[From British Blue Book "North America," No. 9, (1872,) p. 5.]

No. 30.

Sir E. Thornton to Earl Granville.1

[Extract.]

WASHINGTON, May 6, 1872. (Received May 20.)

I called upon Mr. Fish on the 2d instant and learned from him that he had on the previous day received a telegram from General Schenck, which, however, was so unintelligible that he had been obliged to telegraph back that it should be repeated.

Mr. Fish, however, seemed to have made out enough of the telegram to have discovered the wish of Her Majesty's Government that the claims for indirect damages should not be submitted at all to the Tribunal of Arbitration even as an abstract question, or for the purpose of obtaining an opinion upon them. With reference to this point Mr. Fish said that it was impossible for the United States Government to agree to withdraw those claims, though it might consent to ask no money compensation for them; for that, even if it were true that it was in error in supposing that they were included in the Treaty, though he insisted that they were so included, no nation which had any respect for itself could consent to withdraw claims which had been formally presented after due reflection.

Mr. Fish told me that he should, after consulting with the President, instruct General Schenck that, however anxious his Government was that the arbitration should proceed, it could not recede from any part of the Case which had been presented to the Tribunal.

On the following day the President desired one of his secretaries to write to the republican members of the Committee on Foreign Relations of the two Houses, requesting them to meet him at the State Department on the next day. The democratic members of the committees were omitted from the invitation.

The question of the indirect claims was discussed, but it has been impossible to ascertain precisely what decision, if any, was come to.

I saw Mr. Fish this evening at his own house, when he referred to the telegram which he had received on the 1st instant from General Schenck, and said that Her Majesty's Government required that the United States Government should formally acknowledge that the indirect claims were not within the scope of the arbitration. This, he said, was impossible, because they had been presented to the Tribunal under the firm conviction that they were included in the Treaty. Wishing, however, to do his utmost that the arbitration might continue, he had yesterday instructed General Schenck, that if Her Majesty's Government were disposed to negotiate for a reciprocal agreement, that each party as a belligerent should abstain from demanding compensation for indirect damages from the other being neutral, the President would take the matter into his serious consideration with an earnest desire to meet the views of Her Majesty's Government.

The substance of this dispatch was received by telegraph on the 3d of May.

[From British Blue Book "North America," No. 9, p. 6.]

No. 31.

Earl Granville to Sir E. Thornton.

[Extract.]

FOREIGN OFFICE, May 6, 1872.

With reference to my dispatch of the 2d instant, I have to state to you that General Schenck informed me last night of the instructions he had received from Mr. Fish.

In the first place, he mentioned an objection which had occurred to himself. He thought that the sentence "without prejudice to the argument heretofore advanced by Her Majesty's Government," ought to be "without prejudice to the arguments heretofore advanced by either party."

It did not appear from what he said that Mr. Fish objected to the preface at least, has not criticised it.

I observed that the preface was ours, and did not commit the United States Government.

General Schenck then proceeded to say that Mr. Fish objected to embodying in the proposal the declaration that " Her Majesty's Government adhere to their view that it is not within the province of the Arbitrators to consider or to decide upon the claims for indirect losses, viz, the transfer of the American shipping, &c."

Mr. Fish considers that it is not necessary to insert in a statement, of what is to be agreed upon, an insertion as to the principle on which the two parties differ. The United States Government could not, in his opinion, enter upon a basis of an agreement recognizing a principle of conduct and action which they do not admit.

Mr. Fish also objected to the phrases "in similar cases and similar circumstances." No two cases are similar, and circumstances similar to those arising during the rebellion in America cannot occur in Great Britain. Consequently, the terms of the proposed agreement guarantee nothing to the United States. He prefers the language which he used, "that Her Majesty's Government stipulates for the future, that should Great Britain be a belligerent, and the United States a neutral, and should there be any failure on the part of the United States to observe their neutral obligations, Great Britain will make or advance no complaints or claims against the United States by reason or on account of any indirect, remote, or consequential damages, the result of such failure."

General Schenck said he preferred that language. I replied that I could not agree with him in this respect, but I thought the words which I had given to him before he dictated to me his scheme of a draught note would meet this objection.

