Chap.XVII. "The real matter at issue between the two Governments, when kept apart from collateral considerations, is, whether, in the matters connected with the vessels out of whose depredations the claims of Americans citizens have arisen, the course pursued by the British Government and by those who acted under its authority was such as would involve a moral responsibility on the part of the British Government to make good, either in whole or in part, the losses of American citizens.

"This is a plain and simple question, easily to be considered by an arbiter, and admitting of solution without raising other and wider issues; and on this question Her Majesty's Government are fully prepared to go to arbitration, with the further provision that, if the decision of the arbiter is unfavourable to the British view, the examination of the several claims of citizens of the United States shall be referred to a Mixed Commission, with a view to the settlement of the sums to be paid on them.

"But as they consider it of great importance for the maintenance of good understanding between the two countries that the adjudication of this question in favour of one or other of the parties should not leave other questions of claims in which their respective subjects or citizens may be interested to be matter of further disagreement between the two countries, Her Majesty's Government, with a view to the common interest of both, think it necessary, as you have already apprised Mr. Seward in your letter of the 7th of January, 'in the event of an understanding being come to between the two Governments, as to the manner in which the special American claims' (which have formed the subject of the correspondence of which my present despatch is the sequel) should be dealt with, that, under a Convention to be separately but simultaneously concluded, the general claims of the subjects and citizens of the two countries arising out of the events of the late war should be submitted to a Mixed Commission, with a view to their eventual payment by the Government that may be judged responsible

for them.'

"Such, then, is the proposal which Her Majesty's Government desire to submit to the Government of the United States-limited reference to arbitration in regard to the so-called Alabama claims, and adjudication by means of a Mixed Commission of general claims.

"You will read this despatch to Mr. Seward, and furnish him with a copy of it, as the deliberate reply of Her Majesty's Government to his despatch of the 12th of January, and in doing so, you will express to him the earnest hope of Her Majesty's Government that their present proposal will be accepted by the Cabinet of Washington in the spirit in which it is made.

“I am, &c. (Signed) "STANLEY."

"Sir,

Lord Stanley to Sir F. Bruce.

"Foreign Office, May 2, 1867. "Mr. Adams has this day communicated to me the substance of a despatch which he had received from Mr. Seward in reply to the proposals which you were instructed by my despatch of the 9th of March to make on the subject of the claims arising out of the civil war in the United States.

"In this despatch Mr. Seward states that the Government of the United States adhere to the view which they formerly expressed as to the best way of dealing with these claims. They cannot, consequently, consent to a special and peculiar limitation of arbitrament in regard to the Alabama claims such as Her Majesty's Government suggests.

"They cannot give any preference to the Alabama claims over others in regard to the form of arbitrament suggested; and while they agree that all mutual claims which arose during the civil war between citizens and subjects of the two countries ought to be amicably and speedily adjusted, they must insist that they be adjusted by one and the same form of tribunal, with like and the same forms, and on principles common to all.

"The President of the United States, therefore, respectfully declines the proposal of Her Majesty's Government; but reciprocating the feelings of good-will which have been expressed on the part of Great Britain, the United States' Government will cheerfully receive any further suggestions that Her Majesty's Government may have to offer.

Chap.XVII.

(Extract.)

"Foreign Office, November 16, 1867. "Whilst agreeing to this limited reference as regards the so-called Alabama claims, I have repeatedly stated that Her Majesty's Government could not consent to refer to a foreign Power to determine whether the policy of Her Majesty's Government in recognizing the Confederate States as belligerents was or was not suitable to the circumstances of the time when the negotiation took place. After referring, however, to the terms of my despatch of the 24th of May, Mr. Seward goes on to say that, in the view taken by the United States' Government, that Government would deem itself at liberty to insist before the arbiter that the actual proceedings and relations of the British Government, its officers, agents, and subjects, towards the United States in regard to the rebellion and the rebels as they occurred during that rebellion, are among the matters which are connected with

Chap.XVII. the vessels whose depredations are complained of; just as, in the case of the general claims alluded to by me, the actual proceedings and relations of Her Majesty's Government, its officers, agents, and subjects in regard to the United States, in regard to the rebellion and the rebels, are necessarily connected with the transactions out of which those general claims arise.

"The language thus used by Mr. Seward appears to Her Majesty's Government to be open to the construction that it is the desire of the United States' Government that any tribunal to be agreed upon in dealing either with the so-called Alabama claims or with the 'general claims' might enter into the question whether the act of policy of Her Majesty's Government in recognizing the Confederate States as a belligerent Power was or was not suitable to the circumstances of the time when the recognition was made; a construction which, after the distinct and repeated avowal of Her Majesty's Government that they could not consent to a reference of such a question, Her Majesty's Government can hardly suppose that it was intended by Mr. Seward that the passage in his despatch should bear.

