Papers Relating to the Foreign Relations of the United States, With the Annual Message of the President Transmitted to Congress December 6, 1910

The Secretary of State to Minister Dawson.

Department of State,
Washington , August 5, 1909 .

No. 5.]

Sir: As soon as practicable after your formal reception by the president of Chile you will present to the minister for foreign affairs a note as follows:

The undersigned envoy extraordinary and minister plenipotentiary of the United States of America, has, by direction of his Government, the honor to bring anew to the attention of the Government of Chile, the claim of the firm of Alsop & Co., in the expectation that that Government, animated by a spirit of plain justice, will accept one or the other of the two proposals herein set forth for the settlement of a controversy which has for so inordinate a length of time been dragging on as a disturbing factor in the relations of the two Governments.

The recent correspondence regarding this claim which has passed between the United States and Chile would tend to reveal the extraordinary situation that, notwithstanding the numerous promises and undertakings of the Government of Chile to meet the claim as hereinafter set forth, and notwithstanding, as will also be shown, the fact that the Government of Chile now admits that it has no evidence going to show that the full sum called for by the terms of the contract was not equitably due, the Government of Chile is nevertheless now prepared to suggest a doubt as to the right of the Government of the United States formally to espouse this claim and diplomatically to request its settlement.

This seeming attitude of the Government of Chile has been observed with surprise by the Government of the United States which regards the claim as the claim of American citizens, equitable and just in its nature, and valid and subsisting as against the Government of Chile. Feeling, therefore, that this attitude of the Government of Chile must, if assumed at all, have been taken without careful and attentive consideration of the facts and circumstances connected with the case, the Government of the United States, in order that the matter shall be fully and properly presented to the attention of the Government of Chile, has instructed the undersigned to lay before his excellency the minister of foreign affairs for the Republic of Chile the following statement of the jurisdictional facts, as shown by the records of the Department of State of the United States, upon which the claims against the Government of Chile are based.

For a period of years prior to 1874, one Pedro Lopez Gama advanced to the Government of Bolivia large sums of money which, as evidenced by appropriate documents in writing, that Government became indebted to Gama to the value of 150,000 tons of guano. Gama was in turn indebted in large amounts to Alsop & Co., who had loaned him the money which he had advanced to the Government of Bolivia. To meet this indebtedness to Alsop & Co. for actual money thus loaned (which at that time amounted to more than $1,250,000) Gama, in 1875, assigned to that company his rights against the Government of Bolivia, the assignment being by an express declaration approved and ratified by the Government of Bolivia.

In 1876 a special contract for the settlement of this debt was made between the Government of Bolivia and Alsop & Co., the latter acting through its liquidator, John Wheelwright, the firm of Alsop & Co. being an association of American financiers doing business with American capital in Chile and adjacent countries. This contract fixed the principal then due upon the debt at 835,000 Bolivianos (at that time worth about $805,775 American gold) and provided that this sum was to bear interest at 5 per cent from the date of the contract. The same contract also stipulated for the payment by the Government of Bolivia to Alsop & Co. of interest then due, amounting to 240,700 Bolivianos (at that time worth about $232,375.50 American gold).

This agreement, which the Government of Chile and that of Bolivia have both repeatedly recognized as legally valid and binding, specified two sources from which the debt was to be paid:

1. Bolivia’s share of the customs receipts levied in the Peruvian port of Arica or (under a specified contingency) from a reestablished national customhouse of Bolivia.

2. The proceeds from certain State mines or estacas granted to Alsop & Co. for a period of 25 years, the estacas thus leased being located in the Bolivian littoral.

Before Alsop & Co. had received any payment upon account from the customs receipts and before the expiration of the period within which Wheelwright was to make his selection of the Government estacas which he would work under his lease, war broke out between Chile on the one side and Peru and Bolivia on the other. The war closed with the Bolivian littoral, as well as the customhouse of Arica, in the possession of the Government of Chile, under whose provisional control and jurisdiction they have ever since remained.

This occupation injuriously affected the Alsop Co. in two ways. In the first place, it resulted in depriving it of any income whatsoever from the customs receipts of Arica which had been pledged to the payment of the sums due Alsop & Co., owing to the fact that the Governments of Chile and Bolivia, by a series of treaties and protocols negotiated after the war, provided for a distribution of the proceeds in a way entirely ignoring the rights thereto which were possessed by Alsop & Co., and it may be observed incidentally in this connection that a considerable portion (40 per cent of the total amount collected, after deducting 25 per cent for expenses of collection) was by this agreement devoted to the payment of claims held by citizens of Chile against the Government of Bolivia. In the next place, upon taking possession and assuming control of the Bolivian littoral, the Government of Chile, in nonobservance of the well-established principle of international law that all private rights and property must be respected and protected by a government assuming jurisdiction and control over territory in which such rights exist, applied to the littoral and to the Alsop mineral holdings therein certain provisions of Chilean law which not only materially derogated from the definite rights which Alsop & Co. had acquired from the Government of Bolivia under the Wheelwright contract, but also required that Alsop & Co., in order to retain their title to and possession of the mines, should expend large sums of money not necessary under Bolivian law. Alsop & Co. applied both to the courts and to the Executive of Chile to correct this trouble, but were able to obtain no relief from either. The company then referred this phase of the matter to the Department of State of the United States, which, after an examination of the questions involved, declared that the proceedings of the Chilean courts and the Chilean Executive were contrary to the principles of international law and amounted to a confiscation of property.

The undersigned begs further to point out regarding the other phase of this controversy that the Government of Chile, having taken from Bolivia the sources from which the Government of Bolivia planned to get the funds to meet the debt due under the contract, it was very early agreed and has since been formally incorporated in numerous protocols and treaties between Chile and Bolivia that the Government of Chile should assume and pay Bolivia’s obligation as specified in the Wheelwright contract.

From 1885 until the present the rights of Alsop & Co. have been the subject of correspondence between the Government of the United States and that of Chile. The questions involved have gone before two claims commissions, the first of which found itself unable to pass upon the merits of the claim on account of the expiration of the time limit for its existence, and the second of which dismissed the claim for want of jurisdiction, owing to the peculiar wording of the protocol under which the claims were submitted.

Discussing first the liability of the Government of Chile for the amount called for by the Wheelwright contract, the undersigned deems it proper to preface the discussion with the remark that in all the correspondence which has taken place concerning this matter the Government of Bolivia has not only never questioned, but has never even suggested that the contract was not valid or that the whole amount called for by the contract, both principal and interest, was not justly and equitably due. Moreover, the Government of Chile has never questioned the legality of the contract; and while more recently it nas been suggested by certain officials of the Government of Chile that the full amount of the claim, principal and interest, was not in equity due the claimants, yet the Government of Chile has failed even though specifically requested so to do to furnish to the Government of the United States any evidence which justified the position regarding this matter taken by the Government of Chile. Indeed, the present minister of Chile at Washington, Mr. Cruz, has expressly affirmed that the Government of Chile has no such evidence to offer.

