Mr. Hill to Mr. Hunter.
Washington, October 6, 1899.
Sir: The Department of State has given careful consideration to the claim of Mr. R. H. May against the Government of Guatemala, and to the evidence on file in the Department in relation thereto. The memorials (which are too voluminous for transmission) that have been filed by Mr. Hay and the evidence in support of his claim show:
That Mr. Hay entered into a contract with the Guatemalan Government on April 5, 1898, by which he was to operate the Guatemala Northern Railroad for the period of one year from April 16, 1898, and was to receive from that Government a monthly subvention of $35,000, and also the revenues of the road, and he was to do certain extra work and make certain repairs, such as building bridges, etc., on the railroad, made necessary by floods causing washouts, landslides, etc.
That on July 16, 1898, May entered into a further contract with the said Government to furnish and place in the roadbed 5,000 crossties, and as many more as the Government might require, for which he was to be paid $2 per tie.
That May faithfully performed his obligations under said contracts until October 20, 1898, when he was forcibly and arbitrarily dispossessed by the Guatemalan Government of said railroad property, materials, commissary supplies, drugs, fuel, etc.
[Page 655]The Guatemalan Government denies this contention and pleads in defense that May was dispossessed by civil authority. But no evidence has been adduced to show that he was dispossessed under any judicial proceedings, and in virtue of any judgment or judicial process against him therefor. This Government is convinced by overwhelming proofs on file in the Department that he was dispossessed by military force and was compelled to yield such possession at the peril of his life, if he had refused to comply with the order given to him to “disoccupy.”
The Guatemalan Government further pleads in defense:
- 1.
- That May had, on September 21, 1898, voluntarily suspended the operation of the railroad. The evidence in the Department establishes, on the contrary, that the Guatemalan Government had failed to perform its part of said contract by making payments to May as therein stipulated, and that by its breach of said contract May was unable to pay his employees, thereby causing a strike. Whatever blame there is for the temporary suspension, wholly or in part, of the operation of said road attaches to the Guatemalan Government and can not be imputed to him.
- 2.
- That May had on the 23d day of September, 1898, agreed with the Guatemalan Government for the rescission of said contract, and that in pursuance thereof said Government was placed in possession of the road. Mr. Hay maintains that the terms and conditions of the rescission of the contract were not complied with by the Guatemalan Government. His contention is strongly sustained by the proofs submitted to the Department, and strong color is given to his contention by the treatment to which he has been subjected throughout the entire controversy. It is further strongly sustained by the various and conflicting statements put forward in behalf of that Government as to what those terms actually were.
There arose a grave and indisputable conflict between the parties as to the terms of the alleged agreement of rescission, and this Government does not admit that one of the parties to the contract had the right to decide and determine the conflict by the strong hand, as was done in this case.
Mr. Hay contends that, as a matter of fact, the Guatemalan Government continued to recognize him in operating the road until October 20, 1898, and submits evidence to the Department strongly supporting his contention.
He claims an indemnity in the sum of $127,793 damages, by reason of his forcible dispossession from said property and for the violation of his contract rights, and also damages for the injury to his reputation, credit, and business standing occasioned thereby, and for expenses incurred in defense of his said rights.
In view of the premises, the Government of the United States has come to the conclusion that Mr. Hay is entitled to its intervention in his behalf, and to demand an indemnity which will reasonably and fully compensate him for the damages sustained. Considering the nature of the controversy, it is a fit one for international arbitration; and in view of the friendly relations existing between the two Governments, and moved by the high spirit of justice which is its only object, the Government of the United States is willing, in order to reach an amicable settlement of the controversy, alike just and honorable to both governments, to submit to arbitration the determination of the amount of the damages which should be assessed. You will [Page 656] accordingly communicate said demand to the Government of Guatemala, and you are at liberty, if requested to do so, to furnish to it a copy of this instruction.
I am, etc.,
Acting Secretary.