or at least a portion, of the liabilities incurred by Spain for or on account of the Philippines, Cuba, and Porto Rico. Many notes relating to this subject and numerous proposals in regard thereto were submitted by the Spanish Commission and rejected by the American Commission. (See id., pp. 41, 48, 59, 85, 100, 103, 240, 262.) By reference to pages 240, 241 of said publication, it appears that by protocol 20 the Spanish Commission proposed that the United States should be holden to all the rights and obligations of the Spanish Government" by reason of the "railroad concession from Manila to Dagupan," and that said proposal was rejected by the American Commission. The final outcome of the negotiation and the basis of the treaty stipulation is shown by the following notes passing between said commissions on November 22, 1898. (Id., pp. 216–218): Annex 1 to Protocol No. 16. COMMISSION FOR THE NEGOTIATION OF Mr. WILLIAM R. DAY. MY DEAR SIR: In order that this commission and, if necessary, the Government of H. C. M. may study with a full and exact knowledge the proposition which closes the memorandum presented at yesterday's session by the Commission you worthily head, the translation into Spanish of which has just been completed, it becomes necessary to beg you that with all possible haste you will be pleased to make clear the meaning of the following points of said proposition, which to me is obscure and vague: First. Is the proposition you make based on the Spanish colonies being transferred free of all burdens, all, absolutely all, outstanding obligations and debts, of whatsoever kind and whatever may have been their origin and purpose, remaining thereby chargeable exclusively to Spain? * * Annex 2 to Protocol No. 16. E. MONTERO RIOS. UNITED STATES AND SPANISH PEACE COMMISSION, Señor Don E. MONTERO RIOS. MY DEAR SIR: Having received and read your letter of to-day, touching the final proposition presented by the American Commissioners at yesterday's conference, I hasten to answer your inquiries seriatim, first stating your question and then giving my reply. First. Is the proposition you make based on the Spanish colonies being transferred free of all burdens, all, absolutely all, outstanding obligations and debts, of whatsoever kind and whatever may have been their origin and purpose, remaining thereby chargeable exclusively to Spain? In reply to this question it is proper to call attention to the fact that the American Commissioners, in their paper of yesterday, expressed the hope that they might receive within a certain time "a definite and final acceptance" of their proposal as to the Philippines, and also "of the demands as to Cuba, Porto Rico, and other Spanish islands in the West Indies, and Guam, in the form in which those demands have been provisionally agreed to.” The form in which they have thus been agreed to is found in the proposal presented by the American Commissioners on the 17th of October and annexed to the protocol of the sixth conference, and is as follows: ARTICLE 1. Spain hereby relinquishes all claim of sovereignty over and title tc Cuba. ART. 2. Spain hereby cedes to the United States the Island of Porto Rico and other islands now under Spanish sovereignty in the West Indies, and also the island of Guam in the Ladrones. These articles contain no provision for the assumption of debt by the United States. In this relation I desire to recall the statements in which the American commissioners have in our conferences repeatedly declared that they would not accept any articles that required the United States to assume the so-called colonial debts of Spain. To these statements I have nothing to add. But in respect of the Philippines the American commissioners, while including the cession of the archipelago in the article in which Spain "cedes to the United States the island of Porto Rico and other islands now under Spanish sovereignty in the West Indies, and also the island of Guam in the Ladrones," or in an article expressed in similar words, will agree that their Government shall pay to Spain the sum of $20,000,000. * * WILLIAM R. DAY. The United States both generally and specifically refused to assume the obligations of this concession. A review of the many notes on this subject which passed between the Spanish and American commissioners convinces me that the amount of $20,000,000 was paid by the United States and accepted by Spain in lieu of a transfer of said obligation. This application of the Manila Railway Company finds no support or assistance in the treaty of peace with Spain. Does international law require that the United States assume the contract obligations of Spain created by the guaranty provided in the concession to the Manila Railway Company? To answer this interrogatory it is necessary to determine whether or not the debt arises on the personal obligation of the national Government of Spain or that of the local government of the ceded territory. Liability for debt arising upon the personal obligation of the general government does not pass with ceded territory unless stipulated for in the treaty of cession. Ordinarily a treaty of cession resulting from conquest does not contain such stipulation. Hall on International Law says (4th ed., p. 104, note): There are one or two instances in which a conquering state has taken over a