9. That when a neutral fails to use all the means in its power to prevent a breach of the neutrality of its soil or waters, in any of the foregoing respects, the neutral should make compensation for *the [213] injury resulting therefrom. (See precedents of General Washington's administration between Great Britain and the United States; treaty of 1794 between Great Britain and the United States; treaty of 1819 be tween the United States and Spain; correspondence between Portugal and the United States, 1817-22, and Articles VII and X of the Treaty of Washington.)

10. That this obligation is not discharged or arrested by the change of the offending vessel into a public man-of-war. (See the cases of the Santisima Trinidad and the Gran Para, above cited.)

11. That this obligation is not discharged by a fraudulent attempt of the offending vessel to evade the provisions of a local municipal law. (See the Gran Para, as above; also Bluntschli and other writers on International Law.)

12. That the offense will not be deposited so as to release the liability of the neutral even by the entry of the offending vessel in a port of the belligerent, and there becoming a man-of-war, if any part of the original fraud continues to hang about the vessel. (See the Gran Para, as above.)

[214]

WHEREIN GREAT BRITAIN FAILED TO PERFORM ITS DU. TIES AS A NEUTRAL.

"There is no doubt that Jefferson Davis and other leaders of the South have made an army; they are making, it appears, a navy.”—Speech of Mr. Gladstone, Chancellor of the Exchequer, October 7, 1862.

Admissions of British Cabinet Min

isters.

"It has been usual for a power carrying on war upon the seas to possess ports of its own in which vessels are built, equipped, and fitted, and from which they issue, to which they bring their prizes, and in which those prizes when brought before a court are either condemned or restored. But it so happens that in this conflict the Confederate States have no ports except those of the Mersey and the Clyde, from which they fit out ships to cruise against the Federals; and having no ports to which to bring their prizes, they are obiged to burn them on the high seas."Speech of Earl Russell, Principal Secretary of State for Foreign Affairs, April 26, 1864.

'Her Britannic Majesty has authorized her High Commissioners and Plenipotentiaries to express in a friendly spirit the regret felt by Her Majesty's Government for the escape, under whatever circumstances, of the Alabama and other vessels from British ports, and for the depredations committed by those vessels."-Treaty of Washington, Article I.

The extracts which are placed at the head of this division of the Case of the United States are at once evidence of the facts which will now be set forth, and a condensation of the line of argument which those facts logically suggest. The United States summon no less illustrious a person than the present Prime Minister of England, to prove, not only that the insurgents were engaged in the year 1862 in making a

navy, but that the fact was known to the gentlemen who then [216] constituted Her Majesty's Government. They place on the stand

as their next witness Her Majesty's Principal Secretary of State for Foreign Affairs during the whole period of the rebellion, to prove where the insurgents were constructing that navy, and why they were constructing it in the Mersey and the Clyde; and further, to prove that these facts, also, were known at the time to the gentlemen who then constituted Her Majesty's Government. And lastly, they lay before the Tribunal of Arbitration the graceful and kindly testimony of the regret of Her Majesty's Government that the escape1 of the cruisers, which were built in Great Britain, with the knowledge of the Govern ment, and which constituted that navy, should have resulted in the subsequent destruction of the property of citizens of the United States. In discussing this question, except so far as may be absolutely neces

sary for the protection of the interests which they are bound to [217] guard, the *United States will not attempt to disinter from the

grave of the past the unhappy passions and prejudices, and to revive the memory of the injuries, often great and sometimes petty, which caused such poignant regret, such wide-spread irritation, and

"I wish the word 'escape' had not been found in the apology, as it is termed in describing the exit from our ports of the Alabama and other ships of that kind. I Cannot help thinking that was an unguarded expression, which may affect the course of the future arbitration. I can easily imagine that in some minds the word 'escape' would be construed unfavorably to this country, for it means that something has got away which might have been retained. We speak of the escape of a prisoner; and the meaning of the term is that there was power to prevent the escape, and that the espe happened in spite of it."-Lord Cairn's (ex-Chancellor) speech in the House of Lords, June 12, 1871. See London Times, June 13, 1871.

such deep-seated sense of wrong in the United States. Over much of this feeling the kindly expression of regret in the Treaty of Washington has forever cast the mantle of oblivion.

The reports of the diplomatic and consular officers of the United States, made from the British dominions to their Government during the war, which are printed in the volumes which will accompany this case, are full of proof of a constant state of irritating hostility to the United States, and of friendship to the insurgents in the several communities from which they are written. These dispatches are interesting, as showing the facilities which the complicity of the community often, if not always, gave to the schemes of the insurgents for violating the Sovereignty of Great Britain. The reports from Liverpool, Nassau, Bermuda, and Melbourne are especially interesting in this respect, and tend to throw much light on the causes of the differences which are, it is to be hoped, to be forever set at rest by the decision of this Tribunal.

