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treaty provides its own obligations based on the particular facts that that treaty is taking care of. And after that it is simply a matter of the Government carrying out its obligations.
Mr. Vores. You have the treaty here?
Mr. SCHIFFLER. What would you say was the opportunity for American nationals to get reimbursement for their claims in Mexico?
Mr. FITZHUGH. Well, there were the Mexican courts. And under the comity between the two countries they would have the right to go to the Mexican courts. Tliere were open the channels of negotiation. Those were the ones we were employing. Both of those were eliminated by this treaty. There was open the channel of diplomatic representations by our Government.
Mr. SCHIFFLER. Take, for instance, a claim originating in, say, 1868. What standing would that have had in the Mexican courts say in 1910? Mr.
ITZHUGH. Well, I don't know. Mexican courts to my mind are not very satisfactory. I'll say that.
Mr. Bloom. Well, thank you very much, Judge, for appearing before the committee. You have permission, without objection, to insert anything in the record, any briefs or anything of that kind.
Mr. FITZHUGH. There is one case I would like especially to ask the committee to give a hearing on. That is the case of the Illinois Central Railroad Co. which very well illustrates much of what I have been saying. Mr. Foster, one of the attorneys, is here. I would like very much if he might have an opportunity to be heard on that.
Mr. Bloom. I am afraid we have already given you an hour and a quarter.
Mr. JOHNSON. There is just one feature of it, I recall, Mr. Chairman. I think it would be well for him to illustrate because it shows the point that they were about to get a settlement of their claim.
STATEMENT OF VERNON W. FOSTER, GENERAL SOLICITOR OF THE
ILLINOIS CENTRAL RAILROAD CO., CHICAGO
Mr. FOSTER. My name is Vernon W. Foster. I am general solicitor of the Illinois Central Railroad Co., with offices in Chicago. I was privileged to make a statement before this committee last year when a counterpart of this bill was before it and favorably considered. I appreciate from that experience that brevity and accuracy is desirable at least before a committee of this importance and I have reduced some of these dates and details into a memorandum which I have prepared and which I can refer to and perhaps read briefly and try to take only a few moments of your time.
The Illinois Central Railroad Co. has one of the largest awards which was rendered in these cases. It is for upwards of $2,000,000. Now, the size of the award, I take it, has no particular bearing on the merits of the bill. But the treatment which was given to this claim by the responsible representatives of the State Department and of the United States Government illustrate, and we contend clearly demonstrate the interpretation which the Government and particularly the State Department intended to be put upon this treaty and did put upon it.
Mr. Johnson. Was your claim for locomotives sold to the Mexican Government?
Mr. FOSTER. It was. Yes, sir. Now, our claim grew out of a contract which the railroad entered into in 1921 for the sale to the United States of Mexico of 91 second-hand locomotives.
Mr. JOHNSON. That was to the Government itself?
Mr. FOSTER. To the Government itself. Because that Government at that time was operating, as our Government did during wartime, was operating on what is known as the National Railways of Mexico. That company knew of the equipment we had in service on our road and it just fitted its traffic, and our company was willing to sell it to them for the reason we were just reaching an era when we were wishing to put on higher locomotive power. So the representatives of this Mexican Government came to Chicago and negotiated a contract with our company for the sale to it of these locomotives. The contract provided that all of the locomotives should be put into first-class conditions and repaired and delivered in Mexico, and Mexico would pay a percent cash down and the balance would be due at the rate of $50,000 per month. That contract, I want to say, was signed not only by the director general of railroads in Mexico but was also signed by the minister of finance of Mexico. Well, now, to the unitiated, like we were at that time, we would have thought we had a pretty sound agreement. And we did put these locomotives into good condition and we delivered them into the United States of Mexico and, of course, at that time they did have to and did pay this percent cash. And then thereafter it paid us just one payment of $50,000 and without any further ado it just stopped paying. In the vernacular they just thumbed its nose at us. This was a time, this was 1921, and was at a time when the conditions were serious, as these gentlemen have related here too in their talks, as well as Senator Sheppard here. There were raids up and down the border at the time.
Mr. JOHNSON. It looked like war between the United States and Mexico.
