Papers Relating to the Foreign Relations of the United States, Transmitted to Congress, With the Annual Message of the President, December 3, 1888, Part I
No. 97.
Mr. Hall to
Mr. Bayard.
Guatemala, February 16, 1888. (Received March 6.)
Sir: In continuation of my dispatch No. 718 of the 12th of October, and referring to your instruction No. 517 of the 5th of November, 1887, and to other correspondence relating to the differential duty of 5 per cent, which the Government of Costa Rica applies to vessels of the United States at the port of Punta Arenas on the Pacific, I have now to inform the Department that after a delay of nearly three months the minister for foreign affairs has replied to my note of the 12th of October last, a copy of which accompanies my dispatch above referred to.
[Page 128]I beg leave to inclose a copy and translation thereof, and a copy of my reply thereto, to all of which I respectfully invite the, Department’s notice.
The minister refers to the contracts of his Government with certain British and German lines touching at Port Limon on the Atlantic, which enjoy the same rebate of 5 per cent., and I will add to the exclusion of our vessels, although probably more than three-fourths of the export trade of Costa Rica by that port is with the United States.
I have, etc.,
Señor Esquivel to Mr. Hall.
San José, Costa Rica, January 10, 1888.
Mr. Minister: I had the honor to receive the note of your excellency of the 12th of October of the past year, in which you are pleased to manifest that the contract made by this Government with the Marquis de Campo Line of steamers is contrary to to the stipulations of the treaty of commerce of 1851, between Costa Rica and the United States, inasmuch as in addition to granting a subsidy to the enterprise a rebate of 5 per cent, in customs duties is conceded upon all importations by this line, and that during the ten years of the duration of that contract no other line of steamers shall be granted a like concession. Your excellency believes that the stipulations referred to are not in harmony with the reciprocal freedom of commerce stipulated in the treaty of 1851, nor with its provisions that no higher duties shall be demanded of American vessels in Costa Rica than of the vessels of any other nationality whatsoever, and upon this point your excellency informs me that you are authorized by your Government to say that the alteration of the tariff in favor of the Spanish enterprise overpasses the limits of subsidies to lines of steamers and will cause the ruin of American freighters on these coasts. Finally after expressing the necessity of your protesting, and of your Government protesting, in case that the contract with the Marquis de Campo should be sustained, of establishing differential duties upon merchandise conveyed by the Spanish Line from Costa Rica to American ports, your excellency concludes by suggesting that the rebate of 5 per cent, shall be extended to American vessels touching at Costa Rican ports on the Pacific. The nature of this subject and the strict observance of its international engagements which has always been characteristic of my government require that my reply be extended so as to present to your excellency considerations which, I doubt not, will convince you that the contract with the Marquis de Campo is not contrary to the treaty of 1851, and that the concessions made to him do not go beyond the natural powers of the Costa Rican Government nor of the subsidies that are granted to steamer lines.
My Government has been anxious to increase its maritime communications for the benefit of its commerce in general, and as in this Republic there are not yet sufficient inducements to attract spontaneously lines of steamers to our ports, it has been necessary to stimulate them by means of concessions or subsidies, and this has been done with the lines which touch at the port of the Atlantic as well as those which touch on the Pacific.
In regard to the first, that is to say, Limon, a decree of the permanent commission issued on the 15th of January, 1885, and approved by Congress on the 31st of May of the same year, authorizes the executive power to make contracts for the time deemed requisite with the different companies of steamers on the Atlantic which should bind themselves to touch at least once a month at the port of Limon, to bring and convey the mails gratis, and to reduce their freights in benefit of commerce. The authorization granted by the said law was extended to the companies by conceding to them a rebate of 5 per cent, from the customs duties upon merchandise imported or exported by their respective vessels.
In virtue of these legal powers, my Government, in the contract made on the 9th of June, 1885, with the Atlas Company, plying between Limon and New York, and vice versa, conceded a rebate of 5 per cent. ; it conceded likewise the rebate of 5 per cent, on the 20th of August, 1885, to the Harrison Company, and on the 19th of October of the same year to the British Royal Mail; on the 10th of January, 1886, to Minor C. Keith, a citizen of the United States, as the owner of the steamer Foxhall (sailing under the British flag), and on the 21st of August, 1887, to the Hamburgh-American Line.