Inasmuch, therefore, as the Government of Bolivia, which made the contract, and the Government of Chile, which has assumed the payment thereof, have never questioned the legality of the contract; and inasmuch as the Government of Bolivia has never questioned that the amount called for by the contract was justly and equitably due; and inasmuch as while certain officials of the Government of Chile have suggested that the full amount called for by the contract was not properly due the claimants, yet the Government of Chile has failed, though repeatedly and specifically requested so to do, to furnish any evidence in support of this suggestion by its officials; and inasmuch as the minister of Chile at Washington states on this point that the reason that the Government of Chile has not submitted the evidence is that it has none such in its possession, the Government of the United States is unable to perceive wherein there is any ground sufficient to justify a further refusal upon the part of the Government of Chile to pay to the claimants the full amount called for by their contract of 1876 with the Government of Bolivia. Indeed, in this connection the Government of the United States has not forgotten and the Government of Chile can not fail to remember the many and repeated promises of the Government of Chile to pay this debt due from the Government of Bolivia to Alsop & Co. and assumed by the Government of Chile. These promises appear in the diplomatic correspondence between the United States and Chile, in the formal treaties negotiated between Bolivia and Chile, and in the formal assurance made by the present minister of Chile at Washington, as agent for the Government of Chile, before the second United States and Chilean Claims Commission.

It is also within the knowledge of the Government of Chile that very soon after the outbreak of the war between Chile on the one hand and Bolivia and Peru on the other, the minister of foreign affairs for Chile addressed to the various foreign ministers at Santiago a circular in which he used the following language:

I need not assure your honor that your countrymen will find every description of guarantee for their persons and interests in the territory in which Chilean law has now resumed its sway.

The records of the Chilean ministry of foreign affairs will bear out the statement that relying upon this formal declaration by the Government of Chile, the Government of the United States, notwithstanding numbers of its citizens found themselves deprived of their rights and property, refrained from making any urgent representations in their behalf, secure in the belief that, pursuant to the high purpose it had announced, the Government of Chile would voluntarily, upon the cessation of hostilities, restore such citizens to the rights and property of which they had been deprived. Inasmuch, however, as there was some delay in carrying out this guarantee thus formally given, the minister of the United States at Santiago, early in 1884, took up the matter of the payment of certain American claims, then pending with His Excellency the President of Chile, whereupon President Santa Maria assured the minister of the United States that the Government of Chile would honorably settle every just claim upon it, but requested that the Government of the United States “postpone any further action in the case until such time as the definite arrangement with her opponents would leave Chile free to consider the questions growing out of the rights of neutrals.” The minister of the United States at Santiago, in reporting this conversation, stated that the President of Chile was very cordial, and that the minister left with the conviction that the Government of Chile would honorably arrange for the settlement of American claims in accordance with the principles of law and equity.

With appropriate deference to the request of President Santa Maria that the matter of a settlement of American claims be not at that time pressed, nothing further was done until October, 1884, when the minister of the United States at Santiago again addressed a note to the foreign office of Chile regarding the settlement of American claims, in the course of which he made the following statement:

With a feeling of profound friendship for Chile, and appreciating the difficulties in which the Government was placed during the earlier part of the last quarter of a century, my Government has contended itself with simply presenting them to your excellency’s Government for consideration, feeling entirely satisfied to await the arrival of a more auspicious moment when the high sense of justice which has always characterized your excellency’s Government would certainly bring about their settlement upon an equitable basis.

In January, 1885, the minister of the United States informed the Department of State of his Government that in the course of an interview regarding the settlement of American claims, the Chilean foreign office informed him that it had decided not to enter into any other claims commissions than those already agreed upon, and that the Government of Chile would consider all claims upon the old basis of direct diplomatic negotiations. In 1887 his excellency the minister of foreign affairs for the Republic of Chile, in response to an inquiry made by him of the minister of the United States at Santiago (Mr. Roberts) as to whether or not he had received instructions in regard to American claims, was informed by the American minister that such instructions had been received, but that a “desire not to embarrass Chile in her negotiations with European powers, has kept me from presenting the matter to your Government.” In May, 1888, the minister of the United States at Santiago again informed the President of Chile that the Government of the United States had abstained from presenting these claims for consideration from a desire not to embarrass the Government of Chile while that Government was engaged in settling similar claims with European Governments, but now that the European claims had been settled, the Government of the United States, “naturally solicitous for the interests of its citizens, who for some time have been presenting their claims upon its attention, would like to negotiate for the appointment of a commission for their adjustment.”

The minister of the United States was, however, unable at that time to arrange for the settlement of American claims.

In September, 1890, the minister of the United States to Chile, at that time Mr. Egan, informed the Department of State of the United States that he had refrained from taking up the question of the claims of American citizens against Chile because of certain strained relations which then seemed to exist between the legislative and executive branches of the Government of Chile. At about the same time the minister also reported an interview with President Balmaceda, in which he specifically mentioned the claim of the “late John Wheelwright,” and in which the President of Chile assured him “of the readiness of Chile to fairly meet every just and reasonable claim,” and requested the minister of the United States to furnish to the minister of foreign relations of Chile “a full statement of all United States claims against Chile.” Accordingly, in a note addressed to the Chilean foreign office under date of August 30, 1890, the minister of the United States, after calling attention to certain American claims, and after briefly reviewing the postponements which had been made in the matter of their settlement, stated “that in 1884 President Santa Maria had conveyed to Minister Logan the request that the consideration be postponed until “such time as a definite arrangement with her opponents would leave Chile free to consider the questions growing out of the rights of neutrals, which time, His Excellency the President, considered would not be very long.”

The minister of the United States then expressed himself upon this matter as follows:

Actuated by those sentiments of profound friendship which have ever characterized the relations of the United States of America with her sister Republic of Chile, and with the most entire confidence in the honor and sense of justice of the Chilean people, my government has been satisfied to wait until a favorable opportunity for a satisfactory arrangement should present itself.

In a note dated September 30, 1890, the minister of the United States, in accordance with the suggestion of the President of Chile, furnished to the Chilean foreign office a list of the American claims against Chile. Among the claims submitted at this time was that of Alsop & Co., which was set forth as follows:

No. 2. Representatives of the late John Wheelwright (the liquidator of Alsop & Co., of Valparaiso) for a debt of 835,000 Bolivian dollars, admitted and agreed by contract of the 24th of December, 1876, as being due from the Government of Bolivia to said claimants, and secured by mortgage upon the excess of proceeds from the northern customhouse, over and above the sum of 405,000 Bolivian dollars each year, and also by an agreement on the part of the Bolivian Government to lease to Mr. Wheelwright, as representative of the Alsop Co., for a term of 25 years all the Government Estaca mines on the coast of Bolivia, giving him three years to select those which he might consider worth working, which contract has been set aside by the Government of Chile.

