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Statement on behalf of the United States.

[Submitted by Senator William M. Stewart and Mr. C. J. Kappler.]

This controversy grows ont of donations made by pious persons in the eighteenth century to create a fund for the civilization and conversion of the natives of the Californias, and for the maintenance and support of the Catholic religion in that country. The fund created by such donations was covered into the Mexican treasury by the decree of October 24, 1842, with an undertaking on the part of Mexico to pay interest thereon for the purposes intended by the donors. After the sale of California to the United States the Mexican Government failed to pay the agreed interest on that part of the principal belonging to the missions of Upper California. The questions as to the amount of the principal and the amount of the interest due thereon, with all collateral questions necessary to be decided for the determination of those questions, were submitted to arbitration by the United States and Mexico by the convention of July 4, 1868. The commissioners of the United States and Mexico failing to agree, Sir Edward Thornton, the British minister at Washington, made the decision as umpire, and found that the principal, which was a permanent investment, amounted to $1,435,033; that the part to be apportioned to Upper California was $717,516.50, and that the interest then payable amounted to $904,070.79. He therefore rendered judgment for such interest against Mexico and in favor of the bishops of California. Mexico thereupon paid the judgment, but she has paid no interest on the principal since October 24, 1868. The present proceeding is to determine what interest, if any, is now due and payable to the bishops of California.

I.

The United States contend that all questions relating to the principal investment and the annual interest due theron, and all questions of the rights of the bishops of California thereto, were determined and became res judicata by the decision in the former arbitration.

We will not now discuss the question of res judicata, but refer this honorable tribunal to the argument of the agent and counsel of the United States on that subject. We will, however, venture the assertion that no tribunal of recognized authority, whether national or international, having jurisdiction of the parties and the subject-matter has ever held that any question, either of law or fact, which it was necessary to decide to reach the final judgment was not res judicata and binding upon the parties and their privies in all subsequent proceedings involving the questions thus put in issue and decided. This principle is especially important in international courts of arbitration, because if matters decided by them are not finally settled such courts will naturally fall into disuse.

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II.

We are now conf ronted with the denial by the representative of Mexico that anything became res judicata by the judgment in the former arbitration, except the duty of Mexico to pay the sum of $904,070.79 awarded, and also with his contention that every matter of law and fact upon which such judgment was founded and which was necessarily decided to reach the final conclusion, is still open to investigation and decision. We confess our surprise at the position taken by the representative of Mexico. But without waiving the question of res judicata, and being desirous of treating respectfully any argument the representative of Mexico may advance, we will make the following statement of the case:

The Californias consisted of the peninsula of California and the western part of the Spanish dominions in North America. The harbors of San Diego, Monterey, San Francisco, and numerous other harbors and landings were visited and the rivers and streams connected therewith explored a considerable distance inland by Spanish navigators and adventurers. The explorers had penetrated and described the country sufficiently to show that Upper California was a vast region, blessed by nature with a salubrious climate and boundless resources. It was occupied by numerous tribes of Indians, furnishing an almost unlimited field for the work of the Christian missionaries in converting the natives to the Catholic religion.

As early as 1697 donations were made, and thereafter continued to be made from time to time down to 1765, by the Christian people of Spain to the fund now known as the “Pious Fund of the Californias,” to be used for the civilization and conversion of the natives of the Californias. These donations were made for the avowed purpose of civilizing and converting the natives to Christianity and for the maintenance and support of the Catholic missions in the Californias. In 1735 a large donation was made by the Marchioness de las Torres de Rada and the Marquis de Villapuente. The object and desire of the donors were then fully set forth and particularly described. The habendum of their deed, which is denominated the Foundation Deed, proceeds as follows:

To have and to hold, to said missions founded, and which hereafter may be founded, in the Californias, as well for the maintenance of their religions, and to provide for the ornament and decent support of divine worship, as also to aid the native converts and catechumens with food and clothing, according to the destitution of that country; so that if hereafter, by God’s blessing, there be means of support in the “reductions” and missions now established, as ex. gr. by the cultivation of their lands, thus obviating the necessity of sending from this country provisions, clothing, and other necessaries, the rents and products of said estates shall be applied to new missions to be established hereafter in the unexplored parts of the said Californias, according to the discretion of the father superior of said missions; and the estates aforesaid shall be perpetually inalienable, and shall never be sold, so that, even in case of all California being civilized and converted to our holy Catholic faith, the profits of said estates shall be applied to the necessities of said missions and their support; and in case that the reverend Society of Jesus, voluntarily or by compulsion, should abandon said missions of the Californias, or (which God forbid) the natives of that country should rebel and apostatize from our holy faith, or in any other such contingency, then, and in that case, it is left to the discretion of the reverend father provincial of the Society of Jesus in this New Spain for the time being, to apply the profits of said estates, their products and improvements, to other missions in the undiscovered portions of this North America, or to others in any nart of the world, according as he may deem most pleasing to Almighty God; and in such ways that the dominion and government of said estates be always and perpetually continued in the Reverend Society of Jesus and its prelates, [Page 247]so that no judge, ecclesiastical or secular, shall exercise any control thereon or intervene in or about the same; and all such rents and profits shall be applied to the purposes and objects herein specified, i. e., the propagation of our holy Catholic faith. And by this deed of gift, we, the said grantors, both divest ourselves of and renounce absolutely all property, dominion, ownership, rights, and actions, real and personal, direct and executive, thereover, and all others whatever which belong to us, or which from any other cause, title, or reason may belong, appertain to us; and we cede, renounce, and transfer the whole thereof to said Reverend Society of Jesus, its missions of Californias, its prelates and religious, under whose charge may happen to be the government of said missions and of this province of New Spain, now and at all times hereafter, in order that from the profits of said estates and the increase of their cattle, large and small, their other gains, natural or otherwise, they may maintain said missions in the manner above proposed, indicated, defined, and laid down forever. (Transcript, p. 106.)

