the Diplomatie Body may visit him. He informed me that he had received the day before a telegram from General Schenck, in which he stated that your Lordship had told him that, if Mr. Fish's answer to your note of the 20th ultimo did not contain some satisfactory communication with regard to the claims for indirect damages, Her Majesty's Government would be obliged to announce its intention of withdrawing entirely from the Arbitration at Geneva. Mr. Fish added that he should sincerely regret to hear of such an announcement being made, for that it could only be looked upon as a menace, and would destroy all hope of an understanding upon the subject. Mr. Fish then sent for the draught of his dispatch to General Schenck in answer to your Lordship's note of the 20th ultimo, and read it to me., Your Lordship will probably have received a copy of it from General Schenck yesterday or to-day. Mr. Fish also read me part of the dispatch which he had sent to General Schenck on the 19th instant, and in which Mr. Fish expressed his surprise that Her Majesty's Government should object so much to a decision by the Tribunal of Arbitration at Geneva on the matter of the indirect claims; for that it must be aware that the United States Government neither expected nor desired a money-award on account of those claims, and that the United States were quite as much interested as Great Britain in obtaining from the Tribunal a decision adverse to those claims. The tone of the dispatch was friendly and conciliatory, and was evidently intended to contribute to bringing about an agreement upon the question at issue. Indeed, I gathered that the part of the draught which was not read to me contained a distinct proposal upon the subject. I fear, however, that this dispatch will reach General Schenck too late for practical purposes.

Mr. Fish told me that Mr. Adams left New York for England on the 24th instant, and that, on his arrival there, he would convince your Lordship, though unofficially, that he was entirely opposed to the principle of claims for consequential damages.

But, during the whole conversation, Mr. Fish betrayed anxiety that the Treaty should not be allowed to break down, and frequently expressed his hope that your Lordship would suggest some means of disposing of the indirect claims, which would at the same time satisfy Her Majesty's Government and would be possible for that of the United States; for he said that, even if the latter was not justified in ever having presentd those claims-which he could not admit-it was impossible for it now to recede or withdraw them, unless it should obtain a quid pro quo. If Her Majesty's Government was really anxious that the provisions of the Treaty should be carried out, which I earnestly assured him certainly was the case, why, he asked, should not your Lordship, in your answer to his dispatch, now on its way, state that, as the United States Government had made it evident that it did not desire a money-award on account of the indirect claims, but merely a decision on their merits by the Tribunal, Her Majesty's Government would consent never to present such indirect claims, under similar circumstances, when England might happen to be a belligerent, and would allow the abstract question to be decided for the benefit of both parties, if the United States Government would engage not to ask for a money-award on the indirect claims from the Tribunal at Geneva.

Mr. Fish asked my opinion upon this suggestion; but I replied that it was impossible for me to imagine what Her Majesty's Government might think of such a mode of arrangement, which I had now heard from him for the first time, and upon which I could not possibly have received

any instructions from your Lordship. Upon his urging, however, that I should let him know my private feeling on the subject, I said that, with some modifications, I thought it possible that it might form the basis of an arrangement, and that I would have no objection to telegraph the substance of his communication to your Lordship. But I asked whether the President would be able to agree to such an arrangement without receiving the sanction of the Senate to it. Mr. Fish replied with confidence that he could do so, for that it would be merely an agreement as to the regulation of the mode of reference to the Tribunal, which was entirely in the hands of the Executive.

Immediately after my interview with Mr. Fish on the 25th instant, I found, in the evening newspaper, allusions to what he had suggested, and coupled with it a statement that the President disagreed with Mr. Fish upon the subject. The latter paid me a visit on the afternoon of the 26th instant, and assured me that the President was entirely in accord with him as to the possibility of an arrangement on the basis to which he had alluded in his conversation of the previous day; and he begged me to assure you that he was fully supported by the President. During this visit I pointed out to Mr. Fish that, in case the suggestions made by him were taken into consideration, the United States Government would probably be expected to engage on its part that it would never again make such claims against England as a neutral as had recently been presented in its Case. Mr. Fish replied that, as a matter of course, it never would do so, but that to take a formal engagement to that effect would involve the necessity of an application to the Senate.

No 24.

General Schenck to Mr. Fish.

[Telegram.]

LONDON, May 2, 1872.

Lord Granville proposes the following as the introductory part of the note submitted to you by my telegram of the 30th ultimo:

I have laid before my colleagues the dispatch addressed to you by Mr. Fish on the 16th ultimo, of which you furnished me with a copy on the 1st instant. I informed you, in my letter of the 20th of March, that Her Majesty's Government, in communicating to you the grounds on which they hold that the claims for indirect losses are excluded from the scope and intention of the reference to the Tribunal of Arbitration at Geneva, did not wish to commence a diplomatic controversy, but merely to comply with the desire substantially expressed by the Government of the United States to be advised of the reasons which had prompted the declaration made by me on behalf of Her Majesty's Government on the 3d of February. Her Majesty's Government are still of the same mind; and although they cannot admit the force of the partial rejoinder which Mr. Fish has made to that statement of their reasons, they agree with Mr. Fish in seeing no advantage in the continuance of an argumentative discussion on the subject. It will, however, be understood that, if I do not review the matter of Mr. Fish's dispatch, it is not from an assent to his positions, but from the hope that a way may be found, without prejudice to the arguments heretofore advanced by Her Majesty's Government, to avoid further controversy. In the full expectation, therefore, that an arrangement satisfactory to both countries will be accepted by the Government of the United States, I proceed to state the views of Her Majesty's Government.

SCHENCK.

[From British Blue Book North America, No. 9, (1872,) p. 4.]

