No. 751.
Mr. Blaine to Mr. Morton.

No. 74.]

Sir: I have deferred a reply to the note addressed to yon by M. Barthélemy St. Hilaire on the 15th of September last, concerning the debt of Venezuela to France, until the extreme pressure of public affairs attending the death of the late President and the inauguration of his constitutional successor should cease. I now proceed to answer the note of the French minister, as transmitted in your No. 37, of the 17th of September last.

As I understand M. Barthélemy St. Hilaire’s response to my representations of the 23d of July, he does not meet the equities of the question, or the practical solutions proposed. He seems to limit his consideration of the matter to the literal terms of the conventional agreement of 1864 between France and Venezuela, on which he rests, as constituting more than a mere priority of indebtedness in point of time, because involving a specific security for the payment thereof, namely, a hypothecation of ten per cent, of the gross revenues of the custom-houses of Laguayra, Puerto Cabello, Maracaibo, and Ciudad Bolivar. As those revenues constitute the only practicable guarantee on which the debt of Venezuela to all the creditor nations rests, I infer that the contention of the French Government is that France claims, in effect, to hold a first mortgage, to which all other foreign claims must yield preference, even to the extent of permitting the engrafting on the original debt of the later stipulations of 1867 and 1868, in favor of France in the matter of interest. The indisposition of the Venezuelan Government to accede to this view in prejudice of the rights of its other foreign creditors is, as it appears from the declaration of M. Barthélemy St. Hilaire,

The true cause of the attitude which we [France] have been obliged to assume reluctantly, and which does not permit us, so long as it shall be maintained, to practically consider propositions which involve the renewal of relations between the two countries.

I should be unwilling to regard this declaration as a bar to any settlement of the dispute save at the expense of the other creditor nations, whose joint claim far outbalances that of France, but it is difficult to interpret it otherwise than as a refusal to enter into any negotiations with Venezuela looking to a modification of the attitude of France, so long as Venezuela shall ask a modification of that attitude, or, in effect, a refusal to negotiate at all. I am, however, happy to perceive that the alternative of force is not presented by M. Barthélemy St. Hilaire, who says, in reference to the good interposition of the Government of the United States, that “it has never entered into our [the French] mind to wish to forestall the effect of its kind services by a premature action.” This last declaration is received by this government with profound satisfaction, as indicating only a pacific policy on the part of [Page 1227] France. And this, indeed, was to have been expected from her intimate friendship with the United States and the mutual interest of both countries in the general question of Venezuela’s foreign indebtedness.

After the careful examination, which was due to M. Barthélemy St. Hilaire’s statements, I am constrained to express the conviction that the United States, in common with all the other governments, creditors of Venezuela, is no more called upon, in law or equity, to recognize the supremacy of the guarantees of the Franco-Venezuelan convention of 1864 than it is required to defer to mere priority in point of date of recognition of the debt.

The indebtedness of Venezuela to France, like that of Venezuela toward other foreign governments, including the United States, ante-dated the conventional recognition thereof.

Pending the adjustment of the respective claims all stood alike on an equal plane of right as against Venezuela. Properly regarding its foreign debt as an aggregate obligation of honor on its part, that republic was not in a position to discriminate in favor of any one among many creditors. Neither was any one of the creditor nations in a position of right or equity to assert preference for its claims against the common interests of the other creditor governments. The mere circumstance that France, while other nations were likewise negotiating, was successful in securing an earlier settlement of her claim, and also a material guarantee for its payment, does not, in the opinion of this government, interpose a rightful bar to the equality of the claims of other creditor nations.

In private affairs the adjustment of one debt among many, pendente lite, to the detriment of the rights of the others, is void 5 and in international jurisprudence no less just rule of procedure can be admitted. So far as the share of the United States in the mass of the Venezuelan debt is concerned, this government must frankly declare that it would regard any persistent reliance upon the Franco-Venezuelan convention of 1864 in bar of the equal claims of the United States against Venezuela as retroacting in such a degree as to make the very conclusion of that convention an act in derogation of the rights which the United States then possessed in common with France.

I have been thus explicit in presenting the true merits of the question because I observe that M. Barthélemy St. Hilaire has, naturally perhaps, fallen into a misconception of the scope of my note of July 23, and has regarded it as controverting the French claim of priority of date rather than that of alleged superiority of right. The declarations of that note, however, extend to the very essence of the conventional transactions between France and Venezuela. You will accordingly so bring them to the attention of M. Gambetta. Pending his consideration thereof, I am unable to regard the note of Mr. Barthélemy St. Hilaire as meeting the position which the United States is constrained in common justice to assume, or as conveying more than a very gratifying assurance of the good will which the French Republic bears toward the United States, and of its resolve to take no premature step which might forestall the effect of the kind services of this government. I need hardly assure the French Government of the heartiness with which this sentiment of good will is here reciprocated.

Beyond and above the pecuniary interest involved, either for France or the United States in the matter of the Venezuela claims, there lies a consideration which appeals with equal force to the two leading republics—France and the United States. That consideration is, the fraternity of feeling and the harmony of relations which should be maintained between all the republics of the world. It would, in the opinion [Page 1228] of this government, be a deplorable spectacle to see hostilities against Venezuela initiated by the great European republic, and it would be an evil to France, for which her share in the Venezuelan debt would afford no compensation whatever. You will remind M. Gambetta that the question at issue is not whether France shall surrender the amount owed her by Venezuela, but whether she will have it paid in installments at the same ratio of the other creditor nations, or in a larger ratio not acknowledged by the United States to be equitable.

This government is convinced that, speaking as its representative, you can readily persuade M. Gambetta that the position of the United States in the controversy is one founded on the principles of justice, and you should further pursuade him that the solicitude of this government has not been so much for the protection of its pecuniary interests as for the higher object of averting hostilities between two republics, for each of which it feels the most sincere and enduring friendship.

You will take an early occasion to bring the whole matter, in connected shape, to the attention of M. Gambetta, adverting especially to the condition of the question at the time when the previous representations of this government were made. In doing so you will read this dispatch to M. Gambetta, at the same time leaving with him a copy.

I am, &c.,