III.

The above quotation, and in fact the entire deed, shows a very clear conception on the part of the donors of the magnitude of the undertaking to convert the natives of the Californias. It devotes the entire fund to the civilization and conversion of the natives and the maintenance and support of the Catholic religion in that country, and provides particularly that after the civilization and conversion of the natives, the proceeds of the fund are to “be applied to the necessities of said missions and their support” in the Californias. The language is as follows:

And the estates aforesaid shall be perpetually inalienable, and shall never be sold, so that, even in case of all California being civilized and converted to our holy Catholic faith, the profits of said estates shall be applied to the necessities of said missions and their support. (Transcript, p. 106.)

The donors state in what events the proceeds of the Pious Fund may be diverted to the support of missions other than those in the Californias. This exception is so important in fixing the Californias as the place which the donors intended the proceeds of their gifts to be employed that we quote the language:

And in case that the Reverend Society of Jesus, voluntarily or by compulsion should abandon said missions of the Californias, or (which God forbid) the natives of that country should rebel and apostatise from our holy faith, or in any other such contingency, then, and in that case, it is left to the discretion of the reverend father provincial of the Society of Jesus in this New Spain for the time being, to apply the profits of said estates, their products and improvements to other missions in the undiscovered portions of this North America, or to others in any part of the world, according as he may deem most pleasing to Almighty God; and in such ways that the dominion and government of said estates be always and perpetually continued in the Reverend Society of Jesus and its prelates, so that no judge, ecclesiastical or secular, shall exercise any control thereon, or intervene in or about the same; and all such rents and profits shall be applied to the purposes and objects herein specified, i. e., the propagation of our holy Catholic faith. (Transcript, p. 106.)

The natives did not rebel or apostatize and there is nopretext for claiming that exception as an excuse for the use of the Pious Fund elsewhere than in the Californias. The Reverend Society of Jesus did not voluntarily abandon the missions, but was expelled by the King of Spain. The reverend father provincial of the Society of Jesus in this New Spain did not order tne fund to be used elsewhere because he was also expelled and deprived of his functions, so that he could not control the fund or order its use elsewhere. The royal decree of February 27, 1767, declares:

Therefore, by virtue of the supreme authority vested in me by the Almighty for the protection of my subjects and maintaining the respect due to my crown, I have [Page 248]decided to order the banishment from out of all my dominions in Spain, the Indias, Philippine, and other islands, of the regulars—both priests and laymen—of the Order of Jesus; also such as may have taken up vows and the novices who may desire to follow the calling; and that all the temporalities belonging to the order within my dominions be taken possession of; and for the uniform execution of the same I have given full powers and instructions to Count Arrauda, president of my council, to immediately proceed to take the necessary measures, as set forth by my other royal decree of the 27th of February. (Transcript, p. 410.)

The Pope, after the expulsion of the Jesuits by the King, suppressed the Order of Jesuits, which deprived them of the control of the Pious Fund and of the missions for which it was established. In his bull of July 21, 1773, he said:

But as regards the religious missions, we desire to extend and include all that has been decreed concerning the suppression of the society (of Jesuits), reserving (atthe same time) the privilege of providing the means by which not only the conversion of the infidels, but also the peaceful settlement of dissensions may be obtained and secured with greater facility and stability. (Transcript, p. 335, par. 32.)

The Jesuits having thus been excluded and deprived of all participation in or control of the properties of the Pious Fund or the distribution of the proceeds thereof, the King of Spain assumed to himself the trusteeship of the Pious Fund and the management of the properties belonging thereto. The Franciscan Fathers were substituted in the place of the Jesuits as to Upper California to continue the work inaugurated by them in establishing missions and in educating and converting the natives. The King appointed agents to manage the properties of the Pious Fund, and to collect the proceeds thereof, and authorized the officers of the Spanish treasury to transmit the same to the fathers in the Californias.

IV.

On acquiring her independence Mexico, as we shall hereafter see, followed the policy of Spain and provided by law for the management of the properties of the Pious Fund and the collection and transmission of the proceeds thereof to the fathers conducting the missions in the Californias. In 1836 she made an important change. On the 19th of September of that year she passed a law petitioning the Pope to create the Californias into a diocese and to appoint a bishop therein. The Pope appointed as such bishop the Right Rev. Francisco Garcia Diego, who was consecrated on the 27th of April, 1840. (Transcript, p. 182.) The residence of the bishop was located at Monterey, in Upper California, about 500 miles northerly from the north line of Lower California, and in what was then about the center of the population of the missions in the Californias. The bishop of Monterey remained in office during his life.

The bishop of a diocese has charge of the Roman Catholic Church and all missions, charities, and Christian establishments in his diocese. He also has charge of all the temporalities and the receipt and disbursement of all moneys to be used or distributed within his jurisdiction. The creation of the Californias into a diocese and the appointment of the Right Rev. Francisco Garcia Diego bishop thereof conferred upon him and his successors in office the control of the temporalities of the church and the right to collect, receive, and disburse all moneys belonging to the church, the missions, and all Catholic establishments in such diocese. When, upon the petition of Mexico, a bishop was appointed for the Californias, it became the duty of such bishop to receive and distribute the proceeds of the Pious Fund in his diocese.

