apparently insuperable objection to the adoption of a new Article, on the ground that the language describing consequential damages must necessarily be so broad that it would probably commit both Governments beyond what they would either of them wish to be bound. They prefer an interchange of notes, because by that form they can narrow the agreement so as to relate only to the actual points or subjects of difference. I have stated decidedly, as to any interchange of notes, that the President, without the assent of the Senate, will not go beyond the suggestion made in your telegram of April 27. Lord Granville seems to think that, so far as the difficulty for want of constitutional power is concerned, the President might perhaps be willing to submit notes to the Senate for their advice. Would he do that? I asked Lord Granville, as you instructed me, to agree, in order to save time, that negotiation on this point may be conducted at Washington, but he declines. It would relieve me from a painful responsibility, increased immeasurably by having to correspond through the difficult and unsatisfactory medium of the telegraph. His Lordship's last words, after more than two hours' conversation, were as follows: I carefully avoid anything like menace; but in consequence of the views and information you have presented to me yesterday and to-day, I take an unfavorable view of the chances of any settlement. I told him I was getting to be of the same mind. No. 41. General Schenck to Mr. Fish. [Telegram.] SCHENCK. LONDON, May 9, 1872. Lord Granville proposes to modify his amended note, I telegraphed you on the 6th, by substituting "They will not bring for consideration the indirect claims before the Arbitrators," for the words "The Arbitrators are not to have regard, in any award they may make, to the claims for indirect losses." I promised him I would submit the change to you, but thought it would be considered more objectionable than before, inasmuch as the United States insist that those claims are now rightfully before the Tribunal. SCHENCK. [From British Blue Book "North America,” No. 9, (1872,) p. 11.] No. 42. Earl Granville to Sir E. Thornton. FOREIGN OFFICE, May 9, 1872. SIR General Schenck came to me to-day and said that he had considered the communication which I had made to him yesterday evening, and of which I informed you in my dispatch of that date. 32 A-II He expressed his regret that the Cabinet see so much objection to an attempt to settle the difference by a new Article to be added to the Treaty. He had explained to me the difficulty about pursuing the plan of a settlement by an interchange of notes in his statement made to me yesterday, and he desired to do so more explicitly this morning. It consisted in the decided opinion of the President that he had gone as far as he possibly could without the assent of the Senate in the sug gestion of the character of such a note as would be acceptable or assented to by him, in the telegram of the 27th of April. The note presented for his consideration on the part of Her Majesty's Government. originally and as afterwards modified, involves what the Government of the United States cannot agree to, a withdrawal from the province of the Tribunal of what that Government believes to be entirely within its competence to consider, as the Government of the United States have been unable to accede to the proposal as contained in either of the forms of notes submitted by Her Majesty's Government; it is on that account regretted that they have not yet seen that they could con sent to propose a form for a new Article to the Treaty, which, while it would remove the whole difficulty, would at the same time have the concurrence, if it were agreed to, of the Senate as well as of the Presi dent, constituting the whole Treaty power of the United States. The President, he added, had instructed him to say that he cannot withdraw himself any part of what has been submitted within his conception of the intent and spirit of the Treaty. This he cannot do from his constitutional inability to recede from what the Government of the United States is of opinion has been submitted within the intent and meaning of that instrument. If the British Government should make a demand that it should be so withdrawn, the responsibility the President feels of any failure of the Treaty, which he wishes to preserve and maintain, would be upon them. The President hopes, however, that as the two Governments have not been able to come to an agreement on account of these difficulties, as to notes being interchanged for the accomplishment of this purpose, the British Government may yet see their way to maintain the Treaty in the suggestion of a new Article, as mentioned or suggested in the telegram of yesterday. If they adopt that suggestion, he was directed to say that Congress will adjourn about the latter part of this month, and that time may be saved, therefore, if negotiations on this point should be conducted at Washington rather than in London. If Her Majesty's Government desire such ne gotiation at Washington, it might be advisable, in order to save time, to furnish you with instructions. I expressed my fears that this telegraphic message did not give any hope of a settlement. Her Majesty's Government saw great objections to a new Article. The words used by Her Majesty's Government, "in similar cases and similar circumstances," had appeared to the United States Government as too narrow. The words General Schenck proposed, as suggested in the telegram from Mr. Fish, made the Rule too broad. There was great disadvantage in laying down a rule of vast im port, of which neither Government could without the greatest consid eration foresee all the possible applications. Was General Schenck sure that such a rule would not exclude many of the claims called direct put into the American Case ? General Schenck spoke of the importance of a new Article in order to correct the Treaty. I observed that such an argument would be an additional reason for us to object to it, as we should thereby imply that we thought the Treaty required amendment. General Schenck explained, that what he meant was that if such a rule had been inserted in the Treaty originally, then there would have been no such difficulty as has now arisen, and so if an amendment were made now, providing for such a rule, and relating back to the Treaty so as to become a part of it, all the difficulty that has grown up would fall to the ground. He also said, as to the proposal to modify our note so as to substitute for the words "not to have regard," &c., the words "will not bring the indirect claims before the Tribunal," that such a modification would only make the language more objectionable; for that what his Government claims is that these claims are now rightfully under the Treaty before the Tribunal, and the question is not whether the United States shall bring them there, but whether anything can be devised which may remove them from the consideration of the Arbitrators. I said I understood that the President considered the Treaty included the indirect claims, but that he had only exercised