On June 3, 1892, the minister of the United States, strictly confining himself to the Alsop & Co. claim, addressed a note to the Chilean minister of foreign affairs, which the undersigned begs to quote in full:

Sir: In view of the pending negotiations between the Government of Y. E. and that of the Republic of Bolivia with the object of establishing and confirming between the two countries a definite treaty of peace, a result which, on the part of my Government, I sincerely hope may be speedily arrived at, to the mutual and entire satisfaction of both Chile and Bolivia, I trust Y. E. will not consider it inopportune to call the attention of Y. E. Government to the claim of the representatives of the United States commercial house of Alsop & Co., formerly of Valparaiso, the particulars of which Y. E. will find set out in my note of September 30, 1890, addressed to the minister of Y. E. The claim is marked No. 2 in the second series of claims mentioned in said note, and is described as the claim of the “Representatives of the late John Wheel-right, liquidator of Messrs. Alsop & Co. of Valparaiso.”

As Y. E. will perceive the claim is for a debt of 835,000 soles ($835,000), with interest at the rate of 5 per cent per annum from the year 1876, which debt was solemnly acknowledged by the Government of Bolivia and the payment secured by lien upon the income of the northern customhouse over and above the sum of 405,000 soles ($405,000) per year.

Upon the occupation of Tacna and Arica as the consequence of the war between Chile and Peru and Bolivia, this arrangement was arbitrarily set aside by the Government of Chile, to the great loss and suffering of the surviving partners and other representatives of the house of Alsop & Co.

There are also questions with regard to rights in certain mining property, situated in the territory occupied as above stated, and transferred by the Government of Bolivia to the representatives of Alsop & Co. as further security in connection with same debt and interest thereon, which rights have been refused recognition by the tribunals of Chile.

Of these rights under a lawful contract the Government of Y. E. was duly informed, anterior to the signing of the convention of truce with Bolivia, in a petition presented to Y. E. Government by Mr. John Stewart Jackson, attorney for the claimants, dated Valparaiso, September 11, 1882.

At the urgent request of his excellency, President Santa Maria, conveyed to the United States minister, Mr. Logan, in February, 1884, the consideration of the claims of United States citizens arising out of the conflict between Chile, Peru, and Bolivia, was deferred, in the words of his excellency: “Until such time as a definite arrangement with her opponents would leave Chile free to consider the questions growing out of the rights of neutrals.” From considerations of profound friendship toward the Chilean Government and the Chilean people, my Government has, from time to time, up to the present, postponed these claims, although many of the claimants have been suffering great hardships on account of their losses, including some of those interested in this particular one. In view of these considerations I submit to Y. E. that in whatever definite arrangement may be made between the Government of Chile and that of Bolivia, this clearly acknowledged liability to the representatives of the house of Alsop & Co. should in right and justice be taken into account and definite provision be made for its early liquidation, a result which, in full reliance upon the high appreciation of international honor which characterizes the Government of Y. E., I sincerely hope to see accomplished.

I shall be prepared to submit to Y. E. in the course of a very few days all of the documents in the case.

Renewing to Y. E. the assurances of my high consideration and esteem, I have the honor to remain,

Y. E. obedient servant,

Patrick Egan.

A copy of this note the minister of the United States communicated to his Government on the same day, and on June 11, 1892, referring to his transmitting dispatch, he reported to the Secretary of State of the United States as follows:

I have the honor to refer to my No. 306 of 3d instant, inclosing a note addressed by me to the minister of foreign relations in regard to the claim of the representatives of the United States commercial house of Alsop & Co., otherwise known as the “Wheelwright claim,” and I beg to say that on yesterday I had an interview on the matter with the subsecretary of foreign relations, and he told me that in consequence of the changes of ministry it was not possible up to that time to send a written reply to my note of the 3d instant. He assured me, however, that in the definite (definitive) treaty of peace now being negotiated between Chile and Bolivia, under which Bolivia will cede to Chile all territorial claims upon Arica and Tacna, and Chile will undertake the payment of certain of the exterior debts of Bolivia, the payment of this debt to the representatives of Alsop & Co. will be undertaken by Chile.

The reply of the Chilean foreign office to the note addressed by the minister of the United States to it, on June 3, 1892, was made on June 18, 1892, and reads in translation as follows:

I have had the honor to receive Y. E.’s communication dated 3d instant and in. which Y. E. “in view of the pending negotiations between the Government of Bolivia and that of Chile to establish a definite treaty of peace between the two countries” calls the attention of the Government of Chile to the claim of the representatives of the American commercial house of Alsop & Co., hoping it will not be considered inopportune by the undersigned.

Y. E. refers to your communication of September 30, 1890, in which this claim is No. 2 among those mentioned in said note, under the name of the late John Wheelwright, liquidator of the said house of Alsop & Co., asking the payment of a sum amounting to 835,000 Bolivian pesos with an annual interest of 5 per cent from 1876.

Y. E. states that this debt was solemnly ratified by the Government of Bolivia in the form mentioned and that, as a consequence of the occupation of Tacna and Arica by the Chilean forces, the agreement celebrated with Bolivia “was arbitrarily set aside by the Government of Chile.”

Y. E. adds some data relating to the matter, the settlement of which Y. E. has been pleased to state the Government of Y. E. has several times postponed out of considerations of friendship for the Government and people of Chile, and closes asking the Government of Chile to take the claim into consideration in whatever arrangement may be celebrated with Bolivia.

In reply I have the pleasure to inform Y. E. that in the preliminary protocol of a treaty of peace between Chile and Bolivia, ratified by the undersignea in the city of Iquique, as minister of foreign relations of the constitutional Government, the claim of Alsop & Co., which Y. E. has supported, for the sum indicated by Y. E. (835,000 Bolivian pesos), figured among the liabilities that the Government of Chile engaged to pay for account of Bolivia.

Regarding the payment of interest to which Y. E. refers, the Government of the undersigned awaits what may be done in the negotiations that are to follow by the Government that recognized the principal obligation; the Government of Chile, which only assumed the obligations of a neighboring and friendly country, will endeavored to attend to this part of the claim once the Government of Bolivia pronounces upon its legitimacy or validity, confining myself, as a proof of deference to the Government of Y. E., to offering the assurance that I will carefully take into account the resolution that may be adopted by the Government of Bolivia in relation to this point.

Upon forwarding what has already been stated the undersigned is pleased that in the protocol celebrated in Iquique in May, 1891, the Government of Chile had already taken into account the matter referred to in the esteemed communication of Y. E. to which I have the honor to reply.

I avail myself of the opportunity, Mr. Minister, to offer to Y. E. the assurance of my high consideration.

Isidoro Errazuriz.

Under date of June 22, 1892, the minister of the United States to Chile reported to his Government that he had forwarded to the minister of foreign affairs for Chile—

particulars of the contracts entered into by the Government of Bolivia and reduced to public record in La Paz, the 26th December, 1876, recognizing this interest (the interest upon the debt due under the Alsop contract) in the same way as the principal debt, which the subsecretary of foreign relations assured me would be entirely satisfactory.