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V.

We will now consider the action of Mexico in her dealings with the Pious Fund as successor of Spain.

On the 25th of May, 1832, Mexico passed a law providing for the renting and management of the properties of the Pious Fund, and created a board for that purpose. The sixth paragraph provides that—

The proceeds of such properties (of the Pious Fund) shall be deposited in the treasury of the Federal city, to be solely and exclusively destined for the missions of the Californias. (Laws of Mexico, p. 2.)

And by the tenth paragraph, under subdivision 9, the board was required—

To name to the Government the amounts which may be remitted to each one of the Californias in accordance with their respective expenses and available funds. (Laws of Mexico, p. 3.)

Thus it will be seen that Mexico commenced the discharge of her duties as successor of Spain by adopting a system entirely similar to the one established when the Jesuits were expelled.

A change of policy was adopted, as we have already shown, by Mexico on the 19th of September, 1836, when she applied to the Pope for the appointment of a bishop for the Californias. In the sixth article of that application is is provided that—

The property belonging to the Pious Fund of the Californias shall be placed at the disposal of the new bishop and his successors, to be by them managed and employed for its objects or other similar ones, always respecting the wishes of the founders. (Laws of Mexico, p. 5.)

This article recognized the authority of the bishop of the Californias to manage the properties belonging to the Pious Fund which were situated outside of his bishopric and to use the proceeds thereof for the benefit of the missions in the Californias, which he accordingly did, and appointed Don Pedro Ramirez his general agent in Mexico, who received the rents, paid the expenses, and attended generally to the business of the Pious Fund.

On the 8th of February, 1842, President Santa Anna repealed Article VI of the law of 1836, above quoted, and Mexico again assumed the management of the properties of the Pious Fund (laws of Mexico, p. 5); but she did not attempt to deprive the bishop of the right to manage the temporalities of the church and receive whatever money and property which might be for the use of the missions and the Catholic Church in his diocese.

VI.

The officers of the Mexican Government then demanded a statement of the properties belonging to the Pious Fund from Ramirez, the general agent of the bishop of the Californias, which, after protest, he furnished. The properties embraced in the inventory, as computed in the memorial of the United States, amount to $1,853,361.75. (Memorial, p. 11.) Thereupon the Mexican Government, by the decree of October 24, 1842 (having the force of a legislative enactment), ordered the real estate and other property of the Pious Fund sold and the entire fund reported by Ramirez covered into the treasury, which was accordingly done. In the same decree Mexico undertook to pay interest on the capital so turned into the treasury at the rate of 6 per cent per [Page 250]annum, and pledged the revenue from tobacco for the payment of such interest. The following is the language of the decree:

The revenue from tobacco is specially pledged for the payment of the income corresponding to the capital of the said fund of the Californias, and the department in charge thereof will pay over the sums necessary to carry on the objects to which said fund is destined without any deduction for costs, whether of administration or otherwise. (Laws of Mexico, p. 7.)

The revenue thus pledged was abundantly sufficient to pay the interest. Sr. Juan Rodriquez de San Miguel delivered a speech in the Mexican Congress on the 28th of March, 1844, in which he said that this revenue (from tobacco) was merely nominal, so far as the missions were concerned, but that the officers of the Government received from tobacco with the greatest punctuality the sum of $35,000 monthly. (See Mexican Pamphlets about the Pious Fund of the Californias, Nos. 24, 25, p. 12.)

The failure of Mexico to pay to the bishop of the Californias the interest due him from the revenue on tobacco was not because she did not know to whom the same ought to be paid, for we find in the Mexican archives an entry ordering $8,000 from such revenue transmitted to the bishop of the Californias. The following is the entry:

Minister of the Treasury Sec. 2° 297. His Excell. the President has been pleased to order me to inform your Excell., as I now do, to give an order on the maritime custom-house of Guymas, which shall be payable to Sr. Juan Rodrigues de San Miguel as the representative of the Rt. Rev. Bishop of the Californias for the sum of $8,000, on account of the income belonging to the Pious Fund of California, the properties of which were incorporated into the national treasury; and let this be done with the greatest punctuality, although it may be paid in partial payments. And let this order be obeyed with all exactness, notwithstanding my communication of yesterday to your Excells. under No. 277 that the former order of Jan. 30 should be without effect. Contracted in order that the quantity mentioned in it might be paid by the aforesaid custom-house; and without injury to the assignment of the $500 monthly made upon the product of tobacco from the State of Zacatecas. (Transcript, p. 149.)

Mexico also recognized the right of the bishop to receive the property of the Pious Fund by decreeing on April 3, 1845, that—

The credits and other properties of the Pious Fund of the Californias which are now unsold shall be immediately returned to the reverend bishop of that see and his successors, for the purposes mentioned in article 6 of the law of September 29, 1836, without prejudice to what Congress may resolve in regard to the property that has been alienated. (Laws of Mexico, pp. 7, 8.)

This decree would not have been made unless the bishop, as such, was entitled to receive the property referred to. The fact that no property was actually transferred does not affect the designation of the bishop as the proper official to receive any property that might be transferred.

We call attention to the treatment by Mexico of a fund contributed by the pious people of Spain for the establishment of missions in the Philippines, which is a precedent for the claim of the bishops of California.

