Papers Relating to the Foreign Relations of the United States, With the Annual Message of the President Transmitted to Congress December 8, 1908

The Secretary of State to Minister Russell.

Department of State,
Washington , February 28, 1907 .

Sir: The Department of State has made the most careful reexamination of the cases hereinafter mentioned, in which American citizens are claiming redress against injustice suffered at the hands of Venezuela.

You are instructed to bring these cases again to the attention of the Government of Venezuela and to urge upon that Government the reasons existing in each case for favorable action, as those reasons are now restated with more full and definite knowledge and with greater precision than has been possible heretofore.

You will call the attention of the Government of Venezuela to the fact that notwithstanding the long and unbroken friendship manifested by the United States for Venezuela; notwithstanding the repeated occasions upon which the United States has intervened as a friend in need to relieve Venezuela from disagreeable and dangerous complications with other foreign powers; notwithstanding the patience and consideration which has always characterized the action of this Government toward Venezuela, the Government of Venezuela has within the past few years practically confiscated or destroyed all the substantial property interests of Americans in that country This has been done sometimes in accordance with the forms of law and contrary to the spirit of the law; sometimes without even form of law, by one device or another, with the action of the Government apparently always hostile to American interests, until of the many millions of dollars invested by American citizens in that country practically nothing remains.

The first specific claim to be again presented to Venezuela arises from the arbitrary and, it would seem, unlawful expulsion of an American citizen, A. F. Jaurett, who was notified by the Venezuelan authorities on Saturday evening, November 12, 1904, after the closing hours of business, to leave Venezuelan territory.

The reason assigned by the authorities for the expulsion of Mr. Jaurett is that he was notoriously prejudicial to public order On the following morning—that is to say, Sunday—the prefect of police waited upon Mr. Jaurett and formally ordered him to withdraw from the territory of Venezuela in 24 hours Although Mr. Jaurett attempted to obtain a modification of the order, so that he might be able to arrange his affairs, and although the representative of the Government of the United States accompanied and seconded him in this reasonable request, the Venezuelan Government refused to grant such permission Mr. Jaurett was therefore obliged to quit the country on Monday morning in pursuance of the order of the governing authorities of Venezuela, leaving behind him his property and without being given the opportunity to arrange and set in order his business affairs.

The Government of the United States neither questions nor denies the existence of the sovereign right to expel an undesirable resident It can not be overlooked, however, that such a right is of a very high nature and that the justification must be great and convincing Otherwise residence in a foreign country would be neither safe nor profitable, for expulsion might at any moment deprive a resident of the legitimate rewards of a lifetime While, therefore, the existence of the right is not denied, its exercise must be limited The act is sufficiently harsh in itself The manner and method of expulsion should not be humiliating, for it is not the purpose to humiliate and inconvenience the resident expelled, but to save the State from dangers resulting from the residence of the undesirable alien.

It is not too much to insist that the person to be expelled be given an opportunity to explain the misconduct whereof he is accused, and that he should be given an opportunity to arrange his business affairs in order that expulsion may not necessarily carry with it forfeiture of property In no case should the expulsion be decreed and executed after closing hours on Saturday, unless the presence of the undesirable resident is so dangerous to the community as to threaten serious consequences to the State by the mere delay over Sunday.

It is not too much to require that a government exercising the sovereign right of expulsion should state the reasons of such expulsion to the government of the country whereof the expelled is a subject or citizen, because a nation is injured by an injury to a citizen and an unprovoked assault upon him or insult to him necessarily affects the home government While this would seem to be the requirement of international courtesy it is likewise the standard prescribed by international law A citation for these views is needless However, attention is called to the report made by the late M. Rolin-Jacquemyns to the Institute of International Law on the right of the expulsion of foreigners If it be borne in mind that this report was presented in answer to a call by the Institute of International Law for an examination of the question in what manner and within what limits governments may exercise the right of expulsion of foreigners, and if it be further remembered that Rolin-Jacquemyns was not only an authority in international law but was himself a minister of state, accustomed to handling intricate questions of international law, it will be at once obvious that the report states not only the theory but the usages and customs of international law on this subject.

The right to prohibit the admission into a territory or to exclude from it every individual who is an alien to the political community is a direct consequence of territorial sovereignty * * * But in regard to the principle of territorial sovereignty there are other principles which tend, not to nullify it but to restrict its exercise, and upon which principles it is desirable that a body of positive rules be established The first of these principles is that every State forms a part of the community of nations of which the whole makes up humanity As such, it is not permitted to isolate itself nor to isolate its territory from all contact with the rest of the world In acting thus it would place itself outside the law and outside the community of nations, and would expose itself to an expropriation in the cause of humanitarian interests The consequence of this principle is that a State can not interdict in an absolute manner to all strangers access to its territory, nor expel indiscriminately or enmasse all those who are found there * * * Besides these general duties toward humanity and toward the community of States, there are some particular duties which are applicable to the exercise of the right of expulsion and which are founded upon the fact that the individual expelled has the double character of a man and of a citizen In his character as a man he has the right not to be the object of undue severity nor to be injured unjustly in his interests In his character as a citizen of another State he can claim the protection of his sovereign against these severities of these spoliations The State which expels, acting thus in virtue of its own sovereignty, is the sole judge of the motives which determine the measure It does not follow that these motives may be indifferent nor that the right of expulsion can be the pretext of arbitrary violence (Revue de Droit International, vol 20, p. 498.)

In concluding his report he states:

From the point of view of international law every government of a sovereign State has, as a general rule, if it judges it necessary in the interest of this State the right to admit or not to admit, to expel or not to expel, foreigners who wish to enter or who are found upon its territory, as well as to subject their admission or their residence to the conditions which it judges necessary in the interest of its tranquillity or of its security The exercise of these different rights is, however, subject to restrictions.

Among which he states the following:

1. No State can, without placing itself outside the pale of international law, interdict in an absolute manner the access of all strangers to its territory nor expel indiscriminately or en masse all those who are found there.

* * * * * * *

4. The right of expulsion and the mode of exercise of this right may be regulated by international treaties.

5. But in the absence of treaties the State to which the expelled individual belongs has the right to know the motives of the expulsion, and the communication of these motives can not be refused to it Moreover, the expulsion ought to take place with all the considerations which are demanded by humanity and the respect for acquired rights Save in urgent cases, a reasonable time ought to be allowed to the expelled individual to settle his interests Finally, except in cases of extradition, he ought to be left to choose the point of the frontier from which he prefers to depart the country.

The right of a government to protect its citizens in foreign parts against a harsh and unjustified expulsion must be regarded as a settled and fundamental principle of international law It is no less settled and fundamental that a government may demand satisfaction and indemnity for an expulsion in violation of the requirements of international law The cases announcing this right are so numerous that their enumeration would be wearisome It may be permitted, however, to call the attention of the Venezuelan Government to one case, so similar to the case of Mr. Jaurett that it would require a high degree of casuistry to distinguish them The case in question is that of Boffolo v Venezuela, and was tried before the Italian and Venezuelan Commission in 1903 The decision of the umpire may be summarized as follows:

A State possesses the general right of expulsion; but expulsion should only be resorted to in extreme instances, and must be accomplished in the manner least injurious to the person affected.

The State exercising the power must, when occasion demands, state the reason of such expulsion before an international tribunal, and an insufficient reason or none being advanced accepts the consequences.