Three years later, under date of June 22, 1895, Mr. Stroebel, who had then become the minister of the United States, reported to the Department of State a conversation between himself and Señor Gutierrez, the Bolivian minister at Santiago, in which Mr. Stroebel—

called his attention to the note of Señor Errazuriz (of June 18, 1892) and inquired whether provision had been made for the payment of the claim as promised in that note. * * * The Bolivian minister, however, informed me that the payment of a number of claims had been provided for (in the treaties pending between Chile and Bolivia) and that among these the claim of Alsop & Co. was explicitly mentioned and that the amount fixed in settlement was 835,000 bolivianos, the same as stated in the note of Señor Errazuriz, referred to above.

Under date of October 10, 1896, Mr. Stroebel made the following report to the Department of State:

Sir: In reply to the department’s No. 99 of August 10 last, inclosing a letter from the Hon. G. S. Boutwell, and instructing me to ascertain from the Government of Chile the proposed date of settlement of the claim of Alsop & Co., and whether by a treaty or by an understanding between the Governments of Chile and Bolivia the amount to be paid had been fixed, I have the honor to report that yesterday I had a conversation on the subject with Señor Eduardo Phillips, the under secretary of foreign relations, who gave me the following information:

On May 28, 1895, a protocol, supplementary to the treaties between Chile and Bolivia forwarded to the department with my No. 85 of May 6 last, was signed. This protocol was approved by the Chilean Congress, in secret session, but is still awaiting the approval of the Congress of Bolivia, and has, therefore, not been published. It has an important bearing upon the claims assumed by the Chilean Government, in accordance with the provisions of article 2 of the treaty of peace and amity of May 18, 1895.

According to the memorandum presented by the Bolivian minister at this capital, which is regarded as Dart of the protocol, the amount proposed as a settlement of the claim of Alsop & Co. is, without calculating interest (sin computar intereses) 835,000 bolivianos of 20 pence, or 954,285 Chilean pesos.

By article 3 of the protocol the Government of Chile, in order to settle the definite amounts to be paid, shall-take into account the origin of the claims allowed (el origin de dada credito) as well as the data furnished by the Bolivian minister in his memorandum.

It is hoped that the protocol will be approved by the Bolivian Congress, which is now in session, in a few weeks. The Chilean Government can not take up the question of the payment of the claims until this protocol has been approved and promulgated.

On receiving the above information I inquired of Señor Phillips whether it was to be understood that the terms of article 3 of the protocol gave to his Government the right of making a reexamination of the claims; and I stated that if this was the case it was contrary to the impression existing in the minds of the claimants as well as to my own understanding of the matter. He replied that, in view of the large amounts to be paid, it was natural that his Government should desire to examine the papers on which the claims were based; but that he thought that as soon as the protocol was approved and promulgated there would be no disposition to delay a settlement.

The Bolivian minister here, Señor Gutierrez, whom I saw this afternoon and with whom I spoke upon the subject, also seemed to be of this opinion.

As soon as the protocol is approved by the Bolivian Congress, I will again call the attention of the Chilean foreign office to the claim, with a view to obtaining some more definite assurance regarding payment.

It will be seen from the above narration of facts and correspondence that from 1884 to 1890 the Government of the United States, relying upon assurances of the Government of Chile that all equitable claims against the Government of Chile would in due time be met, and deferring to the expressed desire of that Government that the United States should postpone a settlement of the claims of its citizens until Chile should have been able to settle with her European claimants, refrained from pressing upon the attention of the Government of Chile the just claims of American citizens. It will, moreover, be observed that in June, 1892, as the result of representations made by the minister of the United States at Santiago, the Government of Chile definitely promised to pay both the principal and the interest of the debt, as provided for in the contract. This promise to settle the claim was renewed in an assurance given to the minister of the United States in 1896.

There was, at the time of the making of these claims and representations, no question raised as to the legality of the contract, the amount of the claim, nor the obligation of the Government of Chile to pay the same upon the completion of the treaty arrangements with the Government of Bolivia; and the promises thus definitely made were conditioned only upon the negotiation of these treaties, which has been long since effected.

But the undertaking of the Government of Chile to pay this Bolivian debt appears no less clearly in the various treaties and protocols which from time to time have been negotiated and signed by the Governments of Bolivia and of Chile. In the protocol of May 19, 1891, between Chile and Bolivia, it is provided in article 2:

The Government of Chile will take charge of and assume the payment of the obligations recognized by that of Bolivia in favor of the mineral enterprises of Huanchaca or Corocoro and Oruro, deducting the amounts in accordance with the compact of truce, as well as the credits which encumbered the income from the littoral by reason thereof and which are that of * * * the credit acknowledged in favor of Lopez Gama, representing the house of Alsop & Co., of Valparaiso. * * *

Article 3 of the same protocol provided that the sums which make up the credits, referred to above as taken from the books of the national treasurer of Bolivia, are as follows:

* * * * * * *

“Lopez Gama credit $835,000.”

* * * * * * *

The sums approximated are considered without interest; and, with which, according to the liquidation made, reach the amount of 6,604,000 pesos.”

This statement, when taken in connection with that which was made by the Chilean subsecretary of foreign affairs, to the minister of the United States, when, in June, 1892, the latter submitted to the former the contract of December 26, 1876, recognizing the interest due upon the Alsop contract, clearly shows that at this time the Government of Chile acknowledged as due, not only the principal sum called for by the Wheelwright contract of 1876, but the interest due under said contract as well.

Further, on May 18, 1895, there was signed at Santiago a treaty of peace and friendship between the Governments of Bolivia and of Chile. It was provided in article 2 of this treaty that—

it (the Government of Chile) binds itself furthermore to pay the following debts which encumbered the Bolivian Littoral, namely: * * * The credit of Don Pedro Lopez Gama, now represented by the firm of Alsop & Co., of Valparaiso.

And again in a supplementary protocol signed at Santiago on May 28, 1895, it was provided in article 3 that—

those credits which are not included in the declaration aforesaid and which are those * * * pedro Lopez Gama * * * shall be examined by the Government of Chile, which Government, in order to fix the definite amount due, and to agree as to the form of payment thereof, will take into account the origin of each credit, and also the antecedents of the same consigned by the minister of Bolivia in Chile in his memorandum of the 23d of the present month.

In a protocol between the Republics of Chile and Bolivia, signed at Santiago April 30, 1896, explanatory of the protocol of the 9th of December, 1895, the above arrangement for the liquidation of the debts therein named was recognized and there was imposed upon the Government of Bolivia the duty of submitting for the approval of the Congress of that Republic the protocol of May 28, 1895.

