As this was the first occasion, so it was also the last, on which mention was made of any ship or ships, not alleged to have been fitted out, armed, equipped, or manned in any British port, but which had merely been allowed to receive limited supplies of coal or other necessaries in British waters, as coming within the category of vessels whose acts could be made the foundation of claims against Great Britain. The words "the vessels which have given rise to the claims generically known as the Alabama claims" cannot possibly be extended to vessels of this character, unless it be on the ground of this one mention of the "Sumter" in the context which has been cited in these two letters of Mr. Seward. In the "Case," however, presented on the part of the American Government under the Treaty, damages are claimed in respect of five vessels (“Sumter,” "Nashville," "Retribution," "Tallahassee," "Chickamauga,") which were in every sense American; and which are not alleged to have been built, fitted out, armed, equipped, or manned in any part of the British dominions; and in the 7th volume of the Appendix to that "Case," further claims of the like character appear to be made in respect of the acts of two other similar vessels, ("Boston" and "Sallie.")

It may be here observed that, by the general list of claims filed in the State Department of the United States, besides these vessels, not less than eight other American ships ("Calhoun," "Echo," "Jeff Davis," "Lapwing," "Savannah," "St. Nicholas," "Winslow," "York,") in respect of whose acts no claim is now made against Her Majesty's Government, appear to have been also engaged in belligerent naval operations on the part of the Confederate States, which resulted in the destruction of ships and other property belonging to citizens of the United States.

6

When Lord Stanley (24th May, 1867) spoke of "the proceedings of the Alabama' and vessels of that class," and (10th September, 1867) of "claims arising out of the depredations of the Alabama," and "of vessels of the like character;" when Mr. Reverdy Johnson (25th March, 1869) spoke of the possible public claim of the United States Government, as resulting (inter alia) “from the fitting out of the ‘Alabama' and other similar vessels in Her Majesty's ports, and from their permitted entrance into other ports;" when Mr. Fish (25th September, 1869) spoke of the destruction of American commerce "by rebel cruisers fitted out in the ports of Great Britain," and injury "by suffering the fitting out of rebel cruisers, or by the supply of ships, arms, and munitions of war to the Confederates;" when Mr. Motley (23d October, 1869) spoke of "the destruction of American commerce by cruisers of British origin carrying the insurgent flag;" it is clear that they did not include, or mean to include, as if belonging to one and the same category of vessels, ships alleged to be of British origin, and ships of American origin, with the fitting out or equipment of which British subjects had been in no way concerned.

In Lord Granville's instructions to Her Majesty's High Commissioners, it is also plain that the former class of vessels alone is contemplated. In the narrative of the proceedings of the 8th March, 1871, contained in the 36th Protocol, it seems equally clear that the United States Commissioners had also the same class of vessels in view; for they spoke of "the history of the Alabama and other cruisers which had been fitted out, or armed, or equipped, or which had received augmentation of force in Great Britain or in her colonies;" and they expressed a hope "that the British Commissioners would be able to place upon record an expression of regret by Her Majesty's Government for the depredations committed by the vessels whose acts were now under discussion." Her Majesty's Commissioners (on a later day) replied "that they were authorized to express, in a friendly spirit, the regret felt by Her Majesty's Government for the escape, under whatever circumstances, of the Alabama and other vessels from British ports, and for the depredations committed by them;" which expression of regret was accepted by the American Commissioners as "very satisfactory."

In the first Article of the Treaty itself, the expression of Her Majesty's regret, in these identical words, immediately precedes the agreement of reference by which the claims referred are described as "growing out of acts committed by the aforesaid vessels.” The necessary conclusion appears to be that the vessels intended to be referred to in the Treaty were only such as could, in good faith, be alleged to have been fitted ont, or armed, or equipped, or to have received an augmentation of force in some part of the British dominions-the three Rules in the VIth Article of the Treaty being, of course, material to be regarded in determining all questions of fact in any case alleged to be of this nature. The "Sumter," "Nashville," and other ships above mentioned have never been alleged to come within any of the terms of this description, unless, indeed, it is now meant to be said that the permission to any Confederate vessel to obtain, in a British port, such limited supplies of coal as were permitted to both the belligerent parties by Her Majesty's regulations ought to be deemed an improper "augmentation of the force" of such vessel within the meaning of the second Rule.

