conveyed through the Government of the United States, that the present difficulties be submitted to an arbitration for settlement. The memorandum contains the definitive announcement that Germany and Great Britain have jointly agreed to submit to arbitration the questions now at issue, with the exception, on the part of Germany, of certain claims of German subjects arising out of injuries and breach of contract in the civil war in Venezuela during the period from 1898 to 1900. The German Government declares that these claims have long since been presented to the Government of Venezuela; that they have been carefully examined by the German Government and assessed at an aggregate of $325,000. These claims are held by Germany not to be subject to arbitration, and the Imperial Government insists that they must either be paid forthwith or amply secured. Aside from this the German Government agrees to submit to arbitration all its claims set forth in the ultimatums, both for injury and those arising out of the illegal seizure of property or breach of contract, as well heretofore as during the present civil war in Venezuela, though it is to be understood that the responsibility of the Government of Venezuela for such illegal seizure and breach of contract is not to become a subject of arbitration, but must be admitted at the outset. Upon these terms, the Government of Germany and that of Great Britain unite in expressing the earnest hope that the President of the United States will accept the invitation which they extend to him to act as arbitrator. In the event, however, that the President of the United States should, to the great regret of the two powers, decline to act as arbitrator, then they are prepared to submit the case for adjustment to the tribunal at The Hague. This memorandum was presented to me at the foreign office by Baron von Richthofen about 6 o'clock in the afternoon and I sent to you during the evening a dispatch embodying the substance of it. I have, etc., CHARLEMAGNE TOWER. [Inclosure.-Translation.] The Imperial Government expresses to the Government of the United States of America its most earnest thanks for its efforts to adjust in a peaceful manner the unsought conflict with Venezuela. The proposition transmitted by the United States regarding the establishment of a court of arbitration appears to Germany as well as to England to be a suitable basis upon which to arrive at a just decision of their claims. As to this, however, the two powers think it proper to make certain reservations as follows: 1. Amongst their claims are certain demands which can not properly be submitted to decision by arbitration. Such claims are, so far as Germany is concerned, her demands growing out of the civil wars from 1898 to 1900, which are stated more particularly in a memorandum submitted to the Reichstag on December 8, a copy of which is hereto attached. This relates to claims arising out of acts of violence committed by the Venezuelan Government and its officials, for which that Government, after attempts at delay lasting for years, has refused in an almost insulting manner to make a suitable indemnity, notwithstanding repeated representations on the part of the Imperial Government. These claims which, according to a careful examination by the Imperial Government, amount to 1,700,000 bolivars in round numbers ($325,000) must therefore be immediately recognized by the Venezuelan Government. In the event that their immediate payment is impossible, then ample security will be required for their prompt settlement. 2. All further claims which are set forth in the two ultimatums shall be investigated by the proposed court of arbitration. This will, therefore, not only examine claims arising out of the present Venezuelan civil war, but also, so far as Germany is concerned, the claims of German contractors set forth in the above-mentioned memorandum on account of the non fulfillment by the Venezuelan Government of its treaty obligation. 3. The court of arbitration shall decide upon the legality of the several claims as well as upon the manner of settlement and the security to be given. In the cases of claims on account of injury or on account of illegal acts against property the responsibility of the Government of Venezuela must furthermore be recognized in principle; that is to say that this responsibility is not the object of the court of arbitration, but that the court of arbitration shall decide only as to injuries committed or the illegal seizure of property and as to the amount of the damages. The Government of the United States would place the Imperial and the British Governments under especial obligations if it will use its good offices to induce the Venezuelan Government to accept these propositions. The two Governments would be grateful if the President of the United States would accept the office of arbitrator under the foregoing conditions. If, however, the President of the United States, to the great regret of the two Governments, should not accept this invitation then they are prepared to submit the case to the tribunal of arbitration at The Hague. BERLIN, December 22, 1902. Mr. Hay to Mr. Tower. [Telegram.-Paraphrase.] DEPARTMENT OF STATE, Washington, December 26, 1902. (Mr. Hay states that the President appreciates profoundly the courtesy with which the powers in interest have suggested his name as arbitrator in the matters now pending with Venezuela. If no other or better means of settling the subjects in dispute presented themselves the President would willingly comply with the wishes of the powers and give his best efforts to an end so laudable. But he has thought from the beginning that it was most desirable that the entire controversy should be submitted to the judgment of that high tribunal at The Hague which has been created by the principal powers of the world for the consideration of precisely such cases, involving, as the present controversy does, no question of national honor or the cession of territory. After a thorough consultation with all the powers, in which he has found an honorable spirit of candor and mutual consideration animating every one of them, the President has been greatly gratified to learn that in the event of his not undertaking the important duty to which the powers have invited him, they would all be willing to accept a reference to The Hague. He has, therefore, the greatest pleasure in announcing to the Governments of Great Britain, Germany, Italy, and Venezuela that all of them have accepted in principle the proposition of a reference of pending questions to the tribunal of The Hague. If the President can be of any further service in arranging the preliminaries of such an understanding, he will gladly hold himself at the disposition of the powers concerned, and if their representatives should find it desirable to meet in Washington, he would be happy to welcome them there and to facilitate their labors in every possible way.) Mr. Hay to Mr. Tower. [Telegram.