In 1844, eight years after the independence of Mexico was acknowledged by Spain, a treaty was entered into for the settlement of a claim of the missions in the Philippines against Mexico. The property out of which the claim of the missions arose consisted of two haciendas, the Chica and the Grande, both situated in Mexico. By the latter convention Mexico agreed to pay, and did pay, $115,000 as principal and $30,000 in addition thereto as interest or rent, The money was [Page 251]paid to Father Moran, the representative of the Philippine missions. (Transcript, p. 25.)

The fact that Mexico recognized the bishop of the Californias as the proper officer to receive the proceeds of the Pious Fund proves that she did not agree to pay interest, intending at the same time to avoid such payment for want of a person to receive the same.

We appreciate the honor of Mexico too highly to suppose for a moment that she would promise to pay interest on the Pious Fund, knowing her promise was nugatory for the want of a payee, and we hope that no one will hereafter accuse Mexico of such insincerity. But suppose that Mexico intended to confiscate the fund which she covered into her treasury and deny that anyone had a right to receive the interest which she agreed to pay, she has now made ample amends for such unfair conduct. She has agreed that this honorable tribunal, if it finds that the former judgment is not res judicata, shall determine “whether the claim be just,” and “render such judgment or award as may be meet and proper under all the circumstances of the case.” (Protocol, p. 3.)

VII.

We have already called attention to the foundation deed of the pious donors, and shown that they dedicated their donations to the Californias and did not authorize them to be used elsewhere, except under certain contingencies, and that such contingencies have not arisen. Consequently the United States have a right to insist that the money shall be used according to the designs of the donors, which is in accord with the repeated declarations of both Spain and Mexico.

The extract from the foundation deed quoted in the reply of the representative of Mexico is misleading. The parts omitted, and represented by stars, are essential in determining the intention of the donors. In order that the materiality of the parts omitted may be judged, we quote in parallel columns a true extract from the foundation deed and the extract used by the representative of Mexico. The parts omitted by the representative of Mexico are printed in italics in the true copy:

true copy. misquoted copy.
This donation, which we make good, pure, perfect and irrevocable, as a firm contract inter vivos from this day, henceforth and forever.
To have and to hold, to said missions founded, and which hereafter may be founded, in the Californias, as well for the maintenance of their religious, and to provide for the ornament and decent support of divine worship, as also to aid the native converts and catechumens with food and clothing, according to the destitution of that country; [Page 252]so that if hereafter, by God’s blessing, there be means of support in the “reductions” and missions now established, as ex. gr. by the cultivation of their lands, thus obviating the necessity of sending from this country provisions, clothing and other necessaries, the rents and products of said estates shall be applied to new missions to be established hereafter in the unexplored parts of the said Californias, according to the discretion of the father superior of said missions; and the estates aforesaid shall be perpetually inalienable, and shall never be sold; so that, even in case of all California being civilized and converted to our holy Catholic faith, the profits of said estates shall be applied to the necessities of said missions and their support; and in case that the reverend Society of Jesus, voluntarily or by compulsion, should abandon said missions of the Californias or (which God forbid) the natives of that country should rebel and apostatize from our holy faith, or in any other such contingency, then, and in that case, it is left to the discretion of the reverend father provincial of the Society of Jesus in this New Spain, for the time being, to apply the profits of said estates, their products and improvements to other missions in the undiscovered portions of this North America, or to others in any part of the world, according as he may deem most pleasing to Almighty God; and in such ways that the dominion and government of said estates be always and perpetually continued in the reverend Society of Jesus and its prelates, so that no judge, ecclesiastical or secular, shall exercise any control thereon, or intervene in or about the same; and all such rents and profits shall be applied to the purposes [Page 253]and objects herein specified, i. e., the propagation of our holy Catholic faith. And by this deed of gift, we, the said grantors, both divest ourselves of, and renounce absolutely all property, dominion, ownership, rights and actions, real and personal, direct and executive, thereover, and all others whatever, which belong to us, or which from any other cause, title, or reason, may belong, appertain to us; and we cede, renounce and transfer the whole thereof to said reverend Society of Jesus, its missions of Californias, its prelates and religious, under whose charge may happen to be the government of said missions and of this province of New Spain, now and at all times hereafter, in order that from the profits of said estates, and the increase of their cattle, large and small, their other gains, natural or otherwise, they may maintain said missions in the manner above proposed, indicated, defined, and laid down forever.
And we, the said grantors, both desire that at no time shall any judge, ecclesiastical or secular, undertake to investigate or intrude himself to ascertain, whether the conditions of this donation be fulfilled; for our will is that in this matter, there shall be no pretence for such intervention, and that whether the said reverend Society fulfils or does not fulfil the trusts in favor of the missions herein contained, it shall render an account to God our Lord, alone.”
(Transcript, p. 106.)
This donation, we make to said missions founded, and which may hereafter be founded, in the Californias, as well as for the maintenance of their religious, and to provide for the support and conduct of divine worship, as also to aid the native converts and catechumens by the same (probably “from the misery”) of that country; so that if thereafter, by God’s blessing, there be means of support in the “reductions” and missions now established, — as ex. gr. by the cultivation of their lands, thus obviating the necessity of sending from this country clothing and other necessaries, the rents and products of said estates shall be applied of (surely “to”) new missions
* * * *
and in case the Society of Jesus, voluntarily or by compulsion, should abandon said missions of the Californias, or, which God forbid, the natives of that country should rebel and apostatize from our holy faith, or in any other such contingency, then, and in that case, it is left to the discretion of the reverend father provincial of the Society of Jesus in this New Spain, for the time being, to apply the profits of said estates, their products and improvements, to other missions in the undiscovered portions of this North America, or to others in any part of the world, as he may deem most pleasing to Almighty God; and in such a way that the government of said estates be always and perpetually continued in the reverend Society of Jesus and its prelates, so that no judge, ecclesiastical or secular, shall exercise any control therein,
* * * *
we, desire that at no time shall this donation be set aside nor shall any judge, ecclesiastical or secular, undertake to investigate or intervene to ascertain, whether the conditions of this donation be fulfilled; for our will is that in this matter there shall be no pretence for such intervention, and that whether the said reverend Society fulfils or does not fulfil the trusts in favor of the missions herein contained, it shall render account to God our Lord, alone.”
(Answer to Memorial in English, p. 4.)

