The Acting Secretary of State to Chargé Hutchinson.

No. 222.]

Sir: The Department has received Mr. Bowen’s No. 316, of the 21st ultimo, inclosing a copy and translation of the note of Señor Sanabria, Venezuelan minister of foreign relations, of the 20th of August, in reply to Mr. Bowen’s note of the 20th of the same month, requesting the Venezuelan Government to direct its attorney-general to move the discharge of the receiver and the restoration of the Bermudez Lake to the New York and Bermudez Company, its lawful owner, pending the trial and the determination of the suits lately brought against that company by the Venezuelan Government.

From the tenor of Señor Sanabria’s note, it would naturally be inferred that he has not correctly apprehended the purport of this government’s request.

While not directly declining to comply with that request, Señor Sanabria seems to suppose that he has impliedly denied it when he declares that “as is well known, the United States has maintained on more than one occasion the principle that actions relative to the interpretation or existence of contracts made by its citizens with foreign governments can only be decided by the courts of the nation where the contracts were made and in conformity with the laws that existed there.”

The United States has undoubtedly acted on more than one occasion upon the principle that questions relative to the interpretation or existence of contracts made by its citizens with foreign governments presumptively fall within the cognizance of the local courts, and it has said nothing inconsistent with that principle on the present occasion. It has, on the contrary, been endeavoring to uphold it against the action of the Venezuelan Government in depriving the New York and Bermudez Company of its extensive and valuable properties on a judicial order made ex parte and in entire disregard of the company’s titles.

It is established by the records in the case that the Venezuelan Government, represented by its attorney-general, went into one of its courts, and upon a complaint, in which the mining and land titles obtained by the company in 1888 were disregarded, secured an order for the appointment of a “receiver” for the company’s property on the pretext that the company was a mere “lessee” under the Hamilton concession of 1883, and this was done ex parte, without affording the company an opportunity to show cause why its property should not be so taken from it.

While it is stated in the order for the appointment of a “receiver” that the “extraordinary circumstances” required by law to justify such action had been established, and while it has been stated that the “receiver” was appointed as a “precautionary measure,” no substantial foundation whatever has been shown for either of these assertions, [Page 948] no disclosure or description has been attempted, and this government is at a loss to imagine any that could be suggested with a show of seriousness, much less of plausibility. As to the “extraordinary circumstances” that were alleged to exist, the only one which any attempt was made to establish was that the company had failed to “canalize” or dredge an obscure stream in the recesses of the old state of Bermudez, in no possible way connected with the use of company’s property. The supposition that this failure, which, if it existed, had existed for twenty years without any complaint or remonstrance on the part of the Venezuelan Government, suddenly created an emergency which justified the seizure of the company’s property, would be manifestly frivolous, even if the company had been a mere “lessee” under the Hamilton concession.

But it is not alone the frivolity of the charge that shocks one’s sense of justice in the present instance. It is a fact that on July 17, 1900, upon the application of Mr. A. H. Carner, the “present receiver” of the property, but then managing director of the New York and Bermudez Company in Venezuela, the Venezuelan Government, through Dr. Guillermo Tell Villegas Pulido, its minister of fomento, issued a decree declaring—

That the New York and Bermudez Company has fulfilled up to date the engagements and obligations of the contract of which it is concessionary, entered into with the executive power on the 15th of September, 1883, to which additions were made on the 19th of October following, approved by National Congress by law of the 5th of June, 1884, and confirmed by the high Federal court by sentence of August 23, 1898, and that therefore the said contract is in full force and effect.

General Castro was then, as he is now, President of Venezuela. The Hamilton concession had been in force for seventeen years, and if the stream in question is “uncanalized” now it was in the same condition then, nor has there been during the intervening four years any complaint or representation to the company of any failure on that score. It is evident, therefore, that the supposition of emergency is destitute of foundation, so that it would afford no justification for the seizure of the company’s property, even if the company had been a mere “lessee.”

But the fact was well known to the Venezuelan Government that the company, availing itself of the Venezuelan laws governing the acquisition of titles to mines and wild lands, obtained on December 7, 1888, by purchase a definite title conveying to it the Bermudez Lake deposit and a right to work it for ninety-nine years; and, further, obtained on the 14th of the same month the title to and absolute property in a tract of public lands, including and extending beyond the asphalt deposit itself. Of these facts the Venezuelan Government can not deny knowledge, since the titles have been formally recognized by it and form part of its records. Indeed, when President Crespo, by his decree of January 4, 1898, attempted arbitrarily to terminate the Hamilton concession, he expressly reserved the rights belonging to the company by virtue of its mining titles. These titles have not been impeached; but if they had been they would, by the universal principles of jurisprudence, written in the law of Spanish America as well as of the United States, give the company a clear right to hold the property till they were set aside by a legal decision duly and fairly rendered.

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But while the so-called “receivership” was decreed in entire disregard of the company’s rights and in a manner neglectful of the plainest principles of justice, it is also necessary to point out that in its execution and management it has borne none of the characteristics of a legal proceeding.

The proceedings of the “receiver” have been conducted clandestinely, and every device has been employed to conceal his transactions. Charters of vessels to take away the company’s property have been made secretly, and even their existence has been denied. When the steamer Kennett, whose chartering for Guanoco had been repeatedly denied, lately arrived in New York from that place, with asphalt taken by the “receiver,” not from Bermudez Lake, but from deposits previously mined and stored by the company, all information was refused as to the destination of her cargo, which was consigned to the captain, who in turn declared that he knew nothing about it.

These transactions appear to bear none of the marks of a bona fide receivership, but, on the contrary, they characterize the recent proceeding as in fact an act of arbitrary and unlawful spoliation, though clad in legal forms.

The Government of the United States has sought to avoid even the appearance of interfering with or making any demands upon the Venezuelan courts, and it has not so interfered nor made any such demands. This government has, however, requested that of Venezuela to undo its own wrong by directing its attorney-general to go into court and ask for the discharge of the “receiver,” so that the property of the New York and Bermudez Company may be restored to its possession, there to remain till a lawful and just decision shall have been shown that the company is not entitled to such possession. This it is in the power of the Venezuelan Government to do, and the Government of the United States must under the circumstances renew and earnestly press its request. Such compliance would be but an act of respect on the part of the Venezuelan Government to its own tribunals, whose process has been perverted to the perpetration of a grave injustice, the continuance of which this government can not view without deep concern. It is evident that the avowed object of the proceedings was for all substantial purposes accomplished before they were fairly begun and that unless this condition of things shall be remedied their further prosecution will be practically superfluous, their apparent object having already been accomplished. The Government of the United States is desirous to show toward that of Venezuela every possible consideration. It therefore indulges the hope that the latter will, as an act due to substantial justice, remove the present cause of complaint. But it is proper to add that the Government of the United States in any event can not stand by and permit the property of American citizens to be seized and appropriated by any foreign government through a gross and palpable perversion of the forms in which justice is administered, in order to defeat the ends of justice.

You are directed to read this instruction to the minister of foreign relations, and to leave with him a copy of it.

I am, etc.,

Alvey A. Adee.