The only reasons advanced in the present case being contrary to the Venezuelan constitution, and Venezuela being a country not of despotic power, but of fixed laws, the umpire can not accept them as sufficient.

It therefore appears that not only are writers of theory in accord, but that carefully considered and matured judgments of courts of international arbitration approve and apply the theory of international law to the question of expulsion.

While, therefore, international law fails to justify the expulsion of Mr. Jaurett, and while the method and manner of his expulsion were harsh and inconsiderate, if not inhuman, there is another reason why Mr. Jaurett should not have been summarily and ignominiously expelled, namely, that the constitution of Venezuela prevented such expulsion, and that the actual expulsion was in contravention of the constitutional law of Venezuela.

The decree of the Federal executive expelling Mr. Jaurett was based upon article 80, section 22, of the constitution of Venezuela, by virtue of which the President is authorized to prohibit, according to his discretion, the entry of foreigners into Venezuelan territory, or to expel from Venezuelan territory foreigners who do not possess an established domicile in the country A residence of two years is sufficient to establish a domicile in Venezuela, and Mr. Jaurett had resided for a period of eight years; he had established himself permanently; he was engaged in commercial pursuits, and he had complied fully with the requirements of the law The provision invoked by the executive did not apply to him, because he was a domiciled foreigner, not a foreigner in transit.

To justify, by constitutional law, the expulsion of Mr. Jaurett, the Venezuelan Government has referred to article 80, section 8, which gives to the President the right, “in cases of foreign war, or domestic disturbances, or rebellion in arms against the institutions, upon previous declaration that public order is disturbed, and only for the time of the disturbance, * * * to arrest, confine, or expel from the territory of the Republic citizens or foreigners interfering with the reestablishment of peace.” It is at once apparent that these clauses are restricted in their operation to cases of foreign war, domestic disturbance, rebellion in arms, or to interference with the reestablishment of peace As none of these grounds for executive action existed in the case of Mr. Jaurett, they are inapplicable.

The expulsion of Mr. Jaurett is, therefore, as unjustifiable upon the principles of constitutional law of Venezuela as it is without defense according to the enlightened theory and practice of international law.

In view of authority and precedent the claim of Mr. Jaurett commended itself to the department and the attention of the Venezuelan Government has been called to all the circumstances of the case and an indemnity requested.

Mr. Jaurett has been domiciled in Venezuela for many years; had acquired property which was lost to him wholly or in part by the unwarrantable action of the Venezuelan authorities in expelling him from Venezuela without giving him an opportunity to close up his affairs and prevent financial ruin Mr. Jaurett states his losses at $25,000, and the Government of the United States, finding this sum reasonable, has requested its payment by Venezuela Hitherto the Venezuelan Government has not given to this claim the care and attention which the Department of State feels it deserves Delay has taken the place of argument, and the department feels that the time has come for the settlement of the indemnity.

You are therefore directed corteously but firmly to present the claim of Mr. Jaurett to Venezuela and to insist that the payment of a claim so just in the light of international law should not be longer deferred.

2. The claim of the Orinoco Corporation is one with which the Venezuelan Government has been familiar for the past 20 years and more For many years conflicting claimants appeared before the Venezuelan authorities to make good their claim to different portions of the territory, under conflicting and inconsistent grants The Venezuelan Government has at various times, by executive decree, annulled claims of concession; the courts of Venezuela have held that such executive action was unable to divest rights conferred upon claimants by acts of the Federal Congress, and upon a recent and solemn occasion, namely, by judgment of the American and Venezuelan Mixed Claims Commission, under the protocol of February 17, 1903, the various acts of the Venezuelan executive in contravention of the title of claimants, were declared null, void, and of no legal effect whatever.

In view of these circumstances, therefore, an extended examination of the bases of the claim is unnecessary; but for the purpose of calling the attention of the Venezuelan Government to the justness of the claim and the long-suffering of the claimants patiently borne, certain facts are set forth:

On September 22, 1883, the Government of Venezuela granted to Cyrenius C. Fitzgerald, his associates, assigns, and successors, for the term of 99 years, a concession of a certain portion of the delta of the Orinoco, with the exclusive right to develop the resources of the territory granted, which was national property This concession was approved by Congress May 27, 1884, and on the 14th day of June, 1884, Fitzgerald conveyed to the Manoa Co (Ltd.) the entire concession, with all his rights thereunder.

On the 1st day of January, 1886, Gen Guzman-Blanco, envoy extraordinary and minister plenipotentiary of Venezuela to various courts of Europe, entered into a contract with one George Turnbull, an American citizen, for the region previously granted to Fitzgerald, but such contract was to “enter into vigor in case of the becoming void through failure of compliance within the term fixed for this purpose of the contract celebrated with Mr. Cyrenius C. Fitzgerald the 22d of September, 1883, for the exploitation of the same territory.”

By resolution of the executive and the Federal council, dated September 9, 1886, the Fitzgerald contract was declared insubsistent and no longer in force, and on the following day the contract with Turn-bull was ratified by the executive and the Federal council and was approved by Congress on April 28, 1887.

Leaving out minor transactions, it would appear that on May 28, 1895, the Manoa Co., the successor to Fitzgerald’s rights, petitioned the Government to acknowledge and reaffirm by decree its rights and ownership of the entire Fitzgerald concession, and the President of the Republic, on the 18th of June, 1895, declared the annulment of the contract for the concession granted to Turnbull; on the same day the Government issuing a decree ratifying and reaffirming the original Fitzgerald grant, as vested in the Manoa Co., and authorizing said company to renew its work of exploitation and development.

On October 17, 1895, the Manoa Co conveyed its entire grant to the Orinoco Co., and the President of Venezuela, on November 20, 1895, recognized as valid this transfer made by the Manoa Co.

Passing from immaterial transactions, it appears that on the 10th day of October, 1900, the supreme chief of the Republic by resolution of that date, promulgated through the minister of the interior, declared the Fitzgerald contract of September 22, 1883, upon which the Orinoco Co based its rights, insubsistent and annulled, and that the decree of June 18, 1895, ratifying the contract after it had been annulled by the decree of September 9, 1886, was ineffectual without the intervention of a new contract, which had not been made; and on May 14, 1901, the Government of Venezuela issued an abstract of certificate from the registry of the records, finding and certifying that the title to the property had been continuously, from the 13th of May, 1888, when the same was granted, until the 14th of May, 1901, vested solely in Turnbull.

Such was the state of affairs when the United States and Venezuelan Claims Commission was organized under the protocol of February 17, 1903 In view of the fact that the various claims and counterclaims based upon the transactions beginning on the 22d of September, 1883, to the date of the commission, were referred to the commission and passed upon by this commission, and inasmuch as the finding of the commission was as binding upon Venezuela as it was upon the claimants, and in view, furthermore, of the fact that the judgment of the international tribunal in favor of the Manoa Co is a public record, it is unnecessary to do more than call the decision of the commission to the careful attention of the Venezuelan Government.

It should be stated, however, that the court held squarely that a right vested in the claimants by an act of the Federal Congress of Venezuela could not be vitiated or destroyed by the decree of the Venezuelan executive; that the cancellation of a concession so granted and safeguarded was a matter for judicial, not political, action The effect of the decision of the court, therefore, was to reestablish the Fitzgerald concession and to vest in the Orinoco Corporation, as assignee of the Orinoco Co., the entire interest of the original concession of September, 1883.