In comparing the foregoing extracts, the materiality of the parts omitted by the representative of Mexico will be readily observed.

VIII.

The contention of the representative of Mexico that all the natives in Upper California have been converted, and that, therefore, there [Page 254]is no necessity for the use of the interest on the Pious Fund in that locality, rests on two mistakes:

1.
There are many thousands of natives in Upper California who are still unconverted.
2.
It was not the intention of the donors, as we have already seen, that the use of the proceeds of the Pious Fund should terminate upon the conversion of all the natives in the Californias. On the contrary, they intended that the use of such proceeds should be continued indefinitely for the benefit of Christian missions in that locality. For the purpose of calling particular attention to the provision in the foundation deed which makes the use of the Pious Fund in the Californias perpetual, we again quote one of the parts omitted in the extract from the foundation deed used by the representative of Mexico, which is follows:

And the estates aforesaid shall be perpetually inalienable, and shall never be sold, so that, even in case of all california being civilized and converted to our holy Catholic faith, the profits of said estates shall be applied to the necessities of said missions and their support. (Transcript, p. 106.)

The foregoing provision shows that the donors anticipated the argument of the representative of Mexico that there would be no further use for the Pious Fund in the Californias after all the natives were converted and gave a complete answer thereto. Such conversion is not yet accomplished. The necessities for the continuance of the work of conversion and the maintenance of the Catholic faith in the missions will remain indefinitely, and the donors made special provision therefor.

IX.

The contention of the representative of Mexico that the United States, by the treaty of Guadalupe Hidalgo, proclaimed July 4, 1848, which, among other things, ceded a large territory, including upper California, to the United States for the sum of $15,000,000, discharged Mexico from all demands on account of the Pious Fund, can not be maintained. Article XIV of the treaty, quoted by the representative of Mexico as establishing a full defense to this proceeding, reads as follows:

The United States do furthermore discharge the Mexican Republic from all claims of citizens of the United States, not heretofore decided against the Mexican Government, which may have arisen previously to the date of the signature of this treaty, which discharge shall be final and perpetual, whether the said claims be rejected or be allowed by the board of commissioners provided for in the following article, and whatever shall be the total amount of those allowed. (Appendix to record, p. 16.)

There are several conclusive reasons why the foregoing article does not discharge Mexico from the obligation she assumed to pay interest on that part of the Pious Fund dedicated to Upper California. The United States did not undertake to exonerate Mexico from her obligations to persons who were then Mexican citizens and who might thereafter become citizens of the United States on compliance with the provisions of the treaty. The undertaking of the United States was confined to the then citizens of the United States. Neither the Roman Catholic Church nor its dignitaries or members of its fold were citizens of the United States at the time ratifications of the treaty were exchanged. Whether they would ever become citizens of the United States depended upon an election or option to be exercised by them after such exchange of ratifications.

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The Pious Fund, by the action of Mexico, was a permanent investment upon which she agreed to pay interest annually. No claim for interest has been made by the United States in behalf of the bishops of California for any installment of interest which became due and was payable previous to July 4, 1848, but interest arising after that date was submitted to arbitration under the convention of July 4, 1868, and decided in favor of the United States. The claim for interest in this proceeding has arisen subsequent to October 24, 1868. There is nothing in the treaty which can give the slightest pretext for the assertion that the United States either agreed to extinguish the obligations of Mexico to Mexican citizens or to pay the debts of Mexico to citizens of the United States which might become due after the execution of the treaty.

X.

The recital of the representative of Mexico of various statutes of his Government confiscating church property, barring debts by limitation, and fixing times within which demands against the Mexican Government must be presented has nothing to do with this proceeding. Whatever efforts Mexico may have made to close her own tribunals against the claim of the bishops of California by her local legislation do not concern us. It is sufficient for the purpose of this proceeding that both the United States and Mexico have agreed that the alleged obligation of Mexico to pay interest to the bishops shall be tried before this honorable tribunal.

Fortunately, Mexico does not now repudiate the various recitals in her statutes that her intention was to preserve, maintain, and apply the Pious Fund to the conversion and civilization of the natives of the Californias and for the maintenance and support of the Catholic religion in that country, but on the contrary agrees that this honorable tribunal shall, in the event the matters are not res judicata, determine whether the beneficiaries of the Pious Fund have a just claim against Mexico, and “render such judgment as may be meet and proper under all the circumstances of the case.”

