Papers Relating to the Foreign Relations of the United States, With the Annual Message of the President Transmitted to Congress December 7, 1903
Mr. Tower to Mr. Hay.
Berlin, December 29, 1902.
Sir: I have the honor to inclose to you herewith a copy and a translation into English of the memorandum relating to the claims of Germany against Venezuela, which accompanied the note of the German Government to which my dispatch No. 6 of the 24th December has reference.
I was unable to inclose this memorandum to you with that dispatch, because as the mail was leaving at once there was not time enough, to my regret, to have the translation finished, neither did I wish to delay my dispatch by reason of its far greater importance; therefore, I sent it forward with a copy of the memorandum.
I have, etc.,
Memorandum of the claims of Germany against the United States of Venezuela.
For a long time past the attitude of the Government of the United States of Venezuela in regard to the claims of the Imperial Government has given cause for serious complaint.
These are claims of Germans living in Venezuela since the last Venezuelan civil war and the claims of German contractors for the nonfulfillment of obligations guaranteed by Venezuelan Government contracts.
By the civil wars carried on in Venezuela from 1898 to 1900, and thereafter, since the end of last year, a large number of German merchants and owners of real estate have suffered great loss, partly through the extortion of compulsory loans and partly for the seizure, without pay, of the necessaries of war, but especially the seizing of the cattle required for the subsistence of troops, and lastly because of the pillaging of the houses and the devastation of land.
The amount of the losses during the civil wars from 1898 to 1900 comes to 1,700,000 bolivars (francs), and a loss of 3,000,000, in round numbers, has already been reported during the late civil war.
Several of the sufferers have lost nearly all they had and have thereby made their creditors living in Germany their fellow-sufferers.
The Venezuelan Government openly refuses to meet its obligations and to make reparation for their losses. For settling the claims from 1898 to 1900, which it alone has thus far attended to, the following procedure was adopted:
After it had, firstly, fixed a term of six months during which it would not entertain any claim for damages, it issued a decree, dated January 24, 1901, according to which a commission, consisting solely of Venezuelans, to which the injured parties had to present their claims within three months, was to pass upon said claims.
In three respects were the provisions of this decree deemed unacceptable. In the first place, indemnity claims of earlier date than May, 1899, before Castro became [Page 430] President of the Republic, were excluded, although Venezuela is naturally responsible for the acts of her former governments. Next, diplomatic protest against the decisions of the commission was barred; appeal to the highest Venezuelan court only was admitted, although judicial officials there, as shown in several instances, are actually dependent upon the Government and have at times been removed from office without much ado. Lastly, the claims whose validity might be admitted by the commission were to be paid by bills of a newly created revolutionary loan, which, as past experience has shown, would be practically worthless.
As a matter of fact, the proceedings carried out on the basis of this decree have not led to a satisfactory settlement of the claims.
Specifically, particular German claims brought before the court were rejected without giving any reason therefor. Others were reduced in a manifestly arbitrary manner. For instance, the case of a German cattle raiser who had, in round figures, 3,800 head of cattle, valued at more than 600,000 bolivars, which were taken from him by force, and for which an amount of but 14,000 bolivars was adjudged.
Furthermore, the claims adjudged by the court were not paid in cash, but the persons who had suffered the loss were made to depend upon a financial bill to be submitted to the Congress at some later time.
After the repeated efforts made by the Imperial minister resident at Caracas to induce the Government of the Republic to change the indicated three points had failed, the minister resident positively declared that the Imperial Government now found itself constrained to refuse to recognize the decree. Similar declarations were also made by Great Britain, the United States of America, Italy, Spain, and the Netherlands. The Venezuelan Government took the stand, with regard to these declarations, that it was not ready to treat aliens differently from its own citizens, and that it considered the settlement of claims of the nature of those in question to be a matter of domestic concern with which no foreign power could interfere without violating her sovereignty.
In this condition of affairs the Imperial Government could not do otherwise than to examine itself the German claims and, so far as they proved to be well-founded upon investigation, to bring them to the immediate attention of the Republic.
