Mr. Bayard to Mr. Belmont.
Washington , February 20, 1889.
Sir: I inclose with this dispatch copies of an extended correspondence which has recently taken place with Messrs. James E. Ward & Co., of New York, agents of the New York and Cuba Mail Steam-ship Company, and with the consular officers of the United States at Matanzas and Havana, in relation to the vexatious requirements of the Cuban customs regulations, by which minute and circumstantial declarations of manifested merchandise, which are unusual and unnecessary in the legitimate course of mercantile and shipping transactions, are demanded by the Cuban authorities; and whereby also fines are imposed without apparent recourse of revision or appeal in cases of shortage in the delivery of cargoes under circumstances admitting of the conclusive establishment of good faith in the transaction.
Although the correspondence herewith transmitted relates to two different causes of complaint, it has seemed convenient to embrace them in one instruction, inasmuch as the conclusion reached in both cases involves the same treatment in their presentation and suggests the same remedy.
The files of your legation for the last sixteen or seventeen years contain a mass of correspondence in relation to the general subject of vexatious and obstructive treatment of commerce by the Spanish colonial officials through the imposition of wholly disproportionate penalties for trivial errors in the preparation of the manifests of vessels and for accidental irregularities in the cargo they carry. It would be convenient for you to familiarize yourself with so much of the correspondence in question as may be applicable to the question treated of in the present instructions. You may in particular consult the correspondence which took place in the early part of 1873, when concurrent action was had by the representatives of the United States, Great Britain, Germany, and Sweden and Norway at Madrid, in the effort to obtain some amelioration of the existing restrictions upon trade; and you will also find the subject referred to in the instructions and correspondence which preceded the negotiation of the original Foster-Ruiz modus vivendi of 1884.
Messrs. Ward & Co. complain in the first instance of the imposition of a fine of $800, at Matanzas, upon the steamer Manhattan, of their line, in July last, because her cargo was found upon discharge to be short four tierces of lard. The facts of the case are very simple and the explanation of the shortage and establishment of complete bona fides in the transaction are conclusive, and yet it appears that the financial authorities of the Island of Cuba raise technical objections to considering the case in the light of the evidence presented and allege their incompetency to revise or reverse the decision of the predecessor of the present general administrator of customs.
It appears that the steamer Manhattan, in the course of her regular [Page 659] trip by way of Havana from New York, arrived at Matanzas on the 28th of July last. When her cargo was unloaded it appeared that the four tierces of lard in question, while borne upon the vessel’s manifest, were not found on board. The maximum fine of $200 for each missing package was thereupon imposed, but was not immediately collected pending inquiry to ascertain whether the missing packages might not have been delivered at the intermediate port of Havana. They were not so delivered. Meanwhile it was ascertained that the four missing tierces had by accident been left upon the wharf at New York, and on the next voyage of the steamer Manhattan they were put on board, carried to Matanzas, and there entered, upon payment of duties, apparently under the original manifest of the voyage of the 28th of July. The agents of Messrs. Ward & Co. at Matanzas seem to have regarded the affair as ended by the production and entry of the missing packages, and took no steps by way of appeal from the fine until the 1st of September following, when they were advised by the collector of customs at Matanzas that the fine in question must be paid. The intervention of the consul of the United States at Matanzas was exerted to procure suspension of the collection of the fine in order to permit the consignees to obtain from New York, under the seal of the Spanish consulate, duly-certified proof that the four tierces of lard had been in fact left on the wharf at New York, which certificate was duly received and communicated by the consul to the collector of customs at Matanzas on the 26th day of September, 1888. The collector, however, persisted in claiming the payment of the fine 5 and on the 14th of December the consignees presented their case anew by way of appeal through the consulate-general at Havana, to which the consulate at Matanzas referred the case. On the 27th of December the consul-general, Mr. Williams, informed the consul at Matanzas that on presenting the case to the intendente-general and the central administrator of customs, he found that the case had already been passed upon and decided two months before by the predecessor of the present intendente, who, it was therefore said, could not reverse the decision.
