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final decision, save as otherwise provided in article IV, shall be referred any claim upon which they may not be able to come to a decision. If they should not be able to agree upon an arbitrator or umpire, the commissioners on either side shall name a person as arbitrator or umpire, and in each and every case in which the commissioners may not be able to come to a decision, the commissioners shall determine by lot which of the two persons so named shall be arbitrator or umpire in that particular case. The person or persons so to be chosen as arbitrator or umpire shall make and subscribe the same solemn declaration which is prescribed to the commissioners, and it is to be entered of record. In the event of the death, absence, incapacity, or failure of such arbitrator or umpire, another shall be named to act as arbitrator or umpire, in the same manner as the person originally named.

In regard to this article I, I remark that we must require that it may be amended so as to provide that the commissioners to be named on the part of the United States shall be pamed by the President, “ by and with the advice and consent of the Senate of the United States.” It is not doubted that this ought to be, as it probably would be taken to be, the meaning of the convention as it now stands. Nevertheless, with the view to avoid possible misapprehension, it is desirable that the article should be amended so as to make the provisions literally conform in this respect to the Constitution of the United States. Of course her Majesty's government can have no objection to this amendment.

Secondly, we are advised that in accordance with my suggestions here! tofore made by cable telegram, her Majesty's government have consented to amend this first article so as to substitute “Washington" instead of "London" for the place of the meeting of the commissioners. This amend. ment will be expected to be finally made.

Thirdly, we must insist upon amending this first article by striking out the words “ save as otherwise provided in article IV of this convention." Our reasons for this amendment will fully appear in my commentary upon articles IV, V, and VI. You are authorized to say that with these amendments article I would be satisfactory to the President of the United States.

I proceed to article II. Article II prescribes certain forms and rules for the proceedings of the commissioners, and provides that each government may name one person to attend the commissioners as agent upon its behalf, to present and support claims on its behalf, to answer claims made upon it, and to represent it generally. Article II closes with the following paragraph: “The provisions of this article shall, however, be subject to the special arrangements made by articles IV, V, and VI of this convention, respecting the claíins which form the subject of those articles, which shall be dealt with as directed in those articles."

The United States must insist on striking out this last paragraph of article II, for the reasons which appear in the remarks hereinafter made on articles IV, V, and VI. You are authorized to say that with this exception article II would be satisfactory to the President.

I pass to article III. Article III fixes the periods within which claims shall be submitted, examined, and decided. This article is unobjectionable, and is entirely approved.

I have thus come to article IV. Article IV specially declares that the commissioners shall have power to adjudicate upon the class of claims referred to in the official correspondence between the two govern. ments as the Alabama claims, but declares that, before any such claims are to be taken into consideration by them, the two high contracting parties shall fix upon some sovereign or head of a friendly state as an

arbitrator in respect of such claims, to whom such class of claims shall be referred in case the commissioners shall be unable to come to a unani. mous decision upon the same,

The United States are obliged to disallow this article IV. The United States have no objection to the first clause of the article, which declares that the commissioners shall have power to adjudicate upon the so-called Alabama claims. Indeed, the United States would willingly retain this clause because of its explicitness in regard to the Alabama claims. They did not in their instructions to you insist upon such a special direction in regard to the Alabama claims, but only because they thought that special mention of those claims might be deemed inconvenient on the part of her Majesty's government, while it could not admit of doubt that these so-called Alabama claims were plainly included, as well as all other claims of citizens of the United States, in the comprehensive description of claims contained in article I.

Secondly, it is to be considered by her Majesty's government that the Alabama class of claims constitute the largest and most material portion of the entire mass of claims of citizens of the United States against Great Britain which it is the object of the convention to adjust. Upon the Alabama claims, as well as all others, this government is content to obtain and most earnestly desires a perfectly fair, equal, and impartial judicial trial and decision. This government has always explicitly stated that it asks no discrimination in favor of the Alabama claims, and can admit of no material discrimination against them in the forms of trial or judgment, but must, on the contrary, have them placed on the same basis as all other claims. This article IV, so far from placing them on an equal footing with the other United States claims and with the British claims, prejudicially discriminates against them in these respects :

1. While the convention provides that the other United States claims and the British claims shall be settled and determined by a majority of the commissioners, this article IV requires entire unanimity of the commissioners for a decision upon any of the Alabama claims.