This honorable conduct on the part of Mexico ought not to be disparaged by her own representative or anyone else by an intimation that she is willing to oppose the rendering of a judgment which shall be just and equitable. Even if Mexico had confiscated the Pious Fund before California became a part of the United States, why has she not the right to waive any advantage such confiscation or any other arbitrary act might afford her and submit the justice of the claim as it originally existed to arbitration? If the claim is just, no act of Mexico, however arbitrary or wrong, stands in the way of a judgment directing the payment thereof, because by her agreement to arbitrate she has swept away all defenses to the claim of the beneficiaries of the Pious Fund except the plea that it is unjust.

Can there be any question of the justice of the claim? If there was no Pious Fund of the Californias, why did Mexico, by the law of May 25, 1832, provide for leasing the same? If the proceeds of such property when leased did not belong to the missions of the Californias, why did Mexico declare, in the sixth section of that law, that “the proceeds of such property shall be deposited in the treasury of the federal city to be solely and exclusively destined for the missions of the Californias?” If the proceeds were not to be remitted to the Californias, why did Mexico, in section 10, subdivision 9, of that law require [Page 256]the administrators of the fund “to name to the Government the amounts which may be remitted to each one of the Californias in accordance with their respective expenses and available funds?”

Again, why did Mexico on the 24th of October, 1842, in the preamble of the decree directing the sale of the Pious Fund, say that the decree of February 8, 1842, “was intended to fulfill most faithfully the beneficent and national objects designed by the foundress without the slightest diminution of the properties destined to the end?” Why did Mexico pledge, by the third section of that act, the revenues arising from tobacco for the payment of interest on the Pious Fund, “without any deduction for costs, whether of administration or otherwise?” Why did Mexico, by the law of April 3, 1845, order all unsold property of the Pious Fund restored to the bishop if it was not the property of the missions and the Catholic Church of the Californias?

In short, why did every law or decree enacted or promulgated by Mexico recognize the existence of the Pious Fund, and also that it belonged to the missions of the Californias and the Catholic Church in that region? Why was neither the existence of the Pious Fund nor the objects and purposes of its founders not questioned until after the beneficiaries of the fund became citizens of the United States? If the Pious Fund was not the property of the missions and the Catholic Church of the Californias, why did not Mexico claim it as her own? Why did she continually declare, in effect, that it was not her property by asserting that it belonged to the missions and the Catholic Church of the Californias?

Very different questions are submitted to this tribunal from those which the arbitration under the convention of 1868 was called upon to decide. Under that convention the arbitrators were not authorized to disregard any defense which would be allowed under the ordinary rules of procedure in courts of justice. Confiscation, or any other arbitrary act which would have been a bar in Mexico to the recovery of the Pious Fund while California was a part of that country, might have been urged as a defense under the general language of Article II of the protocol of 1868. But the issue submitted to this tribunal, in case the matters are not res judicata, is different in that it submits the justice of the claim without regard to technical defenses. This tribunal is not restrained from “rendering such a judgment as may be meet and proper under all the circumstances of the case” by any matter not affecting the justice of the original claim. All honor is due to President Diaz for the liberal conditions of this arbitration. He has fully reciprocated the example of the United States in returning to Mexico the money awarded by the former arbitration to Weil and La Abra, hereafter mentioned. His agreement that full justice shall be done to the missions and the Catholic Church of California, waiving all excuses and objections not affecting the justice of the claim, is a full and cordial response to the action of the United States in protecting Mexico from dishonest demands.

XI.

The complaint of the representative of Mexico, under various headings, that the United States are demanding of Mexico extravagant and inequitable claims is unreasonable. The United States demand nothing from Mexico which the officers of the United States do not believe, after careful investigation, to be absolutely just. The good faith of [Page 257]the United States is illustrated by their treatment of the Weil and La Abra claims. Those claims were submitted to and decided by the arbitration under the convention of July 4,1868, and the aggregate of the judgments in the two cases rendered, against Mexico amounted to $1,130,506.55. Upon the suggestion by Mexico to the United States of a discovery of false evidence and perjury in obtaining such judgments, the United States, although Mexico had paid the money into their treasury, refused to pay the same to the claimants. Congress thereupon passed a law giving the courts of the United States jurisdiction to hear and determine both of those cases, and after a full and fair hearing such courts held that the claims were fraudulent; whereupon all the money deposited in the treasury for the payment of the Weil and La Abra claims was refunded to Mexico in gold coin. But the United States have continued to insist upon the solemn obligation of Mexico to pay to the bishops of California the interest on the Pious Fund dedicated for use in the Californias. The character and standing of the various Secretaries of State of the United States who have called the attention of Mexico to and reminded her of her obligation to make such payment ought to be accepted as some proof of the good faith of that Government.

The following is a list of the officers of the United States who have conducted the negotiation with Mexico which has terminated in the present proceedings:

  • Hon. William F. Wharton, Acting Secretary of State, August 3, 1891. (Transcript, Diplomatic Correspondence, p. 23.)
  • Hon. James G. Blaine, February 19, 1892. (Same, p. 24.)
  • Hon. John W. Foster, September 15, 1892. (Same, p. 24.)
  • Hon. Walter Q. Gresham, June 8, 1893. (Same, p. 24.)
  • Hon. John Sherman, October 30, 1897. (Same, p. 122.)
  • Hon. W. R. Day, Acting Secretary, July 17, 1897. (Same, p. 22.)
  • Hon. John Hay, December 4, 1899. (Same, p. 46.)

XII.

We will now briefly consider the complaints of extravagant demands and bad faith made by Mexico against the United States.

