No. 77.
Mr. Bayard to Mr. Hall.

No. 424.]

Sir: I have received your No. 603 of the 6th instant, touching the proposed establishment of a line of Spanish steamers between Panama and San Francisco, and have to express the Department’s satisfaction at the rejection by the Government of Salvador of the clause in the contract granting 3 per cent, rebate of customs duties in favor of that line. Although professedly in the nature of a contract-subsidy, such alterations of the national tariff so far assume the form of a discriminating duty as to be open to remonstrance, on the ground of being at variance with the spirit of international relations based upon equality and comity.

I am, etc.,

T. F. Bayard.