No. 750.
Mr. Morton to Mr. Blaine.

No. 37.]

Sir: With reference to your dispatch No. 402, of date July 23, relative to the claims of the French Government against Venezuela, and to my dispatch No. 15, of date August 23, by which I informed the Department that in accordance with your instruction I had left a copy of your communication with Mr. B. Saint Hilaire, I have now the honor to send herewith a copy of the reply of the French minister to this communication, together with a translation of the same.

I have, &c.,

[Inclosure in No. 37.—Translation.]

Mr. Saint Hilaire to Mr. Morton.

Sir: You are kind enough to leave with me a copy of the dispatch addressed to your legation on the 23d of July last, by the Secretary of State at Washington, in relation to the difference which has arisen between France and Venezuela. The point is therein insisted upon that the misunderstanding arises from the neglect of the Government of Venezuela to pay promptly and in good faith, the amount which it should have paid annually according to the convention of 1864, to its French creditors. Mr. Blaine, moreover, endeavors to show that the French Government has no reason to consider the debt due to it as entitled to preference over that which is due to other countries, the mere priority of a claim not being sufficient to secure decision in favor of one creditor to the exclusion of the others.

In regard to this latter point, it seems not to be out of place to lay before the United States Government the text of the treaty stipulation which places Venezuela under obligations to France. Article IV of the treaty of July 29, 1864, is as follows:

“The Government of the United States of Venezuela specially hypothecates, as a guaranty of the execution of the present treaty, 10 per cent, of the total amount of the annual customs duties, both ordinary and extraordinary, that shall he collected at La Guayra, Porto Cabello, Maracaibo, and Ciudad Bolivar.”

We do not, therefore, base our claim upon priority, but upon the precise text of a convention regularly and publicly concluded between the two countries. From this evidently results the right of preference for the French claims, for which provision was made in 1864, a kind of privilege which we cannot now renounce.

The delays which have taken place, moreover, in the payment of our debt of 1864, do not constitute, as is apparently thought, the only or the essential cause of the pending difficulties. The case arising, it might perhaps not be impossible, either by adding to the principal still due on this ground a sum designed to represent the whole or a portion of the interest stipulated by another treaty concluded in 1867, or by some similar arrangement to be devised hereafter, it might not be impossible, I say, to conclude an arrangement that would permit the Government of the French Republic to renounce its privilege without prejudice to its citizens, who would then be placed in the same category with the other creditors. However, as we remarked in our note of the 13th of May last, the Venezuelan Government has openly declared its intention to pay no more heed to the treaties concluded between the two, countries. It has refused, in total disregard of its solemn engagements, to liquidate the claims not comprised in the arrangements of 1864, 1867, and 1868; and lastly, it has appeared determined not to increase the sum finally appropriated to the payment of its diplomatic debt, the amount of which is increasing, by reason of the new debts already recognized or hereafter to be recognized.

The purpose which has been shown by the Venezuelan Government to disregard, henceforth, its treaty obligations, is the true cause of the attitude which we have reluctantly assumed, and so long as this purpose shall be manifested we cannot advantageously examine any proposals implying a resumption of the relations between the two countries. We are, however, none the less sensible to the evidences of good will [Page 1226] shown to us by the Government of the United States, in endeavoring to devise the bases of an acceptable arrangement, and we have never had an idea of forestalling the effect of its good offices by any premature action.

Accept, &c.