The rights of the Orinoco Corporation, however, recognized and safeguarded by a decision of an international tribunal, do not depend solely upon the judgment of this tribunal, for on the 1st day of March, 1906, the Federal court of Venezuela held squarely, on a suit brought by one Juan Padron Ustariz to declare the Fitzgerald contract insubsistent, that a contract once properly granted could not be annulled by executive decree.

It thus appears that the Orinoco Corporation is in the enviable position of having its rights recognized by an international tribunal and by the highest constitutional court of Venezuela.

Notwithstanding these solemn adjudications and during the pendency of the action in the Venezuelan Federal court the Government of Venezuela granted and conceded, on the 2d of January, 1906, to a Venezuelan citizen a part of the territory embraced within the Fitzgerald concession And it may be said in passing that this grant of 1906, notwithstanding its utter illegality, was officially recognized by the Venezuelan Government as late as January 12, 1907 On the 5th day of January, 1906, a second grant was made conflicting with the rights of the Orinoco Corporation On the 20th day of February a third grant was made of territory within the Fitzgerald concession, and on the 7th day of March, one week after the decision of the court, a further concession of property situated within the Fitzgerald grant was made by the Venezuelan Government.

In view of the circumstances of this case, the repeated favorable adjudications settling the question of title and vesting it securely in the claimants, it would seem that these acts of Venezuela are clearly unjustifiable The repeated concessions of territory within the Fitzgerald concession evidence an intent either to hinder the company from exploiting the concession or to destroy the concession by grants inconsistent with its existence It is needless to say that the Orinoco Corporation can not undertake the exploitation of its concession while its title is thus interfered with, and the constant and repeated granting away of its vested rights by the Venezuelan Government in contravention of international and national judgments offers little encouragement to the investment of labor and capital in the development of their property The corporation has sought relief in the courts and overcome opposition It can not enter into a conflict with the Venezuelan executive.

In view, therefore, of all the facts set forth, you are instructed to request from the Venezuelan Government its assent to an immediate reference to a tribunal of The Hague Permanent Court of Arbitration (unless some other tribunal shall be agreed upon), and on which no national of either country, or of any country interested in the controversy, shall sit, to consider and determine—

1. Whether by the wrongful acts of the Venezuelan Government, its officers and agents, the contract rights of the Orinoco Corporation have been destroyed and the value of its concession impaired or destroyed; and

2. Whether injuries have been inflicted upon the Manoa Co (Ltd.), the Orinoco Co (Ltd.), and the Orinoco Corporation, or either of them, by wrongful interference with or trepasses upon them while in the partial or entire enjoyment of their contract rights in the Fitzgerald concession; and to award damages accordingly, payable in American gold and bearing interest from the date of the sentence until paid and with power in the tribunal to fix the time and manner of payment of said awards.

You are also instructed to request that, pending the arbitration, all proceedings in the suit which, it is said, has recently been begun by the Venezuelan Government against some of said companies to annul or cancel said Fitzgerald concession shall be stayed and that the status quo shall be preserved.

3. The third claim is that of the Orinoco Steamship Co., incorporated on January 31, 1902, under the laws of New Jersey for the purpose of acquiring and taking over “as a going concern the business now carried on by the Orinoco Shipping & Trading Co (Ltd.), of London, England.” This latter company was incorporated in England on the 14th day of July, 1898, and the Orinoco Steamship Co appears as the assignee to any and all rights which the Orinoco Shipping & Trading Co (Ltd.) had acquired The English company was itself organized to acquire properties in Venezuela, including concessions, and to carry on the business of steamship transportation The capital stock of this company was $100,000, and of this all except seven statutory shares was owned by American citizens As the present Orinoco Steamship Co is owned and controlled in its entirety by these American citizens, it will appear that the claim was largely American in its inception and that it is now wholly American.

On December 12, 1898, the Shipping & Trading Co acquired by purchase the entire assets of two Venezuela corporations Among these was a franchise of unquestioned validity known as the Grell concession, which provided for the establishment of a regular steamship line between Ciudad Bolivar and the ports of Curacao and Trinidad, British West Indies, and included permission to navigate the Macareo and Pedernales Channels of the Orinoco River, notwithstanding the general law of Venezuela prohibiting vessels engaged in foreign trade with Ciudad Bolivar from proceeding otherwise than by the Boca Grande (Great Mouth) of that river This concession was to have a duration of 15 years By executive decrees of October 18, 1898, and September 4, 1899, the transfer of this concession to the shipping company was recognized and approved by the Government of Venezuela.

It further appears that the Government of Venezuela was at that time indebted to the shipping company as the assignee of the Orinoco Red Star Line, one of the Venezuelan corporations above referred to, in the alleged sum of $77,818.01, and in the further alleged amount of $476,732.50 for services rendered the Government, for which bills had been duly submitted and not questioned or disputed, and that the Venezuelan Government entered into an agreement with the shipping company on May 10, 1900 According to the terms of this agreement the Government paid 100,000 bolivars ($19,219.19) down and agreed to pay 100,000 bolivars ($19,219.19) more, and granted an extension of the concession held by the shipping company for a further term of six years—that is, until 1915 In return the company acknowledged full satisfaction for the above claims held against the Venezuelan Government.

By executive decree of October 5, 1900, the law of July 1, 1893, which prohibited the free navigation of the Macareo, Pedernales, and other navigable waterways of the Orinoco River was repealed, thereby destroying the exclusive right to use these channels which the shipping company claimed was conferred by the concession and which, as a matter of fact, they had enjoyed up to that time.

By a later executive decree, dated December 14, 1901, the Venezuelan Government absolutely annulled the extension of the concession granted by the contract of May 10, 1900 At the time of this decree the company, owing to misfortunes which had befallen its other vessels in the troubled times of the revolution, possessed only one steamer available for its La Guaira service It appealed to the Government of Venezuela for a promise for protection for this vessel, and received in return a note inclosing a copy of the executive decree annulling the extension of the concession The company, which had hitherto endeavored to carry out its part of the contract irrespective of the decree of October 5, 1900, destroying the exclusive character of the concession which it claimed as of right, seems to have given up in despair and abandoned any further effort to continue navigation between La Guaira and the Orinoco (although it maintained its service between Ciudad Bolivar and Trinidad until interdicted by the Venezuelan Government, May 31, 1902, on account of the disturbed state of the country), and to have turned first to England and then to the United States for diplomatic relief.

On April 1, 1902, the Orinoco Shipping & Trading Co (Ltd.), for value received, duly assigned and transferred to the Orinoco Steamship Co., hereafter referred to as the steamship company or the claimant, all its assets, of every sort and kind, including its Venezuelan franchises and properties and all claims and demands in its favor against the Republic of Venezuela Thereafter, from time to time, the claim of the Orinoco Steamship Co formed the subject of correspondence between the United States and the Government of Venezuela.

As a result of these negotiations, on February 17, 1903, a protocol of agreement for arbitration was entered into between the United States and Venezuela, covering “all claims owned by citizens of the United States of America against the Republic of Venezuela which have not been settled by diplomatic agreement or by arbitration between the two Governments, and which shall have been presented to the commission hereinafter named by the Department of State of the United States, or its legation at Caracas.” The terms of the protocol provided that “before assuming the functions of their office the commissioners and the umpire shall take solemn oath carefully to examine and impartially decide, according to justice and the provisions of this convention, all claims submitted to them, and such oaths shall be entered on the record of their proceedings The commissioners, or, in case of their disagreement, the umpire, shall decide all claims upon a basis of absolute equity, without regard to objections of a technical nature or of the provisions of local legislation.”

