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3d Session.

No. 30.


MARCH 3, 1879.-Referred to the Committee on Foreign Affairs and ordered to be printed.

Mr. WILSON, from the Committee on Foreign Affairs, submitted the following as the


The Committee on Foreign Affairs, to whom was referred the letter of Hon. John Sherman, Secretary of the Treasury, dated February 8, 1879, addressed to Hon. Samuel J. Randall, Speaker of the House of Representatives, and accompanying papers contained in Executive Document No. 76, third session, Forty-fifth Congress, having had the same under consideration, respectfully beg leave to report, as the views of the subcommittee, as follows:

The object of the letter of Secretary Sherman was to transmit to the House a letter from the Secretary of State under date of January 31, 1879, inclosing a note from the German minister of the date of January 25, 1879, presenting an application from the North German Lloyds, of Bremen, and the Hamburg-American Packet Company, of Hamburg, ship companies, for payment of interest on the amount of tonnage dues collected by this government from these companies subsequently to the 1st of June, 1862, in contravention of treaty stipulations.

On June 19, 1878, the following act of Congress was approved:

AN ACT to amend section twenty-nine hundred and thirty-one of the Revised Statutes of the Unite States so as to allow repayment by the Secretary of the Treasury of the tonnage tax where it ha been exacted in contravention of treaty provisions.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the provisions of section twenty-nine hundred and thirtyone of chapter six, title thirty-four, of the Revised Statutes shall not apply to cases of the payment of tonnage-tax on vessels where the Secretary of the Treasury and Attorney-General shall be satisfied that the exaction of such tax was in contravention of treaty provisions; and he may draw his warrant for the refund of the tax so illegally exacted, as is provided in section three thousand twelve and one-half of said statutes: Provided, That this act shall not be construed to authorize the refunding of any tonnage-duties whatever exacted prior to the first day of June, eighteen hundred and sixty-two, nor shall it apply to cases of the payment of tonnage-tax heretofore made on vessels other than those of the Hanseatic Republics and Sweden and Norway.

It will be seen by this act that the government virtually admits that tonnage-dues had been unlawfully exacted and collected by its agents from these companies, in violation of treaty stipulations.

During the last session of Congress this subject was referred to this

committee, who, among other things, reported: "For thirty years anterior to July 14, 1862, tonnage-dues were not levied or collected by the United States on vessels of foreign countries; but the necessities of the government, compelled as it was to raise revenues from all sources to pay the expenses of the war, led to an act, that went into effect on that day, providing for the collection of such duties"; and this act contained the provision that it should not in any way impair the rights and privileges which had been acquired relative to tonnage-dues on vessels This act was several times amended, always retaining provisions to respect treaty stipulations.

The committee here quote from their former report on this subject:


The committee are of the opinion that this government is not without fault touching this matter. Its treaties bound it to exempt the lines spoken of from the payment of tonnage-dues, and by its act of Congress of July 14, 1862, it recognized such treaty obligations to exist, and declared that the same should not be impaired; nevertheles, under the direction of the government, moneys have been collected from those lines which it is clearly manifest that this government had no right to collect, and the honor of the government requires that that money shall be refunded.

The committee deem it worthy of remark that no question can now arise as to this government having violated its treaty stipulations by the exaction and collection of the dues referred to. The act approved June 19, 1878, providing for this refund, was concurred in by both the House and Senate committees, and was passed by an almost unanimous vote of both houses of Congress, and met the approval of the AttorneyGeneral, the Secretary of State, and the Secretary of the Treasury. Under that act the moneys so collected have been refunded by the Treasury Department, and the claim for interest having been also presented by each of these companies at the time of presenting the claim for the prin cipal sums, after the passage of the act of June 19, 1878, but disallowed under the peculiar phraseology of that act, these ship companies, throngh the intervention of the German minister, have applied to the Treasury Department for the payment of interest on the sums so exacted and collected, from the time of its collection up to the date of that act, formal protests having been filed at the time against the acceptance of the principal in any wise operating as a waiver of the claim for interest.

