the objects which they have had in view. I can only attribute such a misunderstanding to the imperfection una voidably attendant on negotiations by telegraph, which makes it difficult for either party clearly to understand the views and arguments of the other. This circumstance seems to strengthen the reason for the suggestion which I made in favor of an adjournment of the meeting of the Tribunal of Arbitration at Geneva. Her Majesty's Government have stated their objections to the words proposed by the Senate. I have already informed you that they did not pretend that the words suggested by themselves were incapable of improvement, and they have resolved to make a suggestion which they trust will meet the views of both Governments. I proceed therefore to put you in possession of a draught Article, of which I inclose a copy, and which, if adopted by the Government of the United States, Her Majesty's Government would be prepared to accept: "Whereas the Government of Her Britannic Majesty has contended in the recent correspondence with the Government of the United States as follows, namely, that such indirect claims as those for the national losses stated in the Case presented on the part of the Government of the United States to the Tribunal of Arbitration at Geneva, to have been sustained by the loss in the transfer of the American commercial marine to the British flag, the enhanced payments of insurance, the prolongation of the war, and the addition of a large sum to the cost of war and the suppression of the rebellion-firstly, were not included in fact in the Treaty of Washington; and further and secondly, should not be admitted in principle as growing out of the acts committed by particular vessels alleged to have been enabled to commit depredations upon the shipping of a belligerent by reason of such a want of due diligence in the performance of nentral obligations as that which is imputed by the United States to Great Britain; and whereas the Government of the United States has contended that the said claims were included in the Treaty; and whereas both Governments adopt for the future the principle that claims against neutrals for remote and indirect losses should not be admitted as resulting from the act of belligerents which such belligerents may have been enabled to commit by reason of a want of due diligence on the part of a neutral in the performance of neutral obligations so far as to declare that this principle will hereafter guide the conduct of both Governments in their relations with each other: now, therefore, in consideration thereof, the President of the United States, by and with the advice and consent of the Senate thereof, consents that he will make no claim on the part of the United States before the Tribunal of Arbitration at Geneva, nr ect of the several classes of indirect losses hereinbefore enumerated." No. 76. Mr. Fish to General Schenck. [Telegram.-Extract.] WASHINGTON, May 31, 1872. As stated in a previous dispatch which you communicated to Her Majesty's Government, unless a treaty be signed and ratified by this Government this day, so as to be transmitted to London by to-morrow's steamer, for ratification by Her Majesty, it will not be possible that it become operative in time to be laid before the Arbitrators at Geneva on 15th June, on which day the existing Treaty requires that the arguments be presented. Your telegram reached me this morning within thirteen hours of the departure of the last conveyance by which a copy of a treaty can leave here to take the steamer of to-morrow. It would be impossible for the Senate, within that time, to consider the important change proposed of the form and terms in which, after long deliberation, they have agreed to advise the President to negotiate the proposed Article. Her Majesty's ministry has already been apprised of this. To propose a change of language, involving a change of object and of effect, at this late period, is therefore practically to defeat any agreement. Lord Granville admits that the language of the Article first proposed by Her Majesty's Government might be improved. The President thinks that the same may be said of that now proposed by Lord Granville; it appears to him to leave a large class of very probable cases unprovided for, and he holds that the result of bad faith, or of willful misconduct toward either of these two Governments, will never be the subject of pecuniary compensation. I have suggested to Sir Edward Thornton that we sign the Article as recommended by the Senate, and thus put it in operation, and allow the arbitration to proceed. It is not believed that there is any such difference of object between the two Governments in the definition and limitation which each desires to place upon the liability of a neutral, as to prevent an agreement on the language in which to express it, if time be allowed for an exchange of views by some other means than the telegraph. There is no probability of a practical question on the extent of that liability arising immediately. This Government is willing at once to enter upon negotiations for the purpose of ascertaining whether language can be employed which shall more clearly express the views which it is believed are entertained by both parties. FISH. [From British Blue Book "North America," No. 9, (1872,) p. 33.] No. 77. Earl Granville to Sir E. Thornton. FOREIGN OFFICE, May 31, 1872. SIR: I send you the draught of a Convention for adjourning the period for the presentation of the arguments under the Vth Article of the Treaty of Washington, to be used, however, by you only in case of the new Treaty Article proposed by us not being agreed to, and an adjournment being agreed to, in which case you are authorized to sign it as it. is now sent to you. I am, &c., GRANVILLE.. [Inclosure in No. 77.] Sketch of a Convention. Her Majesty the Queen of the United Kingdom of Great Britain and Ireland, and the United States of America, deeming it expedient to extend the time assigned in the Vth Article of the Treaty of Washington, of the 8th of May, 1871, for the delivery in duplicate to each of the Arbitrators appointed under the Ist Article of the said Treaty, and to the Agents of the respective parties, of the written or printed argument, showing the points and referring to the evidence upon which each of the said parties respectively relies, in regard to the matters submitted by them for arbitration under the aforesaid Ist Article, they have agreed to conclude a Convention for that purpose, and have accordingly named as their Plenipotentiaries : That is to say, &c. |