The claim of the steamship company was duly submitted to the arbitral tribunal so constituted The claim consisted of four items: (1) For $1,209,701.05, which sum the claimant company reckoned as due for damages and losses caused by the executive decree of October 5, 1900, said decree having, as the company affirmed, annulled its exclusive concessionary right; (2) for 100,000 bolivars, or $19,219.19, overdue on account of the settlement contract of May 10, 1900; (3) for $147,638.79, at which the claimant company estimated its damages and losses sustained during the revolution and the value of services rendered by the company to the Government of Venezuela; (4) for $25,000 for counsel fees and expenses incurred in protecting and pursuing its rights.

The commissioners appointed by the United States and Venezuela having disagreed, the claim was referred to the umpire, Dr Barge, who awarded $28,224.93 United States gold to the claimant company, this being the amount which he found due for services, etc, rendered the Venezuelan Government by the claimant company subsequent to the transfer to the claimant of all the rights of the shipping company Dr Barge rejected all the other contentions of the claimant, especially refusing to allow damages for the annulment of the alleged exclusive concession held by the shipping company.

After holding that he had jurisdiction over the case, the umpire rejected the first item in the claim of the company—the claim for damages caused by the annulment of its exclusive franchise—on three grounds: (1) Because in the opinion of the umpire the concession did not confer the exclusive right claimed by the company; (2) because Article XIV of the concession bars recovery before an international tribunal, even although the exclusive right claimed by the company existed, and even although Article XIV did not prevent the umpire from taking jurisdiction of the case, for by Article XIV the concessionary pledged himself not to submit any dispute or controversy which might arise with regard to the interpretation or execution of the contract to any but a Venezuelan tribunal; (3) because the transfer from the Orinoco Shipping & Trading Co to the claimant had never been notified to the Government of Venezuela in accordance with the terms of Article XIII of the concession.

The second item in the claim of the company for 100,000 bolivars was rejected by the umpire, first upon the suggestion that it had not been satisfactorily proved that the sum claimed was then due, but principally upon two of the grounds already given for rejecting the company’s principal claim in regard to the exclusive franchise, namely, on account of the provision of the contract binding the company to seek redress only in the local courts, and because the Venezuelan Government had not been notified of the transfer of the claim from the Orinoco Shipping & Trading Co to the present claimant.

Of the various sums, amounting in all to $147,638.79, which, grouped together, constitute the third item in the company’s claim, the umpire allowed $28,224.93 and disallowed the remainder Of this amount about $60,000 appear to have been disallowed for reasons going to the merits of the claim, and $49,978.76, practically all the remainder, were disallowed upon the ground that the transactions upon which the claim for this sum was founded took place prior to the transfer from the Orinoco Shipping & Trading Co to the claimant, and the transfer had never been properly notified to the Venezuelan Government.

The item of $25,000 for counsel fees and expenses shared the fate of the greater portion of the company’s claim and was disallowed.

It is a reexamination of this award before an impartial and competent tribunal that the claimant now asks.

To this reasonable request that the case of the Orinoco Steamship Co be reopened and that the case be submitted in its entirety to an impartial and international reexamination, the Venezuelan Government sets up as a bar the fact that this decision of the American-Venezuelan Mixed Claims Commission is final, and that to reopen a decision of a court of arbitration would be to disregard the finality of such decision.

To this there is an obvious and very reasonable reply, namely, that a decree of a court of arbitration is only final provided the court acts within the terms of the protocol establishing the jurisdiction of the court, and that a disregard of such terms necessarily deprives the decision of any claim to finality In this individual case the protocol specifically stated that “the commissioners, or, in case of their disagreement, the umpire, shall decide all claims upon a basis of absolute equity, without regard to objections of a technical nature or of the provisions of local legislation.”

The equity meant is clearly not local equity, that is, not necessarily the equity of the United States or the equity of Venezuela, but the spirit of justice applied to a concrete question irrespective of local statute, ordinance, or interpretation.

Attention has already been called to the expressed terms of the protocol defining the jurisdiction of the commission to be established thereunder, and it will be recalled that all claims owned by citizens of the United States against the Republic of Venezuela were to be submitted which had not been settled by diplomatic agreement or arbitration between the two Governments It was, furthermore, stated in express terms that these claims so owned, unsettled, and outstanding should be “examined and decided” by the mixed commission to be appointed Nevertheless, in express violation of the terms of the protocol, claims amounting in the aggregate to about $70,000, partially for money loaned and admittedly due to the claimant company, partially for services rendered by the claimant’s vessel to the Venezuelan Government and for damages for the detention of such vessel, were disallowed by the umpire.

To say that these claims should be rejected for lack of jurisdiction would be as was said by Ralston, umpire, in the Martini case (Ralston’s Report, p. 841), “equivalent to claiming that not all * * * claims were referred to (the commission), but only such * * * claims as have been contracted about previously, and in this manner and to this extent only the protocol could be maintained,” and it is equally vicious in law and equally disastrous in fact to the claimant to assume technical jurisdiction over the claim and then disallow it, evidently on its merits, because of the clause in question, as the umpire did For this Government can never admit that a claim unpassed upon by a Venezuelan court is not a claim which it has a right to protect and enforce, and by protocol to submit to an international convention to the end that such claim in its entirety be passed upon, or to quote the exact language of the protocol, be “examined and decided” upon its merits irrespective of any contract or waiver which the holder of the claim may, in his private capacity, have made with the contracting Government.

And not only did the umpire, in disallowing these claims upon the ground of the Calvo clause, do violence to the terms of the protocol in the manner already stated, namely, by refusing to examine them on their merits, but also by disallowing these claims he violated the express provisions of the protocol that all claims submitted should be examined in the light of absolute equity “without regard to objections of a technical nature, or of the provisions of local legislation.”

It is difficult to see how the umpire could more clearly have disregarded the plainest principles of justice and equity than to disallow the claims of the claimant upon the ground that it had violated the Calvo clause in seeking redress by international reclamation, when, admittedly, the defendant Government violated every provision of the contract by totally annulling it To quote the language of the umpire, “in the face of absolute equity, the trick of making the same contract a chain for one party and a screw press for the other never can have success.” (Ralston’s Report, p. 21.) And it is doubly difficult to understand the reasoning by which one party to a contract may violate all its terms by annulling it and yet refer to those very terms as existent and measuring the rights of the claimant seeking redress.

Again the umpire disregarded the express terms of the protocol above quoted when he gave as another reason for disallowing these same claims, amounting to about $70,000, that either by the terms of the contract with the company or by provision of Venezuelan law it was necessary for the claimant to notify the Venezuelan Government, the other party to the contract and the debtor of the transfer of the claims in question from the Orinoco Shipping & Trading Co to the Orinoco Steamship Co., for a clearer illustration could hardly be found of a stickling for technicalities and disregard of general equity than this ruling Absolute equity in Anglo-Saxon countries does not require the creditor to notify the debtor of the transfer of a debt provided said transfer does not injuriously affect the rights of the debtor, and absolute equity does not mean the technical provision of the Venezuelan law or the technical requirements of the contract between the parties Absolute equity assimilates knowledge to specific notice according to the requirements of local legislation Of the transfer in question the Government had actual knowledge.