-Paraphrase.] DEPARTMENT OF STATE, Washington, December 27, 1902. (Mr. Hay states that he has telegraphed in full to Minister Bowen the German preliminary conditions, as received from Mr. Tower, and that the response of Venezuela will be promptly communicated to Mr. Tower.) No. 10.] Mr. Tower to Mr. Hay. EMBASSY OF THE UNITED STATES, SIR: I have the honor to inclose to you herewith a copy and a translation into English of the memorandum relating to the claims of Germany against Venezuela, which accompanied the note of the German Government to which my dispatch No. 6 of the 24th December has reference. I was unable to inclose this memorandum to you with that dispatch, because as the mail was leaving at once there was not time enough, to my regret, to have the translation finished, neither did I wish to delay my dispatch by reason of its far greater importance; therefore, I sent it forward with a copy of the memorandum. I have, etc., CHARLEMAGNE TOWER. [Inclosure.-Translation.] Memorandum of the claims of Germany against the United States of Venezuela. For a long time past the attitude of the Government of the United States of Venezuela in regard to the claims of the Imperial Government has given cause for serious complaint. These are claims of Germans living in Venezuela since the last Venezuelan civil war and the claims of German contractors for the nonfulfillment of obligations guaranteed by Venezuelan Government contracts. By the civil wars carried on in Venezuela from 1898 to 1900, and thereafter, since the end of last year, a large number of German merchants and owners of real estate have suffered great loss, partly through the extortion of compulsory loans and partly for the seizure, without pay, of the necessaries of war, but especially the seizing of the cattle required for the subsistence of troops, and lastly because of the pillaging of the houses and the devastation of land. The amount of the losses during the civil wars from 1898 to 1900 comes to 1,700,000 bolivars (francs), and a loss of 3,000,000, in round numbers, has already been reported during the late civil war. Several of the sufferers have lost nearly all they had and have thereby made their creditors living in Germany their fellow-sufferers. The Venezuelan Government openly refuses to meet its obligations and to make reparation for their losses. For settling the claims from 1898 to 1900, which it alone has thus far attended to, the following procedure was adopted: After it had, firstly, fixed a term of six months during which it would not entertain any claim for damages, it issued a decree, dated January 24, 1901, according to which a commission, consisting solely of Venezuelans, to which the injured parties had to present their claims within three months, was to pass upon said claims. In three respects were the provisions of this decree deemed unacceptable. In the first place, indemnity claims of earlier date than May, 1899, before Castro became President of the Republic, were excluded, although Venezuela is naturally responsible for the acts of her former governments. Next, diplomatic protest against the decisions of the commission was barred; appeal to the highest Venezuelan court only was admitted, although judicial officials there, as shown in several instances, are actually dependent upon the Government and have at times been removed from office without much ado. Lastly, the claims whose validity might be admitted by the commission were to be paid by bills of a newly created revolutionary loan, which, as past experience has shown, would be practically worthless. As a matter of fact, the proceedings carried out on the basis of this decree have not led to a satisfactory settlement of the claims. Specifically, particular German claims brought before the court were rejected without giving any reason therefor. Others were reduced in a manifestly arbitrary manFor instance, the case of a German cattle raiser who had, in round figures, 3,800 head of cattle, valued at more than 600,000 bolivars, which were taken from him by force, and for which an amount of but 14,000 bolivars was adjudged. ner. Furthermore, the claims adjudged by the court were not paid in cash, but the persons who had suffered the loss were made to depend upon a financial bill to be submitted to the Congress at some later time. After the repeated efforts made by the Imperial minister resident at Caracas to induce the Government of the Republic to change the indicated three points had failed, the minister resident positively declared that the Imperial Government now found itself constrained to refuse to recognize the decree. Similar declarations were also made by Great Britain, the United States of America, Italy, Spain, and the Netherlands. The Venezuelan Government took the stand, with regard to these declarations, that it was not ready to treat aliens differently from its own citizens, and that it considered the settlement of claims of the nature of those in question to be a matter of domestic concern with which no foreign power could interfere without violating her sovereignty. In this condition of affairs the Imperial Government could not do otherwise than to examine itself the German claims and, so far as they proved to be well-founded upon investigation, to bring them to the immediate attention of the Republic. The Venezuelan Government had, it is true, held out a prospect of bringing about a satisfactory settlement through its Congress. The law adopted by it last spring, however, only repeats the insufficient regulations of the decree of January 24, 1901, and is to be extended to such claims only which could not be placed in due time before the commission appointed through the decree. Every other argument on the affair was repeatedly declined