It is not easy to conjecture the grounds upon which an adverse decision confirming the fine in question was reached, as stated, in October last, when the authorities at Havana must have had before them full explanation of the shortage and conclusive proof of the absence of all bad faith in the transaction, which was furnished by the certificate of the Spanish consul-general at New York, dated September 18, 1888, and when they must have had knowledge that the missing tierces had been subsequently produced and entered in perfect good faith; and the refusal of the financial administrator of authorities at Havana to review the case, upon appeal being made through the authoritative channel of the United States consulate-general at Havana, is equally inexplicable.
The whole proceeding illustrates the constant tendency in the administrative procedure of Cuba to regard the original application of a penalty under a strict and technical, although morally indefensible construction of the letter of the Spanish customs law as a conclusive disposition of the case, and to interpose further technical obstacles to all attempts at explanation, justification, or appeal. In this respect, the Spanish system is in striking contrast with that which is pursued in the United States and the benefits of which are secured to Spanish vessels entering our ports under the existing modus vivendi, as Consul-General Williams well points out in his dispatch No. 912, of January 30 last. While in this country good faith is made the sole test in the case of questioned enforcement of a penalty, and where the law expressly provides [Page 660] that no fine shall be collected or punishment inflicted if satisfactory explanation of the penalized shortcoming can be made, the Spanish procedure appears to follow a directly contrary rule, and to surround with every possible obstacle, any attempt of the parties in interest to explain the case or exculpate themselves from the charge of violation of the law. In brief, while the United States law punishes only the willful infraction thereof, the Spanish law appears to be designed to furnish opportunities for technical exaction of penalties, even though the absence of all wilful intent to do wrong is patent.
It is true that on some occasions in the past, upon representation made through the United States legation at Madrid, conclusively establishing good faith and absence of intent to defraud, fines have been in part remitted although it is to be remarked that even in such instances justice has been but tardily rendered to the injured party, and the redress furnished has been inadequate owing to the alleged incompetency of the Government of Spain to remit the moiety of the fine collected and paid to the informers. The viciousness of this moiety system and its injurious effects upon commercial operations have been heretofore abundantly represented in the instructions sent to your predecessors, and it therefore appears unnecessary in this connection to do more than advert to this point, in the assumption that you will bear it fully in mind in the execution of the present instructions.
But even the fact that tardy and partial reparation may be at times obtained in this round-about way, serves only to emphasize the contrast which it is now sought to point out as existing between the customs administrative procedure in the United States and in Spain and its dependencies. So long as this complete diversity between the two systems of procedure exists, and so long as direct, speedy, and simple resort to administrative relief does not enable those parties who may be injured by the technical application of Spanish law to exonerate themselves from any charge of wilful intent to defraud and to furnish satisfactory explanation of the charges against them, it can not be said that a full and complete reciprocity in this regard exists between the United States and the Spanish Antilles.
Another aspect of the general question now under consideration is presented by Messrs. Ward & Co., respecting the requirements of the Spanish customs law that the manifest of cargo while conforming in every respect to the bills of lading signed by the master or agent of the vessel shall yet contain a minute description of the articles shipped, specifying among other things, not only the generic character of the merchandise but the specific character or composition thereof. The ground of the particular complaint they present in the imposition of small fines in June and July, 1888, and January, 1889, upon the master of the steamer Cienfuegos for using the word “drugs” in the manifests presented, it being claimed by the collector who imposed the fines that under paragraph 26, art. 3, of the general orders to be observed by captains of vessels trading between foreign ports and the Island of Cuba, issued by Spanish royal decree on May 1, 1881, the employment of a vague term like the word “drugs” is punishable by a fine as aforesaid. The complainants, however, represent that the phrase in question is habitually used by the whole commercial world to distinguish mixed consignments of assorted drugs and medicines, and that it so appears, customarily, in bills of lading.