While this Government believes that such a disregard of the express terms of the protocol justifies a reopening and a resubmission of the entire case to an impartial tribunal there are other reasons which tend to discredit the judgment in its entirety.

The claimant always contended that the franchise granted by the Grell contract was an exclusive franchise to ply between a foreign port and Trinidad and to use at the same time the channels which were exclusively reserved to coastal trade In other words, the company was to engage in foreign commerce, but was to possess at one and the same time the right to use certain channels which it would not have had the right to use but for the concession While this would in itself have been a considerable advantage, the benefit of the contract, according to the claimant, consisted in the fact that the company was to possess the exclusive right to navigate, to trade with foreign ports, and yet to use the channels reserved to coastal trade, and that during the continuance of the concession to the company no like privilege would be extended to any competing company.

In the opinion of the umpire the exclusiveness was not a matter of law, but he overlooked the important and fundamental point that the company was to exercise exclusively the right and privilege specified in the concession until such time as the Venezuelan Government should fix certain points of transshipment and make the necessary installation Supposing that the umpire was right in his construction of the contract, which is not admitted, that the exclusiveness claimed by the company did not exist in law, it necessarily follows that the exclusiveness existed in fact, and the company was therefore entitled to the exclusive right claimed until the Venezuelan Government divested that right by establishing points of transshipment and making the necessary installations In other words, the fixing of these various points of transshipment and the establishing of the necessary installations were made a condition precedent to the deprivation of any exclusive right which the company, as a matter of law or as a matter of fact, enjoyed.

The judgment of the umpire, therefore, disregarding these simple yet essential considerations is wholly unacceptable He did, indeed, take jurisdiction, but the error committed was so gross and so palpable that this Government can not ask its citizens to accept this judgment as a finality.

Although these contentions have been called at various times to the attention of Venezuela and the request made courteously and with confidence that the claimant’s case in its entirety be submitted to a reexamination before a competent and impartial tribunal, the Venezuelan Government has interposed curtly that “the decisions of the commissioners, and in the event of their disagreement, those of the umpire, shall be final and conclusive.” At the very moment and almost in the same breath that Venezuela declared the finality of the judgments of the commission she has been busy protesting Belgian and Mexican awards, although the protocols under which these two commissions were established provided “the decisions of the commission, and in the event of their disagreement, those of the umpire, shall be final and conclusive.” It would appear, therefore, to a disinterested person that judgments in favor of Venezuela are final and conclusive, but that judgments adverse to Venezuela are not final nor at all conclusive.

In this conflict between theory and practice this Government not unnaturally looks to the practice of Venezuela.

It is, however, apposite to call the attention of the Venezuelan Government to the fact that the United States has granted on various occasions the request that it now confidently makes; that the United States at the request of Mexico set aside an unjust arbitral award, and that as Venezuela may doubtless recall, at its express and distinct request the United States set aside the findings of the United States and Venezuela Commission of 1866 and appointed a new commission under a convention signed in 1888, whereby a saving resulted to Venezuela amounting in the aggregate, including interest, to nearly a million and a half dollars, as compared with the findings of the first commission.

In view; therefore, of the circumstances of the case and the express violations of the terms of the protocol, or errors in the final award, arising through gross errors of law and fact, and in the light of the history of both nations in the matter of arbitral awards, this Government insists upon and confidently expects a reopening and a resubmission of the entire case of the Orinoco Steamship Co to an impartial and a competent tribunal.

4. The claim of the New York & Bermudez Co against Venezuela is one of long standing in the department, and the details of the wrongs suffered by the unfortunate claimants are familiar alike to the diplomatic and judicial authorities of Venezuela In order, however, that the facts of this case may be presented and the attitude of this Government justified, the origin, history, and present status of this case are set forth briefly and pointedly.

The company claims the ownership of an asphalt lake situated in the State of Bermudez by three separate and distinct titles, each one of which was lawfully acquired from the Venezuelan Government Venezuela has by judicial process canceled the first of these titles, and, as an incident to the cancellation of this one title, has taken possession, which it now retains, of the properties obtained under the second and third titles.

On September 15, 1883, one Horatio R. Hamilton, an American citizen, obtained from Guzman Blanco, President of Venezuela, for the period of 25 years, a concession or contract for the exclusive exploitation of asphalt and of the uncultivated lands in the State of Bermudez The concession gave “the right to explore and exploit the natural products of the forests,” consisting principally of woods and resins, “existing in the uncultivated lands of the State of Bermudez.” Article 2 granted “the right to exploit the asphalt in the said State of Bermudez;” article 8 provided that during the period of 25 years “the Government will not grant any similar concession in the State of Bermudez to any other person; “article 10 provided that the contract could be transferred upon notice, and the contract specifically provided in article 9 that “in case of nonfulfillment of any of the stipulations expressed, this will annul the present contract ipso facto.” In other words, the contract was a grant of the right to explore and exploit within the State of Bermudez during a period of 25 years, and that in case of failure to exercise this right, or to perform the conditions expressed in the concession, the contract was to be null and void.

To this contract there was afterwards, on October 19, 1883, appended an additional article, known as the “first additional article,” which imposed duties upon dyewoods or building woods which the concessionary, Hamilton, may exploit or export.

On June 5, 1884, the Hamilton contract and the additional article were approved by the Federal Congress, and the concession and its supplement were published in the Official Gazette July 21, 1884, thereby acquiring the force and effect of law.

On May 30, 1884, a so-called “second additional article” was entered into between Hamilton and the minister of fomento, by which the concessionary “bound himself to channel for exportation and importation one or more of the rivers of the State of Bermudez.” In case Hamilton canalized according to the terms of the article he was to enjoy the exclusive right of navigation on the rivers that he may channel, and was to collect a tax for navigation thereof It appears that the parties had in contemplation the construction of a railroad, and the last clause of this second additional article provides that “he will have the same rights in case of his constructing a railroad,” from which it will appear that Hamilton did not bind himself to construct a railroad, but that should he do so he was to enjoy certain rights and privileges which otherwise would not be his.

It is important to note that this second additional article was not attached to the contract when the latter received the approval of Congress, and that the second additional article has never been approved by the Congress of Venezuela In other words, the second additional article was a separate and distinct contract; that it had no connection with the first contract or the first additional article; that it was merely a contract between the same Hamilton and the Venezuelan authorities; separate and distinct in its origin, it has remained separate and distinct; it was based upon a separate and distinct consideration; it therefore rose and fell by itself It is difficult to see how a performance of this second additional article could affect favorably the Hamilton concession It is also difficult to understand how a failure to comply with the conditions of the article could in any way invalidate or concern a previously existing contract, separate and distinct in its origin, and which had no necessary relation to or connection with the original concession.

On October 24, 1885, the New York & Bermudez Co was incorporated under the laws of New York, and on November 6, 1885, Hamilton assigned his contract to them, including the additional articles.

