Mr. Clayton to Mr. Hay.

No. 1583.]

Sir: I have the honor to transmit herewith, for the information of the Department, copies in duplicate of President Diaz’s message delivered to Congress on the 16th instant. The Department’s attention is respectfully called to the President’s remarks under the head of “The Pious Fund claim,” also under the head of “The silver question.”

I have, etc.,

Powell Clayton.
[Inclosure.—Translation.]

Extracts from message of President Diaz.

the pious fund claim.

The first contentious international case, in which the contending parties are Mexico and the United States of America, has, by mutual consent, just been submitted to the permanent arbitration court instituted at The Hague by virtue of the conference called, and justly called, the peace conference. The case in question grows out of a claim presented by the Catholic Church of Upper California against the Mexican Republic and upheld by the Government of the United States, looking to the payment of interest on a fund which was created in the colonial epoch for the benefit of the missions in that former portion of our territory.

Originally, the fund in question was intrusted to the Jesuits for their California missions, but, as a consequence of the royal order which expelled the Jesuits from Spanish territory in 1768, the property constituting the fund passed to the Crown of Spain, which intrusted its administration to a royal commission, in whose hands it was at the time when our independence was consummated.

The National Government continued to administer the fund, which was destined for the reduction of the barbarous Indians and their conversion to Christianity, and though in 1836 it caused the fund to be placed at the disposal of the bishop of California to be administered by him, that arrangement was canceled by decree of Februarys, 1842, and the administration of the fund reverted to the Mexican Government to be employed by that Government in such form and manner as it might determine compatible with the original intention of the founders.

When, in 1848, Upper California was segregated from the Mexican federation, the Mexican Government, taking its stand principally on article 14 of the peace treaty with the United States, concluded in that same year, which pronounced as ended and canceled all debts and claims which citizens of the United States might allege against Mexico, considered itself released from all liability toward the representatives of the Church in California, who, if they believed they had any claim to urge, ought to have urged it against the Government to which the sovereignty of Upper California with all its correlative rights and obligations had passed.

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Not convinced by the considerations to which I have alluded, the Church in question, notwithstanding its lack of competency, went before the Joint Claims Commission which was held at Washington under the convention of July 4, 1868, demanding payment of interest up to the date of the claim. Owing to a lack of agreement between the commissioners, the case was submitted to the arbiter or referee, who, believing he had found grounds for such action, sentenced us to pay a certain sum.

The Mexican Government, notwithstanding that it considered the sentence unjust, paid the interest assessed against it.

On the strength of that decision the California Church has since claimed that the Republic ought to continue paying interest on the fund, and its claims were presented through the diplomatic channel. After an exchange of notes between the representative of the United States and the minister of foreign relations, and seeing that no agreement was reached (we, on our side, maintaining that the arbitral decision of 1875 did noc include subsequent interest and that there is no ground for claiming that interest or for regarding the principal itself as still subsistent), it was decided, with that spirit of conciliatoriness which befits friendly nations, to submit the case to The Hague court for adjudication. With this end in view a protocol binding both parties was signed at Washington on May 22 last fixing the basis for the action of the court, and that protocol, as you will remember, received the approval of the Mexican senate.

I have to add that, in accordance with the stipulations of the agreement in question, both Governments in due course appointed their respective arbitrators who met on the 1st instant at The Hague, and the arbitrators in turn appointed a fifth arbitrator or referee to decide in case of disagreement.

The Mexican Government confides in the acknowledged integrity and high character of the jurists who constitute the respected tribunal, and once more engages itself to comply with the definite sentence uttered in this matter.

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the silver question.

The fate of silver is to us an arduous problem, and as the definite solution can not yet be conjectured the Executive feels obliged to maintain a waiting attitude and to continue its studies with a view to elucidating the various aspects of the question, such as the conditions surrounding the production, circulation, and consumption of the metal in question, and as nearly as possible the advantages and disadvantages which its depreciation has occasioned or may occasion to Mexico. In any event it is necessary to bear in mind that with silver we meet about one-half of what for various reasons the country is compelled to remit abroad and that, notwithstanding our substantial production of silver, it, would be rash for the Republic alone to attempt to regulate the world’s output of the white metal, and in that way to bring about stability in its price.

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