British ports the

erations; a partial

the insurgents; a

ernment established

in Liverpool; their

evading the blockade

them with arms, mu

for carrying on the struggle.

*As soon as the authorities who were directing at Richmond the [218] fortunes of the insurgents were sure that their right to base of insurgent op carry on a maritime war would be recognized by Great hospitality shown to Britain, their Secretary of the Navy recommended to Mr. branch of their Gov Jefferson Davis to send an agent to Great Britain for the Government vessels purpose of contracting for and superintending the constructofficially aided in ion of men of-war; and Mr. James Dunwoody Bullock, who and in furnishing had been an officer in the Navy of the United States, was, nitions, and meins in accordance with that recommendation, sent there in the summer of 1861, and entered upon his duties before the autumn of that year. Mr. North, also formerly of the United States Navy, was empowered "to purchase vessels" for the insurgents; and Mr. Caleb Huse, formerly of the Ordnance Department of the Army of the United States, was sent to London for "the purchase of arms and munitions of war."1 Mr. Bullock, Mr. North, and Mr. Huse continued to discharge their duties during most of the struggle, and served the purposes of those who sent them there, with intelligence and activity. The means for carrying on these extensive operations were to be derived from the proceeds of the cotton crop of the South. It will probably be within the personal recollection of the several [219] gentlemen, members of the Tribunal, that in the year 1860 the world was dependent upon the fields of the insurgent States for a large portion of its supply of cotton, and that, when the blockade was estab lished by the United States, a large part of the crop of 1860 was still unexported. This, and all subsequent crops that might be produced during the struggle, would yield their value in gold as soon as landed in Liverpool.

The insurgent agents took advantage of this fact. They secured, through their assumed authority as a Government, the control of so much as might be necessary for their purposes, and they early made arrangements for a credit in Liverpool upon the faith of it.

Walker to Green, 1st July, 1861, Vol. VI, page 30.

2"It was estimated that only about 750,000 bales at most of the crop of 1860 remained on hand in the South when the blockade began. The crop of 1861 was about 2,750,000 bales-a little more than half the total quantity consumed in 1860-and this supply, or so much of it as could be properly picked, cleaned, and baled, would, together with what remained from the previous year, have been available for exportation in the winter and spring of 1861-62. The quantity actually sent abroad, however, up to July or August, 1862, was reckoned not to exceed 50,000 bales, the great bulk of which, but not the whole, went to England."-Bernard's Neutrality of Great Britain, page 286.

It so happened that there was at Charleston, at that time, a wellestablished commercial house, doing business under the The firm of Fraser, name of John Fraser & Co. The head of this firm was Trenholm & Co.

George A. Trenholm, of Charleston. Another prominent member [220] was Charles K. Prioleau, also a citizen of the United States. Before or about the time the insurrection broke out, and, as the United States believe, in anticipation of it, this house established a branch in Liverpool, under the name of Fraser, Trenholm & Co. Prioleau was dispatched thither to take charge of the Liverpool business, and became, for purposes that may easily be imagined, a naturalized British subject. George A. Trenholm remained in Charleston, and, in due course of time, became the Secretary of the insurgent Treasury, and a member of the so-called Government at Richmond. An arrangement was made by which the cotton of the insurgent authorities was to be sent to Fraser, Trenholm & Co., to be drawn against by the purchasing agents of the insurgents.1

The first amount (five hundred thousand dollars) was placed to their credit in Liverpool, somewhere about the month of May, or early in June, 1861; and, under the name of "depositories," Fraser, Trenholm & Co. re

mained a branch of the Treasury of the insurgent Government. [221] *Thus there was early established in Great Britain a branch of

the War Department of the insurgents, a branch of their Navy Department, and a branch of their Treasury, each with almost plenary powers. These things were done openly and notoriously. The persons and places of business of these several agents were well known to the communities in which they lived, and must have been familiar to the British officials. If there was any pretense of concealment in the outset it was soon abandoned.

On the 22d of July, 1861, Huse writes to the officer in charge of the insurgent Ordnance Department, complaining of the activity of the agents of the United States in watching and thwarting his movements. "It is difficult," he says, "for a stranger to keep his actions secret when spies are on his path." He says that he shall have ready, by the 1st of August, some of the goods that had been ordered on the 17th of the previous April, and more by the 1st of October, and that "the shipping of the articles will be left in the hands of the Navy Department." On the 18th of September, the steamer "Bermuda" ran the blockade, and arrived at Savannah with "arms and munitions on board.”3 [222] She came * from Fraser, Trenholm & Co., consigned to John Fraser

& Co. Information of the character and purposes of this steamer, and of the nature of her freight, had been given to Lord Russell by Mr. Adams on the 15th of the previous August, and he had declined to "interfere with the clearance or sailing of the vessel." On the fourth day after her arrival at Savannah her consignees offered to charter her to the insurgents, and the offer was accepted."