on the grounds of state judicial regulations in force in Venezuela, according to which the diplomatic settlement of war claims was excluded. In this she has established the principle that a diplomatic intervention could be excluded by municipal law. This principle is contrary to the law of nations, as the question whether such a resort is admissible is to be determined not by municipal law, but by the principles of international law. The correspondence with the Imperial representative at Caracas was carried on by the Government of the Republic in an almost insulting tone, and finally the documents relative thereto, among which some were marked confidential, were published without asking for the consent of the Imperial Government, and furthermore adding a memorandum of an offensive nature. In the entire demeanor of the Venezuelan Government, the attempt can be found to deny to foreign claims the treatment accorded them by the laws of nations. And it must be added that in the last Venezuelan civil war the Germans were treated with especial animosity, as, for instance, when the violence of the Government troops during the plundering at Barquisemeto was mainly directed against German houses. This proceeding of the Venezuelan governing power would, in case it remained unpunished for a longer period, create the impression that Germans in Venezuela are lett without protection to foreign arbitrariness and seriously impair the prestige of the Empire in Central and South America as well as the large German interests which are to be protected there. Though the Imperial Government is animated by a manifest desire to maintain friendly relations with the Republic of Venezuela, and far as it is from thinking of molesting the state independence of this Republic or wishing to trespass on its home institutions, it can nevertheless tolerate no longer the action of the Venezuelan Government, hurting, as it does, the honor of the Imperial Government, which therefore believes that it must look toward the settlement of the German war claims in a determined manner. Judging from past experience, success is not expected from further negotiations with Venezuela. The Imperial chargé consequently handed yesterday to the Venezuelan Government an ultimatum, in which he demands, by order of the Imperial Government, the immediate payment of the war claims from 1898 to 1900, as well as the giving of a satisfactory explanation in regard to the fixing and securing the claims of the late civil war. The above-described treatment of German war claims has, furthermore, led the Imperial Government to believe that the other German claims, in view of the Venezuelan Government's failure to meet its treaty obligations, require its protection, in order that they may be duly settled. In this connection the claims of the German firms for the building of a slaughterhouse at Caracas, as also those of the German railroad company for the guaranteed interests, come into consideration. For the erection of a slaughterhouse at Caracas, a contract was made in 1896 between the Venezuelan Government and the engineer, Karl Henkel, in Hamburg, to which, with the Government's assent, the Aktien-Gesellschaft für Betonund Monierbau in Berlin, was made a party. The entire building has in the meantime been completed. The Government has, however, stopped the promised weekly part payments, which were to be made to the Betonund Monierbau since the end of 1900, and to Henkel since September, 1901, so that it still owes the two contractors 820,000 bolivars. During the years 1888 to 1894 the Deutschen Grossen Venezuela Eisenbahngesellschaft built the railroad line-Caracas-Valencia. When the concession for the building was granted the Venezuelan Government guaranteed an interest rate of 7 per cent on a capital of 77,000,000 bolivars. This obligation, which began on February 1, 1894, was not met. In 1896, however, the Government released itself of the guaranty, by paying a sum of 33,000,000 bolivars in certificates of a 5.per cent loan contracted by it in the sum of 50,000,000. The interest on this loan and the amortization have not been regularly paid since 1898, so that the claim of the company at the present time amounts to 7,500,000 bolivars, and is continually on the increase. The negotiations carried on for some time for the adjustment of the above claims have thus far been without result. The Imperial chargé in Caracas has, therefore, requested the Venezuelan Government in the ultimatum to also furnish a satisfactory security for this claim. In case no satisfactory answer is made immediately to the ultimatum the Imperial Government would, to its regret, be compelled to take up itself the settlement of the German claims. Similar complaints to those made against Venezuela by Germany have also been made by other powers, particularly England. The British claims are partly for the unlawful seizure or destruction of English merchant ships, and in part those of English railroads in Venezuela for the destruction of the roads of the line and nonfulfillment of contractual obligations, some being claims of the holders of the English loan of 1881, on which, as on the German loan, no regular percentage or amortization has been paid for a long period, since 1881. In this matter Germany and England have agreed to take joint action for the satisfaction of all their claims against Venezuela. The British representative at Caracas also delivered an ultimatum on yesterday to the Venezuelan Government. BERLIN, December 8, 1902. Mr. Tower to Mr. Hay. No. 11.] EMBASSY OF THE UNITED STATES, Berlin, December 29, 1902. SIR: I have the honor to acknowledge the receipt on the 19th of December last of your dispatch relating to the nomination of Mr. Bowen by the Government of Venezuela, with full powers to enter into negotiations on the part of Venezuela to settle the difficulties with Germany, Great Britain, and Italy. Upon my communication to the Baron von Richthofen, Imperial secretary of state for foreign affairs, of the proposal made by Venezuela in regard to Mr. Bowen, he informed me that he should consider the subject and return an answer within a day or two. Accordingly, on the 23d of December the Imperial secretary of state for foreign affairs handed me a memorandum, of which I have the honor to inclose to you herewith a copy and a translation into English. He announces in this |