This assignment was approved by the Venezuelan Government December 9, 1885 By these various transactions the New York & Bermudez Co succeeded to all the rights in the Hamilton concession and its supplements The New York & Bermudez Co., however, was unwilling to rest its right to exploit asphalt under the Hamilton concession Its secretary made application, in 1888, to obtain a mining title to the asphalt deposit, and in conformity with the law of mines then existing, the secretary obtained a title from the President of the Republic and the Federal council on December 5, 1888 Two days later a definitive deed was executed to the property involved in the concession, which was to run for a period of 99 years, and on August 1, 1893, the secretary of the company and his wife made an assignment to the company of the title, which had been acquired originally and solely for the company’s benefit.

But the company did not rest here in its endeavors to obtain a perfect title to the property in question On October 8, 1888, the secretary, in the name of the company, applied for a title to the “wild lands that comprise the mines already mentioned for the use of exploitation work.” On December 14, 1888, a final deed was granted to the lands “in favor of the New York & Bermudez Co.”

It is evident, therefore, that the company asserts its right to the asphalt lake by three separate and distinct titles: First, the Hamilton concession, giving it the exclusive right to exploit asphalt in the State of Bermudez for 25 years from September 15, 1883; secondly, the right to exploit the asphalt lake for 99 years from December 14, 1888, under the mining title: and, thirdly, under the wild-lands title the fee simple to the land surrounding and covered by the lake.

It is unnecessary to state in detail the various interruptions to which this company was subjected Suffice it to say that on January 4, 1898, without any notice to the company or any judicial proceeding, President Crespo annulled, by executive decree, the Hamilton concession As national (Aug 23, 1898) and international courts (the American-Venezuelan Mixed Commission under the protocol of Feb 17, 1903) have decided that a validly granted concession can not be annulled by executive decree, it is unnecessary to discuss the various attempts to carve out from the company’s property the mines known, respectively, as the “Venezuela “and the “Felicidad,” because if title was in the Bermudez Co., it could not be in the claimants of the “Venezuela” and the “Felicidad” at one and the same time This was also the view of the high Federal court which decided in January, 1904, that a suit brought by the claimants of the alleged Felicidad mine possessed no title to the property in question because it was wholly included within the Hamilton concession, which concession, notwithstanding executive interference, was still valid and subsisting.

It thereupon occurred, it would seem, to the Venezuelan authorities, that no act of unquestioned validity could be taken against the New York & Bermudez Co while the Hamilton title was outstanding and valid On July 20, 1904, the attorney general of Venezuela therefore instituted proceedings in the high Federal court for the cancellation of the Hamilton contract and the sequestration of the property The grounds for this cancellation, simply expressed, was nonuser, for, although the concession had been in existence for 21 years, the company had restricted itself, according to the attorney general, solely and exclusively to the exploitation of the Bermudez asphalt lake, thereby neglecting to fulfill the other obligations of the contract, in consequence whereof the exploitation of the natural products of the State of Bermudez, other than asphalt, had remained stationary for upward of 20 years The exploitation of asphalt had been conducted, it was said, upon so small a scale that the returns to the Government had been ludicrously small It may be said, in passing, that the company received little or no encouragement to mine asphalt when Venezuela had parceled out portions of its property to other claimants And finally it was alleged that the company had not canalized any of the rivers in the State, which was a breach of the contract The attorney general therefore brought suit for the dissolution of the contract and for the recovery of damages incurred by reason of the company’s failure to execute the contract “according to the just findings of appraisers and calculated in accordance with the basis established by the first additional article.”

It can not well escape notice that the first additional article laid a duty upon dyewoods and building woods which the company might export, and that asphalt found no place in the first additional article It is also a matter of record that the right or duty to canalize arose by the second additional article which never was an integral part of the contract, and which never received the approval or ratification of the Venezuelan Congress Asphalt is not mentioned It also will be borne in mind that the second additional article gave an exclusive right of navigation on the rivers that Hamilton might channel As the Venezuelan Government disregarded the exclusiveness of the article, it is difficult to see how the breach of this condition, subsequent to the breach of its express terms by the Venezuelan Government, could give the Government any right of action against the Hamilton concession, even supposing that the second additional article was, as it was not, a constituent part of the Hamilton concession.

While it would serve no useful purpose to detail these proceedings at length, it is necessary to consider the sequestration proceedings and the main suit by which the Hamilton concession was annulled It seems to have been a matter of great importance to the Venezuelan Government to obtain possession of the asphalt lake before the Hamilton concession could have been canceled by decree of a court of justice Why the possession of the lake was so urgent pending proceedings does not appear, but the Government decided that its possession was essential Therefore the Hamilton possession was considered by the attorney general as a lease, although there was no rental of any kind reserved, and although the characteristics of the concession point to a grant rather than to the relation of landlord and tenant However that may be, the court construed the concession to be a lease, and under article 373 of the code of civil procedure sequestration of the property was decreed Reliance was placed on section 7 of article 373, which would seem to the disinterested to apply solely to the case of a lease, not a grant The exact wording of this section follows:

Sequestration may be decreed:

7th Of the property leased, if the defendant is sued for default in payment of rental; on account of the property becoming deteriorated; or on account of having failed to make improvements to which he is bound by the contract; provided any of the circumstances be proved in the manner indicated in article 368.

It is not easy to understand how this section could be made the basis of sequestration proceedings, because, supposing, which is not admitted, that the grant was a lease, the defendant was not sued for default in the payment of rental, because no rental was reserved The property was not deteriorated, because the property was in its natural state, and it is not the nature of trees and rivers to deteriorate The company did not fail to make improvements to which it was bound by the contract, because no improvements are specified in the original concession, and canalization appears solely in the second additional article, which was not a part of the Hamilton concession If it be supposed, which can not be admitted, that the additional article, unratified by the Congress, was a part of the original Hamilton concession, a sufficient answer to the claim of the Government is found in the fact that Venezuela disregarded the terms of the additional article in granting to others what was exclusively reserved to Hamilton by the exact terms of the second additional article The attorney general placed great reliance upon the failure to make improvements as a basis for the sequestration proceedings, the only basis which would seem to support such proceedings in law, although in fact, as is shown, no cause existed.

Article 368 of the code of civil procedure is referred to as giving the court the right, upon request of any of the parties, to appoint a sequestrator pending the trial of the cause of action There are three conditions mentioned when such sequestrator may be appointed: First, when necessary to prevent the alienation of the subject-matter of the suit, and it does not appear that the Bermudez Co sought to alienate, but rather to retain, the subject-matter Second, the judge may grant sequestration of determinate properties It is true that the properties here were determinate, but they were not leased properties; they were properties held under a grant of land and mining titles, not under the Hamilton concession, for under the Hamilton concession the rights of enjoyment were indeterminate, not determinate No importance, however, is attached to this section, because the right of sequestration would seem to exist, if at all, under article 373 previously quoted Third, the judge may require deposit of security, and, in default thereof, order the attachment of sufficient property The court never demanded security from the company before issuing an order Indeed, the motion for the appointment of a sequestrator in alleged accordance with articles 373 and 368 was made in the absence of the company’s agent without his knowledge, and the order appointing the sequestrator was made and sought to be executed before the company knew of the pendency of the motion Comment upon ex parte proceedings of this nature involving all the property of the New York & Bermudez Co is unnecessary; and no comment is necessary or required upon the appointment, without opportunity to object and without bond, of the bitterest enemy and business rival of the company, Mr. A. H. Carner, as sequestrator It should not be omitted, however, to mention that the sequestrator was placed in possession of the property sequestered by a show of force From which it will appear that the Government asserted a right to which it was not entitled, that it made the order without notice to the defendant, and executed the writ with armed force It is a matter of common knowledge that the sequestrator is still in possession of the property sequestered, that he works the mines of the New York & Bermudez Co without responsibility to them, and without the duty to account.