The claim of the United States that the interest due to the bishops of California should be paid in the gold coin of Mexico and not in depreciated currency is made one cause of complaint. Mexico can hardly afford to insist upon paying the bishops of California in silver, since she has recognized her duty to pay her other foreign obligations in gold. The interest on her bonded debt which is dealt in by foreigners is paid in gold. Her recognition of the money current in commercial nations has strengthened her credit and been of great benefit to her both at home and abroad. The payment to the bishops in silver would be grossly inequitable.

At the time Mexico sold the estates belonging to the Pious Fund and covered the entire property belonging to that fund into her treasury, and undertook to pay interest thereon, her silver coin was at a premium over the gold coin of any other country. In the second section of the act of October 24, 1842, we read:

The minister of the treasury will proceed to sell the real estate and other property belonging to the Pious Fund of the Californias for the capital represented by their annual product at six per cent per annum. (Laws of Mexico, p. 7.)

[Page 258]

In the unsettled and revolutionary condition of Mexico the vast haciendas belonging to the Pious Fund could not possibly have produced a net income corresponding to their actual value. Mexico had just passed through a struggle for independence and was in a revolutionary condition. It is certain that no hacienda in that country was producing at the time a net revenue equal to 6 per cent on the value of the property. It is even doubtful if 2 per cent was then realized upon any hacienda in the Republic. The property sold must have been worth at least three times what was received and covered into the treasury. The former members of the tobacco monopoly, to wit, Messrs. Don Francis de Paula Rubio and brother, Don Manuel Fernandez, Don Joaquin Maria Errazu, Don Felippe Neri de Barrio, Don Manuel Escandon, Don Benitto de Magna, and Muriel Brothers, made an offer of purchase within twenty-four hours from the passage of the law. These gentlemen knew the value of the property and were ready to purchase as soon as, and perhaps before, the law was passed. Their prompt action indicates that they realized that the sale of the haciendas at the price fixed was an opportunity to make money. (See deed, Exhibit D, to replication on behalf of the United States.) Since Mexico by that sale must have sacrificed a very large part of the property of the Pious Fund, it would be extremely inequitable to allow her to pay such an obligation in depreciated money. If Mexico keeps in circulation depreciated currency, it should not affect the claim of the bishops. She coins both gold and silver, and her gold coin corresponds in value to the money she covered into her treasury belonging to the Pious Fund; but her silver coin is at a discount, when compared with gold, of nearly 60 per cent.

While Mexico may require her citizens to receive any kind of money which by her law is current, it is grossly inequitable for her in her capacity as trustee to pay in a depreciated currency an obligation contracted by her when her money was gold or its equivalent. Notwithstanding Mexico, as we have already seen, forced the sale of the properties of the Pious Fund without the consent of the beneficiaries, she has failed to perform her undertaking as trustee in the payment of interest. The former award reduced the annual installments of interest due the bishops to $43,080.99, which must be accepted if the matter is res judicata. In that case simple interest at 6 per cent on each of such installments from the time it became due, without including the principal, amounts to $2,858,652, which, according to the principles of equity, Mexico ought to pay in gold. It is not “meet and proper under all the circumstances of the case” to exonerate Mexico from the payment of interest and permit her to pay in depreciated currency. Article X of the protocol, submitting the kind of currency in which the judgment is to be paid, must be considered in connection with the power conferred upon this honorable tribunal to do justice between the parties.

XIII.

There is another consideration which the representative of Mexico has entirely overlooked, and that is the liberality shown to Mexico in the judgment rendered by Sir Edward Thornton, the umpire, in allowing Upper California only one-half of the interest due on the Pious Fund belonging to the two Californias. The donations were made for [Page 259]the conversion of the natives of the Californias and for the maintenance and support of Catholic worship in that region. It is true that the work was commenced by the Jesuits in Lower California, because that locality was more easily reached from Mexico than the great body of the country contemplated by the donors. Comparatively little was accomplished in Lower California on account of the barren and desolate character of the country, which afforded sustenance for only a very few natives, and could not be made the home of any considerable population. Father Rubio, who gave evidence before the mixed commission in 1868, declared that he was 68 years of age at that time; that he had resided at the Mission of San José for thirty years, and at the Mission of Santa Barbara nine years; that he had been most of that time a vicar general in the Catholic Church, and had been engaged in instructing and converting the natives. He testified that the number of missions in Upper California was 21 and in Lower California 13, giving the date of the establishment of each; that in Upper California in 1832, when he first went there to reside, there were 17,364 converted natives living at the several missions; that in Lower California there were scarcely any Indians in the missions; that in some of the missions there were none; that more than seven-tenths of the whole population of the Californias subject to the missions belonged to Upper California. (Transcript, p. 148.) The reason for the diminution of the population of Lower California was the want of water and fertile soil.

In 1857 Mexico appointed a commissioner by the name of Ulises Urbano Lassépas to examine into and report upon the resources and population of Lower California. The examination was very thorough and the report exhaustive. The country was found to be practically a rocky, barren waste, almost destitute of water, and the population to be very small and continually growing less. The report fully verifies the testimony of Vicar-General Rubio. (See De La Colonization de la Baja California, by Ulises Urbano Lassépas-Primer Memorial. 1859.)

The writer visited the missions of Upper California in 1850. At that time he conversed with many reliable persons familiar with Lower California, who described to him the country and the inhabitants thereof. Lower California was said to be destitute of water for irrigation and practically uninhabited. The missions of Upper California were in a more prosperous condition. They had immense herds of cattle, horses, and sheep, and cultivated fields sufficient to more than supply the inhabitants with vegetables and cereals. Their vineyards and orchards were especially important. They furnished grapes and fruit for a population of many thousands of miners.

