Owing to the extra duties that Venezuela has imposed on exports and
imports since the protocols were signed, the income of the two
custom-houses that have to provide the money to pay off the awards is
likely to decrease.
Yesterday I had another talk with the minister for foreign affairs about
Venezuela’s obligations to the creditor nations, and I left with him a
memorandum (a copy of which I inclose herewith) of my views, and he
promised to submit it to President Castro. I think it is a fair
statement of the facts and of what may be justly and properly expected
of Venezuela.
[Inclosure.]
Minister Bowen
to the Minister for Foreign
Affairs.
American Legation,
Caracas,
Venezuela, April 15,
1904.
memorandum.
On January 27, 1903, it was agreed that Venezuela would pay 30 per
cent of the “total income” of the customs houses at La Guaira and
Puerto Cabello to the creditor nations and that the said 30 per cent
should be absolute, unchangeable, and not diminished by any previous
or subsequent agreements affecting the said custom-houses. It was
estimated by Venezuela that the average yearly payment would amount
to 5,400,000 bolivars.
That agreement and that estimate having been made in good faith, the
creditor nations naturally expected that Venezuela would not adopt
new tariff measures until after their claims had been paid; but she
did adopt new tariff measures. She increased her duties on imports
by 30 per cent and imposed some heavy duties on exports.
Furthermore, she decided to interpret the words “total imports” as
meaning the income she derives solely from the old duties that
existed at the time the said agreement was made, and not the entire
income she obtains from all the duties, new and old. Thirty per cent
of
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those old duties is
all, she claims, that she is obliged to pay. The first year they
amounted to 5,084,577 bolivars and 50 centimos, which is less than
the estimate by 315,422 bolivars and 50 centimos, and this next year
they are expected to fall considerably below 5,000,000 bolivars. The
decrease is of course the natural result of increasing the
duties.
It is clear, therefore, that the new tariff measures have increased
Venezuela’s share of the income of the said two ports. One of the
main objects of the agreement, consequently, has been ignored by
Venezuela, and that was to establish and maintain the proportion of
the total receipts that should be paid to the creditor nations. No
permission was given in that agreement to Venezuela to alter that
proportion. On the contrary, it contains a stipulation that the
proportion, which was fixed at 30 per cent, should remain absolute
and unchangeable. Therefore, the creditor nations are entitled to 30
per cent of the total income of the said two ports, and the plain,
indisputable meaning of the words “total income” is the entire
income, and not the part of it that the old tariff produces.
In other words, under and by virtue of the agreement the creditor
nations are entitled to 30 per cent of all the duties, export and
import, ordinary and extraordinary, new and old, that are collected
in the custom-houses of the said two ports.
It may of course be urged on behalf of Venezuela that when the
protocols were signed the creditor nations had practically decided
that they would be satisfied with the payment of the sum they had in
mind, which was 5,400,000 bolivars; but unless Venezuela offers to
guarantee the payment of that amount and induces the creditor
nations to accept that offer the claim may be made by the creditor
nations that Venezuela is not carrying out her undertaking, and that
consequently Belgian officials must be placed in charge of the said
customhouses until the liabilities of Venezuela shall have been duly
discharged, and that claim would undoubtedly be strengthened by the
assertion of the fact that the new custom-house at Tucacas reduces
the income of the custom-house at Puerto Cabello by from 15 to 20
per cent.
In view of all the circumstances the suggestion that Venezuela should
guarantee the payment of 5,400,000 bolivars seems likely to remove,
if accepted, all cause of dispute and to settle the question of
payment satisfactorily and honorably.