However important the sequestration proceedings were, and however unjustified they may be in law or in fact, they were but an incident in the case The purpose of the suit as originally instituted by the attorney general was to obtain the cancellation of the Hamilton concession, and damages for the breach of the concession It would serve no useful purpose to relate in detail the proceedings in the court, because such proceedings are a matter of record and the original documents are in the possession of the Venezuelan Government It is sufficient to note that the Hamilton concession was canceled August 7, 1905, by the decision of the federal and cassation court, the court of last resort of Venezuela.

An examination of the proceedings shows that the Hamilton concession was canceled for nonuser It was not and could not be canceled for nonexploitation of the asphalt, because the gravamen of the charge was that the New York & Bermudez Co had restricted itself solely to the exploitation of asphalt The reason for the cancellation is to be found elsewhere, namely, the failure during a period of 20 years to exploit the natural products of the territory included within the concession It will be observed that the grounds relied upon appear in the first and the second additional articles The first additional article gave the company the right to cut and exploit or export dyewoods and building woods upon payment to the Government of certain specified sums It is admitted that the company did not continuously devote itself to cutting dyewoods or building woods The chief grievance, however, of the Venezuelan Government consisted in the fact that the rivers were not canalized, as they might have been under the second additional article.

It is stated without hesitation and with great insistence that the second additional article was neither in law nor fact a part of the original Hamilton concession, and it is a matter of fact that it was never ratified by the Congress as a part of the concession If it were a subsisting and valid agreement, it was an independent agreement subject to be annulled or set aside in a separate and proper proceeding But it further appears that the Venezuelan Government disregarded the terms of this second additional article in violating the exclusive rights of navigation granted to Hamilton by granting to one Pinelli, in 1887, a concession of certain navigating privileges included within the territory set aside to Hamilton by the second additional article This was an express repudiation of the second additional article, and it is difficult to see how a government can repudiate a contract and at the same time make its repudiation a basis for assessing damages upon the concessionary It is impossible to comprehend how the failure to improve or to canalize a river when the right to do so was expressly annulled by the Government could be made the basis of sequestration proceedings as previously stated, when Hamilton’s original concession was not a lease, when the second additional article was not a part of that instrument even supposing it to be a lease, and when the repudiation of the second additional article by the Venezuelan Government destroyed the life of that article.

Supposing that the Hamilton concession was properly canceled, the Government seeks damages for its breach, and finds the measure of damages contained in the first additional article A careful reading of that article shows that it related merely to the exploitation and exportation of dyewoods and building woods It did not refer to the right to enjoy and exploit the other natural resources specified in the concession It is difficult to see how a clause which specified the duties which the concessionary was to pay to the Government for cutting and exporting certain woods can be made the basis of damages for not doing so; for it is evident that the company would have to pay the Government the sum specified upon cutting and exploiting; if the company did not cut the woods in question there was nothing to pay There was clearly no damage to the Government and there was no damage to the wood, for it still continued standing and might be made the subject of subsequent grant But if a measure of damages is necessary where no damage has been suffered, it is found in article 9 of the concession rather than in the first additional article Article 9 specifically provides that “in case of nonfulfillment of any of the stipulations herein expressed this will annul the present contract ipso facto.” In other words, the violation of the contract carried its own penalty with it, namely, forfeiture In view of these circumstances it is unnecessary to discuss further the question of damages.

Again, supposing that the Hamilton concession was properly canceled, it follows that only the interest was or could be affected by the decree of cancellation which Hamilton and the company and his assignee held in the asphalt lake by virtue of the Hamilton concession of September 15, 1883 As, however, the company held the lake by a separate and distinct mining title, the validity of which has never been questioned, and inasmuch as the company held the lands surrounding and covered by the lake in fee by virtue of a wild-lands title, which likewise has never been questioned, it would seem that the company possesses at this very moment the right in law to exploit, manufacture, and export asphalt from its property by virtue of these two unimpeached, unquestioned, validly existing titles.

This fact was admitted by the attorney general in argument before the court The court was aware of the existence of these titles, for they are a matter of public record and they are published in the Official Gazette The attorney for the defendant company stated in open court the existence of these titles and that the very existence of them was and must of necessity be a bar to the forfeiture of the property granted by these titles The attorney general stated that these titles were not then in litigation, because he was proceeding against the Hamilton concession, not against the land and mining titles.

It would appear, therefore, that the cancellation of the Hamilton concession, improperly called a lease, has been made the pretext to obtain possession of the asphalt lake, the title to which is in the company not by virtue of the Hamilton concession, because that was a right of enjoyment for the limited period of 25 years, but by virtue of the mining title and the title in fee to the lands covered by the lake.

In view, therefore, of these facts and circumstances, set forth briefly, but in sufficient detail, the seizure of the property belonging to the company by unquestioned and subsisting titles is a harsh and unjust deprivation of property, and the continued possession and exploitation of these mines by a sequestrator or by any person other than the lawfully authorized agent of the company is a daily and growing grievance As the company has failed to obtain the protection of courts of justice, and as the company continues to be deprived of its property, this Government feels itself constrained to protest firmly but courteously through diplomatic channels against the continuance of a wrong perpetrated by the abuse of judicial process This is not the first time that this matter has been called diplomatically to the attention of the Venezuelan Government; but inasmuch as the repeated requests of this Government have failed to restore the company to its just rights, the Government again calls attention to a state of affairs which should not and can not be permitted to exist.

While this Government is sure of its position and states that a grave injustice has been done the company, still this Government is willing to submit the entire case upon its merits to an impartial and competent tribunal in order that the rights of the company may be ascertained and its wrongs redressed by the judgment of others than parties to the issue This Government, therefore, requests an international arbitration of the case of the New York & Bermudez Co against Venezuela.

5. The Government of Venezuela is also familiar with the claim of the United States & Venezuela Co., commonly known as the Crichfield claim, and, being familiar with the case, the Venezuelan Government will not need to be informed that the actions of the Government have so seriously interfered with the peaceable and profitable operation of the mine and the railroad that the company has for some time past abandoned all work.

The essential facts of the case, briefly stated, are, that Gen Castro, on June 18, 1900, granted to one Guzman a concession and definitive title to the asphalt mine called Inciarte, located some 70 miles west of the city of Maracaibo; that Dr Guzman, on February 5, 1901, sold the mine for $25,000 to one George W. Crichfield, a citizen of the United States, who was acting as the agent of a syndicate composed of American citizens, afterwards incorporated, June 12, 1901, in New Jersey, under the name of the United States & Venezuela Co., for the express purpose of operating the concession All formalities required by the law were complied with; the sale was recorded on the date thereof in the public registry at Maracaibo; later, on March 22, 1901, the sale was also placed on record in the ministry of fomento, and on February 25, 1902, the concession was validated by the Congress of the United States of Venezuela It will be remembered that at the period of the concession Gen Castro was provisional president of the Republic; that Congress was not in session, and that upon the assembling of Congress the provisional president presented to it an account of his labor, political and administrative A vote of confidence was immediately passed, and all that which the President had done during the provisional presidency was expressly ratified, as appears from the language of the resolution of Congress:

The Congress of the United States of Venezuela, having examined scrupulously the message which has been sent by Citizen General Cipriano Castro, provisional president of the Republic, giving an account of his labor, political and administrative, agrees:

First To give our approbation to all of the acts executed by the Citizen General Cipriano Castro during the period in which he has exercised the provisional presidency of the Republic.

