Whatever may be the correct interpretation of the Treaty as to the employment of foreigners generally on board American vessels, His Majesty's Government do not suppose that the United States Government lay claim to withdraw Newfoundlanders from the jurisdiction of their own Government so as to entitle them to fish in the employment of Americans in violation of New foundland laws. The United States Government do not, His Majesty's Government understand, put their claim higher than that of a common" fishery, and such an arrangement cannot override the power of the Colonial Legislature to enact laws binding on the inhabitants of the Colony. It can hardly be contended that His Majesty's Government have lost their jurisdiction not only over American fishermen fishing in territorial waters of Newfoundland, but also over the British subjects working with them.

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It may be as well to mention incidentally in regard to Mr. Root's contention that no claim to place any such restriction on the French right of fishery was ever put forward by Great Britain; that there was never any occasion to advance it, for the reason that foreigners other than Frenchmen were never employed by French fishing vessels.

The main question at issue is, however, that of the application of the Newfoundland regulations to American fishermen. In this connection the United States Government admit the justice of the view that all regulations and limitations upon the exercise of the right of fishing upon the Newfoundland Coast, which were in existence at the time of the Convention of 1818, would now be binding upon American fishermen. Although Mr. Root considers that to be the extreme view which His Majesty's Government could logically assert, and states that it is the utmost to which the United States Government could agree, His Majesty's Government feel that they cannot admit any such contention, as it would involve a complete departure from the position which they have always been advised to adopt as to the real intention and scope of the treaties upon which the American fishing rights depend. On this vital point of principal there does not seem to be any immediate prospect of agreement with United States views, and it would, therefore, seem better to endeavour to find some temporary solution of the difficulty as to the regulations. under which the Americans are to fish.

His Majesty's Government note with satisfaction Mr. Root's statement that the American Government are far from desiring that the fishery should go unregulated, and believing as they do that the Newfoundland regulations have been framed with the intention of preserving and maintaining the fishery in the most efficient and productive condition, and for the prevention of practices that must be detrimental to the common interests they propose to communicate a copy of all the regulations that are now in force, and if there is anything in these regulations which the United States Government feel to bear hardly upon the American fishermen, His Majesty's Government will gladly pay the utmost consideration to any American representations on the subject with a view to the amendment of the regulations in the sense desired, provided that such be consistent, with the due preservation of the fishery.

Pending this examination of the regulations, His Majesty's Government would propose the following arrangements as to the provisions in the Newfoundland enactments that have been most discussed.

These are the obligations to report at a Custom House and to pay light dues, and the prohibition to use purse seines, and to fish on Sundays. Other regulations, such as the prohibition to throw ballast or rubbish into the water frequented by herring, and to throw overboard on the fishing ground fish offal, heads and bones, have occasionally come in question, but are clearly reasonable, and are not, it is believed, objected to by the United States Government. Fishing at night is another question which has been discussed, although it is not forbidden by the regulations. His Majesty's Government understand that by tacit consent among the fishermen themselves fishing is not pursued at night, and with this arrangement there seems no reason to interfere.

With regard to the entry and clearance of American vessels at Newfoundland ports, I would remind your Excellency that the American vessels engaged in the winter fishery in the Bay of Islands must pass in close proximity to several Custom Houses, and that it cannot be said that the obligation to report and clear unduly interferes with the operations of the vessels. On this point, however, His Majesty's Government would, in order to secure an arrangement for the next fishing season, be prepared to defer discussion of the question of right; but they would urge, on the other hand, that it would be most advisable that American vessels should comply with the regulation on the ground that unless the vessels enter at the Custom Houses, the British authorities have no cognizance that they are in Newfoundland waters, and that, as His Majesty's Government are responsible for keeping the peace, it is important that they should know exactly what American vessels are on the fishing grounds. Moreover, the provision in question is clearly necessary for the prevention of smuggling, and unless American vessels have made proper entry at a Custom House, there is no means, short of searching the vessels, of ascertaining whether they are really fishing vessels, and not smugglers.

The next point in dispute is the prohibition of purse seines. His Majesty's Government have the independent testimony of British naval officers who have been employed on the Treaty Coast as to the distinctive results of their use; and they would, therefore, point out that there is complete justification for the Colonial regulation.

I would, moreover, remind Your Excellency that the regulation is in force in all the waters of the Colony of Newfoundland and of the Dominion of Canada, and applies equally to all fishermen whether they be Newfoundlanders or not. His Majesty's Government, therefore, feel that they cannot interfere with the enforcement of the regulation which prohibits purse seines in the waters of Newfoundland. They would also point out that fishing on Sundays is always liable to lead to regrettable breaches of the peace, and they would propose that the American fishermen should agree to abstain from this practice.

Finally, His Majesty's Government feel that the payment of light dues by an American vessel entering a port of the Colony clearly does not involve an unreasonable interference with the exercise of the treaty rights of the American fishermen on board. These dues are payable by all vessels of whatever description and nationality. other than coasting and fishing vessels owned and registered in the Colony. As, however, vessels of the latter class are under cer

tain conditions exempt either wholly or in part from payment, His Majesty's Government consider that it would be unfair to introduce any discrimination against American vessels in this respect, and it is proposed that the demand for light dues should be waived under the same conditions as in the case of the Newfoundland vessels. I venture to express the hope that the temporary arrangement outlined above will be agreed to by the United States Government.

