No. 584.
Mr. Blaine to Mr. Hurlbut.

No. 25.]

Sir: Since sending my instruction No. 19, of the 22d ultimo, to you, upon a more careful examination of the protocol transmitted in your [Page 956] dispatch of the 5th of October, signed by yourself on behalf of the United States, and Señor Galvez, minister of foreign affairs, on behalf of Peru, for the cession of a naval and coaling station to the United States at Chimbote, I find it difficult to discover what substantial advantages would be gained by this government in the event of its acceptance of the proposed agreement.

I have already had occasion to remark that the time was not opportune for any negotiation for a concession from a power reduced to such extremity as that in which Peru stands to-day, and to call your attention to other grave considerations which should outweigh any apparent temptation to our sense of immediate self-interest in asking or accepting the concession of special privileges in that country.

But the advantages offered by this protocol grow more shadowy as its provisions are more closely examined. The first article concedes to the United States the right to establish a coaling station at Chimbote, and the second immediately adds that this shall not be exclusive; that Peru reserves the right to concede the same facilities to any other friendly power which may solicit them. The third subjects to Peruvian law whatever land might be required by the United States for the purposes of a coaling station; and by the fourth article Peru has the right to withdraw all that is conceded by the agreement whenever she sees fit, upon one year’s notice.

A naval and coaling station on the South Pacific coast, carefully chosen, with the aid of the professional knowledge of those specially qualified to determine its capacity to answer the wants of our national ships, and over which we might exercise proper and necessary jurisdiction, with a secure tenure, would be of undoubted value, and this government, at a fitting time, may be willing to negotiate upon fair terms for such a privilege. In the protocol presented I observe that you have, with perfect justice, offered no consideration to Peru for this amiable concession, which would only enable us to enjoy on her shores the same privileges which we substantially possess to-day, and which she is ready to extend to every other power with which she is not in actual war. It has the merit at least of innocent diplomacy; nothing was given and nothing was taken.

While your negotiation of this protocol may be regarded as an error of judgment, involving no serious or lasting consequences, I regret that another proceeding which you report in the same dispatch is of a graver nature, and I cannot pass it by without the most decided expression of disapprobation.

You have commenced an extraordinary negotiation with President Calderon in regard to a railroad company of which you, while American minister, propose to become the trustee or intermediary, the road to be ultimately turned over to an American company, an unfinished road which you say has already cost nine millions of dollars.

The principal terms of the arrangement will be the payment to the Peruvian Government of one million of dollars in money, and the same in paid-up stock, to clear up all existing incumbrances, for which sums they concede the right to construct and operate the road for twenty-five years after it is finished. You consider the grant very valuable and the possibilities of the company very large. The special advantage which the United States may derive from these possibilities is that the price to be charged for coal carried over the road may be limited, as the railroad runs to Chimbote and the railroad arrangement is a sequel to and part of the plan for a coaling station there.

[Page 957]

I have learned of this negotiation with profound astonishment and regret.

It is hardly conceivable that under any circumstances whatever your government would consent that its minister should accept such a position, but for the minister himself, without instruction and without permission, to assume the charge of an extensive financial scheme for the purchase, completion, and transfer of a railroad is an utter disregard of every rule of prudence and propriety that should govern the conduct of a representative of the country. At a time like the present, when the ruin of Peruvian interests and the embarrassment of that government in its almost hopeless attempts to contrive a method of raising money have given birth to so many speculative schemes, and filled the press with accounts of contending companies and their enticing proposals, the direct participation of the American minister in a plan for the reorganization of a railway wreck cannot fail to lead to misapprehensions on the part of other governments and distrust of the United States and its minister, whose motives and proceedings would be viewed in the most unfavorable light.

Whether the grant be very valuable or the possibilities of the railroad very large, or the profit of the speculation great or not, are questions of little moment compared to those higher considerations of national interest and dignity which should govern every act and every word in the intercourse and dealings of this nation with others, as conducted by a representative clothed with its power and charged with its interests and its honor. The construction of a railroad and the cheapening of coal may be laudable enterprises in themselves, but this government does not send its envoys abroad to undertake them. It is inconsistent with the first duty of a diplomatic agent to assume such functions; and however disinterested or innocent might be his design, it would inevitably awaken surmises prejudicial to his standing and would impair, if not destroy, his influence with his colleagues and with the people of the country to which he was accredited.

With some relief I note that this negotiation was not wholly completed at the time of writing your dispatch. I presume it was broken off by the arrest of President Calderon; but I would be better pleased to learn that upon mature reflection the impropriety of engaging in such a project and undertaking functions so incompatible with your representative character had occurred to your own mind, and that you had abandoned it altogether.

If, on the contrary, you have actually endeavored to carry it out by any compact or convention with the Peruvian Government, you will at once notify it that the project is disapproved and will not be ratified; and you will abstain from taking any further steps in the name of the United States tending to the acquisition or control of the railroad or the interference in any way whatever in that enterprise so long as you are minister from the United States.

I am, &c.,

JAMES G. BLAINE.