No. 742.
Mr. Blaine to Mr. Noyes.
Washington, D. C., July 23, 1881.
Sir: The response made by M. St. Hilaire to the request of this government for delaying any movement on the part of France against Venezuela was prompt, friendly, and reassuring. Disquieting rumors, however, are circulated afresh to the effect that the French Government designs taking forcible possession of some of the harbors and a portion of the territory of Venezuela in compensation for debts due to citizens of the French Republic.
In the absence of direct proof of this design, the Government of the United States is unwilling to believe that it is entertained by France, and I would not call the subject to your attention except for the fact that our Venezuelan advices indicate the fear of such an impending calamity as quite general among the people of that helpless country, and as being shared by those who are entrusted with its administration. The alleged ground for this expected hostile demonstration on the part of France, is the failure of the Venezuelan Government to pay, with fidelity and promptness, the sum stipulated to be paid annually to the French creditors by the settlement of 1864.
To understand the question clearly it may be necessary to recite the essential facts and conditions of the debt now owed by Venezuela to citizens of the different countries named below.
The facts embraced in this tabular statement have been thoroughly investigated by the American minister at Caracas, who vouches for its substantial, if not literal, correctness:
Recognized foreign debt of Venezuela.
| Country. | Total debt. | Monthly payment July 29, 1873, to May 1, 1880. | Monthly Payment since May 1, 1880. | Debt adjusted. |
| Francs. | Francs. | Francs. | ||
| Spain | 7,704,457.64 | 13,980 | 25,949.94 | May 10, 1874. |
| United States of America | 5,847,163.32 | 13,980 | 19,694.25 | Convention, 1866. |
| Holland | 4,190,906.56 | 7,220 | 14,115.70 | do. 1866. |
| France | 3,455,155.60 | 28,275 | 11,637.55 | See report. |
| England | 2,392,835.24 | 10,020 | 7,385.84 | June 14, 1878. |
| Germany | 200,000.00 | 4,000 | 673.63 | May 24, 1877. |
| Denmark | 161,241,16 | 88,125 | 543.09 | March 17, 1866. |
It will be observed that prior to May, 1880, the monthly payment to France for a series of years was 28,275 francs, and since that date it has been reduced to 11,637 francs. The payment to France prior to May, 1880, was much larger in proportion to her debt than to any of the other creditor nations, and Venezuela alleges that she was unable to continue the payment at that rate without doing manifest injustice to other nations, whose claims are as sacred as those of France. In conversations with the French minister here, I have received the intimation that France regards her claim as in some sense superior to those of the other countries, because first acknowledged and liquidated. It is the judgment of the President that no absolute superiority can be claimed on that ground. A national debt rests for its security upon national honor, and is valuable to the creditor by reason of that foundation. A question of national honor is not to be determined by the time at which the promise was given, nor is the duty to fulfill it dependent on the date of record. If Venezuela is unable to discharge all her obligations, the President is unwilling to admit that mere priority of date can determine in favor of one to the exclusion of others. If the United States had been unable to discharge her great national war debt, according to its letter, no prior claim would have been acknowledged as attaching to the bonds of 1861 over those of 1865, no matter in whose hands they might have been held. So likewise in France. No contingency could possibly arise in the administration of the finances of that great country in which a distinction would be drawn between the relative obligations to pay the rentes of the ancient monarchy, of either of the empires, of the revolutionary tribunal of Robespierre, or of the great republic which now embodies the will and the power of the French people.
The President, therefore, rejects altogether the claim of superiority for the French debt, based on priority of the date of settlement. He rejects it if Venezuela is to be treated as an independent government with national sovereignty, as inconsistent with and derogatory to that sovereignty. He rejects it with equal decision if she is to be treated as a bankrupt, her property seized, and her independence destroyed; for, in that event, should it be permitted to happen, the plainest of justice requires that an equitable partition should be made of the assets among air the proved creditors.
The Government of the United States is anxious, only that justice may be done to all parties, and that Venezuela may be so sustained that in good time she will be able to acquit herself honorably of all her obligations. Disclaiming any intention or desire to interpose our own judgment as a rule for the conduct of other powers, it is the conviction of the President that a general accord should be reached among the creditor nations, and that a convention should be established which would be mutually and generally satisfactory. Without attempting to prescribe or dictate, the President suggests that the United States will place an agent in Caracas authorized to receive such amount each month from the Venezuelan Government as may be agreed to be paid—not less than the aggregate now paid—and to distribute said amount pro rata to the several creditor nations. Should the Venezuelan Government default for more than three months in the regular installments, then the agent placed there by the United States and acting as trustee for the creditor nations shall be authorized to take charge of the custom-houses at Laguayra and Puerto Cabello, and reserve from the monthly receipts a sufficient sum to pay the stipulated amounts, with 10 per cent, additional, handing over to the authorized agent of the Venezuelan Government all the remainder collected. It is the judgment of the President [Page 1218] that an arrangement of this kind would give all reasonable security to each of the creditor nations, and would be an effectual bar against any one obtaining an inequitable advantage over the others.
Believing that France only desires justice in the premises, and that, in common with the United States, her government abhors war and will never use force needlessly, the President confidently believes that a peaceful and honorable adjustment will be accepted by all the nations interested. The offer of the United States to intervene was made solely in the interests’ of peace and justice, and the President will sincerely regret if anything said or intimated herein shall be accepted by France in any other spirit than that of friendly co-operation.
You will at the earliest opportunity communicate to M. St. Hilaire the substance of this note, and if, in your judgment, it shall seem desirable, you may leave with him a copy.
I am, sir, &c.,