No. 25.

Earl Granville to Mr. Thornton.

FOREIGN OFFICE, May 2, 1872.

SIR: With reference to my dispatch of the 29th ultimo, I transmit to you herewith copies of a further private letter to General Schenck, and its inclosure.

MY DEAR GENERAL SCHENCK: According to your request I send you the proposed preface to the words which I have already communicated to you, embodying the proposal, based on your suggestions, which we are prepared to make to the Government of the United States, on condition of our being previously informed of their assent, and of the form in which that assent will be given being satisfactory to us.

Yours, &c.,

[For inclosure 2 in No. 25, see p. 483.]

GRANVILLE.

No. 26.

Mr. Fish to General Schenck.

[Telegram.]

WASHINGTON, May 4, 1872.

The President regrets that Her Majesty's Government have not thought proper to make the proposal mentioned in my telegram to you of 27th April, which this Government had been led to hope might afford a solution of the differences between the two Governments with regard to the arbitration now pending under the Treaty of Washington. The nature and terms of the proposition contained in your telegram of 30th April are such that it cannot justify his assent.

He cannot assent to any proposition which by implication or inference withdraws any part of the claims, or of the Case of this Government. from the consideration of the Tribunal. The British Government proposes that the views heretofore presented by them, that certain of the claims put forth by the United States are not within the province of the Tribunal, be continued as their principle of action and conduct, and that in recognition of such principle an assurance be reciprocally given by both parties.

The United States do not entertain the views thus presented by Her Majesty's Government, and cannot enter into an assurance on the basis

of such principle. The proposal limits the agreement of the British Government to a stipulation not to advance claims of that nature in similar cases and similar circumstances. No two cases are similar, and circumstances similar to those arising during the rebellion cannot occur to Great Britain; consequently the terms of the proposed agreement guarantee nothing to this Government.

The proposal prevents any expression of opinion or of judgment by the Tribunal on the class of claims referred to, and thus virtually denies what this Government believes that the Tribunal has jurisdiction over all the claims which have been put forth. Under these circumstances the President is compelled to adhere to the opinion that it is within the province of the Arbitrators at Geneva to consider all the claims, and to determine the liability of Great Britain for all the claims which have been put forward by the United States.

Will endeavor to see Granville to-night or early to-morrow. Will urge him to modify his proposal in accordance with your views. Will you examine it, including introductory paragraphs as given in my telegrams of April 30 and May 3, and, taking it for a basis, suggest exactly what modifications would make it possible for the President to assent to it? Also give me draught of such reply as you would be willing to make. I am confident this Government will not agree to the last paragraph of your telegram of April 27. They may agree that if the United States will engage not to press for award for indirect damages, nothing need be said about any modification of the original Case, nor whether such agreement is a withdrawal or not a withdrawal of any part of that Case. Rather than agree to submit the indirect claims to the judgment of the Tribunal, I apprehend this Government, backed by Parliament, would cease negotiation and make an absolute declaration against proceeding with the arbitration. Could the President assent to their offer if I can get the following substitute for what I telegraphed April 30?

Her Majesty's Government are now ready tɔ state that if the United States will and do agree not to press for a pecuniary award before the Tribunal of Arbitration at Geneva, on account of claims for indirect losses or damages, namely, the increased premiums of insurance, the transfer of American shipping, and the prolongation of the war, then Her Majesty's Government will and do, on their part, engage and stipulate that, should Great Britain at any time in the future be a belligerent while the United States is a neutral; and should there be any failure on the part of the United States to observe their neutral obligations, Great Britain will make or advance no complaints or claims against the United States by reason or on account of any indirect, remote, or consequential results of such failure. This rule, or principle, not to advance or press complaints or claims for indirect, remote, or consequential damages, to be mutually and reciprocally observed by both parties in the future. The notes which are exchanged on this subject to be presented to the Tribunal of Arbitration and entered on its record.

SCHENCK.

No. 28.

General Schenck to Mr. Fish.

[Telegram.]

LONDON, May 6, 1872.

Had two hours' discussion with Granville last night. To-day he hands me, as the result of conference with his colleagues, the following amended proposal. Compare it with their former offer and inform me how far you can assent or must object. I told him I thought it not modified so as to be yet satisfactory, but agreed to submit it to you.

Her Majesty's Government are ready to engage that, in the event of the Government of the United States agreeing that the Arbitrators are not to have regard, in any award that they may make, to the claims for indirect losses, namely, the transfer of the American shipping, the increased premiums of insurance, and the prolongation of the war, Her Majesty's Government will, on their part, agree that the view which they have heretofore presented of such claims shall be their principle of future action and conduct; and they are ready, in pursuance of the recognition of such principle, to give assurance to the United States that if Great Britain should at any time hereafter be a belligerent while the United States are neutral, Great Britain will never advance any claims inconsistent with that principle, such an engagement for the future being reciprocally given by both parties; the notes which are exchanged on this subject to be presented to the Tribunal of Arbitration and entered on its records.

In the prefatory paragraphs he strikes out, at my suggestion, the words "without prejudice to the arguments heretofore advanced by Her Majesty's Government."

Your telegram received during the night.

An agreement which is to bind the future action of this Government can be made only by treaty, and would require the assent of the Senate. Should the Tribunal decide that a nation is not responsible in pecuniary damages for the consequential results of a failure to observe its neutral obligations, such decision could not fail to be regarded as settling the question between the two Governments in the future.

If the British Government desire to open negotiations to define by treaty the extent of liability for consequential damages resulting from a failure of observance of neutral obligations, the President will carefully consider any proposals in that direction."

FISH.