2. This article IV further discriminates against the Alabama claims in this, that while the choice of an arbitrator or umpire in regard to all other than the Alabama claims is left to be decided by lot in case of a disagreement of the commissioners, this article IV provides that in regard to the Alabama claims the two governments shall definitely agree in the appointment of an arbitrator or umpire.

3. This article IV again discriminates against the Alabama claims in requiring that in regard to those claims the arbitrator or umpire shall be some sovereign or head of a friendly state, while no such limitation is made in regard to any other class of claims.

The present negotiation was undertaken in the hope that the controversy about international claims which has so long existed, and has been attended with so much national feeling on both sides, might be amicably settled and closed by adopting the very simple yet comprehensive principles and forms of reference and adjudication which were adopted with 80 much success, under circumstances not very dissimilar, by the convention for the adjustment of international claims of February 8, 1853. That convention was proposed by the United States, as a model which had already received the approval of both parties and had the prestige of complete and even felicitous success. That convention of 1853 had no reservations and no preference of, for, against, or concerning claims of any class of citizens or subjects of either nation. A judicial tribunal was constituted by it in a manner perfectly equal, just, and fair, and to that tribunal was confided the duty of hearing all claims of whatever separate classes in only one and exactly the same manner, and deciding upon them in only one and exactly the same manner. It probably would conduce to no good end to set forth on this occasion the reasons why the Alabama claims, more than any other class of international claims existing between the two countries, are the very claims against which the United States cannot agree to or admit of any prejudicial discrimination. To present those reasons now would be simply to restate arguments which have been continually presented by this department in all the former stages of this controversy, while it is fair to admit that those reasons have been controverted with equal perseverance by her Majesty's department for foreign affairs.

It is not to be understood by these remarks that the United States except against the possible designation of a sovereign or head of a friendly state as arbitrator or umpire in regard to the Alabama claims. On the contrary, the United States would not be unwilling to have so distinguished an arbitrator or umpire agreed upon by the commissioners in any and, indeed, in every case that shall come before them. All that is insisted upon is that the arbitrament of a sovereign or head of a nation shall not be made unnecessary in regard to other United States claims and British claims and yet be made indispensable to the adjustment of the Alabama claims.

Article V provides that in the event of a decision on any of the claims mentioned in the next preceding article (article IV) being arrived at by the arbitrator involving a question of compensation to be paid, then the amount of such compensation shall be referred back to the commissioners for adjudication, and in the event of their not being able to come to a decision, it shall then be decided by the arbitrator appointed by them, or who shall have been determined by lot, according to article I.

I remark upon this article V that no objection will be made to it if it shall be so amended as to adapt it to the general structure of the convention after article IV shall have been stricken out.

Article VI provides that, with regard to the Alabama class of claims, neither government shall make out a case in support of its position, nor shall any person be heard for or against any such claim. The official correspondence which has already taken place between the two governments respecting the questions at issue shall alone be laid before the commissioners, and in the event of their not coming to a unanimous decision, as provided in article IV, then before the arbitrator without argument, written or verbal, and without the production of any further evidence. But the commissioners unanimously, or the arbitrator, shall, however, be at liberty to call for argument or further evidence if they shall deem it necessary.

The United States are obliged to disallow this article in its present form, upon the principle set forth in my remarks upon article IV, and for the reason there given. The article is believed to be superfluous, while the precautions it contains against allowing as full a hearing and exami. nation of the Alabama claims as is allowed to all other American claims and to British claims, would have the mischievous effect of exciting unnecessary distrust in the Senate and among the people of the United States, and it is presumed even among the people of Great Britain. The President confidently hopes that upon reconsideration of the subject her Majesty's government will consent to amend the convention by striking out article VI, or at least by amending it, so that article VI will read as follows:

" In case of every claim the official correspondence which has already taken place between the two governments, respecting the questions at issue, shall be laid before the commissioners, and in the event of their not coming to a decision thereupon, then before the arbitrator. Either government may also submit further evidence and further argument thereupon, written or verbal.”

Article VII provides that the decision of the commissioners or of the arbitrator or umpire, as the case may be, shall be considered by both parties as absolutely final and conclusive, and full effect shall be given to such decisions without any objection or delay whatsoever.

This article VII is approved.

Article VIII provides that no claim arising out of any transaction prior to the 26th of July, 1853, the day of the exchange of the ratifications of the convention of the 8th of February, 1853, shall be admissible under the convention.

This article VIII is approved.

Article IX provides that all sums of money which may be awarded by the commissioners or by the arbitrator or umpire, on account of any claim, shall be paid in coin, or its equivalent, by the one government to the other, as the case may be, within twelve months after the date of the decision, without interest.

