No. 907.
Mr. Bacon to Mr. Bayard.

No. 193.]

Sir: I had the honor to inclose with my No. 176, dated August 19 last, the original protocol in re “The United States and Paraguayan Navigation Company,” entered into by his excellency Dr. Don Benjamin Aceval, minister for foreign affairs for Paraguay, and myself, as chargé d’affaires, whereby Paraguay was to pay $90,000 in gold.

In my dispatch I stated that the protocol had been submitted to the Paraguayan Congress for approval, and that I would advise the Department of the action of that body as soon as received. Mr. Hopkins, the agent of the said company, has just returned from Asuncion, and informs me that the protocol passed the senate without opposition and went to the house (chamber of deputies), where it met with the fiercest opposition. This occasioned delay, and gave the opponents of the Government time to marshal their forces and prepare their ammunition, which was most admirably done. The result was the refusal by the chamber of deputies (house) to approve the protocol by only one vote.

While writing I have received two dispatches from Asuncion, one of them (copies in Spanish and English sent herewith, and marked, respectively, inclosures Nos. 2 and 3) advising me of the rejection by the chamber of deputies of the protocol, and the other of the resignation of Mr. Aceval.

You will perceive that the minister for foreign affairs ad interim, in his note announcing the fact, deplores the failure of the chamber to approve the protocol.

The present status of the claim is as follows: The protocol rejected by one vote in the house, having passed the senate without opposition. This leaves the whole matter unsettled, the award having been opened. This was all that the Department asked in No. 12, dated December 26, 1885.

I regret exceedingly the defeat of this protocol, which I had succeeded in obtaining with so much difficulty and labor.

I console myself, however, to a certain extent, by the fact that even according to the extracts from the opposition journals my official connection therewith has been unusually successful. With the action of the chambers, of course, I had nothing to do.

It is a matter of consolation also that, notwithstanding the defeat of the protocol by the Paraguayan Congress, the award stands open, and that by reason of the acknowledgment of the claim and the agreement in the protocol to pay $90,000 in gold the present administration and [Page 1347] the senate are committed to the justice thereof, as is also the preceding administration, inasmuch as that administration agreed to open the award.

Mr. Decoud, who was then the minister for foreign affairs, is admitted to be far the ablest of the Paraguayans. Indeed, he is the ablest and best-informed man that I have met in South America. He was educated in Buenos Ayres and Europe; speaks English, French, German, and Spanish; has the best and largest library in the Plata Valley; among other books quite a number American, among them Kent, Story, Pomeroy, Cooley, etc., and has done more for Paraguay than all others together.

The claim, I suppose, stands ready for re arbitration.

As to the persecution and despoliation of the company and the justice of their claim, as also the fact that the commission exceeded their powers, I have little or no doubt. In fact, my dispatches, both to the State Department, Nos. 55, 72, 108, 173, especially No. 108, dated October 7, 1886, and my notes to the ministers of foreign affairs for Paraguay, the principal of which are inclosed with my said No. 108, were sufficient to convince, and did convince them of the fact, as appears by the consent to open the award.

The Paraguayan records, as stated by the minister for foreign affairs, Mr. Decoud, having been destroyed, the only evidence, historical and otherwise, is to be found in the messages of Presidents Buchanan and Lincoln, the opinions and instructions of Secretaries of State Marcy and Cass, the proceedings of Congress, and the histories, dispatches, and reports of Messrs. Washburn and Page, all of which are referred to in Wharton’s International Law Digest, section 321, page 113, volume 3, and all of which, save the version given by Calvo, page 115, ibid., concur in denouncing the tyrannical conduct of Lopez, the President of Paraguay, and the ruin and despoliation of the company.

The conclusion of Calvo as to the character of Mr. Hopkins and the conduct of the United States Government, to wit, in substance as stated by Wharton, page 115, volume 3, “that the precipitate action of the Government of the United States was a wrong, not merely to Paraguay, but to the United States, which, to support an unfounded claim, got up an expedition, whose mere preparation cost over seven millions of dollars,” is founded upon a total misconception of the facts, as will appear from his own statement thereof, same page, where he falls (as I propose to show further on) into at least seven or eight fundamental mistakes.