Mr. FOSTER. It was just an undeclared war, you might say—a most chaotic state of affairs.
Now, this brings me to the point which emphasizes the argument here and the contention that the United States assumed when it took over and caused these claimants to surrender their claims, that it assumed the entire control of them and would dictate the conditions under which any payments might be made, and the claims for all practical purposes were assigned to the United States of America and became the United States' claims.
Now, let me give you some of these dates so as to come right down to the point. I want to, in passing, just simply remark that these locomotives are down there today operating on the Mexican railroad. That is one of the ironies of the situation, too.
Mr. Johnson. That is the irony of the iron horse.
After this convention had been entered into in 1923, and it provided, as Judge Fitzhugh and others have stated here, that all claims must be turned over to that Commission or they are forever barred, you will find that in article 8 of the convention, or the treaty itself, we naturally as a railroad company had to file our claim with the United States agent. That was done, and after looking the matter over the United States agent adopted the claim and it espoused the claim before this General Claims Commission.
Mr. JOHNSON. When this Commission was created, what had you done and how far had you progressed with reference to trying to collect your claim with Mexican Government directly? That is what I am interested in.
Mr. FOSTER. We had, during those 2 years, carried on the most active negotiations and had gone down to Mexico and there had been constant correspondence back and forth and representatives were sent there. Promises were given-always promises but never any payments. But those negotiations were continuing and were in progress at the time that this convention was entered into.
Mr. JOHNSON. And had to be stopped when this treaty was entered into?
Mr. FOSTER. The treaty said: You must come in and present your claim through this international tribunal or you are forever barred.
Mr. KEE. Was there any objection raised by any of the claimants to the negotiation of this treaty?
Mr. FOSTER. Not so far as I know. And we would not have had any voice in that in any event, Judge. Coming now to the more pertinent part, we accordingly filed our claim. In due course the merits of the claim were heard and an award rendered December 6, 1926. But before that time, and after our claim had been filed, the representatives of the Mexican Government came to us again and they said, in substance:
We do not deny, because we never have, we owe you the money. We will make a settlemet with you.
Mr. JOHNSON. That was in 1927 ?
Mr. FOSTER. No, no, Mr. Johnson. This was in 1926 before we got our award. This raises the equity of the situation because it demonstrates the interpretation which the State Department put upon it. They came to us in March 1926. They sent a special representative from Mexico. They said, "Mr. Illinois Central, we will settle with you. The only thing, we won't pay you any interest on the deferred payments. We will settle with you." "How will you settle?” “Well, we will give you $100,000 cash and $100,000 every month.” And the gentleman laughingly took out of his pocket a check, knowing the experience we had had with the Mexicans and said, “There is a certificate check on a New York bank for the down payment of “$100,000.” He had it in his possession at that time. “After considerable negotiations with the officers and executives, the railroad company entered into a tentative agreement with him, for he had his lawyer, a Mexican lawyer too, for the payment of this balance, which was upward of $2,000,000, on the basis of $100,000 down and $100,000 every month through a New York bank. The railroad said: “All right, of course, we have presented our claim—we have surrendered our claim to the Government. It will, therefore, be necessary for us to go to Washington and get its authority to do this thing. Now, there is the point I wish to emphasize. So we came down here and we presented this matter to the agent of the Government who represented all the claimants before this Commission. And this gentleman heard the story. They said, "Well we will have to take that up with the State Department. We don't know if that can be done. And they did go and take it up with the State Department and they came back and they said, in substance, this: "No, you cannot do that. This is our claim. It has been surrendered to us. We cannot permit one claimant to be paid at this time. You will not be permitted to enter into any other agreement."
Mr. JOHNSON. That is 1926 ?