part of the general debt of the state from which it has seized the territory. Thus in 1866 the debt of Denmark was divided between that country and Slesvig-Holstein, and in the same year Italy, by convention with France, took upon itself so much of the Papal debt as was proportionate to the revenues of the Papal provinces which it had appropriated. It may be doubted whether any other like cases have occurred. The reason for this rule is apparent. Conquest is one way by which a nation enforces payment of a debt. But if the enforcement of the payment subjected the creditor nation to a proportionate share of the debts of the debtor nation, the purpose of the proceeding would be defeated. If such were the rule, an enormous national debt would afford a better protection than an army and navy, and the more hopelessly bankrupt a nation was, the less the likelihood of its being called upon to perform its international obligations. Such a rule would eventually disrupt the family of nations. Hall on International Law further says (note, p. 99): The fact remains that the general debt of a state is a personal obligation. The case also of the creation of a new state out of part of an old one is not distinguishable, so far as the obligation to apportion debts is concerned, from that of the cession of a province by one state to another. When the latter occurs, at least as the result of conquest, it is not usual to take over any part of the general debt of the state ceding territory. The Spanish Commission at Paris, 1898, insisted that it was usual and customary to assume a proportionate share of such obligations upon the cession of territory, and proposed the following as a treaty stipulation (55th Cong., 3d sess., Sen. Doc. 62, p. 240): Contracts formally entered into by the Spanish Government or its authorities for the public service of the islands of Cuba and Porto Rico, the Philippines, and others ceded by this treaty, and which contracts are still unperformed, shall continue in force until their expiration pursuant to the terms thereof. Such contracts as also cover the service peculiar to Spain or any of her other colonies, the new government of the above-mentioned islands shall not be called upon to carry out, save only in so far as the terms of said contracts relate to the particular service or treasury of such islands. The new government will therefore, as regards the said contracts, be holden to all the rights and obligations therein attaching to the Spanish Government. The American Commission rejected this proposal (Id., p. 241), and the Spanish Commission filed a protest, and in support thereof said with reference to the action of the United States (Id., p. 258): It refuses also to stipulate anything in relation to the respect due the contracts entered into by a legitimate sovereign for public works and services-contracts which materially affect the rights of property of private individuals, which were respected in the treaties of Campo Formio of 1797, of Paris of 1814, of Zurich of 1859, of Paris of 1860, of Vienna of 1864 and 1866, and which Germany respected also when ending the war with France by the treaty of Frankfort of 1871. The fact that the treaties referred to contained such stipulations shows that obligations of the character designated do not pass with the territory, for if they did, a special stipulation would not be necessary. An application of this doctrine may be found in the diplomatic correspondence between the United States and England in 1854, with reference to the authority exercised by England over the Mosquito shore. In illustration of the arguments of the United States, reference was made by Mr. Buchanan to a treaty between Great Britain and Mexico, and it was urged generally that "it would be a work of supererogation to attempt to prove at this period of the world's his tory that these provinces having, by a successful revolution, become independent states, succeeded within their respective limits to all the territorial rights of Spain." Lord Clarendon replied that the clause in the treaty with Mexico stipulating that British subjects shall not be disturbed in the "enjoyment and exercise of the rights, privileges, and immunities" previously enjoyed under a treaty with Spain, which had been referred to by Mr. Buchanan as proving the adhesion of Great Britain to the doctrine stated by him, proves, on the contrary, that "Mexico was not considered as inheriting the obligations or rights of Spain, as otherwise a special stipulation would not be necessary." (De Martens. Nouv. Rec. Gen. II, 201-206.) In commenting on this correspondence, Hall on International Law says (4th ed., pp. 101-102): The contention of Lord Clarendon was evidently well founded. Mr. Buchanan's general statement was accurate, but the very fact that Mexico succeeded to all the territorial rights of Spain, and consequently to full sovereignty within the territory of the Republic, shows that it could not be burdened by limitations on sovereignty to which Spain had chosen to consent. It possessed all the rights appertaining to an independent state, disencumbered from personal contracts entered into by the state from which it had severed itself. That the obligation which the Manila Railway Company is now seeking to have the United States assume is "a general debt" and "personal