Having set forth the status of the claim I might close, leaving to the Department the trouble to refer to my various dispatches and to the proceedings that have been had in the premises for the last thirty years, in order to have a correct understanding of the whole matter.

This I deem neither politic nor proper to do. I will therefore, at the risk of being both prosy and prolix, endeavor to state the case fully, so that the Department may be saved the trouble of referring, seriatim, to the many papers connected therewith, and I shall do so as briefly and succinctly as possible. It is as follows:

In 1845 Mr. Edward A. Hopkins was sent by the United States to congratulate Paraguay upon throwing off the Spanish allegiance and to encourage her in adopting a republican form of government. The elder Lopez was then President of the Republic.

He was both able and shrewd, and soon comprehended the advantages that would accrue to Paraguay from a closer connection with the United States. He was anxious to encourage immigration, and held out such inducements as eventuated in the forming of a company in [Page 1348] Rhode Island for the purpose of improving the agricultural condition of Paraguay. This company, chartered as “The United States and Paraguay Navigation Company,” bought a steamer, filled it with agricultural, mechanical, and manufacturing implements, and with a number of first class immigrants, started for Asuncion. The steamer, El Paraguayo, as it was called, was wrecked and lost. The company, however, fitted out another in a similar manner, which reached Asuncion in 1854, bought a tract of land called “San Antonia,” near Asuncion, built houses, erected buildings, tobacco factories, etc., at great expense, all of which was approved and encouraged by President Lopez. Meantime Mr. Hopkins had become consul to Paraguay.

The company prospered. Everything was flourishing, and it was about to realize its most sanguine expectations, when a sudden change was observed in President Lopez.

Mr. Washburn, afterwards United States minister to Paraguay, in his history (vol. 1, History Paraguay, 362), says:

Lopezsaw, however, that the company were working rather in their own interest than in his, and soon became uneasy at the presence of such a company.* * * It was soon evident to all that Lopez had changed his mind in regard to the whole project, and that the company were regarded hy him with fear and aversion.

This aversion was soon increased by a difficulty between Hopkins, personal or as consul, and Lopez, and was extended to the company by the latter, and ended in his (Lopez) “commencing a series of annoyances, outrages that rendered the property of the company valueless, and left the members of it exposed and helpless.* * * The land which had been bought by the company, to the purchase of which no objection had been made at the time of the bargain, was declared to have been illegally sold, and that there were claims upon it by others than the former owner, so that the deed of purchase was null and void. This pretense of illegality was clearly trumped up for no other object than an excuse for ejecting the company from their rightful possession. But the company had no means of redress. Lopez had determined to drive them from the country and break up the enterprise, and as he was responsible to no power in the world bull his own arbitrary will it was hopeless at this stage for the company to contend with him. His action toward them, however, was somewhat embarrassed from the fact that an American man of-war was in the river.” (Washburn, History Paraguay, 363.)

This steamer, the Water Witch, was in command of Lieutenant Page, and had been sent out by the United States to explore the Plata River.

Hearing of the hostility of President Lopez towards Hopkins and the company, he returned from an extended voyage up the river to Asuncion. Upon reaching that city Lieutenant Page, in his report, says:

The consular exequatur had been revoked, and the wrath of the chief magistrate extended to the members of the American company, of which Hopkins was the agent. They had been permitted to occupy the cuartel of San Antonio; had improved the grounds, purchased some adjoining lands, erected a saw-mill, and established a cigar factory. They were now forced to give up the cuartel; the controversy waxed hotter and hotter, decrees or bandos intended to embarrass their operations were issued, and at last the cigar factory was closed, thereby virtually closing the business of the company in Paraguay.