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I have, &c.,

E. GREY.

&c., &c., &c.

His Excellency the Honourable WHITELAW REID,

No. 259.-1907, July 12: Letter from Mr. Whitelaw Reid to Sir Edward Grey.

AMERICAN EMBASSY,

London, July 12, 1907.

SIR, Referring to your letter of June 20th, in relation to the Newfoundland Fisheries, I beg to say that while its propositions seemed so much in conflict with our views on the subject that my previous instructions would have enabled me to make an immediate reply, I hastened to lay them before my Government.

Before communicating the result I desire to acknowledge and reciprocate to the full the kindly expressions you have been good enough to use as to the moderation and fairness with which Mr. Root has stated the American side of the case. We have had the same appreciation of your conduct of the discussion, and we share your wish to bring the long-standing controversy on the subject to a satisfactory conclusion without having added anything tending in the slightest degree to embitter it.

But with the utmost desire to find in your last letter some practical basis for an agreement, we are unable to perceive it. Acquiesence in your present proposals would seem to us equivalent to yielding all the vital questions in dispute, and abandoning our fishing rights on the coast of Newfoundland under the Treaty of 1818.

Without dwelling on minor points, on which we would certainly make every effort to meet your views, I may briefly say that in our opinion, sustained by the observations of those best qualified to judge, the surrender of the right to hire local fishermen, who eagerly seek to have us employ them, and the surrender at the same time of the use of purse seines and of fishing on Sunday would, under existing circumstances, render the Treaty stipulation worthless to us. My Government holds this opinion so strongly that the task of reconciling it with the positions maintained in your letter of June 20th seems hopeless.

In this conviction my Government authorizes me, and I now have the honour, to propose a reference of the pending questions under the Treaty of 1818 to arbitration before the Hague Tribunal.

We have the greater reason to hope that this solution may be agreeable to you since your Ambassador to the United States recently suggested some form of arbitration, with a temporary modus vivendi

pending the decision, as the best way of reaching a settlement. We hope also that the reference of such a long-standing question between two such nations at such a time to the Hague Tribunal might prove an important step in promoting the spread of this peaceful and friendly method of adjusting differences among all civilized countries of the world.

If this proposition should be agreeable to you we should trust that the conclusion might be reached in so short a period that the continuation in force meantime of the modus vivendi I had the honour of arranging with you last year could work no real hardship to any British or Colonial interests. In its practical operation last year it resulted in voluntary arrangements by which our fishermen gave up purse seines. They did, however, employ Newfoundland fishermen. We do not think the continued employment of men so eager for the work, and the consequent influx of their wages into the Colony could, for the short time involved, work the Colony any harm. But if for any reason you should find it unsuitable or inconvenient to renew for so short a time this feature of the modus vivendi, we should be compelled to insist on the use of purse seines for the reason already stated. To give that up too we should consider under existing circumstances as giving up altogether our Treaty rights of fishing on that coast.

Hoping that in these proposals we have made an offer not only indicating our earnest desire to reach a mutually satisfactory arrangement, but an honourable and agreeable means of doing so,

I have, &c.,

Sir EDWARD GREY, Bart.,

WHITELAW REID.

&c., &c., &c.

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No. 260.-1907, September 7: Telegram from Lord Elgin (British Colonial Secretary) to the Governor of Newfoundland.

(Sent 3.20 p. m., September 7, 1907.)

[Telegram.]

Referring to my telegram of yesterday's date, following modus vivendi as embodied in note from United States Ambassador has been concluded:

1. It is understood that His Majesty's Government will not bring into force the Newfoundland Foreign Fishing Vessels Act of 1906, which imposes on American fishing vessels certain restrictions in addition to those imposed by the Act of 1905, and also that the provisions of the first part of Section 1 of the Act of 1905, as to boarding and bringing into port, and also the whole of Section 3 of the same Act, will not be regarded as applying to American fishing vessels.

2. In consideration of the fact that the shipment of Newfoundlanders by American fishermen outside the three mile limit is not to be made the basis of interference nor to be penalised, my Government waives the use of purse seins by American fishermen during the term

governed by this agreement, and also waives the right to fish on Sundays.

3. It is understood that American fishing vessels will make their shipments of Newfoundlanders as fishermen sufficiently far from the exact three mile limit to avoid reasonable doubt.

4. It is further understood that American fishermen will pay light dues when not deprived of their rights to fish, and will comply with the provisions of the Colonial Customs Law as to reporting at a Custom House when physically possible to do so.

But my Government has every desire to make the arrangement, pending arbitration, as agreeable as possible to the Newfoundland authorities, consistent with the due safeguarding of Treaty Rights which we have enjoyed for nearly a century. If, therefore, the proposals you have recently shown me from the Premier of Newfoundland, or any other changes in the above modus vivendi should be proposed by mutual agreement between the Newfoundland authorities and our fishermen, having due regard to the losses that might be incurred by a change of plans so long after preparations for the season's fishing had been made, and the voyage begun, my Government will be ready to consider such changes with you in the most friendly spirit, and if found not to compromise our rights, to unite with you in ratifying them at once.

Please communicate at once to your Ministers, but do not publish till Monday. United States Ambassador has promised to delay publication till then.-ELGIN.