to Mr. Osborn.
Washington , June 9, 1879.
Sir: I have to acknowledge the reception of your dispatch of the 31st of March last, with the inclosed correspondence in reference to the purchase of three English-built ships, by H. L. Stevens, an American citizen domiciled in Chili.
You say that it appears that the ships in question were purchased by Mr. Stevens on the 27th of February last from the South American Steamship Company; that the bill of sale was recorded in the American consulate at Valparaiso, and a certificate to that effect made on the original, pursuant to sections 220 and 221 of the Consular Regulations.
You state, furthermore, that you requested the consul at Valparaiso to investigate the good faith of the sale, and that that officer, in response, submitted a favorable report. It appears, moreover, that the Itata, one of the vessels in question, was cleared from the American consulate at Valparaiso for Callao, and that soon after her arrival at that port she was required by the American consul, acting under instructions from Minister Gibbs, to haul down the American flag, under which she had sailed from Valparaiso, and that, in order to avoid any conflict with the authorities of our own country in Peru, you had directed the acting consul at Valparaiso to clear only registered vessels at Peruvian ports uhtilhe shall be further instructed.
The chief question raised by your dispatch, with its inclosures, is as to the character of tire protection to which foreign-built vessels, purchased abroad in good faith by American citizens, are entitled from the American Government, and the right of such vessels to carry the American flag and to be cleared by American consuls.
It is proper to observe, first, that, in the case under consideration, grave doubts are entertained by this Department as to the bona fides of the purchase of the vessels in question by Mr. Stevens, under the circumstances as disclosed in your dispatch. Inasmuch, however, as these doubts could only be solved properly by a judicial investigation, the Department can do no more than lay down the general principles which would be deemed applicable to this case, provided the good faith of the transaction should be established.
The statutes of the United States, sections 4131 to 4134, inclusive, very clearly point out what vessels are entitled to be considered vessels of the United States. A mere reference to provisions of the sections just named is sufficient to show that the vessels which it is alleged Mr. Stevens purchased were not entitled to the benefit of the registry laws of the United States.
The Consular Regulations provide for the purchase of foreign vessels abroad by citizens, and (section 220) that, if such purchase is made in good faith, it entitles the vessel to protection as the lawful property of a citizen of the United States. Section 4196 of the Revised States provides that—
No sea-letter or other document certifying or proving any vessel to be the property of a citizen of the United States shall he issued, except to vessels duly registered or enrolled and licensed as vessels of the United States, or to vessels which shall be wholly owned by citizens of the United States, and furnished with or entitled to sea-letters or other custom-house documents.
This section clearly recognizes the right of American citizens to become the owners of foreign-built vessels.
There is, however, no law which in express terms permits a foreign vessel, so owned by an American citizen, to use the flag of the United States, nor, on the other hand, is there any prohibition of such use by a foreign vessel beyond the jurisdiction of the United States, or any penalty provided therefor.
The practice of making purchases of foreign-built vessels has been advantageously pursued by American citizens from the origin of this government. There may have been instances in which the privilege has been abused by collusion between a consul and the parties to a sale, and it is known, as you state in your note to Mr. Christiancy of the 26th of April last, a copy of which you inclose in your No. 96 of that date, that there are many vessels thus purchased and owned by citizens of the United States now doing business on the coasts of Chili and Peru and other South American countries, and that while there is no specific provision of law, either permissive or prohibitory, on the subject of such vessels carrying the flag of the United States, it has been the long-established practice of these vessels to sail under that flag.
Under these circumstances the Department does not feel disposed, at the present moment, to issue any more or specific instructions on the subject, and especially any that might in anyway tend to jeopardize the interests of American citizens owning such property.
The matter will receive the attention of the President at an early day, with a view to such general instructions to the diplomatic and consular officers of the United States as may tend to secure uniformity of action, and at the same time promote, as far as may be in accordance with existing law, the interests of American citizens involved in this somewhat delicate question.
In the case under consideration, the vessels having been sold to a British subject since the action of the consul at Callao, to which you refer, it is not probable that any further action will be called for upon your part in regard to the vessels in question. You are instructed, however, to apply the principles herein laid down to any cases of a similar character which may hereafter arise having first thoroughly investigated the good faith of such transactions.
I am, &c.,