And finally on October 20, 1904, the Governments of Chile and of Bolivia entered into a general treaty, article 5 of which provides as follows:

* * * and the sum of 2,000,000 pesos in gold of 18 pence in the the same form as the preceding for the cancellation of the credits arising from the following obligations of Bolivia: * * * the debt recognized to Don Pedro Lopez Gama, represented by Messrs. Alsop & Co.; subrogates of the former’s rights. * * *

Regarding the extent to which the Government of Chile had by this undertaking obligated herself to meet Bolivia’s debts it appears, as his excellency the minister of foreign affairs for Chile is aware, that the Government of Bolivia, fearing that some doubt might in the future arise, set forth its understanding of the undertaking of the Government of Chile in the following note:

Legation of Bolivia,
Santiago, October 21, 1904.

Mr. Minister: The Government of Bolivia agrees with your excellency’s Government on the necessity of determining the purport of the wording of article 5 of the treaty of peace and friendship signed to-day by your excellency on behalf of the Government of Chile and by the undersigned in representation of the Government of Bolivia.

Both in regard to the claims of the Corocoro, Huanchaca, and Oruro Companies and of the bondholders of the Bolivian loan of 1867 which were being paid out of 40 per cent of the receipts of the Arica customhouse, and in regard to the claims against Bolivia of the bondholders of the Mejillones Railroad, of Alsop & Co. (assignees of Pedro Lopez Gama), of the estate of Juan Garday, and of Edward Squire (representing the rights of John C. Meiggs), it has been agreed that the Government of Chile shall permanently cancel all of them, so that Bolivia shall be relieved of all liability, the Government of Chile being obligated to answer every subsequent claim presented either by private means or through diplomatic channels, and considering itself liable for every obligation, bond, or document of the Government of Bolivia relating to any of the claims enumerated, Bolivia’s liability being entirely eliminated for all time and the Government of Chile assuming all liabilities to their full extent.

My Government desires that your excellency may be pleased to state to me, on behalf of the Government of Chile, whether this is the purport which it has given to article 5 of the treaty of peace and friendship signed to-day between the representatives of the two Governments.

I avail myself of this opportunity to renew to your excellency the assurances of my high and distinguished consideration.

(Signed) A. Gutierrez.

To His Excellency Dr. Emilio Bello C.,
Minister of Foreign Relations, City.

To this the representative of the Government of Chile replied as follows:

No. 1008.]

Republic of Chile,
Minister of Foreign Relations,
Santiago, October 21, 1904.

Mr. Minister: In reply to the note which your excellency addressed to me on this day I take pleasure, in compliance with your request, in defining the purport which this chancellery assigns to clause 5 of the treaty of peace and friendship signed to-day by your excellency in representation of the Government of Bolivia and by the undersigned on behalf of the Government of Chile.

My Government considers that the obligation which Chile contracts by article 5 of the said treaty comprises that of arranging directly, with the two groups of creditors recognized by Bolivia, for the permanent cancellation of each of the claims mentioned in said article, thus relieving Bolivia of all subsequent liabilities.

It is consequently understood that Chile, as assignee of all the obligations and rights which might be incumbent on or pertain to Bolivia in connection with these claims, shall answer any reclamation which may be presented to your excellency’s Government by any of the parties interested in the said claims.

I renew to your excellency the assurances of my highest and most distinguished consideration.

(Signed) Emilio Bello C.

To his excellency Mr. Alberto Gutierrez,
E. E. and M. P. of Bolivia.

These notes seem clearly to establish that, although if read alone, the treaty provisions might perhaps be construed to place a limitation upon the amount which the Government of Chile was to pay upon the debts recognized as existing against the Government of Bolivia, yet that in reality the Government of Chile obligated itself to pay the entire amount which should be found due upon these debts, irrespective of the question as to whether or not it was able to do so from the sum specifically named in the treaty.

It would thus appear that the Republic of Chile has repeatedly obligated itself to the Government of Bolivia to pay the Alsop debt-—a debt which the Governments of both of these Republics have again and again recognized in these protocols as a valid and existing obligation. This obligation of payment was first assumed in express words by the Government of Chile in the protocol of May 19, 1891, in which not only was the principal of the debt as specified in the Wheelwright contract named, but the interest which it was to draw recognized. The obligation was expressly renewed by the Government of Chile in the treaty of peace and friendship signed at Santiago on May 18, 1895, and this was reaffirmed in the supplementary protocol signed in Santiago between the same parties on May 28, 1895. Subsequently, on December 9, 1895, the obligations recognized in the preceding treaties were by express terms again reaffirmed. Finally, on October 20, 1904, the Republic of Chile in a general treaty again assumed the obligation to pay the Alsop claim; and while the treaty itself specified a lump sum from which the indebtedness was to be met, thus perhaps lending some color to a suggestion that there might be a reduction from the full value of the claim, with interest, yet the aforesaid secret notes exchanged at the same time specifically provided that the obligation of the Government of Chile was full and complete, as to whatever sum should be found due upon the debts which that Government assumed to pay.

But not only has the Government of Chile thus promised diplomatically as between the United States and the Republic, of Chile to pay the sum called for by the formal contract of 1876, between John Wheelwright and the Government of Bolivia; and not only has the Government of Chile repeatedly obligated itself in formal and solemn treaties negotiated between the Governments of Chile and of Bolivia to pay this debt, but that Government has renewed and affirmed this undertaking in a most formal promise made to a high international tribunal.

In the course of the arguments before the second United States-Chilean Claims Commission in 1901, the present minister of Chile to the United States, acting then as agent and counsel for Chile, conjointly with the Hon. Edward H. Stroebel, formerly accreditd by the Government of the United States as its minister near the Government of Chile (during which time, as has already been pointed out, he carried on certain diplomatic correspondence concerning this claim) the latter in his capacity as special counsel, made the following declaration to the Alsop claimants and to the commissioners in regard to this claim:

As is stated in the claimant’s brief, it is among the liabilities that the Government of Chile engaged to pay for the account of Bolivia. This explains exactly the situation of the claim. The Chilean Government has always regarded it, and does still regard it, as a liability on the part of Bolivia, toward the claimant; and in order to induce the Bolivian Government to sign the definite treaty of peace which has been negotiated for many years, the Chilean Government offers to meet this and other claims, as part of the payment or consideration which it offers to Bolivia for the signature of the treaty. This has always been the position of the Chilean Government, and is its position to-day, and if Bolivia signs the treaty, the claim of Alsop & Co., as well as the other claims mentioned, will be promptly paid under the treaty engagement as a relief to Bolivia from the liabilities which that Government has incurred and for the account of Bolivia.