The writer was much impressed with the fact that the greater part of the Pious Fund was not only intended to be used but was actually used in the fertile valleys of Upper California, where the field for missionary work and the necessity for funds for that purpose were many times greater than in Lower California. If the work done and the natives converted in the two Californias, when the writer visited that country in 1850, were compared, it would be an exaggeration to assume that as much as one-tenth of the proceeds of the Pious Fund was required to be used in Lower California. Certainly the result produced by the expenditure was at least as much as ten to one in favor of Upper California. The statement of Vicar-General Rubio that in 1832 seven-tenths of the whole population of the Californias subject to the missions belonged to Upper California was undoubtedly true. [Page 260]Notwithstanding these historical facts, the umpire in the former case, to make it as easy for Mexico as possible, gave only one-half of the interest on the Pious Fund to Upper California. If the matter were not res judicata, but were open to reexamination as to all the facts, the United States would confidently contend for 85 per cent of the interest instead of one-half, which would then be a more liberal allowance to Lower than to Upper California.

XIV.

The statement of the representative of Mexico that there is no legal basis on which to claim anything from the donation of properties made by the Marchioness de las Torres de Rada and the Marquis de Villapuente to the Pious Fund is not sustained by the evidence. He has not pointed out how Mexico has lost one dollar by any alleged defective title of the estate of the marquis, nor what claims the heirs of the marquis have against Mexico in consequence of the sale of the property and the covering of the proceeds thereof into the treasury. On the contrary, the value of the estate which the umpire rejected and excluded from the fund was more than the amount demanded by the claimants under the marquis in full satisfaction of their pretended judgment. (Transcript, p. 520.) In addition to that, the representative of Mexico has utterly failed to show by the evidence adduced that Mexico has not retained in her treasury the entire proceeds from the sale of the Cienaga del Pastor, amounting to $213,750. The evidence of such disbursements, if it exists, is in the possession of Mexico, and that Government not having furnished such evidence it is fair to presume no disbursements have been made in consequence of the alleged attachment.

It must be presumed, in the absence of evidence to the contrary, which, if it existed, Mexico could and would produce, that the entire proceeds of the sales of the property of the Pious Fund were covered into the treasury and there remain. There is no evidence whatever in the record to warrant the exclusion of the $213,750 for which the Ciénaga del Pastor was sold.

The amount now due, if the matter is not res judicata, as we have already seen, is $1,853,361.75, but the American commissioner, in the arbitration under the convention of 1868, leaving out sundry small items as bad debts or claims not sufficiently proved, and also the value of the Ciénaga del Pastor, reduced the total to $1,436,033. The umpire at first concurred in this amount, but afterwards deducted $1,000 on account of an error in calculation. He found the principal to be $1,435,033, and awarded one-half thereof, or $717,516.50, to Upper California.

On an accounting, if the matter is not res judicata, the claimants would contend that the Ciénaga del Pastor, valued at $213,750, with 6 per cent interest thereon since July 4, 1848, together with the other items mentioned in the memorial, should be added to the capital of the Pious Fund, and that the bishops are entitled to 85 per cent thereof, making an aggregate of at least $3,108,207.52 now due. (Memorial, p. 11.)

The charge of exaggeration of amounts must be disregarded, because Mexico has the records to prove such exaggerations, if they exist, and no such proof has been furnished. In the former arbitration [Page 261]Sir Edward Thornton, although he felt constrained to adopt the views of the commissioner of the United States, who excluded from his finding a large portion of the claim, was manifestly dissatisfied because the Mexican Government did not exhibit in its defense the records in its possession showing the actual amount which was covered into the treasury. He said:

A larger sum is claimed on the part of the claimants, but even with regard to this larger sum the defense has not shown, except indirectly, that its amount was exaggerated.

There is no doubt that the Mexican Government must have in its possession all the accounts and documents relative to the sale of the real property belonging to the Pious Fund and the proceeds thereof; yet these have not been produced, and the only inference that can be drawn from silence upon this subject is that the amount of the proceeds actually received into the treasury was at least not less than it is claimed to be. (Transcript, p. 609.)

Notwithstanding the matter was called to the attention of Mexico by Sir Edward Thornton thirty-three years ago in the forcible language above quoted, the records and accounts referred to by him are still retained in the archives of Mexico, to which the claimants have no access. The nonproduction of the records which ought to show the amount of the Pious Fund covered into the Mexican treasury leaves no other inference than that “the amount of the proceeds actually received into the treasury was at least not less than it is claimed to be.”

The introduction of a book relating to legal proceedings which took place long ago without proving that it affected the fund covered into the treasury, is indirect evidence that there is nothing in the Mexican archives showing that the amount claimed is excessive. The inventory of Ramirez and the items particularly described in the memorial can not be charged by the defense as excessive in the absence of proof to sustain such charge. The basis for everything claimed in the memorial must have been of record and must now be in the possession of the defense. No evidence having been produced by Mexico to contradict the claimants’ case, the presumption that the amount stated is correct will prevail.

XV.

We have made the foregoing statement of the case, not because we doubt that the decision in the former arbitration is res judicata as to the amount of interest annually due to the bishops of California from the Mexican Government, but to answer charges of unfairness against the United States.

  • William M. Stewart,
  • Charles J. Kappler,
    Of Counsel.