"But to prevent any misapprehension on this subject, Her Majesty's Government think it necessary distinctly to say, both as regards the so-called Alabama claims brought forward by citizens of the United States and as regards the general claims, that they cannot depart, directly or indirectly, from their refusal to 'refer to a foreign Power to determine whether the policy of recognizing the Confederate States as a belligerent Power was or was not suitable to the circumstances of the time when the negotiation was made,'

"As regards the so-called Alabama claims, the only point which Her Majesty's Government can consent to refer to the decision of an arbiter is the question of the moral responsibility of Her Majesty's Government, on the assumption that an actual state of war existed between the Government of the United States and the Confederate States; and on that assumption it would be for the arbiter to determine whether there had been any such failure on the part of the British Government as a neutral in the observance, legally or morally, of any duties or relations towards the Government of the United States as could be deemed to involve a moral responsibility on the part of the British Government to make good losses of American citizens caused by the Alabama and other vessels of the same class.

"As regards the general claims, the question of moral responsibility on the part of Her Majesty's Government does not, and cannot, come into dispute at all.

"Mr. Seward rightly supposes that Her Majesty's Government contemplated two tribunals for the adjudication, one of the Alabama claims, the other of the general claims; the one being, in the first instance, at all events, the tribunal of an arbiter, who would be called upon to pronounce on the principles of the moral responsibility of the British Government, and on the nature of whose decision would depend

the question of the appointment of a Mixed Commission for the exami- Chap.XVII. nation in detail of the several claims of citizens of the United States to which that decision applied, namely, those arising out of the depredations of the Alabama and other similar vessels, and the adjudication of the sums payable in each case; the other, in its commencement and to its close, a purely Mixed Commission for the examination of the general claims of the subjects and citizens of both countries arising out of the war, and the adjudication of the sums payable by either country in each case.

"The distinction between the two classes of claims is clear: the one may never come before a Mixed Commission, and therefore may not require the assistance of an arbiter to decide differences of detail arising between the Commissioners; the other, though originally brought before a Mixed Commission, may possibly require the intervention of an arbiter in case of a difference of opinion among the members of the Commission which could not be otherwise reconciled, and for which case provision would be made in the ordinary way in the Convention for the Settlement of the Mixed Claims, by the insertion of Articles in regard to the selection of an arbiter.

"The functions of such an arbiter, as well as of an arbiter for a like purpose in the other Mixed Commission, for which provision would have to be made to meet the contingency of the so-called Alabama claims coming eventually under the cognizance of a Mixed Commission, would have nothing in common with the functions of the arbiter, to whom the question of principle involved in the last-mentioned class of claims would be referred.

"Her Majesty's Government cannot but apprehend that, if Mr. Seward really requires unrestricted arbitration as applicable to both classes of claims, and that the tribunal in both classes of cases should proceed upon the same principles and be clothed with the same powers, he has not fully considered the wide and inevitable distinction which exists between the classes; and in directing you to submit to the consideration of Mr. Seward the explanations and observations con, tained in this despatch, I have to instruct you to express the earnest hope of Her Majesty's Government that the Government of the United States will, on further reflection, accept without hesitation the proposal made in my despatches to Sir F. Bruce of the 9th of March and of the 24th of May, both of this year, namely, 'limited reference to arbi, tration in regard to the so-called Alabama claims,' and 'adjudication by means of a Mixed Commission of general claims.'

"You will furnish Mr. Seward with a copy of this despatch,

"I am, &c. (Signed)

"STANLEY,"

Chap.XVII.

"Sir,

Mr. Seward to Mr. Adams.

"Department of State, Washington, "November 29, 1867.

"The Government of the United States adheres to the views concerning the proposed arbitration which I have heretofore had occasion to make known, through your Legation, to Lord Stanley. We are now distinctly informed by Lord Stanley's letter that the limited reference of the so-called Alabama claims which Lord Stanley proposes is tendered upon the condition that the United States shall waive before the arbitrator the position they have constantly maintained from the beginning, namely, that the Queen's Proclamation of 1861, which accorded belligerent rights to insurgents against the authority of the United States, was not justified on any grounds, either of necessity or moral right, and, therefore, was an act of wrongful intervention, a departure from the obligation of existing Treaties, and without the sanction of the law of nations. The condition being inadmissible, the proposed limited reference is therefore declined.

Here the subject dropped. But Mr. Reverdy Johnson, who succeeded Mr. Adams in 1868, as Minister of the United States in London, was instructed to re-open it with Lord Stanley, then Secretary of State for Foreign Affairs. This he did at several interviews, first, by throwing out suggestions that Great Britain might dispose of the question by payment of a sum of money,

1 Extract from Mr. Reverdy Johnson's Instructions.-(Communicated to Lord Stanley by Mr. Reverdy Johnson, 16th October, 1868.)

"Our conclusion is, that in the event that you become convinced that an arrangement of the Naturalization question which would be satisfactory to the United States, in view of your previous instructions, can be made, then and in that case you may open concurrent negotiations upon the two questions first herein-named, to wit, San Juan and the Claims question; but that those two negotiations shall not be completed, or your proceedings therein be deemed obligatory, until after the Naturalization question shall have been satisfactorily settled by Treaty or by Law of Parliament."

A Protocol on the Naturalization question had been signed before Mr. Johnson began to treat on the "Claims" question, which these Instructions authorized him to do.