an administrative act in directing that these claims should be put forward in the Case; that it would be simply another administrative act to direct that the Agent should not press for a pecuniary award, but that to adopt our words "not to have regard," &c., would go beyond his constitutional powers. If, however, the Senate was willing to consent to give powers to the President, which he deemed that he did not now possess, by the adoption of a new Article, what was his objection to obtaining their consent to an interchange of notes? I was sure Her Majesty's Government would feel great objection to interrupting the course of negotiation by abruptly transferring it to Washington. I concluded by saying that I carefully avoided anything that might be construed into menace, but, in consequence of the views and information he had presented to me yesterday and to-day, I took an unfavourable view of the chances of settlement. Lord Granville has this moment sent a message requesting me to telegraph you immediately that a Cabinet will be held this morning, and that he wishes me to meet him afterwards. This looks like reconsideration of what he said yesterday. I have come to the conclusion that they have two reasons for their conduct: One, an unwillingness on the part of Mr. Gladstone to seem to retract the extreme position he took at the beginning as to the interpretation of the Treaty; the other, an actual unwillingness to adopt any rule to limit claims against neutrals in the future, their only object being to get rid of a portion of the demands of the United States. SCHENCK. No. 44. General Schenck to Mr. Fish. [Telegram.] LONDON, May 10, 1872. Lord Granville a few minutes since brought to me in person the following draught of an article which, if the Government of the United States think fit to adopt, will be accepted by Her Majesty's Government. I made no comment on it, but said I would telegraph it to you immedi ately: Whereas the Government of Her Britannic Majesty has contended in the recent correspondence with the Government of the United States as follows, namely: That such indirect claims as those for the national losses stated in the Case presented, on the part of the Government of the United States, to the Tribunal of Arbitration, at Geneva, to have been sustained in the loss in the transfer of the American commercial marine to the British flag; the enhanced payments of insurance; the prolongation of the war, and the addition of a large sum to the cost of the war and the suppression of the rebellion-firstly, were not included in fact in the Treaty of Washington, and further, and secondly, should not be admitted in principle as growing out of the acts committed by particular vessels, alleged to have been enabled to commit depredations upon the shipping of a belligerent, by reason of such a want of due diligence in the performance of neutral obligations as that which is imputed by the United States to Great Britain; and Whereas the Government of Her Britannic Majesty has also declared that the prin ciple involved in the second of the contentions, hereinbefore set forth, will guide their conduct in future; and Whereas the President of the United States, while adhering to his contention that the said claims were included in the Treaty, adopts for the future the principle contained in the second of the said contentions, so far as to declare that it will hereafter guide the conduct of the Government of the United States, and the two countries are therefore agreed in this respect: In consideration thereof the President of the United States, by and with the advice and consent of the Senate thereof, consents that he will make no claim on the part of the United States, in respect of indirect losses as aforesaid, before the Tribunal of Arbitration, at Geneva. SCHENCK. [From British Blue Book "North America," No. 9, (1872,) p. 12.] No. 45. Earl Granville to Sir E. Thornton. FOREIGN OFFICE, May 10, 1872. SIR: General Schenck, at an interview with me this day, read to me a statement, which he subsequently gave to me, and of which I inclose a copy, summing up what he regarded as the present position of the question between the two Governments of the claims for indirect losses. I said, in reply, that I received this paper as another proof of the desire which General Schenck had so persistently shown, while strongly supporting the views of his Government, to maintain the Treaty of Washington. There were some passages in it upon which I might make observations, but I thought the letter, which I was about to send to him. would prove to be the most practical and satisfactory answer. He would not fail to remark the labors which Her Majesty's Government had bestowed on an attempt to remove the obstacles to a satisfactory settlement of the misunderstanding which had arisen. I am, &c., [For inclosure in No. 45, see p. 516.] GRANVILLE. No. 224.] No. 46. General Schenck to Mr. Fish. [Extract.] LEGATION OF THE UNITED STATES, London, May 11, 1872. (Received May 27.) SIR: When I received last evening from Lord Granville the draught of the new Article which is proposed by Her Majesty's Government as a supplement to the Treaty of Washington, I hastened to communicate it to you by telegraph. This, with the labor of carefully preparing it to be transmitted in cipher, made it impossible to furnish in time for the mail of to-day, copies of the papers, less important in their character, which accompanied that draught. These accompanying papers consist of two notes with their respective inclosures, of all of which I send copies now. The first is a note of the 10th instant, addressed to me by Lord Granville, recapitulating in a general and compendious way what had recently passed between us, and concluding with the information that although they think it belongs to the Government of the United States to frame the suggested Article, yet, in order to meet our wishes and to save any inconvenient delay, they would transmit a draught of an Article, which if the Government of the United States thinks fit to adopt will be accepted by Her Majesty's Government. Accompanying this note and appended to it are a copy of the draught or memorandum, in relation to a proposed exchange of notes on the subject, which was communicated to me on the 6th instant, and a copy of a memorandum which he made of one of our several interviews, being that of the 8th instant, when I communicated to him the substance of your telegram of the 7th, and informed him that the President would be willing to consider, and if pos sible would present to the Senate, any new Article which might be proposed by the British Government. The second is the brief note from Lord Granville, also of the 10th instant, with which he transmitted the draught of the Article referred to in his first. But the draught which he inclosed was not in fact and precisely, in terms, the one which I have telegraphed to you. After it had been, copied and prepared to be sent in cipher, Lord Tenterden came in haste to the Legation from Lord Granville to recall it, and substituted the amended form which I forwarded to you. I preserve and send you a |