[Page 129]Referring now to the port of the Pacific, Punta Arenas, I have to apprise your excellency that for a long time no other line of steamers besides the Pacific Mail had touched there, and its service was not sufficient for the necessities of the commerce which has been increasing on that side between this Republic, the ports of Central America, and California. The Pacific Mail placed us in communication with San Francisco once a month only, while to-day we have that communication assured four times a month by the Marquis de Campo Line.
This line makes a considerable rebate in freights and passages, a point to which I beg to be permitted to call your attention, for it can not be disguised that American commerce would unquestionably gain by taking advantage of the facilities which the Spanish line affords for placing its merchandise at Punta Arenas at an expense for transportation much less than the former tariff rates of the Pacific Mail, the only line which formerly touched at our Pacific port.
Even to-day no other American line plies between Punta Arenas and San Francisco, and the Pacific Mail has no cause of complaint against the Government of Costa Rica, because it is subsidized by the sum of $12,000 a year, which it will still continue to enjoy during the present year.
In addition to the foregoing I beg to inform you that the Marquis de Campo’s Line renders the Costa Rican Government special and very important services. It makes a rebate of 25 per cent, in freight upon articles which the Government imports for its own account, carries gratuitously the diplomatic ministers and employés who travel on commission of the Government; it affords also, besides that, four passages every year between Panama and San Francisco; it is bound to carry troops at half the tariff rates, the same also for laborers who enter or leave the Republic by order of the Government; it admits every year four young men to learn the duties of navigators, four others as engineers and quartermasters, and twelve as helmsmen; finally it is under the obligations and responsibilities established by the contract of the 1st of July of last year.
The advantages set forth and the services expressed therein my Government remunerates in part by the rebate in customs duties; and it is to be noted that to-day the Spanish company enjoys solely this rebate, while the Pacific Mail, without all of the obligations weighing upon it, which the Marquis de Campo’s Line has accepted, enjoys the before-mentioned subvention, which is paid in coin.
Your excellency will observe at once that no difference has been established in favor of the Spanish marine, which might give cause to say that an international inequality had been established in contravention of the treaty of 1851. In reality it is nothing more than a remuneration conceded to a private enterprise for the special services it renders, and neither the merchant marine of any other nation nor even the Costa Rican can consider themselves injured. And your excellency will permit me to call your attention also to the fact that the contract with the Marquis de Campo does not prohibit the making of similar concessions, but solely the extension of greater favors to another company.
From the foregoing it may be deduced that my Government, in granting the rebate of customs duties in exchange for services rendered, has had no other thought than to attract to our ports an indispensable element for the service of commerce, and to remunerate such services without prejudice to any one and without infraction of the rules which international compacts impose.
Although I believe I have already sufficiently answered the note which has given rise to this communication, I will intimate to your excellency that my Government, in its anxiety to increase, so far as possible, means of maritime communication, proposes to submit opportunely to the legislative power a project asking its authorization to grant to the lines of steamers which touch at Punta Arenas the same rebate of 5 per cent, whenever they undertake, in behalf of this Republic, obligations like those of the lines which touch at the Atlantic port and enjoy that concession.
I improve this opportunity to renew to your excellency my distinguished consideration and to subscribe myself,
Your obedient servant,
Mr. Hall to Señor Esquivel.
Guatemala, February 14, 1888.
Mr. Minister: Absence from this legation has prevented my giving earlier attention to the courteous note of your excellency of the 10th ultimo, relative to the differential duties to which vessels of the United States are subject at the port of Punta Arenas, in consequence of the rebate in import duties, conceded by your excellency’s Government [Page 130] to the line of steamers of the Marquis de Campo, plying between Panama and San Francisco.
In the first place I beg leave respectfully to explain that the statement contained in my note of the 12th of October last, to the effect “that by the terms of the contract with the Marquis de Campo equal advantages can not be conceded to other lines of vessels,” was made under the erroneous impression that the corresponding clause in the contracts of the Marquis de Campo with the other Central American Governments was the same in the contracts with Costa Rica. I now find that in the latter “mayores ventajas” only are mentioned, while in the former,” iguales ó mayores ventajas” are stipulated.
