Papers Relating to the Foreign Relations of the United States, With the Address of the President to Congress December 2, 1913
File No. 815.77/132.
The American Chargé d’Affaires to the Secretary of State.
Tegucigalpa, June 3, 1912.
Sir: With reference to your cablegram of May 25th, I have the honor to inform you that I immediately presented the matter to the Minister for Foreign Affairs, leaving with him at his request a memorandum on the subject; and that I received, on the 31st ultimo, in reply, a long memorandum from the Minister for Foreign Affairs; copies of which accompany this despatch.* * *
I have [etc.]
The American Chargé d’Affaires to the Minister for Foreign Affairs.
memorandum.
On March 2, 1896, the Government of Honduras granted to Mr. W. S. Valentine a concession, which was subsequently ratified by the National Congress, to build and to operate for a period of twelve years a wharf at Puerto Cortes, Department of Cortes. In the contract governing this concession provisions were made (article 9) for further extension of the concession by the Government of Honduras.
By a decree dated August 20, 1907, the Government of Honduras extended, under the provisions above referred to of article 9 of the original contract, Mr. Valentine’s concession for a further period of twelve years, that is, until March 2, 1920.
Mr. Valentine now makes a formal complaint to the Government of the United States of America that he is in receipt of a notification dated March 12th last from the Collector of Customs at Puerto Cortes in which the concessionary is given twenty days, which cannot be extended, in which he may state whether he is prepared to come to an agreement regarding the sale of the wharf and that at the expiration of that period the Government of Honduras will not permit him to collect wharfage on the ground that such collection is illegal, as the contract of 1896 expired on March 12, 1908.
In view of the decree of August 20, 1907, extending Mr. Valentine’s right to this concession and the operation of the concession thereunder for nearly five [Page 604] years, the Government of the United States of America is convinced that the Collector of Customs at Puerto Cortes must have misinterpreted his Government’s instructions, since the action threatened by the Collector appears from the representations made to the Department of State at Washington to be entirely arbitrary and lacking the legal formalities and guaranties with which governments customarily surround the exercise of the high sovereign powers involved.
In order that the concessionary be unmolested in the exercise of his rights as granted in the contract of March 2, 1896, subsequently extended on August 20, 1907, until 1920, and that the Collector of Customs at Puerto Cortes be corrected in any misunderstanding entertained by him in this matter, it is the urgent desire of the Government of the United States of America that the Government of Honduras, at as early a moment as possible, will instruct him to cease any interference of whatsoever kind with the operation of the wharf by the concessionary.
Tegucigalpa, May 27, 1912.
The Minister for Foreign Affairs to the American Charge d’Affaires.
memorandum.
The Minister for Foreign Affairs of the Republic of Honduras has the honor to reply to the memorandum which the Chargé d’Affaires ad interim of the United States of America directed to him under date of the 27th instant, regarding the exploitation of the wharf at Puerto Cortes by Mr. Washington S. Valentine, in the following manner:
It is true that the Government of Honduras through the Inspector General of Finance celebrated a contract with the Messrs. Washington S. Valentine and George Isham Scott on March 2, 1896, approved by the National Congress Decree No. 75, of March 24 of the same year 1896, by which another contract was modified which had been approved in favor of Valentine by the Assembly of Honduras on June 7, 1895, for the contract and exploitation of the wharf at Puerto Cortés in the Department of Cortés.
But it is equally true that in section No. 9 of the same contract it was declared that “the contract will last for a term of twelve years, to be prolonged at the will of the Government, and will commence to be in force from the date of its approval by Congress. Upon conclusion of this term the Government can take the wharf, paying its value according to the just valuation by experts, or it will permit that the concessionaries dispose of it as they see fit.”
It is also true that the Government of Honduras, upon request of Mr. Washington S. Valentine of July 15, 1907, granted him by means of a simple resolution, not decree, as Mr. Valentine states (to issue the latter being a right reserved for Congress) a concession by means of which the contract of the 2d and 24th of March, 1896, was prolonged for another term of twelve years, to begin March 2, 1908.
But it is also true—and this was concealed by Mr. Valentine in his complaint—that in order to make a concession complete and valid, it needs, by means of an appropriate decree, the approval of the National Congress of the Republic, according to number 21, article 90 of the Constitution of Honduras, without which it has not and can not have any legal value.