After a careful consideration of the purely technical defense offered at that time, a majority of the commission—that is, the commissioner for the Republic of Chile and the umpire—decided that, under the protocol of submission, the commission was authorized to consider merely the claims of “citizens of the United States,” and that therefore they could not consider this claim upon its merits. In dismissing the case, however, these same members of the commission said:

By this conclusion it is not denied that certain cases may arise (like the Cerruti case) in which redress may justly be granted by means of diplomatic intervention to an individual member of a society for injury to the partnership property. The demurrer is sustained wholly upon the ground that Alsop & Co., in liquidation, being a citizen of Chile, this commission, under Article I of the convention of 1892, has no jurisdiction to entertain the claim. The case is dismissed, therefore, without prejudice, however, to any rights which the claimant, or claimants, or Alsop & Co., or its liquidator may have, either by diplomatic intervention or before the Government of Chile, or the courts of Chile. Nor are the merits of the claim in any way prejudiced by this decision. According to the brief of the honorable agent of Chile, it is declared that this claim “is among the liabilities that the Government of Chile engage to pay for the account of Bolivia. * * * The Chilean Government has always regarded it, and does still regard it, as a liability on the part of Bolivia toward the claimant; and in order to induce the Bolivian Government to sign the definite treaty of peace, which have been negotiated for many years, the Chilean Government offers to meet this and other claims as part of the payment or consideration which it offers to Bolivia for the signature of the treaty. This has always been the position of the Chilean Government, and is its position to-day, and if Bolivia signs the treaty, the claim of Alsop & Co., as well as the other claims mentioned, will be promptly paid under the treaty engagement, as a relief to Bolivia from the liabilities which that Government has incurred and for the account of Bolivia.”

The claimant is, therefore, remitted for relief to the Government of Chile, whose assurances are thus given, and the case is dismissed.

Thus it is seen, the undersigned submits, that Chile has by repeated diplomatic promise, by solemn treaty obligation, and lastly by formal assurance given by the agent and the special counsel of the Government of Chile before a high international tribunal and incorporated by the commissioners in their decision, again and again obligated itself to satisfy this Alsop debt.

To meet the obligation thus repeatedly and voluntarily assumed, the Government of Chile offered in settlement, in December, 1903, through the minister of the United States at Santiago, 954,285 Chilean dollars of 18 pence, or about $343,542 American money. His excellency the minister of foreign affairs of Chile will permit it to be pointed out that the value of the mere principal of the debt, without interest, amounted to $805,775 American gold, while the interest due under the contract, at the time this offer was made, would amount to a further sum of $1,087,796.25, the two sums due, at that time, totaling $1,893,571.25; and that this does not take into consideration the amount still due upon the $232,275.50 American gold which the contract recognized as interest due at the date of its making. As the minister for foreign affairs of Chile is aware, this offer was declined by the claimants, and the Department of State of the United States pronounced the proposal as not in accordance with the equity of the claimants.

As the result of the renewed representations of the Government of the United States, the Government of Chile in December, 1904, made a second offer of settlement, this time, however, offering but 524,333 Chilean dollars, equivalent to about $190,647 American gold. At the time this offer was made, the value of the debt, principal and interest, had been increased from the figure last given by $40,288.75. The Department of State of the United States having already characterized as inequitable an earlier offer which was, almost as large again as this second offer, at once declined to accept the proposed sum, stating that the amount offered “appears to be disproportionate to the claimant’s equity.” The Government of Chile was invited to make a further offer.

On August 1, 1907, the Government of Chile made a third proposition in settlement of the claim, this time offering 568,192 Chilean dollars, equal to about $200,000 American gold. At the time of this offer, the debt, principal and interest, exclusive of the original interest acknowledged as due by the contract itself amounted to $2,287,481.25. Obviously the Department of State could not, and it did not, consider this proposed settlement as satisfactory and so informed the Government of Chile. Notwithstanding this, the last offer was renewed by the Government of Chile in April, 1908.

Moved to feel by these persistent offers of a sum apparently so inadequate to the equities of the claimants under their contract, that perhaps the Government of Chile was in possession of facts which the Government of the United States was ignorant and which would justify the reduction proposed by the Government of Chile, and taking advantage of the kindly offer of the Chilean legation at Washington, in its note of July 31, 1908 (transmitting a copy of the note of the minister of foreign affairs of Chile to the minister of the United States at Santiago) to furnish to the Department of State antecedents and information regarding the case, the Department of State, under date of August 29, 1908, requested the minister of the Republic of Chile at Washington to furnish to that department “copies of the documents and statements of the evidence which your (the Chilean) Government regards as justifying the reduction which it proposes.” In making this request the Department of State indicated that it did so because it was animated by a desire to make as to the matter of the settlement of this claim no request which equity and justice did not support. No reply having been received by it to this note, the Department of State repeated its request on November 24, 1908. On November 26, 1908, the minister of the Republic of Chile at Washington stated that he had informed his Government of the request and that he would communicate with the Department of State upon receiving the documents asked for. On January 24, 1909, the Department of State, still not having received the documents promised, instructed the minister of the United States at Santiago, by cable, to inform the Government of Chile that the Department of State, being most desirous of reaching a fair and equitable determination upon this whole matter, awaited the antecedents mentioned by the minister of Chile and requested by the Department of State. On February 26, 1909, the minister of the United States at Santiago cabled the Department of State that he had received a reply from the office of foreign affairs of the Government of Chile in which it was stated that the antecedents called for by the Department of State had on the same date been sent to the minister of Chile at Washington. On March 18 the Department of State communicated the substance of this telegram to the minister of Chile at Washington and requested that he forward to it at his earliest convenience the documents which his Government was then forwarding to him. This note the minister of Chile acknowledged under date of March 19, and assured the Department of State that he would hasten to transmit to it whatever information he might receive bearing upon the subject. Nothing having been heard in the meanwhile, and the evidence which the Chilean foreign office stated had been forwarded to the legation of Chile at Washington not having been received, the Secretary of State of the United States on April 15 took up the matter personally with the minister of Chile at Washington. In the course of an interview which followed, the minister of Chile stated that the Government of Chile had no evidence such as that called for—that is, evidence going to show that the amount due under the contract was not really due the claimants—and that to justify its reduction the Government of Chile relied upon the fact that the sums specified in the treaty between the Governments of Chile and of Bolivia for the settlement of this and other claims was not sufficient to meet in full the demands of all the claimants, and that the amount offered Alsop & Co. was its pro rata share of the sums so stipulated to be paid. It would thus appear from this correspondence and from this statement made orally by the minister of Chile at Washington that the Government of Chile has no evidence going to show that the amount called for, principal and interest, by the contract between John Wheelwright as liquidator for Alsop & Co. and the Government of Bolivia is not legally and equitably due the claimants.