Mr. Fish adheres to having some expression of opinion from the Arbitrators as to the admissibility of indirect claims, insisting that it is within the jurisdiction of the Tribunal to consider that question.

He insists also that there shall be nothing from which it is to be implied that any part of the United States Case is withdrawn. General Schenck then said that he wished to make a suggestion, although without instructions. I observed that there must be a limit to these suggestions stated to be without instructions.

He believes that the whole thing may be simplified by stripping the proposal of all that is unnecessary, and preserving that which is agreed

between the parties, without a statement of the views of either or the claims of either. He could understand why Mr. Fish objects to having it declared that there is any withdrawal of any part of the Case; but if the thing be virtually done, why, General Schenck observed, give it a name?

But he also understood why Great Britain, making an agreement which amounts to a settlement on this point, should not want-or consent to ask-the opinion of the Arbitrators on that agreement. He had draughted a brief statement of the mutual proposal which he submitted to me, and would also ask Mr. Fish if it were possible for the President to assent to it, if presented by Her Majesty's Government in this form, as a substitute for that already communicated to him.

He did this without obtaining for it Mr. Fish's instructions, and for the present therefore entirely confidentially. General Schenck proceeded to read the following statement:

Her Majesty's Government are now ready to state that if the United States will and do agree not to press for a pecuniary award before the Tribunal of Arbitration at Geneva, on account of claims for indirect losses or damages, viz, for the increased premiums of insurance, the transfer of American shipping, and the prolongation of the war, then Her Majesty's Government will and do engage, on their part, and stipulate that should Great Britain at any time in the future be a belligerent while the United States is a neutral, and should there be any failure on the part of the United States to observe their neutral obligations, Great Britain will make or advance no complaints or claims against the United States by reason or on account of any indirect, remote, or consesequential results of such failure. This rule or principle not to advance or press complaints or claims for indirect, remote, or consequential damages, to be mutually and reciprocally observed by both parties in the future.

The notes which are exchanged on this subject to be presented to the Tribunal of Arbitration, and entered on its record.

I told General Schenck that I could not give him any formal answer without consulting my colleagues; but I desired to impress upon him that, individually, I was perfectly convinced such a draught would not further in any degree the negotiation. He observed that it had no official character; that it was only a suggestion of his own, and that it would only have validity if agreed to by Her Majesty's Government and by Mr. Fish. He continued to say, that the only chance of an agreement was for each party to consider what modifications each should make with a view to an approximation; and that this would be more easily arrived at by leaving out all unnecessary matter. I told him that, generally speaking, I was sure my colleagues did not desire to introduce any unnecessary words. They only desired that the meaning of what was agreed upon should be perfectly clear; that no possible misunderstanding should arise. For instance, the words which he preferred as to not pressing for a pecuniary award, instead of those proposed by us, to have regard .. to," &c.; if there was no arrière pensée, what could be the objection to the latter?

"not

General Schenck repudiated the idea that there could be an arrière pensée, and he himself thought the two phrases came substantially to the same thing, but that his instructions adhered to the first. He did not understand how his words, if communicated to and recorded by the Arbitrators, would admit of a doubt.

He hoped we should take his draught, modifying it as little as was possible for us to do. He had telegraphed to Mr. Fish everything that I had communicated to him. He had asked Mr. Fish to tell him whether he on his part would agree to the note of which he had just given me a copy; and he had begged him to send him back our draught altered as he wished it to be, and the form of assent which Mr. Fish was ready to give.

[From British Blue Book "North America," No. 9, (1872,) p. 7.]

No. 32.

Earl Granville to Sir E. Thornton.

FOREIGN OFFICE, May 6, 1872.

SIR: With reference to my other dispatch of this day's date, I transmit to you herewith, for your information, a copy of a revised draught which I gave confidentially to General Schenck, after consultation with the Cabinet.

I pointed out to him that we had left out the sentence objected to by him, "without prejudice," &c., on condition that no converse proposi tion should appear in the answer from Mr. Fish.

That we had omitted the whole of the sentence objected to by Mr. Fish, "Her Majesty's Government adheres," &c.

That we had left out the words, "in similar cases and in similar cir cumstances," and have further modified the sentence as to the principle which will bind both nations for the future.