Under the circumstances the company were obliged to leave the country, but even in this they were thwarted by President Lopez to such an extent that Lieutenant Page was forced to intervene, and, [Page 1349] after several interviews, to advise him that he should protect the said company. Lieutenant Page says:

Again I called on the President. It was my last interview with his excellency. I reminded him of the assurance he had given me as to the personal treatment of the members of the company and stated the new complaint, informing him at the same time, in decided but courteous language, that my duty obliged me to watch over the rights of American citizens wherever I should meet them abroad.

Lieutenant Page then proceeds to state the difficulties he encountered in getting the consent of Lopez for the departure of the company and the shipping of their goods and chattels. It was finally arranged that the captain of the port should procure a vessel for the purpose, but having failed to do so, and the company being in great fear, Lieutenant Page addressed a note on their behalf to the minister for foreign affairs, alluding to the President’s promises, and advising what would be done if the company “were not allowed to depart by the usual mode of conveyance.”

To this note Lieutenant Page received an answer, returning his notes, and informing him that the President did not read English, and that he must “translate it into Spanish, and they would receive proper attention,” to which Lieutenant Page replied as follows:

I replied to Mr. Falcon, stating that the contemptuous treatment of my official communication, addressed in courteous language, was a thing unprecedented in this age of civilization; that it deprived me of the means of arriving at the intentions of the Government relative to the departure of the Americans, and forced upon me the inference that my request had been refused, thus making it an imperative duty to remove them in the Water Witch. At the same time I informed the, captain of the port that I should receive them and their effects on board and leave at a certain hour.

This was done, and, as Washburne says (History Paraguay, vol. 1, p. 371)—

In this way the Rhode Island Company, with their obnoxious agent, were enabled to escape from the power of Lopez, their enterprise having been broken up and their property seized and rendered valueless or virtually confiscated.

Among other reasons for refusing to comply with the promise to furnish transportation for the company, it was alleged that Hopkins, the agent, had refused to “surrender the papers, deeds, etc., which secured to the company certain lands purchased and paid for” (Page’s Report). Besides that, the company had, among other things, “about 800 arrobas of superior tobacco,” equivalent to about 20,000 pounds, which the President, it is presumed, did not desire to see shipped from Asuncion.

As Lieutenant Page was descending the river with the company, he met Mr. Buckley, a messenger of the United States, bearing the treaty which had been previously made between the United States and Paraguay for the purpose of correcting a mistake inadvertently made therein by terming the United States the “United States of North America.” Lieutenant Page was authorized to present the communication of Mr. Marcy, then Secretary of State; and, upon doing so, his note was returned with an insolent and insulting reply, complaining that it was not accompanied by a translation.

On returning from Buenos Ayres, where the Water Witch had landed the unfortunate company, Lieutenant Page dispatched her to explore the Parana, over which President Lopez had no control. When “about 2 leagues from the extreme southern point of Paraguay” and “within close shot” of Port Itapiric, a Paraguayan fort, the Water Witch was fired upon, the wheel cut away, and “the helmsman killed,” and the United States exploration was defeated.

[Page 1350]

These two incidents, though apparently irrelative to the main question, are alluded to to show the animus of Lopez not only to the company, but to the United States and Captain Page.

The United States and Paraguayan Navigation Company, having been ruined and ejected, as above stated, appealed to their Government for redress.

Secretary Marcy, having investigated the matter, officially declared that they were entitled to indemnity. He stated, among other things, that the “authorities of Paraguay not only broke up the company, but seized its property. The conduct of Paraguay appears to have been not only unjust and oppressive, but to have produced the loss of a large amount of property.” A commissioner (Mr. Fitzpatrick) was sent to Asuncion to present a claim for the damages. He “was repelled with rudeness by Lopez” (Washburn’s History Paraguay, p. 376). Afterwards President Buchanan, in a message to Congress, stated that “citizens of the United States, who were established in business in Paraguay, have had their property seized and taken from them and have been otherwise treated by the authorities in an insulting and arbitrary manner, which requires redress.” At the same time he recommended that Congress furnish means for enforcing the claim. (See message for 1857.)

