GREAT BRITAIN. No. 1275.] Mr. Adams to Mr. Seward. Legation of the United States, SIR: I have the honor to inform you of my return last evening to this place, and of the resumption of my duties. I am happy to find that the government has experienced no sensible inconvenience from the permission so kindly granted to me of a brief period of relaxation, which I think may prove of some benefit to me in continuing my labors at this post. I perceive that Mr. Moran has kept you well informed of the progress of opinion in regard to the expediency of reopening the chief question at issue between the two countries, so far as it may be gathered from the expression of the press. The significant intimation given by Lord Derby at the Guildhall dinner, followed by the semi-official leader in the Times of the 17th instant, a copy of which has been transmitted to you, seem to leave little doubt that some change is contemplated of the past policy of the government on this subject. The great difficulty, probably, is in devising some practicable mode of shaping it which will not too seriously wound the pride of the nation. In the only conversation which I have had with Lord Stanley he asked me, with reserve as to our official character in making the inquiry, if I knew whether my government had any plan in view. To which I replied that I had no information extending beyond the two already agitated, which had been arbitration or else the establishment of a commission embracing the consideration of all claims without exception. I thought that we should have accepted either of these. Here the matter dropped. Considering the nature of the later development, it is no more than reasonable to presume that it is this point more than the general principle which is now occupying the attention of the cabinet. Hence, I suppose that there will not be much more delay in reaching a result and communicating it in the form of an official reply to your despatch to me of the 27th of August. Knowing your anxiety to obtain this reply, I shall seize the earliest opportunity after reception to transmit it to the department. I have the honor to be, sir, your obedient servant, Hon. WILLIAM H. SEWARD, CHARLES FRANCIS ADAMS. Secretary of State, Washington, D. C. [From the London Times, November 17, 1866.] An impression has of late prevailed that a royal commission is about to be appointed with a view to the settlement of the Alabama claims. Probably Lord Derby's conciliatory speech at the Mansion house may have contributed to give currency to the rumor, which is not destitute of a certain foundation in fact. We are enabled, however, to state that her Majesty's government have no present intention of referring these particular claims to a royal commission-a course which, if adopted at all, ought to have been adopted in the first instance. What is really in contemplation is to empower such a commission to inquire generally into the operation of our own neutrality laws, and to report upon the possibility of amending them, so as to bring them into more complete conformity with our international obligations. We have reason to believe that this decision, which was announced at the end of last session, and differs little in principle from the alternative since advocated in our own columns, will shortly be carried into effect, and that Lord Cranworth will probably be the chairman of the proposed commission. We need hardly add that an inquiry thus limited in no degree precludes or prejudices any future step that may be taken for the adjustment of the Alabama claims, which are still under the consideration of the government, and must be entertained upon their own merits. This mode of dealing with two questions independent, indeed, of each other, but closely connected in their practical bearings as well as in the public mind, has, doubtless, some advantages, though it is also open to some objections. To reopen the Alabama case after having obtained a report of a commission on the efficiency or non-efficiency of our neutrality laws is one thing; to reopen it in deference to representations from the United States government, and without awaiting that report, is another. If the grounds upon which Lord Russell declined arbitration were conclusive last year, they are conclusive now, for there has been no change since in the facts, and no fresh light has been thrown upon the law. At the same time, we are far from blaming Lord Stanley for reconsidering the whole matter upon his own judgment and responsibility. We have not concealed our doubts whether Lord Russell's statement of it, though very convincing from one point of view, was not tacitly founded on a false assumption, that assumption being that our international duty and liability are measured by the municipal law of this country. It cannot be considered otherwise than a misfortune that Sir Roundell Palmer, then attorney general, should have so early committed his great authority to this view. It is not, to the best of our belief, in accordance