The Secretary of the Treasury, to whom application was made for the payment of interest, not having been advised as to his duty in the matter, submitted the question to the Attorney-General, and upon that subject the Attorney-General, by his letter, contained in Executive Docu ment No. 76, above referred to, expresses the opinion that under the act of June 19, 1878, above quoted, the Secretary is not authorized to pay such interest, and that it is a question of international justice and pro priety, which must be passed upon by Congress. At the time these ship companies demanded the return of the principal, they also de manded the payment of interest thereon, and entered their protest in the Treasury Department against the non-payment of interest, so that the payment thus made has not been accepted by them as a full di charge of the obligations resting on the United States.

As far as your committee are informed, this is the first instance in which the question has been submitted to Congress of the liability of this government to pay interest upon its indebtedness to foreign claimants. In dealing with its own citizens, the custom of this government has been not to pay interest on unliquidated claims. This practice grows out of the presumption that the government is at all times able, ready.

and willing to discharge its obligations. But a different rule seems to have obtained in enforcing the demands of its citizens against foreign governments. It has been the rule, and perhaps without exception, that the United States have demanded and received interest from all foreign governments upon debts to itself and damages of its citizens.

A recent and most prominent illustration of this fact is furnished by the international tribunal at Geneva. The distinguished counsel representing in that tribunal the United States, Mr. Evarts, Mr. Cushing, and Mr. Waite, contended as follows: "That interest will be awarded by the tribunal as an element of the damage. We conceive this to be conformable to the public law and to be required by paramount considera. tions of equity and justice"; and interest was accordingly paid.*

The most important and leading cases which have occurred are those which arose between this country and Great Britain, the first under the treaty of 1794, and the other under the first article of the treaty of Ghent. In the latter case the United States claimed compensation for slaves and other property taken away from the country by the British forces at the close of the war in 1815. A difference arose between the two governments, which was submitted to the arbitrament of the Emperor of Russia, who decided that "the United States of America are entitled to a just indemnification from Great Britain for all private property carried away by the British forces." A joint commission was appointed for the purpose of hearing the claims of individuals under this decision. At an early stage of the proceedings the question arose as to whether interest was a part of that "just indemnification" which the decision of the Emperor of Russia contemplated. The British commissioner denied the obligation to pay interest. The American commissioner, Langdon Cheves, insisted upon its allowance, and, in the course of his argument upon this question, said:

Indemnification means a reimbursement of å loss sustained. If the property taken away on the 17th of February, 1815, were returned now uninjured, it would not reimburse the loss sustained by the taking away and consequent detention; it would not be an indemnification. The claimant would still be unindemnitied for the loss of the use of his property for ten years, which, considered as money, is nearly equivalent to the original value of the principal thing.

Again he says:

If interest be an incident usually attendant on the delay of payment of debts, damages are equally an incident attendant on the withholding an article of property. In consequence of this disagreement, the commission was broken up; but the claims were subsequently compromised by the payment of $1,204,960 instead of $1,250,000, as claimed by Mr. Cheves; and of the sum paid by Great Britain, $418,000 was expressly for interest.

The propriety of this claim for interest was subsequently submitted to William Wirt, then Attorney-General, for his opinion. Mr. Wirt said:


I am of the opinion that the just indemnification awarded by the Emperor involves not merely the return of the value of the specific property, but a compensation also for the subsequent use and wrongful detention of it in the nature of damages. * * I am of opinion that the interest, according to the usage of nations, is a necessary part of the just indemnification awarded by Emperor of Russia." (Opinions Attorneys-General, vol. 2, p. 33.)

In the case of the Betsey, which arose under the treaty of 1794, be

In this instance a demand was made by the United States upon the government of Great Britain. That was a matter of unliquidated and consequential damages, in which a demand was necessary. In this instance the money exacted and collected is a specific amount. The principal of the common law in giving relief is that there shall be "a compensation which shall put the injured party in the same position in which he would have stood had he not been injured." (Co. Litt., 257, a. Parson's Con., 155.)

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