The Spanish requirement is open to many objections, not the least of which is, that it seems to contemplate the regulation or modification by municipal law of the mercantile procedure of other communities by [Page 661] constraining them to adopt new and unusual methods of describing merchandise for which usual, legitimate, and sufficient descriptions are already employed in the course of commerce The change, if effected at all, must be in the bills of lading prepared by the exporting merchants and presented to the agents of the steam-ship companies. Common carriers ordinarily possess no other means of knowledge of the contents of packages than the contents of the bills of lading. They are, besides, constrained under heavy penalties by Spanish law to make their manifests an exact copy of the bills of lading presented.
This phase of the question was very fully discussed at Madrid on the occasion above referred to in 1883. The vexatious character of the constantly recurring lines upon masters of vessels upon trivial allegations of error or irregularity in the preparation of the manifest, for which neither the master nor the owners of the vessel could in any way be justly held responsible, was then thoroughly exposed.
It was pointed out on behalf of the complaining governments that where mercantile usage regarded such descriptions as “shooks and heads,” “flour,” “nails,” and the like, as full and sufficient descriptions of the ordinary merchandise carried, it was a needless and onerous requirement to insist that the shooks and heads should be described as of wood; the flour as made from wheat; and the nails as of iron. Moreover, it appeared clear that it was no part of the business of the ship-owner, as a carrier, to verify the contents of packages as stated in the bills of lading; that they were without the knowledge in most cases which would enable them to correct, when they came to make up the manifests of the vessels, any errors of statements in the bills of lading presented to them; and, further, that any correction of or departure however trivial from the language of the bill of lading, when discovered in the manifest, became a separate pretext for a fine.
Recognizing the justice of these representations, the Spanish Government adopted a more equitable rule in apportioning responsibility for so-called errors in the generic and specific description of imported merchandise, by providing that where an error was discovered to have originated in the bill of lading, and to have been reproduced in the manifest, the consignees should be held responsible, and not the owners or the master of the vessel. It does not appear in the particular instance presented by Messrs. Ward & Co., of the fines upon the Cienfuegos, that this rule was applied, or that the errors, so penalized, originated in the preparation of the steamer’s manifest. It is, on the contrary, to be inferred from the letter of Messrs. Ward & Co., of January 25, that the description of the contents of papers or packages of medicines as “drugs” originated in the bills of lading, and it is further stated in the protest of the master of the Cienfuegos, that such method of description has been used for a number of years on the island of Cuba, and as such, had up to the time of imposing the fines referred to, been accepted by the Spanish custom-house authorities as good and sufficient.
Assuming that this statement of the master of the Cienfuegos is correct (and there seems but little reason to doubt its accuracy, as he speaks of a matter constantly within his knowledge, and under his observation in the course of frequent voyages), it would seem that a new and ingenious device for the imposition of a fine has been discovered by the customs authorities of Cuba. Under the obnoxious system which governs the imposition of such fines, the interested motives of the customs authorities at the port of entry to strain the letter of the law to the utmost against the master or the importer is evident, and this powerful incentive necessarily overlooks considerations of equity, and, by disregarding [Page 662] the most ordinary usages of commercial intercourse, an obstacle is placed in the way of legitimate trade. No just principle of responsibility is discernible in these penal proceedings. No fraud is perpetrated. Duties are not paid upon the manifested descriptions or values of goods. The ascertainment of the exact contents of any package for the purpose of assessing customs duties thereon pertains to the revenue officers of the port of entry, who of course are governed by the precise regulations and requirements of the revenue law; and it is not to be expected, nor is it in any way practicable, that the shippers of goods, much less the mere carriers of merchandise can be made a part of the machinery for the enforcement of all the intricate details of the Spanish revenue laws. The question seems to be much larger in its scope than one of mere form and detail. The enlightened policy of the governments of our day is to extend as far as possible all operations of legitimate commerce, to remove the burdens which oppress and the obstacles which hinder a full and fair interchange of the commodities and productions of neighboring communities; and it is to this end that the present representations are addressed through you to the Government of Spain.