That we had adopted General Schenck's last paragraph.

General Schenck said he would telegraph the revised draught this evening, but would give no opinion on it.

I am, &c.,

GRANVILLE.

Inclosure in No. 32.

Draught of letter from Earl Granville to General Schenck, as given to General Schenck by Earl

Granville, May 6, 1872.

SIR: I have laid before my colleagues the dispatch addressed to you by Mr. Fish on the 16th ultimo, of which you furnished me with a copy on the 1st instant.

I informed you in my letter of the 20th of March last that Her Majesty's Government, in communicating to you the grounds on which they hold that the claims for indirect losses are excluded from the scope and intention of the reference to the Tribunal of Arbitration at Geneva, did not wish to commence a diplomatic controversy, but merely to comply with the desire substantially expressed by the Government of the United States to be advised of the reasons which had prompted the declaration made by me on behalf of Her Majesty's Government on the 3d of February.

Her Majesty's Government are still of the same mind, and although they cannot admit the force of the partial rejoinder which Mr. Fish has made to that statement of their reasons, they agree with Mr. Fish in seeing no advantage in the continuance of an argumentative discussion on the subject.

It will, however, be understood that if I do not review the matter of Mr. Fish's dispatch it is not from an assent to his positions, but from the hope that a way may be found to avoid further controversy.

In the full expectation, therefore, that an arrangement satisfactory to both countries will be accepted by the Government of the United States, I proceed to state the views of Her Majesty's Government.

Her Majesty's Government are ready to engage that, in the event of the Government of the United States agreeing that the Arbitrators are not to have regard in any award that they may make to the claims for indirect losses, viz, the transfer of the American shipping, the increased premiums of insurance, and the prolongation of the war, Her Majesty's Government will, on their part, agree that the view which they have heretofore presented of such claims shall be their principle of future action and conduct, and they are ready, in pursuance of the recognition of such principle, to give assurance to the United States, that, if Great Britain should at any time hereafter be a belligerent while the United States are neutral, Great Britain will never advance any claims inconsistent with that principle; such an engagement for the future being reciprocally given by both parties. The notes which are exchanged on this subject to be presented to the Tribunal of Arbitration, and entered on its record.

No. 33.

Mr. Fish to General Schenck.

[Telegram.]

WASHINGTON, May 7, 1872.

The President earnestly desires to do everything consistent with his duty to the country and with the great interests to the future of both Governments, and to the principles so important to civilization as are involved in the Treaty, to avoid the possibility of its failure. This Government is of opinion that the submission of what are called the indirect claims is within the intent of the Treaty, and that the consideration of those claims is within the province of the Tribunal. The President alone has not the power to change or alter the terms or the principles of a treaty. He is of the opinion that the suggestion expressed in my instruction of 27th April went to the extent of his authority, acting without the assent of the Senate. The proposal submitted in your telegram of last evening is based upon a theory antagonistic to this principle.

The President is anxious to exhaust all proper efforts to reach a settlement of the important questions and the vast interests to two States, submitted to the Tribunal of Arbitration, if it can be done without the sacrifice of a principle and consistently with the dignity and the honor of the Government.

He will, therefore, be willing to consider, and, if possible, will present for the consideration of the Senate, any new article which may be proposed by the British Government, which, while it settles the principle involved in the presentation of what are called the indirect claims, will remove the differences which have arisen between the two Governments in their constructions of the Treaty.

FISH.

No. 34.

General Schenck to Mr. Fish.

[Telegram-Extract.]

LONDON, May 7, 1872.

Your telegram of yesterday was received this morning. After some discussion, Lord Russell's motion was postponed yesterday to next Monday, on Lord Granville's promise that on or before that day he would produce the correspondence or make a statement as to the position of the negotiations now going on. This was only acceded to upon a distinct assurance being given that the Government would not retract its position, that the claims for indirect damages are not within the intention and scope of the reference. To this I am sure they will adhere if no agreement or adjustment be made between now and next Monday. I have little doubt that they will make a declaration which will be decisive against submission to arbitration, and will have the nearly, if not quite, unanimous support of both Houses of Parliament. Desirable and important as it is to both parties and to all nations to have a decision of the Arbitrators, that a nation is not responsible in