Congress accordingly adopted the recommendation, and an “expedition, consisting of 23 vessels, was fitted out and sent to the Plata, with instructions to obtain redress, forcibly if necessary.” The Hon. James B. Bowlin was sent with the fleet, as commissioner, to treat with Lopez as to the claim. His instructions were explicit. He was to endeavor to make a pacific arrangement. The company claimed $1,000,000, but the commissioner was instructed by Secretary of State Cass to accept $500,000 as a minimum. If Lopez refused to accede to this the commissioner was authorized to consent to an arbitration, provided that Lopez would admit the “liability of his Government” and agree to “pay whatever a joint commission might declare to have been the losses sustained by the company through his acts.” Commissioner Bowlin was also charged with the negotiation of the treaty with Paraguay, and a demand for damages for the killing of the helmsman on board of the Water Witch. After considerable delay it was agreed that it should be left to a mixed commission of two persons—one to be appointed by the President of the United States and the other by President Lopez. For this purpose a convention was entered into, by which it was agreed that the Commissioners should meet at Washington to determine the amount due the company. The commissioners appointed under this special convention, to wit: Hon. Cave Johnson, appointed by President Buchanan and Don Jose Berges, by President Lopez, met in Washington for the purpose expressed in the terms of the said convention; that is, to “investigate, determine, and adjust the amount of the claims of the said company” (Treaties of the United States, page 654), and though it was expressly stipulated in the said convention that they were to decide only the “amount” due to the said company, the Paraguayan commissioner and his attorneys insisted upon going behind that and upon opening the whole question as to the original liability of the Lopez Government, which was finally done, and the commissioners thereupon pronounced an award, on the 13th August, 1860, deciding that Paraguay was not responsible for any pecuniary loss or indemnity. President Buchanan was greatly chagrined at this decision. It was indeed a serious matter. The award, if just, showed that the United States had incurred an expense of millions upon insufficient cause and in a precipitate manner.

[Page 1351]

The President, however, well knowing that the commissioners, in pronouncing such an award, had exceeded their jurisdiction, sent a message to Congress, stating in effect that they had not decided the question submitted to them by the express terms of the convention—the amount due the company—and that the United States could not with dignity submit to such an award, and that therefore, in his opinion, the whole matter was still open and undecided.

Thus stood the matter at the inauguration of President Lincoln. The new Administration, regarding the award also as null and void for want of jurisdiction on the part of the commissioners, determined to send a representative to Paraguay with instructions to advise President Lopez that the award was not binding upon the United States, and the whole matter therefore still unsettled and open for further negotiation. Mr. Charles A. Washburn was selected for this purpose.

Mr. Washburn in his dispatches Nos. 1, 2, 4, 5, and 7 to Mr. Seward states substantially that he had advised President Lopez fully of the determination of the United States not to abide by the award; that at first President Lopez stated that the whole matter, “all the proceedings, all the forms will have to be gone over again,” but finally through the minister for foreign affairs informed him, Mr. Washburn, that he would have nothing more to do with it.

Mr. Washburn adds that, in his opinion, President Lopez made this sudden change because he thought that if the United States has a war with England on its hands in addition to the great rebellion it will have enough to do for a while without troubling Paraguay. In other dispatches Mr. Washburn alludes to the rudeness and incivility of President Lopez (pére et fils) towards him.

The United States, having thus advised Paraguay of the intention to regard the award as null and void, and having enough to do with the domestic troubles arising out of the late war and the reconstruction of the Union, allowed the matter to rest.

In June, 1870, the company directed the attention of the United States to the status of the claim, and on July 22 the then Secretary of State advised the company that it would be hopeless to expect the Paraguayan Government to be willing to entertain anew the claims at that time. In fact the allied forces were then in possession of Paraguay and there was no Government.