The Venezuelan Government had, it is true, held out a prospect of bringing about a satisfactory settlement through its Congress. The law adopted by it last spring, however, only repeats the insufficient regulations of the decree of January 24, 1901, and is to be extended to such claims only which could not be placed in due time before the commission appointed through the decree. Every other argument on the affair was repeatedly declined on the grounds of state judicial regulations in force in Venezuela, according to which the diplomatic settlement of war claims was excluded. In this she has established the principle that a diplomatic intervention could be excluded by municipal law. This principle is contrary to the law of nations, as the question whether such a resort is admissible is to be determined not by municipal law, but by the principles of international law.
The correspondence with the Imperial representative at Caracas was carried on by the Government of the Republic in an almost insulting tone, and finally the documents relative thereto, among which some were marked confidential, were published without asking for the consent of the Imperial Government, and furthermore adding a memorandum of an offensive nature.
In the entire demeanor of the Venezuelan Government, the attempt can be found to deny to foreign claims the treatment accorded them by the laws of nations. And it must be added that in the last Venezuelan civil war the Germans were treated with especial animosity, as, for instance, when the violence of the Government troops during the plundering at Barquisemeto was mainly directed against German houses.
This proceeding of the Venezuelan governing power would, in case it remained unpunished for a longer period, create the impression that Germans in Venezuela are left without protection to foreign arbitrariness and seriously impair the prestige of the Empire in Central and South America as well as the large German interests which are to be protected there.
Though the Imperial Government is animated by a manifest desire to maintain friendly relations with the Republic of Venezuela, and far as it is from thinking of molesting the state independence of this Republic or wishing to trespass on its home institutions, it can nevertheless tolerate no longer the action of the Venezuelan Government, hurting, as it does, the honor of the Imperial Government, which therefore believes that it must look toward the settlement of the German war claims in a determined manner. Judging from past experience, success is not expected from further negotiations with Venezuela.
The Imperial chargé consequently handed yesterday to the Venezuelan Government an ultimatum, in which he demands, by order of the Imperial Government, the [Page 431] immediate payment of the war claims from 1898 to 1900, as well as the giving of a satisfactory explanation in regard to the fixing and securing the claims of the late civil war.
The above-described treatment of German war claims has, furthermore, led the Imperial Government to believe that the other German claims, in view of the Venezuelan Government’s failure to meet its treaty obligations, require its protection, in order that they may be duly settled. In this connection the claims of the German firms for the building of a slaughterhouse at Caracas, as also those of the German railroad company for the guaranteed interests, come into consideration.
For the erection of a slaughterhouse at Caracas, a contract was made in 1896 between the Venezuelan Government and the engineer, Karl Henkel, in Hamburg, to which, with the Government’s assent, the Aktien-Gesellschaft für Betonund Monierbau in Berlin, was made a party. The entire building has in the meantime been completed. The Government has, however, stopped the promised weekly part payments, which were to be made to the Betonund Monierbau since the end of 1900, and to Henkel since September, 1901, so that it still owes the two contractors 820,000 bolivars.
During the years 1888 to 1894 the Deutschen Grossen Venezuela Eisenbahngesellschaft built the railroad line—Caracas-Valencia. When the concession for the building was granted the Venezuelan Government guaranteed an interest rate of 7 per cent on a capital of 77,000,000 bolivars. This obligation, which began on February 1, 1894, was not met. In 1896, however, the Government released itself of the guaranty, by paying a sum of 33,000,000 bolivars in certificates of a 5 per cent loan contracted by it in the sum of 50,000,000. The interest on this loan and the amortization have not been regularly paid since 1898, so that the claim of the company at the present time amounts to 7,500,000 bolivars, and is continually on the increase.
The negotiations carried on for some time for the adjustment of the above claims have thus far been without result. The Imperial chargé in Caracas has, therefore, requested the Venezuelan Government in the ultimatum to also furnish a satisfactory security for this claim.
In case no satisfactory answer is made immediately to the ultimatum the Imperial Government would, to its regret, be compelled to take up itself the settlement of the German claims.
Similar complaints to those made against Venezuela by Germany have also been made by other powers, particularly England. The British claims are partly for the unlawful seizure or destruction of English merchant ships, and in part those of English railroads in Venezuela for the destruction of the roads of the line and nonfulfillment of contractual obligations, some being claims of the holders of the English loan of 1881, on which, as on the German loan, no regular percentage or amortization has been paid for a long period, since 1881.
In this matter Germany and England have agreed to take joint action for the satisfaction of all their claims against Venezuela. The British representative at Caracas also delivered an ultimatum on yesterday to the Venezuelan Government.