III. The solution of the third question, viz, what claims are described by the words "all the said claims, growing out of acts committed by the aforesaid vessels, and generically known as the Alabama claims,” (being the words in which the subject-matter of the reference to arbitration agreed upon is defined,) has been anticipated by the conclusions already arrived at. It may be added, however, that the words "growing out of acts committed by the aforesaid vessels" cannot, without forcing them altogether beyond

their fair and natural sense, be applied to claims for indirect losses, not resulting from any particular acts committed by any particular ship or ships, but alleged to result (so far as they may be referable at all to naval or maritime causes) from the very existence on the high seas of a naval force belonging to the Confederate States, and recognized by Great Britain and other neutral powers as having a belligerent character and belligerent rights. If the Confederate States had, in fact, procured all their cruisers from British sources, this criticism would still hold good; much more when several (in fact a considerable majority in number) of the cruisers actually employed by them, and by which losses were inflicted on United States citizens, were otherwise procured.

PART III.

On the amount of the claims for indirect losses.

"The claims as stated by the American Commissioners may be classified as follows: "1. The claims for direct losses growing out of the destruction of vessels and their cargoes by the insurgent cruisers.

2. The national expenditures in the pursuit of those cruisers.

"3. The loss in the transfer of the American commercial marine to the British flag.

4. The enhanced payments of insurance.

"5. The prolongation of the war and the addition of a large sum to the cost of the war and the suppression of the rebellion.

"So far as these various losses and expenditures grew out of the acts committed by the several cruisers, the United States are entitled to ask compensation and remuneration therefor before this Tribunal."--(United States Case, p. 469.)

Mr. Fish observes that "an extravagant measure of damages" has been supposed, not only by the British press, but also, "most unaccountably," by some of the statesmen of this country, to be sought through the claim for compensation on account of indirect damages. It will, therefore, be well to present, from United States authority, some part of the evidence which, in the absence of explanation or retraction, has led to this conception. Undoubtedly the Case (p. 476) disclaims an accurate estimate; but it supplies materials which cannot fail to suggest the appropriate conclusion. They are as follows:

From the 4th of July, 1863, Great Britain is declared to have been "the real author of the woes" of the American people, (p. 479.) From this time" the war was prolonged for the purpose" of maintaining offensive operations "through the cruisers,” (ibid.) And the arbitrators are accordingly called upon "to determine whether Great Britain ought not in equity to re-imburse to the United States the expenses thereby entailed upon them," (ibid.) On all these points, the Case proceeds to state, the evidence" will enable the Tribunal to ascertain and determine the amount." To this amount interest is to be added up to the day when the compensation is payable, within twelve months after the award, (p. 480.) The rate of interest in New York is 7 per cent., (ibid.;) and "the United States make a claim for interest at that rate" from July 1, 1863, "as the most equitable day." The interest, therefore, is to be charged at 7 per cent. for a period of from ten to eleven years.

It may be presumed to be incapable of dispute that more than half the expenses of the war were incurred after the first of July, 1863. What was the sum total of those expenses? Upon this point there is, in a form generally if not precisely appropriate, official evidence from America. In the Report of the Special Commissioner of the Revenue for 1869, (p. vi,) they are stated at 9,095,000,000 dollars, including 1,200,000,000 dollars for the suspension of industry. Of this amount 2,700,000,000 are set down to the Confederates.

Thus it appears that the Case does not go beyond the truth (so far as this head of damage is concerned) in stating that the Arbitrators would find the materials sufficiently supplied for estimating the amount which “in equity” Great Britain ought to pay. It may indeed be said that the amount, suggested by the passages and facts to which reference is made, forms an incredible demand. But, in perusing and examining this Case, the business of Her Majesty's Government has been to deal, not with any abstract rule of credibility, but with actual, regular, and formal pleas, stated and lodged against Great Britain on behalf of one of the greatest nations of the earth. Is it, then, most unaccountable," in view of the evidence as it stands, that the press and that statesmen of this country should have formed the idea that "an extravagant measure of damages" was sought by the Government of the United States ?