Mr. FOSTER. That was in 1926. After our claim had been filed with the Commission, but it had not been heard. They said, “If you propose to do anything of that sort, you will have to do one of two things. You will have to waive your right to have any aid from the United States and abandon this claim before the Commission in its entirety, and we will consent to the petition being dismissed, or we will dismiss it in any event; or as a corollary to that, if you do not do that you will have to cease all private negotiations." Well, of course, having had this unfortunate experience before, of having sent the locomotives down there and they made the one payment, we were faced with the thought they would try to make one payment again and then we would be forever barred, because under the terms of this treaty we could never do anything again in any court or before any tribunal. And the net result was that we, of course, said, "Well, we will. All negotiations, Mr. Mexican representative, are off; and we will have to go forward with our claim before the international tribunal.” And we did go forward with it there and when it was presented there the only defense that was made was the most novel and unusual one that this tribunal had no jurisdiction over the subject, because the defendant did not deny it owed the claim. That was too much even for the Mexican member of the tribunal to swallow and the award in our favor was unanimous, the Mexican signing it as well as the others.
Now, gentlemen, what I emphasize is, here, that that positively demonstrates beyond any peradventure now completely under the terms of this treaty—and the State Department was probably right about it, it was undoubtedly right about it-how completely under this treaty the claimants surrendered their claims under it and they became for all purposes the claims of the United States Government.
At that time the pleadings in that case, as I guess they were in every case, were in the name of the United States on behalf of the Illinois Central Railroad Co. The attorneys of record were the attorneys of the United States. They were not our attorneys. We simply collected and assembled the evidence and turned it over to the Government as we had to turn over the claim. The whole matter was presented before the international tribunal by United States representatives. They proved the case. They argued the case. And when the award finally came it was in favor of the United States, for the benefit of the Illinois Central Railroad Co., and it called for the payment of a sum of money, about $1,800,000, with interest from April 1, 1925. They fixed upon that date because that was the date upon which our claim was filed with the Commission and they had allowed interest in the award until then-with interest from that date until the date of the last award. In this bill we will not get that.
Mr. JOHNSON. You will not get any interest?
Mr. FOSTER. We will not get any interest beyond 1926, the date of our award. But we are not here to quibble about this. This railroad is one of the unfortunate public carriers which at this time is desperately in need to carry on its public functions of all of its credits it can collect. That is all.
Mr. Bloom. Mr. Gerrity, how long do you want?
Mr. CHIPERFIELD. We have heard some very excellent statements on this. I think this committee is ready to vote on this.
Mr. Bloom. You are ? To vote favorably?
Mr. CHIPERFIELD. I think I am ready to do it and I am not speaking only for myself.
Mr. JOHNSON. I am ready to vote. Mr. Bloom. Is there any objection to reporting this bill favorably? Without objection, it is so ordered.
Mr. VORYS. Well, no. I want to be reported against this bill, although if the rest of you have arrived at a decision, it is all right
Mr. Bloom. Without objection, the bill will be reported favorably.
Mr. JOHNSON. Mr. Chairman, if Mr. Vorys has some further matter he would like to be clear on, I would like to have further discussion.
Mr. JARMAN. I move that the bill be reported favorably.
Mr. Bloom. It is moved and seconded. All those in favor say aye. All those to the contrary say no. Motion carried, and the bill is ordered rep: rted.
Mr. Johnson, will you report the bill?
(For the record Harry J. Gerrity, attorney, Washington, D. C., inserted the following :)
Between 1926 and 1931, the General Claims Commission rendered 148 written opinions in separate cases, which are published in three volumes designated “1927, 1929, and 1931 Opinions of Commissioners Under the Convention of September 8, 1923, Between the United States and Mexico.” In these printed opinions 94 claims were allowed and 54 claims disallowed. The total awards to United States citizens shown in these volumes are1927.
$2, 221, 659. 46 1929
296, 461. 70 1931.
81, 044, 94
2, 599, 166. 10 Under the protocol on October 31, 1937, 32 awards were made in favor of United States citizens, and an undisclosed number of awards in favor of Mexican citizens, but no opinions have been published covering these claims. The awards under the protocol total $582,775.05, which includes awards to American citizens of $190,343.23, and the balance of $392,431.82 represents awards in favor of Mexican citizens.
The only published opinions of awards made in favor of Mexican citizens appear in the 1927 volume of printed opinions, as referred to above. The total of these awards was $39,000, in five separate decisions. In a letter to Senator Pittman, dated January 18, 1938, Secretary Hull stated that the total Mexican awards amount to $431,431.82, of which $39,000 was allowed in the cases published in the 1927 volume, and the balance of $392,431.82 was allowed under