In December, 1885, the claim, together with a petition for redress by the company, was presented to the Hon. Thomas F. Bayard, Secretary of State, and on the 20th December, 1885, Mr. Bayard, in a dispatch of that date, addressed to John E. Bacon, chargé d’affaires of the United States to Paraguay and Uruguay, instructed him, among other things, “to ask the Government of Paraguay to open the award, giving as a reason for the desired action the grave doubt felt by this Government as to the regularity and validity of the arbitration.”

Mr. Bacon, upon receiving this dispatch, addressed a note to his excellency Don José S. Decoud, minister for foreign affairs, advising him of his instructions.

His excellency, after some delay, intimated a desire to discuss the matter verbally, and for that purpose Mr. Bacon went to Asuncion in May, 1886, and while there had several interviews with his excellency, in which the whole matter was freely and frankly, and, as Mr. Bacon then thought, favorably discussed. (See Dispatch No 72, Mr. Bacon to Mr. Bayard, of May 20, 1886.)

Shortly after his return to Montevideo Mr. Bacon received a note from his excellency, stating that his Government declined to accede to [Page 1352] Mr. Bayard’s request to open the award, and that therefore it was unnecessary to reply to the grounds alleged by Mr. Bacon for the invalidity of the award.

This declaration was made upon the ground that the United States had never notified Paraguay of any objection to the award or any determination not to abide it.

In reply to this note Mr. Bacon showed conclusively, from Mr. Washburn’s dispatches, that such notice had been promptly given, and that he, Washburn, had, as special commissioner for that purpose, so advised President Lopez on several occasions. Mr. Bacon, in the same dispatch, insisted that, as the only reason for the refusal upon the part of the Paraguayan Government had thus been unquestionably removed, his excellency should advise his Government to open the award. In reply his excellency stated substantially that the Paraguayan records having been destroyed during the war with the allies, there was nothing to show the facts as set forth in Mr. Bacon’s dispatch, and, after quite an explanation, consented to open the award, and asked that Mr. Bacon advise him of the grounds for setting aside the same.

In reply and in conformity to this request, Mr. Bacon, in a dispatch dated the 3d day of October, 1886, set forth these grounds fully and at length.

Meantime Mr. Decoud went out of office, and no answer having been made to the last-named dispatch, Mr. Bacon directed thereto the attention of his excellency Dr. Don Benjamin Aceval, the newly appointed minister of foreign affairs. His excellency did not reply in writing, but signified a desire to discuss the matter in person. Accordingly Mr. Bacon went to Asuncion in August last, and, after several full and frank discussions with his excellency, he stated to Mr. Hopkins, the agent of the company, that inasmuch as the award had been opened, he thought it useless to attempt to reply to the grounds for setting it aside as set forth in Mr. Bacon’s dispatch. It was shortly thereafter agreed that the Government of Paraguay should pay to the company $90,000 in gold, and a protocol with that view was entered into and signed by his excellency and Mr. Bacon on the 12th August, 1887. The defeat of that protocol in the Paraguayan Congress has been fully stated in the first part of this dispatch, and the present status of the claim placed before the Department.

Calvo (Droit International, 3d ed., vol. 1, 416) is the only authority contradictory of Page and Washburn, and as he was neither present nor a party to the proceedings of Lopez, as they were, his statement should have little weight. As he is an Argentine, however, and his version of the matter has taken current hold of the “Plate Valley,” and been quoted to defeat the protocol, I propose to show that he misconceived the facts of the case, as follows:

Indeed from the foregoing plain and unvarnished statement of the facts, as they occurred, it is difficult to understand the conclusion of Calvo above stated, to wit:

That the precipitate action of the United States was a wrong, not merely to Paraguay, but to the United States, which to support an unfounded claim got up an expedition whose mere preparation cost over $7,000,000.