In this connection the undersigned is directed to declare that in the mind of the Government of the United States there is no doubt that the Government of Chile is legally bound to pay this debt due Alsop & Co., and that to the Government of the United States it seems clear that the various promises and undertakings of the Government of Chile to the Government of the United States to pay this claim are of such a character as would, if made between two private parties, constitute a valid and existing contract not only under the rules of common law in force in the United States, but also under the provisions of the civil law as it exists under the Government of Chile; and this being so, the Government of the United States considers that these promises and undertakings create an obligation as between the Government of Chile and the Government of the United States. That the various transactions constitute a contract under the technical principles of the common law appears evident, because the promise given by the Government of Chile was based upon ample consideration, that is, the promised and long-continued forbearance of the Government of the United States to press upon the attention of the Government of Chile the settlement of this and other claims, predicated as it was upon the promise of the Chilean minister of foreign affairs that upon the happening of certain events the Government of Chile would honorably settle all such claims. Moreover, under the doctrines of the common law which empower a beneficiary to sue upon a contract made for his interest and benefit, it would appear that as the result of the repeated undertakings between the Government of Bolivia and the Government of Chile Alsop & Co. has acquired certain rights against the Government of Chile which the Government of the United States may well request the Government of Chile to observe.

And not only do these transactions thus constitute a contract within the meaning of the common law, but they are clearly such as would raise an obligation under the provisions of the civil law, and more specifically under the provisions of the Chilean code, which expressly recognizes the validity of such promises where the parties making them have legal capacity and the motive inducing the contract is not illegal. It appears no less certain that under Chilean law the various treaty obligations between the Government of Chile and the Government of Bolivia also give to Alsop & Co. certain rights as beneficiaries, of which the Government of the United States may, if it sees fit, take advantage.

Thus, that under the various promises made by the Government of Chile to the Government of the United States, the obligation of the Government of Chile to pay the Alsop claim is full and complete, even when tested by the rigorous technicalities of the private law of both countries, can admit of but little doubt. But even if it should be contended that the obligation is, under the private law of the two countries, not as complete as has been contended, still every doubt as to the extent of the obligation disappears and the undertaking becomes clearly perfect when it is considered, as it must be, that the repeated promises, set forth above, upon which reliance in this case is placed, are the promises freely and spontaneously made by one sovereign State to another, the latter placing thereon full and complete reliance. Such a promise by which the faith of a nation is pledged demands that it be not disregarded or evaded, and that it be squarely met and fully discharged. To consider otherwise the promise of a sovereign nation would be to deprive international obligations of that dignity and sacredness which are absolutely essential to the continued maintenance of those feelings of mutual respect and confidence which must of necessity exist between two friendly and independent States desiring to continue in their friendly relations and intercourse.

In this connection the undersigned begs to invite attention to the note, dated April 9, 1908, addressed by the minister of foreign affairs of Chile to the minister of the United States at Santiago, in which the following language was used:

At the same time, in order to obviate any doubts as to the scope and nature of these negotiations (and this is a point to which my Government ascribes special importance), it deemed it necessary to observe to the chargé d’affaires that, in view of the fact that the court of arbitration at Washington had declared Alsop & Co. to be a Chilean corporation, it could not assign any other character to the steps taken by said legation in this matter than that of a “simple conciliatory exercise of good offices (injerencial)”, undertaken for the purpose of bringing about the agreement which was sought in order to terminate the matter within the limitations of clause 5 of the treaty of peace.

The Government of the United States has been at some loss to understand precisely the meaning which this expression of the Government of Chile is intended to convey, and has found itself unwilling to believe that the suggestion which may be gathered from the mere language itself is the meaning which the Government of Chile desired to express.

It is indeed true that Alsop & Co., in order that it might do business in Chile, registered under the Chilean law, and in this sense became a Chilean partnership; but it should be remembered that the partners were all American citizens, that they were investing in their enterprise American capital, that the losses suffered have fallen upon American citizens, and that such losses have involved the destruction of American capital and enterprise. Moreover, it should also be recalled that the partnership has long since ceased to do business in Chile, and that it has, so far as was possible, wound up its partnership affairs. It has, as a practical matter, ceased to exist. To contest the right of the Government of the United States to intervene in behalf of the injured American partners in such a partnership, under such conditions, for the loss of American capital, would be to contest the fundamental sovereign right of the Government of the United States to intervene in behalf of its citizens—a proposition for which the Government of Chile would not, the Government of the United States feels, for a moment contend.

The Government of the United States has in the past asserted its rights to intervene in behalf of its citizens who occupied, with reference to foreign corporations, positions analagous to that held by the partners in this case, as is particularly and precisely illustrated by the famous MacMurdo or Delagoa Bay case in which the Government of the United States joined with the Government of Great Britain in intervening in behalf of American and British stockholders in a Portuguese corporation. Moreover, the famous Cerruti case, to which a majority of the members of the United States-Chilean Claims Commission, in dismissing the Alsop claim without prejudice, referred, and with the justice and equity of the determination of which the same commissioners agreed, seems squarely in point. That case, like the present, was a case in which there was an intervention on behalf of a national in a foreign partnership firm. Concerning this case the Chilean commissioner and the umpire said:

At first objection was made by Colombia to the effect that E. Cerruti & Co. being a society en commandita simple, having a juridicial entity, was, in fact, a Colombian citizen, and therefore that no indemnity could be demanded by Cerruti personally for damages sustained by the property of Cerruti & Co. This position was practically abandoned, for Colombia had, in equity at least, forfeited the right to such a position by injuring Cerruti, for political and individual reasons, not only in all his private interests but also in all his interests in the partnership property as well.

These precedents would justify, if indeed precedents were needed, the Government of the United States in intervening in behalf of the American partners of Alsop & Co. This is peculiarly true since this case, like the Cerruti case, has, as it was expressed by the commissioners, been one “in which the preliminary questions have been discussed for years” during which time, it should be remarked, the Government of Chile never made or even suggested any objection to the various intercessions of the Government of the United States in behalf of these American citizens, but on the other hand, acquiesced in and recognized the right of the Government of the United States to present to the Government of Chile for settlement this claim which the Government of the United States again finds it necessary to urge upon the attention of his excellency the minister of foreign affairs for Chile.

Thus is the liability of the Government of Chile shown upon the Wheelwright contract.

But not only have the claimants suffered great injury because of their inability to collect the amount due them under the Wheelwright contract, but they have also, as stated above, suffered great injury because of the application of the Chilean mining law to the Bolivian littoral. In connection with this point the minister of foreign affairs of Chile will recall that the contract between Wheelwright and the Government of Bolivia provided for the leasing to Wheelwright of the Government estacas located in the Bolivian littoral. The lessee’s interest under this contract was absolute, was entirely independent of the debt due from Alsop & Co., and under the Bolivian law no obligation existed on Alsop & Co. to perform any stated amount of work upon these estacas in order that title thereto might be unimpaired. However, upon the taking of the littoral, the Government of Chile applied to these estacas, thus held absolutely in leasehold by Alsop & Co. from the Government of Bolivia, the provisions of Chilean law, which, among other things, differed from the Bolivian law as to the manner in which the estacas must be chosen, as well as in requiring that a certain amount of assessment work should be carried on each year in order that title thereto might be retained. The application of these provisions of the Chilean law inflicted two sorts of injuries upon the claimants. In the first place it deprived Alsop & Co. of certain estacas as to which their lease was perfect under the Bolivian law, but which was imperfect (at least so declared the courts and the Executive of Chile) under the provisions of the Chilean law. In the next place it required, contrary to the Bolivian law, that Alsop & Co. should do a certain amount of work each year upon each estaca in order to retain it; and this, the claimants allege, has necessitated the expenditure of very large sums of money in order that they might retain the title to mines which at the moment they were not prepared systematically to exploit. These questions were tested in the Chilean courts, which decided that the Chilean law applied. The authorities of the Chilean Executive were then appealed to, but they stated that no relief could be given by the Executive, the matter being one for the jurisdiction of the Chilean courts.