As this weighty approbation and ratification of the acts of the President is a matter of public record, it need not be further referred to.

It should be stated, however, that Crichfield did not obligate himself to take title to the mine and to pay the purchase money, except upon certain condition, namely, that the Venezuelan Government grant to Crichfield a concession for the building and operation of a railroad; and it further appears that President Castro was advised that the consummation of the purchase of the mine was conditioned upon the grant of the right to construct the railroad It also appears that the railway concession was granted by President Castro through his authorized agent, the Venezuelan minister of public works, on April 20, 1901.

There were certain important and fundamental conditions specified in this contract: First, that the grantee was to enjoy immunity from all national taxes or contributions, with the exception of certain stamp fees and mining dues; secondly, that the grantee was exempted from all import duties on the material, etc., required in the construction of the railroad, the operation of the mines, and in refining and transporting the products of the mines; third, the construction of the railroad was to begin within six months from the date of the concession and was to be completed within one year after commencement; fourth, the concession was for the period of 50 years, at the expiration of which the railroad, with rolling stock and all other appurtenances, was to be turned over in good condition to the Government.

The United States & Venezuela Co became domiciled in Venezuela on August 1, 1901, and on January 2, 1902, Crichfield transferred to it the railroad concession and mine, said transfer being approved by the Venezuelan Government on January 30, 1902.

From this brief statement of the origin and terms of the concession it appears that the claimant did not receive a gratuity; that he gave value for the property acquired; that he undertook to construct a railroad to connect the mine with the port, a work of great difficulty owing to the physical conditions of the country, and that he bound himself to deliver the railroad in good condition at the expiration of 50 years to the Venezuelan Government The advantage expected by Crichfield was not to be retained by him solely, for Venezuela was to receive the benefit of the investments and in the course of time was to become the owner in fee of a railroad And it should be stated in this connection that the claimant has, under this concession, expended about $600,000 in gold, has canalized the rivers and made them navigable, cleared the forests, constructed and operated the railroad, and has built and put in operation a large mining and refining plant, furnishing steady employment to about 1,000 Venezuelans.

While the company did not anticipate any of the difficulties which have since arisen, it sought, by a careful and precise statement of the rights and privileges it was to enjoy and the duties it undertook to perform, to avoid future complications which might otherwise result from an honest difference of opinion as to the nature and extent of these rights, privileges, and duties For this purpose it was expressly stipulated in Article XII of the concession that—

Neither this enterprise nor the products of its mines can be burdened with any kind of national taxes or contributions, except those levied by the department of public instruction and the dues prescribed by the now existing law relating to mines.

This statement of the rights and obligations would seem to need no interpretation As no dispute has arisen concerning the stamp fees, it is unnecessary to do more than mention the provision, and it has never been claimed that any of the new taxes imposed since the date of the concession have been stamp fees.

To measure the rights and obligations of the parties under this concession, it is only necessary to consult the mining law of 1901, which was in force at the time of the concession Under that law the only tax was a hectare tax amounting to 10 cents per annum for each hectare of the area of the mine, which in the case of the company’s mine Inciarte, a mine of 300 hectares, amounted to a gross annual tax of $30 It would seem, therefore, that upon the payment of this nominal tax of $30 per annum the company was exempt from further payments of any kind to the Venezuelan Government Such was the understanding of the company; such should have been the understanding of the Venezuelan Government, because it drew up the concession and is supposed to know the import of the terms used It is proper to mention in passing that the claimant contends, and always has contended, that he would not have bought the concession and expended money upon the faith of it had the exemption from future increased taxation not been expressly stated in the concession.

Notwithstanding this solemn exemption, the Venezuelan Government has proceeded to impose additional taxes upon the company by extending to it the provisions of laws subsequently enacted On January 23, 1904, a new mining code of Venezuela was passed, whereby the company’s taxes were increased in the following ways: First, the hectare tax of 10 cents a hectare was increased fourfold, thus imposing a new tax of $120 per annum instead of the tax of $30, the tax specified in the concession; second, a tax of 3 per cent on the gross product of the mine was imposed, which, under the valuation of $20 a ton fixed for refining asphalt, amounted to a tax of 60 cents per ton on the products of the mine; third, by executive decree relating to mines, issued January 21, 1904, further taxes were imposed as follows: Four bolivars, or 80 cents, per ton, as export dues on each ton of asphalt exported; fourth, a minimum tax of 25 per cent of the net products of the exploitation of the mine.

Shortly after the passage of this new code the Venezuelan Government proceeded to enforce these various provisions, except the tax of 25 per cent upon the net product of the mine; and, moreover, in further violation of the terms of the concession the Government proceeded to impose the regular import taxes of the country on certain bags and other articles imported by the company for use in connection with its mine and railroad in packing and shipping asphalt.

The net result of the various taxes imposed is $120 a year hectare tax, and $1.40 tax per ton on each ton of refined asphalt exported, and the regular import taxes of the country upon all goods imported in connection with the operation of the concessions.

The company has contested and does contest the right of the Venezuelan Government to tax them, and a reference to the language of Article XII of the concession justifies, in the opinion of this Government, the contention of the claimant.

It is suggested that the company should seek redress for its grievances, if any it has, in the courts of Venezuela, and attention is called to the Calvo clause, which is supposed to preclude diplomatic intervention; but this Government fails to understand how a country can take advantage of a clause in a contract when it denies the existence of the very contract in which the clause is supposed to be found, nor can this Government concede the right of its citizens to waive or contract away the right of the United States to intervent diplomatically in a proper case.

The invitation to litigate its rights in a court of justice when the rights are stated and safeguarded in the concession as strongly as language can safeguard or state any right or privilege is an invitation to delay operations, to waste the company’s resources in the costs of litigation without any guaranty that the decision of the court when rendered will be accepted as binding upon the executive, should it fail to support the contention of the executive Reference has been made in the case of the Orinoco Corporation, in which it will be remembered that an international tribunal and the law courts of Venezuela denied the power of the executive to annul a contract ratified by the Venezuelan Congress, and yet, notwithstanding the existence of this international and national decree, the Federal executive has repeatedly granted away property of the Orinoco Corporation under its concession as if the judgments of the international and national courts denying the right of the executive were nonexistent Under these circumstances this Government can not advise its citizens to litigate a question when it appears that the judgments rendered in cases in which its citizens were claimants had been repeatedly and systematically disregarded.

The United States, therefore, must insist either that the Venezuelan Government withdraw its opposition to the right of the claimant to perform his contract in accordance with the terms of the concession, or that the question be submitted to an impartial and competent tribunal in which the rights of the company may be adjudicated and damages assessed.

The several cases in regard to which the Government of the United States now finds itself constrained to seek due remedy and redress being thus set forth in all needful detail, you are instructed to bring these several causes of complaint to the immediate and serious attention of the Venezuelan Government and to insist that the Government to which you are accredited shall give to each and every demand herein set forth immediate consideration.

You will deliver a copy of this instruction to the Venezuelan minister for foreign affairs.

I am, etc.,

Elihu Root.