It appears from the dispatch of Mr. Fish that no such idea has ever been entertained by that Government. Having this authentic assurance so supplied, it may be deemed little material to inquire whether on this important matter the language of the Case has been misunderstood by Her Majesty's Government, or whether it is now disavowed. If, however, it has been misconstrued, the misconstruction undoubtedly has not been confined to England, but has been largely shared by writers on the Continent of Europe.

Were this Government indeed prepared to acquiesce in the submission of these claims, it would still remain to ask in what way the Government of the United States proposed to guard against the acceptance by the Arbitrators of those enormous estimates which, taken without authoritative comment, the language of the Case suggests. But it is scarcely necessary to observe that the question of more or less in this matter is entirely distinct from the question of principle on which the statements and arguments of Her Majesty's Government are founded.

[Inclosure 3 in No. 13.]

General Schenck to Earl Granville.

LEGATION OF THE UNITED STATES,
London, 21st March, 1872.

MY LORD: At a very late hour last night I received your Lordship's note of the date of yesterday, informing me that you had laid before your colleagues the copy of Mr. Fish's dispatch to me of the 27th ultimo, of which I furnished you a copy on the 14th instant.

I have also received, at half past four o'clock to-day, a printed copy of a memorandum, which you refer to in the note as being inclosed, and which you request to have read and considered as part of that communication, being intended, as you inform me, to explain to the United States, more fully than can be done in the form of a letter, and as Her Majesty's Government is anxious to do, the considerations which caused them to hold the belief at the time of the ratification of the Treaty that a waiver had been made of the claims for indirect damages.

Having informed me that Her Majesty's Government, recognizing with pleasure the assurance of the President that he sincerely desires to promote a firm and abiding friendship between the two countries, and being animated by the same spirit, gladly avail themselves of the invitation which you say my Government appears to have given, that they should state the reasons which induce them to make the declaration contained in your note of the 3d ultimo, you add that those reasons were purposely omitted at that time in the hope of obtaining, without any controversial discussion, the assent thereto of the Government of the United States.

Your Lordship then proceeds, in reply to Mr. Fish's note, to disenss the whole question of the right of the United States, under the provisions of the Treaty, to put forward in their Case presented at Geneva their claims for indirect losses and damages, and to state the grounds for your denial of such right and the arguments by which that denial is sought to be sustained.

And your Lordship closes this full and long statement of views and arguments by expressing the confident feeling of Her Majesty's Government that they have laid before the President ample proof that the conclusion which was announced in your note of the 3d of February, and by which you think it is hardly necessary to say they adhere, cannot be shaken.

This conclusion I understand to be that "Her Majesty's Government hold that it is not within the province of the Tribunal of Arbitration at Geneva to decide upon the claims for indirect losses and injuries put forward by the United States."

Almost every moment of available time since the receipt of your Lordship's note has been occupied with the copying of it, in order that I may be able to transmit it in time to overtake at Queenstown the mail steamer which leaves Liverpool to-day. I therefore make my acknowledgment of the delivery of your communication brief, and hasten to forward it to my Government at home, that it may have, with the least possible delay, the attention and answer from there which it may be thought to require.

I have the honor to be, very respectfully, your obedient servant,

ROBT. C. SCHENCK.

No. 14.

General Schenck to Mr. Fish.

[Telegram.]

LONDON, 1st April, 1872.

Have you any objection to British Government filing Counter Case, without prejudice to their position in regard to consequential damages ? Received at 9.40 a. m.

No. 15.

Mr. Fish to General Schenck.

SCHENCK.

[Telegram.]

WASHINGTON, April 2, 1872.

We understand the British Government is bound to file Counter-Case, and that their so doing will not prejudice any position they have taken, nor affect any position of this Government. The rights of both parties will be the same after filing as before.

Is the inquiry made at their request?

