Mr. Hay to Mr. Merry.

No. 272.]

Sir: Referring to the question of the repayment to the American merchants at Bluefields of the moneys deposited by them in trust with the British consul at San Juan del Norte, I have to observe, in further acknowledgment of your dispatch No. 308, of the 7th ultimo, that Mr. Sanson, in his note inclosed in that dispatch, bases his argument in the first place on the bare inference that said merchants were in complicity with the Reyes movement because of the alleged—

active participation of their principal clerks and by the gifts which they made to the column organized under the denomination of “rough riders,” besides the public testimony of all those who witnessed the events.

The position thus assumed is untenable, because—

Every man is presumed to be innocent of criminal conduct until the contrary is proven. No evidence is adduced by the Nicaraguan Government in support of the charge against the merchants themselves. If the Nicaraguan Government will produce to the Government of the United States any competent evidence in support of the charge, it will receive most careful consideration. But the Government of the United States can not accept the bare assertion of their guilt. If proofs were submitted of their guilt it would, unless met by counterproofs, terminate the controversy.
The evidence submitted to the Department of State shows that the customs dues were not voluntarily paid, but were paid under threats, menacing the merchants with the detention of their goods in the custom-house, inflicting serious injury upon their property and business interests and subjecting them to a monthly payment of 5 per cent for delay beyond maturity in the payment of the said notes. No evidence has been submitted to this Government that such payments were voluntary. On the other hand, it stands ready to submit proofs to the contrary. The fact that actual violence was not used against those who did not pay is not evidence that those who did pay did so voluntarily.
The customs dues were paid to Mr. A. Salter, who was the collector of revenue appointed by the titular government, and who, before and at the time said payments were made, was continuously exercising his functions as such. When the payments were made he had not been removed from his office, nor had any notice of his removal been given by the titular government.

The statements contained in the paragraphs of said note numbered 3 and 4 amount to an admission that General Reyes was exercising by paramount force during the period from February 3 to 23 last all the functions of government in the Bluefields district. It does not seem just that American citizens should be subjected to oppression by the refusal or neglect of the titular government to afford protection to them, and to punish them for the consequences of its own inability or neglect to afford such protection.

That the notes given for customs had matured, that they were lawfully in the hands of the said collector of revenue, and were collected through menaces by General Reyes, which he was able to enforce to the great injury and possible ruin of the business of the merchants, are incontrovertible facts.

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The Government of the United States does not admit that the captain of the American war vessel did or could recognize or determine the character of the Reyes régime. He was not clothed with such authority, and the statement in said note that the captains of the American and British war vessels said that the Reyes government was not a de facto government is irrelevant to the question. What the British captain did or omitted to do in that regard, and whether the vice-consul and subjects of Great Britain have or have not paid the duties, are matters foreign to the question.

The attitude taken by this Government is in harmony with that assumed by it resulting from the civil war which raged in the United States from 1861 to 1865. After its authority was reestablished it collected no duties on goods imported during the insurrection which had been once paid to the insurgent authorities. The Supreme Court of the United States has decided that a de facto government, or a government of paramount force, exists where it is maintained by active military power within the territories and against the rightful authority of the titular government; but that while it exists it must be obeyed in civil matters by private citizens. In view of this obligation on the part of private citizens to obey such authority existing by paramount force and which exercises supreme authority over a large district or territory and is in the exercise of all the functions of government there, no penalty can be equitably inflicted upon them for such obedience by requiring of them a second payment of debts or dues which have already been lawfully discharged under such circumstances.

It is therefore confidently hoped that the Nicaraguan Government will not be unwilling, in the enlightened consideration of the principles of international justice and of all the circumstances and equities of the case, to consent to the return of said moneys.

You will furnish Mr. Sanson with a copy of this instruction.

I am, etc.,

John Hay.