contract" of the Spanish Government is clearly shown by the learned discussion of the matter in the note of the American Commission prepared by Hon. John B. Moore, counsel to the commissioners of the United States, and submitted October 14, 1898. (See said Sen. Doc. No. 62, pp. 48-50.) The position taken by the American Commissioners, ably sustained by their counsel, ratified by Congress and approved by the Executive, is to be supported by the coordinate branches of the Government. (Foster et al. v. Neilson, 2 Pet., 307; Garcia v. Lee, 12 Pet., 516; United States v. Reynes, 9 How., 153; Doe v. Braden, 16 How., 635.) Certainly the position can not be overthrown by the provisional government existing in the Philippines. The Manila Railway Company concedes that the obligation which it is now seeking to enforce against the United States was originally an obligation of the National Government of Spain. The company contends that the obligation was upon the sovereignty of Spain, attached thereto, and passed therewith. From its application herein the following is quoted (see Letter dated November 27, 1899, signed F. W. Whitridge, Doc. 7, 849): The Spanish Government down to the time of the Spanish-American war fulfilled its obligations under this contract by paying from time to time the quarterly installments of the subvention as they accrued, the amount of which varied from time to time with the earnings of the railway company. Record of the fact of such payment by the Spanish authorities can undoubtedly be found in the Government offices at Manila. I am also informed, although not by the Manila Railway Com pany, that the fact of this contract and of the obligations of the Spanish Government arising thereunder was laid before the Peace Commissioners at Paris, and the obligations of the Spanish Government in respect to the railway, maturing and as yet undischarged, were considered by the American Commissioners in estimating the amount of money to be paid to the Spanish Crown on the ratification of the treaty of peace. If this information be correct, I think that it would tend to show that this Government had already expressly recognized the contract in question. Whether the contract has or not been recognized, I respectfully represent to you that with the cession of the Philippine Islands under the treaty of peace between the United States and Spain the sovereignty of Spain in those islands was ceded by Spain to and was assumed by the United States, and with that cession of the sovereignty there passed to and there was assumed by the United States the obligations of the Spanish Government under this contract. The Manila Railway Company therefore claims that the United States should pay the amount of the quarterly installments due on the subvention which have accrued since the date of the treaty of peace. It is gratifying to note that the Spanish Government recognizes the obligations, of the character of the one under consideration, ast belonging to the National Government of Spain and still binding upon it. In July, 1899, the Spanish minister of finance submitted to the Cortes a proposed law for the reorganization of the debts of Spain. In presenting said law Señor Villaverde, Spanish minister of finance, stated that the Spanish Government declares that it does not consider that the question of the debts of the colonies ceded and relinquished by Spain were finally settled by the negotiations at Paris, nor by the ominous silence of the treaty of peace on the matter. He insisted that the Spanish Government still has the right to insist that where the revenues of a colony were mortgaged or pledged for the payment of a debt the revenues of the territory constituting said colony should be applied to the payment of said debts, although said territory had been ceded to another sovereignty, which refused to take over said obligations and was collecting revenues by virtue of its own right to levy and collect them. The finance minister's official statement was published in the Madrid Gazette and republished by the press of this country. From what purports to be an extract from the official publication in the Madrid Gazette I quote the following: Nevertheless, the statesman who presided over the Spanish commission has declared in a noteworthy document, written on the day after the treaty was signed, that though it is true that the American Commissioners did not admit the validity of the mortgage on the Cuban revenues, and did not consent that they should pass to the colonies as a responsibility inherent in the sovereignty, the Spanish commissioners on their side did not assent to the contrary contention, and the question remained intact (in Spanish, integra). Thus it must be respected, with the hope that by new agreements of the same sort as those for the recognition of the independence of other Hispano-American nations there will be recognized in the future the undoubted right to claim that the revenues of the island of Cuba should answer as a mortgage for the interest and amortization of those debts which the Spanish nation created legitimately in the exercise of its sovereignty. Nevertheless, the Government does not believe that, reserving the exercise of this right, there is any ground in the meanwhile for repudiating the Cuban debts. The Cuban debts, like those of the Philip |