with the better opinion among lawyers, and, even if it were, it would be manifestly contrary to the dictates of natural reason and equity. To hold that a belligerent can demand of a neutral state no more than a due execution of the neutral's own laws is to hold that neutrals are the sole judges of their own obligations. The neutral state might have no law applicable to the subject at all, or a law authorizing piracy, and yet, upon this supposition, there would be no right of redress. Now, although international law is a very indefinite thing, consisting of little more than usages and duties, sanctioned with more or less uniformity by occasional conventions, it is not so wholly illusory as this conception of it would imply. A fundamental distinction has always been recognized between the sale of contraband of war and the equipment of armed vessels within neutral territory, and this distinction would have no meaning if both would be equally innocent but for the special prohibition of the latter by municipal law. In contending, therefore, that we could not accept arbitration because it would put in issue the justice of the construction of our own foreign enlistment act by our own law officers, Lord Russell overlooked the previous question, whether the foreign enlistment act itself is adequate for its purpose. It may or may not be undignified to submit such a question to the judgment of a foreign prince or a body of foreign jurists, but it cannot be set aside, and was, in fact, treated as proper for discussion when the late government offered to revise, in concert with the United States, the neutrality laws of both nations. Had we acceded to Mr. Seward's proposal, the point to have been decided by the arbitrator would not have involved a judicial interpretation of any British statute, still less would it have involved an inquisition into the motives of our government. It ought to have been so presented as to exclude the hypothesis of mala fides, and to involve only one consideration--whether, according to known principles of international law, the circumstances attending the escape of the Alabama were such as to impose any liability for her depredations, legal or equitable, upon Great Britain. It is this consideration, we presume, which is now engaging the attention of our government, and we may be permitted to express the hope that in any future discussion of it more stress may be laid on grounds of policy, and less on grounds of precedent. Precedent is a far safer guide in ordinary litigation than in controversies between sovereign states. It can be shown that America has refused compensation in cases somewhat analogous to that of the Alabama. but unless it can also be shown that her refusal was justified by that higher code of international morality which rests upon the common interest of all civilized nations, little will have been gained by the demonstration. The difficulty in framing a more effective neutral law for these islands is twofold. First, there is the danger that any highly penal legislation against the enlistment of British subjects in the service of a foreign power would practically be a dead letter whenever it happened to conflict with popular sympathy. For instance, the foreign enlistment act could hardly have been enforced against the English volunteers who joined Garibaldi, even if they had technically violated it; and we know that, for similar reasons, the United States government has reluctantly tolerated many open breaches of the American act by the Fenians. Secondly, there is the old difficulty, already mentioned, of distinguishing sales from equipments of vessels. So strongly has this been felt by some jurists that a sweeping enactment against the exportation of all articles contraband of war has been suggested as the only remedy. It is evidently an anomaly that one foreign belligerent may arm all its land forces with rifles from Birmingham, subject only to the risk of capture at sea, whereas the agents of another cannot, without breaking the law of the land and incurring the risk of heavy penalties, fit out a vessel of war at Birkenhead. Morally, the two actions are on a par, and if any attempt be made to place them on the same legal footing, it should certainly be rather directed to regulate the former than to encourage the latter. It would, however, vastly increase the injury entailed by war on neutrals if, while it paralyzes such a branch of commerce as our cotton trade, other branches, such as the manufacture of small-arms for warlike purposes, should be deprived of their legitimate development. For the present, we must acquiesce in the maintenance of the existing line between ordinary contraband and ships of war, and the problem is, how to control the building and sale of these so as to check abuses of neutrality. Experience has shown that, partly owing to the enormous profits that may be realized by such ventures, and partly to the facility of evasion where the proof of guilt must chiefly depend on