In view, however, of possible delays of legislative appropriation in the two countries, the word "twelve" ought to be struck out and the word 66 eighteen" inserted. Article IX, if so amended, would be accepted.

Article X provides that the high contracting parties engage to consider the result of the proceedings of the commission as a full and final settlement of every claim upon either government arising out of any transaction of a date prior to the exchange of the ratifications of the present convention; and further engage that every such claim, whether it shall have been presented to the notice of, made, preferred, or laid before the commission, shall, from and after the conclusion of the proceedings of the convention, be considered and treated as finally settled and barred.

This article X seems unobjectionable and is approved.

Article XI provides that the commissioners shall keep an accurate record, and correct minutes or notes of all their proceedings, with the dates thereof, and shall appoint and employ clerks or other persons to assist them in the transaction of the business which may come before them; that the secretary shall be appointed by the principal secretary of state for foreign affairs of her Britannic Majesty, and by the representative of the United States in London, jointly; that each government shall pay the salaries of its own commissioners, and all other expenses, and the contingent expenses of the commission, including the salary of the secretary, shall be defrayed in moieties by the two parties.

I suggest that this article XI shall be amended, first by inserting after the word “commissioners," in the first line, the words, "an arbitrator or umpire;" and second, by striking out the second paragraph entirely and substituting for it the words following: “The secretary shall be appointed by the representative of her Britannic Majesty in Washington, and by the Secretary of State of the United States, jointly." With these amend. ments this article XI will be satisfactory.

Article XII fixes a period within which the ratifications of the conven. tion shall be exchanged.

This article is unobjectionable and is approved.

I close this dispatch, as you might reasonably expect, with some remarks and directions upon the general subject of the negotiation. It is sincerely hoped that the amendments I have proposed may be allowed by her Majesty's government. It is conceived that these amendments

do not, in fact, change the character of the convention, and that they do not secure to one party, or deprive the other of, any material advantage which the convention allows in its present shape. All that they can accomplish is to relieve the convention of an apparent spirit and tendency to prejudice the largest class of United States claims before the commission and the arbitrator.

In assigning my reasons for requiring the amendments, I have confined myself within the narrowest possible limits, seeking to avoid all unnecessary argument or controversy. You are authorized, however, to say I am of opinion that the amendments proposed are important to recommend the convention to acceptance by the Senate, and approval by the Congress of the United States.

The terms in which you have expressed yourself in your correspondence concerning the convention leave no room to doubt that you have supposed that it would be satisfactory to the United States in its present shape. It is further believed that you may have expressed that opinion to Lord Stanley. Her Majesty's government, disappointed in the expectation thus excited, may possibly be reluctant to continue the negotiation. In that case you are authorized to say that the transaction was conducted on the part of this government by a large use of the cable telegraph; that you were expected by this government to adhere more closely than you have done to the convention of 1853 as a model, and were supposed to be so adhering, while my telegraphic instructions, written under that misconception, were liable to be misunderstood by you as approving the departures you have made from the prescribed model. To this stateinent you will add the expression of regret on the part of this government that this misunderstanding, which now seems to have been unavoidable, should have been a means of leading her Majesty's government to suppose that articles IV, V, and VI might be expected to obtain the constitutional assent of the government of the United States.

If on receiving this instruction you shall be able to bring the negotiations to a satisfactory conclusion, it will be better to have that conclusion expressed in the form of a protocol rather than of a convention. That form would be preferable over the form of a convention, in view of the discussions which any settlement of the subject might be expected to undergo in the Senate and among the people of the United States. It is not intended, however, by this remark to indicate any distrust of the acceptance of the convention when amended as herein proposed. On the contrary, there is good reason to believe that such a settlement would be as promptly approved as its influence upon the relations of the two countries would be immediately felt and appreciated.

It remains only to say that, in view of the present situation of the claims question, it is expedient to let the satisfactory settlement of the naturalization question and the San Juan question rest in protocol. On the other hand, should her Majesty's government accept the amendments of the claims convention herein proposed, you are autlrorized in that case to reduce the three or either two of these agreements to the forms of distinct conventions, and to sign and transmit them at once to this department to be laid before the President for ratification.

To facilitate your understanding of this dispatch, I give you herewith a copy of the convention as it would stand when amended as is herein proposed. I am, sir, your obedient servant,

WILLIAM H. SEWARD. REVERDY JOHNSON, Esq., &c., &c., &c.

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