Messrs. Washburn and Page, one a civilian and diplomatic agent and the other a soldier and gentleman of the United States (both uninterested parties), state positively in their reports and histories, in substance, that President Lopez, having had a personal difficulty with Mr. Hopkins of entirely a private nature, and having no connection with the company, conceived a great hatred to him, and extended it to [Page 1353] the company, to such an extent as to close their factory and ruin their enterprise; that he would not allow them to depart in the accustomed way, and that Lieutenant Page was forced to desist from his exploration and take the members of the company on board of the Water Witch; that shortly thereafter, the Water Witch being engaged in the prosecution of her exploring expedition, was shot into when not in Paraguayan waters by Paraguayan authorities, her helmsman killed, etc., and that Paraguay then also refused to amend the treaty between the two Republics in a simple matter of form.

His excellency Mr. Decoud, in his dispatch to Mr. Bacon, above quoted from, says that all of the Paraguayan records had been destroyed. If so, Messrs. Washburn and Page and the proceedings of the United States Congress, including the messages of President Buchanan, are the only true sources from which the facts can be ascertained, and these, as before stated, disclose them as set forth in this dispatch. Can it be maintained that the United States, after sending two commissioners, Messrs. Buckley and Fitzpatrick, to Asuncion to treat with President Lopez, and his incivility to them, acted precipitately in sending a third commissioner with an adequate force to make him respected, and that claims for the shooting of an American sailor by Paraguayan authorities and for the ejectment of a company of American citizens and the virtual confiscation of their property were or are unfounded claims, as Mr. Calvo concludes? Surely there must have been some misconception in the mind of the author to force him to come to a conclusion so illogical and irrational.

Mr. Calvo, indeed, seems to have labored under misconceptions in his entire statement. He states that Mr. Hopkins purchased a ship in New York, which he called The Assomption, insured it for $50,000, etc., whereas, it is well known and historical (Washburn, History Paraguay, 359) that a company was formed and chartered in Rhode Island, called “The United States and Paraguayan Navigation Company,” composed of men of substantial wealth and character. That they and not Hopkins bought the steamer and cargo, and that her name was El Paraguayo, and not Assomption. He also states that Hopkins fell into difficulties in Paraguay as consul and speculator, when the facts show that the difficulty referred to between Lopez and Hopkins was of a nature entirely personal, arising out of an insult offered to the brother of Hopkins and a lady, the wife of a French consul, whom he was escorting, by a Paraguayan, which insult Hopkins recounted to Lopez, etc. (Washburn, History Paraguay, 363). He also states that by the treaty signed February 4, 1859, the claims of Mr. Hopkins were referred to arbitrators, when in point of fact that treaty does not allude to Hopkins, but is simply “a treaty of friendship, commerce, and navigation.” And if he means to refer to the “special convention” of the same date, the mistake is still more glaring, for that instrument itself expressly states that it was to settle the claims of The United States and Paraguayan Navigation Company,” and not that of Hopkins, nor does the name of Hopkins appear throughout the whole paper. (United States Treaties and Conventions, p. 653.)

Indeed, the result shows conclusively that the claims were not unfounded, inasmuch as Lopez himself apologized and paid $10,000 for the killing of the helmsman of the Water Witch, and Paraguay over thirty-two years afterwards has agreed to recognize and settle the claim of “The United States and Paraguayan Navigation Company.” That is, two of her administrations agreed to the protocol to pay $90,000.

I have paid more attention to the version of Calvo than it may deserve. [Page 1354] I have been induced to do so, however, because it has influenced public opinion here and is manifestly wrong, and was used to defeat the protocol.

Lieutenant Page’s report must be true, as he was an eye-witness of the despotic acts of President Lopez towards the company, and, as he states, was forced to take them on the Water Witch for protection.

I have, etc.,

John E. Bacon.
[Inclosure in No. 193–Translation.]

Mr. Cañate to Mr. Bacon.

Mr. Chargé d’affaires: I comply with a duty in advising you that the Chamber of Deputies have not approved the protocol, in regard to the United States and Paraguayan Navigation Company, signed by your excellency and my honorable predecessor in the charge of the office of foreign relations, dated August 12 last, by reason whereof that arrangement remains ineffectual.

Deploring that the solution which it gave to that claim has not been approved, it pleases me to assure, etc.

Augustin Canate.