intention, the prospect of punishment is of little avail. The one remaining expedient is to arm the executive government with more stringent, if not more arbitrary, powers of pre vention. No. 1277.] Mr. Adams to Mr. Seward. LEGATION OF THE UNITED STATES, London, November 24, 1866. SIR: It is with great regret I find it my duty to apprise you of a difference of opinion between the consuls at London and at Liverpool, which threatens to terminate in a grave question of conflict of authority, to be put at issue before the courts of this kingdom, in the suits which have been brought against the holders of rebel property. As the consuls themselves have, doubtless, made official reports of their dif ferent modes of action under the powers respectively conferred upon them, as well as the result to which they have brought them, I shall not enter into any explanations on that subject. It will be sufficient for me to state the circumstances under which I have been called upon to interpose in the affair. Mr. Morse, in conjunction with Mr. Gibbs, has considered the authority under which he acts sufficient to empower him to negotiate with Mr. Prioleau, of the firm of Fraser, Trenholm & Co., and conclude a contract which involves the withdrawal of the suits in court, hitherto carried on under the sole direction of Mr. Dudley. This gentleman, on the other hand, who appears never to have been consulted in the proceedings, denies the power of Mr. Morse to make such a concession, and considers the terms of that contract so disadvantageous to the government as to render it highly unadvisable for him to consent to it. He therefore appeals to me in a letter, a copy of which is herewith transmitted. Mr. Morse, on the other hand, has submitted to me the letter from the Secretary of the Treasury under which he claims his authority. In it, to my surprise, I find at the close a suggestion that in whatever he may do he should consult with me and obtain my assent. Under the This has placed me in a situation of no slight embarrassment. contract thus made, without my knowledge, by Mr. Morse, the counsel of Mr. Prioleau propose to move in court, next week, that the suits be dismissed, and they expect the assent of the lawyers on our side employed by Mr. Dudley. On the other hand, the latter propose to resist the action, and to deny the validity of Mr. Morse's contract, as not having had my assent. I am, therefore, to be drawn in to give a public opinion in a case, the merits of which I have not been previously called to determine. In order to put an end to the possibility of such an unseemly exhibition in the eyes of a foreign nation, I have at once seen and conferred with Mr. Morse. I did not disguise to him my opinion that it was not the intent of the Secretary of the Treasury to give him powers so extensive as he claims. The purpose seems to me to have been to authorize him to act in cases of discovery of further property than that already proceeded against, and not to trench upon the powers under which Mr. Dudley had been already authorized to act with success. Hence, if appealed to by Mr. Dudley, I should not feel able to direct him to withdraw his suits and abandon the property involved in them, against his own judgment. I therefore recommended it to both gentlemen to exert themselves to procure a suspension of action until the government could be heard from or they could enter upon a plan of perfect and hearty co-operation. To this course Mr. Morse has consented, and I trust the difficulty may be avoided. But it is no more than my duty to point out to you that the trouble has grown out of the division of authority given by the government, and the absence of one directing mind with a clear and single responsibility to the highest authority at home. At an early date I pointed out to you more than once the necessity of sending such a person here to superintend all these proceedings, whether conducted in or out of the courts. I am aware that Mr. Cushing was reported to me as having been assigned to such a duty, and I thought no person was more competent satisfactorily to perform it. Unfortunately, Mr. Cushing has never come out to do so. The consequence is now made visible. I trust I may be excused if I now renew an urgent entreaty either that Mr. Cushing be sent out by the very next steamer, or, if he be unable to come, some other individual equally competent and of high character be commissioned to assume the responsibility of all these negotiations, and, acting with the co-operation of the respective consuls, to make such complete and final settlements with the various parties holding rebel property as may terminate forever all disputes upon the subject in this kingdom. It is highly expedient that there should be no delay in such a mission. It is proper for me to add that I entertain the highest opinion of the motives of the two gentlemen in prosecuting their respective proceedings. Both are animated by their anxiety for the public interest only. I have the