As early as 1886 the claimants brought this matter to the attention of the Government of the United States, at which time the Secretary of State of the United States, Mr. Bayard, commenting upon the matter, laid down the law as follows:

As to his claim for redress for the wrongs which the present memorial narrates, I have also little doubt. The immense interests he held, in 1879, in his representative as well as individual capacity, under Bolivian laws, were virtually confiscated, under form of a judicial decision, by the Government of Chile in 1882. Were this confiscation put on grounds of municipal law, or of revolt against municipal authority, it might be argued that the decision is one as to which we can not sit in appeal. But the decision rests on an alleged rule of international law which, assumed as it now is by the Government of Chile, becomes a proper matter of discussion between ourselves and that Government. It is asserted by the Government of Chile (for, in international relations and the maintenance of international duties, the action of the judiciary in Chile is to be treated when assumed by the Government as the act of the Government) that a sovereign, when occupying a conquered territory, has, by international law, the right to test titles acquired under his predecessor by applying to them his own municipal law, and not the municipal law of his predecessor under which they vested. The true principle, however, is expressed in the following passage cited in the memorialist’s brief:

“But the right of conquest can not affect the property of private persons; war being only a relation of State to State, it follows that one of the belligerents who makes conquests in the territory of the other can not acquire more rights than the one for whom he is substituted; and that thus, as the invaded or conquered State did not possess any right over private property, so also the invader or conqueror can not legitimately exercise any right over that property. Such is to-day the public law of Europe, whose nations have corrected the barbarism of ancient practices, which placed private as well as public property under military law.” (C. Masse, Rapports du droit des gens avec le droit civil, Vol. I, p. 123, secs. 148–149.)

This doctrine has frequently been acted on in the United States. Thus it has been held by the Supreme Court that when New Mexico was conquered by the United States it was only the allegiance of the people that was changed; their relation to each other, and their rights of property, remained undisturbed (Leitensdorfer v. Webb, 20 How., 176). The same has been held as to California. The rights acquired under the prior Mexican and Spanish law, so it was decided, were “consecrated by the law of nations.” (U. S. v. Moreno, 1 Wall., 460; see U. S. v. Augisola, 1 Wall., 352; Townsendw. v Greeley, 5 Wall., 326; Denti v. Emmeger, 14 Wall., 308; Airhart v. Massieu, 98 U. S., 491; Mutual Assurance Soc. v. Watts, 1 Wheat, 279; Delassus v. U. S., 9 Peters, 117; Mitchell v. U. S., 12 Peters, 410; U. S. v. Repentigny, 5 Wall., 211.)

The Government of the United States therefore holds that titles derived from a duly constituted prior foreign government to which it has succeeded are “consecrated by the law of nations” even as against the titles claimed under its own subsequent laws. The rights of a resident neutral having become fixed and vested by the law of the country can not be denied or injuriously affected by a change in the sovereignty or public control of that country by transfer to another government. His remedies may be affected by the change of sovereignty but his rights at the time of change must be measured and determined by the law under which he acquired them. War is between States, and forms of government may thus be changed and laws are forms of government, but can not act retroactively to destroy neutral rights. The Government of the United States is therefore prepared to insist on the continued validity of such titles, as held by citizens of the United States, when attacked by foreign governments succeeding that by which they were granted. Title to land and landed improvements is, by the law of nations, a continuous right, not subject to be divested by any retroactive legislation of new governments taking the place of that by which such title was lawfully granted. Of course it is not intended here to deny the prerogative of a conqueror to confiscate for political offenses, or to withdraw franchises which by the law of nations can be withdrawn by governments for the time being. Such prerogatives have been conceded by the United States as well as by other members of the family of nations by which international law is constituted. What, however, is here denied, is the right of any government to declare titles lawfully granted by its predecessor to be vacated because they could not have been lawfully granted if its own law had, at the time in question, prevailed. This pretension strikes at that principle of historical municipal continuity of governments which is at the basis of international law, holding as I do that the action of the Government of Chile here complained of, by which citizens of the United States have been divested of their property, is in violation of this principle.

The Government of the United States still maintains this opinion. It must, therefore, regard the action of the Government of Chile in applying to the holdings of Alsop & Co. in the Bolivian littoral the provisions of the Chilean law, which derogated so greatly from the rights enjoyed by and the obligations imposed upon Alsop & Co. by the law of Bolivia, as wholly unwarranted by the rules of international law, and therefore as affording a just ground for a demand for damages in favor of Alsop & Co.

The undersigned is further instructed to say to his excellency the minister of foreign affairs of Chile that, in view of the jurisdictional facts of this case thus fully set forth, which facts stand not only uncontroverted and unimpeached, but admitted by the Governments of Bolivia and Chile, and in view of the well-founded liability of the Government of Chile to settle this claim in accordance with the numerous promises and undertakings made and given by that Government, the Government of the United States confidently expects that the Government of Chile will at once either make such a settlement on this controversy as shall comport with the equity of the claimants and with the dignity and the international integrity of Chile, or, as has been suggested by the Government of Chile, immediately agree with the Government of the United States upon a protocol submitting the entire controversy to an arbitral tribunal, for a decision upon the merits, in accordance with the broad principles of-equity and international law; though it should be understood at the same time, that the Government of the United States feels most deeply that the added expense and delay which this latter course will entail upon the claimants are, under the existing circumstances, without warrant and not to be justified.

In the event that the Government of Chile elects to arbitrate rather than to settle this claim in accordance with the many promises and undertakings as above set forth, the undersigned, on behalf of the Government of the United States, proposes the following protocol of submission¹ to conclude which the undersigned is duly and fully authorized.

In conclusion the undersigned begs to state that he can not entertain a doubt but that when the Government of Chile shall have fully considered this claim of Alsop & Co. broadly upon its merits, as above set forth, that Government will be convinced that the principles of equity, justice, and international law demand as to this long-standing and vexatious controversy, a prompt settlement that shall accord with the views of the Government of the United States which the undersigned now has the honor again to present.

The undersigned, envoy extraordinary and minister plenipotentiary of the United States, avails himself of this opportunity to renew to his excellency the minister of foreign affairs the assurance of his most distinguished consideration.

I am, etc.,

P. C. Knox.

1. Not printed. See protocol as finally signed.