FISH.

No. 181.]

No. 16.

Mr. Fish to General Schenck.

DEPARTMENT OF STATE, Washington, April 16, 1872. SIR: I have given very careful attention to the note of the 20th March, addressed to you by Earl Granville, professing to state the reasons which induced Her Majesty's Government to make the declaration contained in his previous note to you of 3d February, that, in the opinion of Her Majesty's Government, it is not within the province of the Tribunal of Arbitration at Geneva to decide upon the claims for indirect losses and injuries put forward in the Case of the United States.

His Lordship declares this statement to be made upon the invitation which this Government appears to have given. I should regret that what was intended only as a courteous avoidance of the naked presentation of a directly opposite opinion to that which had been expressed on behalf of the British Government, unsustained by any reasons, should have subjected His Lordship to the necessity of an elaborate reply. It was not the desire of this Government to invite any controversial discussion, nor have they now any wish to enter upon or continue such discussion.

Some remarks, however, appear in the note of His Lordship which seem to require a reply.

It opens with a seeming denial of the accuracy of my assertion that claims for indirect losses and injuries are not put forward for the first

time in the "Case" presented by this Government to the Tribunal at Geneva-that for years they have been prominently and historically part of the "Alabama claims"-and that incidental or consequential damages were often mentioned as included in the accountability.

It cannot be supposed that His Lordship intends more than to say that the claims for indirect or national losses and injuries were not "formulated" by this Government, and the amount thereof set forth in detail and as a specific demand, for he admits that on the 20th November, 1862, within a few weeks after the "Alabama" had set out on her career of pillage and destruction, Mr. Adams suggested the liability of Great Britain for losses other than those of individual sufferers. In his note of that date to Lord Russell, Mr. Adams stated that he was instructed by his Government to "solicit redress for the national and private injuries already thus sustained."

On the 19th February, 1863, Mr. Seward instructed Mr. Adams that "this Government does not think itself bound in justice to relinquish its claims for redress for the injuries which have resulted from the fitting out and dispatch of the Alabama in a British port."

As the consequences of this fitting out began to develop themselves, and their effects in encouraging the rebellion became manifest, Mr. Adams, in an interview with Lord Russell, indicated them (as described by the latter in a letter to Lord Lyons under date of 27th March, 1863)* as "a manifest conspiracy in this country (Great Britain) to produce a state of exasperation in America, and thus bring on a war with Great Britain, with a view to aid the Confederate cause."

In a note dated April 7, 1865, addressed to Lord Russell, Mr. Adams, after complaining of the hostile policy, pursuant to which the cruisers were fitted out, says, "That policy I trust I need not point out to your Lordship is substantially the destruction of the whole mercantile navigation belonging to the people of the United States." "It may thus be fairly assumed as true that Great Britain, as a national power, is, in point of fact, fast acquiring the entire maritime commerce of the United States."

That Lord Russell regarded this as the foundation of a claim for damages for the transfer of the commercial marine of the United States to the flag of Great Britain is apparent, in his reply to Mr. Adams, under date of May 4, 1865, when he says: "I can never admit that the duties of Great Britain toward the United States are to be measured by the losses which the trade and commerce of the United States may have sustained."

Again, on the 20th May, 1865, Mr. Adams, writing to Lord Russell, distinctly names indirect or consequential losses. His language is, "that, in addition to this direct injury, the action of these British-built, manned, and armed vessels has had the indirect effect of driving from the sea a large portion of the commercial marine of the United States, and to a corresponding extent enlarging that of Great Britain;" that "injuries thus received are of so grave a nature as in reason and justice to constitute a valid claim for reparation and indemnification." In the same note he says, "The very fact of the admitted rise in the rates of insurance on American ships only brings us once more back to look at the original cause of all the trouble."

It is difficult to imagine a more definite statement of a purpose to require indemnification.

On the 14th February, 1866, after the presentation of the above-recited complaints, Mr. Seward, writing to Mr. Adams, said: "There is not one member of this Government, and, so far as I know, not one citizen of the United States, who expects that this country will waive, in any