The existing modus vivendi in regard to commerce between the United States and the dependencies of Spain was doubtless a great step forward in this direction, in that it recognized a just principle of reciprocity in the commercial treatment of imports and exports and of the vessels carrying the same. It would seem to be the part of wisdom and foresight still further to extend the principle of reciprocity and to emphasize the principle of non-discrimination by incorporating in the present agreement a provision for the treatment of American vessels and their cargoes in the colonial ports of Spain on a footing approximating to the treatment which is extended in the ports of the United States to Spanish vessels and their cargoes, particularly in respect of penalties for alleged violations of customs laws. It is but fair that we should expect and obtain the same prompt opportunity in Cuba and Porto Rico for appeal to a superior authority for the remission of technical, but often enormously disproportionate, penalties for so called errors, themselves merely technical, not conducive to fraud, not involving any intent of wrong doing, and capable of simple and sufficient explanation in good faith.
I have, therefore, to instruct you to present this important matter for the consideration of the Government of Her Majesty the Queen Regent. In doing so you will adopt such method of presentation as may appear to you best adapted to the end in view, fortifying your argument with such citations of examples and cases in point from the present instruction or from those addressed to your predecessors and to be found upon the files of your legation as you may deem expedient. You will bear in mind that your present object is not so much to obtain consideration and redress of the complaints herein presented, as to lay down a rule of action which will do away with the causes of such complaints in the future.
A convenient method of accomplishing this result would be the inclusion of an article or articles in the existing commercial arrangement, following as far as possible the draught articles 9 and 10 of the proposed commercial treaty with Spain which was submitted to me by your predecessor, Mr. John W. Foster, on the 16th of April, 1885, and which is referred to in my instruction to Mr. Curry, No. 27, of January 22, 1886. For your greater convenience of reference, I here quote the text of those draught articles:
Art. 9. The two high contracting parties mutually stipulate by the present treaty that the fines and pecuniary penalties which may be imposed, and the product of the [Page 663] forfeitures which may result from violations of the laws and of the customs ordinances of the United States and of the islands of Cuba and of Porto Rico, when the fines, penalties, and forfeitures proceed from violations of said laws and ordinances committed in the commerce of importation and exportation of said States and islands, shall be paid in full into the public treasury of said States and islands and shall remain absolutely under the control of the respective Governments, without being-received directly and with any preferred or any other kind of right by any informer or by any other individual.
The laws and regulations of each one of the two contracting parties shall establish the manner of recompensing individually the services rendered by public officials in the prosecution of fraud.
Art. 10. The two high contracting parties mutually agree that no fines or penalties shall be imposed either in the custom-houses of the United States or in those of the islands of Cuba and of Porto Rico on the vessels of Spain or of the United States, or on the captains thereof engaged in the commerce of importation or exportation between the said States and islands, on account of errors or omissions in the manifests of any part of the cargo of said vessels, if it shall appear that said manifests agree with the bills of lading of said cargo, unless it is proved that there has been complicity on the part of the captains or owners of the vessels in the attempt to defraud the treasury by said omissions or errors.
It is further agreed that the conductors or carriers of merchandise with whose importation the attempt may be made to violate the laws, ordinances, or regulations established by the respective Governments to prevent fraud in the commerce of importation or exportation between said States and islands shall not incur responsibility, fine or imprisonment, unless the complicity of the said carriers in the attempt to commit it is proved. Vessels are also exempt from responsibility and fine if complicity on the part of the captains or owners of the vessels in the commission of the fraud is not proved.
These propositions, which reproduce, with some verbal modification and explanation, the text of the commercial convention signed by my predecessor, Mr. Frelinghuysen, having already received the full assent of the Spanish Government, it is not conceived that any objection can now exist to their incorporation in the existing modus vivendi.
It would, moreover, be advisable to add to them a provision for the prompt and equitable disposition of cases in administrative appeal in the first resort to the superior customs authorities of the locality in the way permitted by our laws, and with opportunity satisfactorily to explain the delinquency which may be caused and to establish good faith in the transaction.
The report of your action upon this instruction will be awaited with interest.
I am, etc.,