"Of twenty steamers, which were said to have been kept plying in 1863 between Nassan and two of the blockaded ports, seven belonged to a mercantile firm at Charleston, who had a branch house at Liverpool, and through whom the Confederate Government transacted its business in England." "The name of the Charleston firm was Jolin Fraser & Co.; that of the Liverpool house, Fraser, Trenholm & Co. Of the five evabers of the house, four, I believe, were South Carolinians, and one a British subFet."-Bernard's Neutrality of Great Britain, page 289 and note. The British subject referred to by Mr. Bernard was Prioleau, naturalized for the purpose.

Huse to Gorgas, Vol. VI, page 33.

Lawton to Cooper, 20th September, 1861, Vol. VI, page 36.

Adams to Russell, Vol. I, page 760.

5 Russell to Adams, Vol. I, page 762.

Benjamin to John Fraser & Co., 27th September, 1861, Vol. VI, page 37.

The experience of the "Bermuda," or the difficulties which she encountered in running the blockade, seem to have induced the insurgent authorities to think that it would be well to have some surer way for receiving the purchases made by their agents in Liverpool. The stringency of the blockade established by the United States, and the nature of the coast that was blockaded, made it necessary to have a set of agents in the West Indies also.

The coast of the United States, from Chesapeake Bay to the Mexican Character of the frontier, is low, with shoaly water extending out for some disblockaded coast. tance to sea. A range of islands lies off the coast, from Florida to Charleston, and islands also lie off Wilmington and *the coast to the north of it. The waters within these islands are [223] shallow, affording an inland navigation for vessels of light draught. The passages to the sea between the islands are generally of the same character. The outlying frontier of islands, or of shallow waters, is broken at Wilmington, at Charleston, and at Savannah. At these three points large steamers can approach and leave the coast; but these points were at that time guarded by the blockading vessels of the United States, so as to make the approach difficult. Vessels not of light draught and great speed were almost certain of capture; while vessels of such draught and speed could not carry both coal and a cargo across the Atlantic.

To avoid this risk it was resolved to send the purchases which might be made in England to Nassau in British bottoms, and there transship them into steamers of light draught and great speed, to be constructed for the purpose,1 which could carry coal enough for the short passage into the waters that connected with either Charleston, Savannah, or Wilmington. The first order from Richmond that is known to have been given for such a shipment is dated the 22d of July, 1861.2

Geographical situa

Bermuda.

The attention of the Tribunal of Arbitration is *invited to the [224] accompanying map, showing how admirably the tion of Nassau and British ports of Nassau and Bermuda were adapted for the illegal purposes for which it was proposed to use them. Nassau was surrounded by a cluster of British islands, so that even a slow-sailing blockade-runner, pressed by a pursuing man-of-war, could in a short time reach the protection of British waters. Bermuda had the advantage of being more directly off the ports of Wilmington and Charleston. Neither Nassau nor Bermuda, however, was more than two days distant from the blockaded ports for the swift steamers that were employed in the service.3

On the 4th of October, 1861, Mr. Benjamin, writing from Richmond, and signing himself as "Acting Secretary of War," addressed Mr. Mallory as "Secretary of the Navy," and asked if he could "spare an officer from his department to proceed to Havana and take charge of funds there, to be used by agents of this department in the purchase of smallarms and ammunition."

774

*Mr. Lewis Heyliger, of New Orleans, was apparently desig- [225] nated for this purpose. On the 30th of November, 1861, he takes

1 Huse to Gorgas, 15th March, 1862, Vol. VI, page 69.

2 Walker to Huse and Anderson, Vol. VI, page 31.

3" The British Island of New Providence, in the Bahamas, became the favorite resort of ships employed in these enterprises. Situated in close neighborhood to the coast of Florida, and within three days' sail of Charleston, it offered singular facilities to the blockade-runners. The harbor of Nassau, usually quiet and almost empty, was soon thronged with shipping of all kinds; and its wharves and warehouses became an entrepot for cargoes brought thither from different quarters. Agents of the Confederate Government resided there, and were busily employed in assisting and developing the traffic.—Bernard's Neutrality of Great Britain, page 299.

4 Benjamin to Mallory, Vol. VI, page 39.