I regret that I can not concur with your excellency in that the rebate of 5 per cent; of import duties, conceded to the vessels of the Marquis de Campo, is not contrary to the treaty of 1851 between the United States and Costa Rica. The object and intention of the treaty may appear to be sufficiently clear; it stipulates for reciprocal freedom of commerce between the two countries, and surely there can be no such reciprocity when the vessels of one party are subject to differential duties in the ports of the other. One of the steamers of the Marquis de Campo’s Line sails under the Costa Rican flag; that this steamer should enjoy exceptional advantages in Costa Rican ports over vessels of the United States, is, ill my judgment, clearly contrary to the letter as well as the intentions of the treaty as expressed in its Article VI. The treaty establishes absolute and unconditional equality of the vessels of both nations in the ports of each other.
In my note of the 12th of October last I stated “that the treaty of 1851 stipulates substantially that no higher duties shall be collected upon merchandise imported into Costa Rica in vessels of the United States than shall be collected upon merchandise imported in vessels of any other nationality and vice versa” If such is not the object and intention of the treaty, it is difficult to imagine why any reference is made therein to reciprocal freedom of commerce or to duties on imports.
That this rebate overpasses the legitimate limits of all subsidies to vessels and in many instances greatly exceeds the rates of freight charged by other lines, making a fair competition impossible, I beg leave to cite the following case of recent occurrence.
In December last, a steamer arrived at San Francisco from China having on board, among other consignments for Central America, a bale of silk goods upon which freight had been paid at Hong-Kong through to Punta Arenas. To avail himself of this rebate in duties in Costa Rica, the consignee at San Francisco had the goods surrendered to him for shipment by one of the Marquis de Campo’s steamers, and without demanding a return of any part of the already prepaid freight to Punta Arenas, showing that the rebate must have exceeded double the amount of freight money by any other line of vessels than that of the Marquis de Campo.
With reference to your excellency’s suggestion that American commerce would unquestionably gain by taking advantage of the facilities which the so-called Spanish line affords, I beg leave to express my doubts whether my Government, after having secured by treaties an equality of treatment for American vessels in the ports of the principal nations of the world, would be prepared to surrender such rights or to see the foreign commerce of the United States transferred to the Spanish flag.
I am well aware that the contract with the Marquis de Campo does not establish a differential duty in favor of the Spanish mercantile marine, but I fail to perceive that this fact in any way warrants the inequality which that contract establishes against American vessels in the port of Punta Arenas, where they pay a higher rate of duties than is paid by the vessels of the before-mentioned line. The advantages the Government of your excellency derives from the steamers of that line should, of course, be remunerated, but there ought to be some other way of doing this than the one adopted of subjecting vessels of the United States and of other nationalities to differential duties.
In regard to the rebate of 5 per cent, conceded to the several lines of British and German steamers which touch at Limon, I beg leave to say that in my opinion it is as contrary to the treaty with the United States as is the same rebate conceded to the Marquis de Campo’s line on the Pacific. While it exists merchant vessels of the United States are practically excluded from the import trade of that port by the differential duties established against them. The same may be said of the contract of the 5th of July, 1887, with Don Pedro Ferres for the establishment of a line of sailing vessels under the Costa Rican flag between Limon and ports of Europe, extended by decree of the 30th of the same month to the vessels of Señor Ferres on the Pacific, to both of which the same rebate of 5 per cent, is conceded.
My Government will be gratified to learn that it is the intention of that of your excellency to solicit the authorization of the legislative power to grant to all lines of steamers which touch at Punta Arenas the same rebate of 5 per cent, now enjoyed by the Marquis de Cainpo’s steamers; it conceives, however, that under the existing treaty vessels of the United States are entitled to this rebate unconditionally, so long [Page 131] as it shall he extended to any other line or lines of vessels, whether of Costa Rican or of any other nationality.
I beg to be permitted to add that these representations are made by instructions of my Government, and in the general interest of American shipping.
Renewing to your excellency the assurances of my highest consideration and respect, I have the honor to subscribe myself,
Your obedient servant,