The concession of August 20, 1907, prolonging the contract of March 2, 1896, was not approved by Congress, for which reason it was never perfected. Besides, on March 17, 1909, Mr. W. S. Valentine, “for himself and as representative of his associates,” concluded an agreement with the Government by means of which (article 2) he revoked “the prolongation of the wharf contract at Puerto Cortés concluded August 20, 1907.”
Article 5 of this agreement declared that “the value of the wharf and its appurtenances” “will be estimated by two experts, one named by each party, who will have the power to name a third in case of disagreement.”
[Page 605]Finally, in article 9 of the said agreement of March 17, 1909, it is expressly stated that “the contracts annulled” are considered “cancelled and without any value,” among which is the contract of August 20, 1907, providing for the extension of time. So that, even admitting, which cannot be done, that the said extension of time might be valid without approval by Congress, which is unconstitutional, it would nevertheless be at the present time cancelled and without any value, according to the agreement of annulment aforesaid.
The National Congress of the Republic so understood the matter at the time of issuing, on February 5, 1912, its Decree No. 28, in which it was declared: “Considering that the above-mentioned contracts are known to the Congress to be already annulled by the parties thereto”; and in the disposing clause it says: “Article 1. It is declared that the National Congress can not recognize the said contracts in their present state.”
From the foregoing the following conclusions are arrived at:
- (a)
- The contract for the construction and exploitation of the wharf at Puerto Cortes terminated in accordance with the meaning of article 9 thereof on March 24, 1908: the date of completion of the twelve years approved by the National Congress, counting from the time that it began to be in force.
- (b)
- Said contract has not been extended, because the concession of extension of August 20, 1907, was never approved by Congress, like the original contract of March 2, 1896, and that of March 24, 1896.
- (c)
- Even if it were possible to accept the existence of an extension of the contract of 1896, through the concession of August 20, 1907, this extension was cancelled and deprived of all value by the agreement of March 17, 1909.
- (d)
- In view of the status of the matter, Messrs. Valentine and Scott have no rights other than those expressed in article 9 of the contract of 1896, according to which the Government either takes from them the wharf and pays for it according to a fair valuation by experts, or allows them to dispose of it as they wish.
It was in view of these facts that the instructions were given to the Collector of the Port at Puerto Cortés.
A legal Government having now been organized in Honduras, its first duty has been and is to reorganize the public administration from every point of view. Finding that because of unjustifiable leniency in the first place, and because of the country’s abnormal condition in the second place, the concessionnaires continued to avail themselves of the concession although the agreement for the continuation of the contract to construct and exploit the wharf at Puerto Cortés had expired March 24, 1908, the Government decided, in accordance with the aforesaid article [9], to buy the wharf, paying its value according to the just valuation of experts, which decision the Government communicated to Mr. Valentine by means of the Collector of the Port at Puerto Cortés. The answer of Mr. Valentine was that he preferred to continue to exploit the wharf himself, for the benefit, as he said, of the Government and of commerce.
As it was not the intention of the Government to allow the ex-concessionnaires to select what might best suit their own interests, but to protect those of the Republic, complying with those stipulations of the contract of 1896 relating to its expiration, new instructions were given to the said Collector to request Mr. Valentine to decide whether or not he desired to sell the wharf, appointing, in case he desired to sell, an expert appraiser who in his behalf should make the valuation in order to fix the sale price, and granting him a term of twenty days for this decision.
The conduct of the Government of Honduras has therefore been entirely in accordance with the explicit terms of the contract of 1896, annulled by that of March 17, 1909, and in accordance with justice and right, which form the guiding principle of its operations; and in setting forth the preceding details it confidently hopes that the Government of the United States, whose upright and just standard it is pleased to recognize, will see, in view of the authentic documents which are herewith enclosed, the right of the Government of Hondurasto proceed as it has proceeded, returning to the public treasury an income that properly belongs to it, at the same time respecting the interest of the ex-concessionnaires of the wharf provided for in the said article 9 of the contract of March 2, 1896, approved by the National Congress March 24, 1896, by buying the wharf in accordance with the just valuation of experts if the ex-concessionnaires so desire or allowing them to dispose of it according to their wis., destroying [Page 606] it or taking away the material, but to cease charging the wharfage to which the expired contract once entitled them, but to which they no longer have any right since the said date of March 24, 1908.
Tegucigalpa, May 31, 1912.