honor to be, sir, your obedient servant, Hon. WILLIAM H. SEWARD, CHARLES FRANCIS ADAMS. Secretary of State, Washington, D. C. Mr. Dudley to Mr. Adams. UNITED STATES CONSULATE, SIR I enclose you a copy of a most extraordinary settlement, or agreement, made by Montgomery Gibbs, esq., and Freeman H. Morse, esq., our consul at London, with Fraser, Trenholm & Co., of this town, the financial agents of the late so-called confederate government during the war, extraordinary in its terms, for what it expresses upon its face, for what it concedes by implication, as well as for the time selected and the circumstances under which it was made. The time selected was while I was temporarily absent from Liverpool. The solicitor, though living in Liverpool, was not consulted, or the least information given us that any such thing was contemplated. The whole matter was kept as a profound secret. Though Mr. Morse and Mr. Gibbs were in Liverpool part of two days, neither of them ever called upon my solicitor or at the consulate. But aside from this slight and discourtesy to myself, which places me in a false position before the courts as well as the people, that I had instituted these suits either without any authority from my government, or else had forfeited its confidence, which is merely personal to myself, there are other and more important considerations involved in it of a public nature to which I deem it my duty to call your attention and to ask for your advice. The first knowledge I received of it was from my solicitor, who wrote me what Mr. Hull had communicated, and on the same day enclosed a letter from Mr. Hull requesting me to discontinue the suits. These letters were dated on the 7th and received by me on the 9th instant. On the 13th instant I received a letter from Mr. Gibbs, dated the 12th, informing me they had made the settlement. The next day, the 14th instant, I received a letter from Mr. Morse, dated the 13th instant. I enclose you a copy of Mr. Morse's letter, and my answer, and his reply received yesterday. Mr. Morse, as you see, gives, or professes to give, the substance of the settlement. Finding that this differed very materially from what the other side was stating it to be, I got my solicitor to call on the solicitors of Fraser, Trenholm & Co., and procure from them a copy of the settlement. I send you, as mentioned before, what they, or Mr. Huil, furnished as the settlement which had been made. You will see how widely this settlement differs from that which Mr. Morse states in his letter. It is for him to reconcile and explain the discrepancy. I know nothing beyond what he saw fit to communicate, and which he calls the substance, and what Mr. Hull gives as the text of the agreement. This settlement, I think, is one-sided, unjust, and unfair to the United States; its interest is totally sacrificed, and everything given to Fraser, Trenholm & Co., and nothing given in return. I assume that you are aware of the condition of things at the time this settlement was made. Two suits were pending in the court of chancery of this county against the firm of Fraser, Trenholm & Co.; one for the cotton brought here in the ship Åline, and valued at about £40,000 sterling, or $200,000, more or less, and which was instituted by me in behalf of the United States by your direction, and which was subsequently approved by the department; and the other, a bill for discovery and a general account of all their transactions and dealings, from the commencement of the rebellion down to the day of filing the bill, involving many millions of dollars and opening up their books, corre spondence and dealings, and exposing and bringing to light the doings of themselves and their English friends, in fitting out piratical expeditions to destroy our commerce and make war upon our government, had been commenced by me under express instructions from the State Department. The management and conduct of both these suits had been intrusted entirely to myself in this country. As I construe this settlement, or agreement, it gives them without question or dispute all the moneys in their hands realized from cotton, ships, and other property sold before and since the termination of the rebellion, amounting in the aggregate to millions of dollars, including the proceeds from the cotton brought by the ship Aline, and supposed to amount to about £40,000 sterling, or $200,000, the four blockade steamers now under seizure at the suit of the United States in the court of admiralty of this country, to wit: the Ariel or Colonel Lamb, the Wasp, the Badger, and the Fox; and the £150,000 sterling, or upwards of $700,000, out of the property remaining in their hands, or under their control, unsold or undisposed of at the date of this agreement, provided it sells for enough to realize this sum. Of the five ships, to wit, the Ruby, Rosine, Penguin, Owl, and Lark, mentioned in the settlement as property, the highest valuation I had received for them is £40,000. I do not myself think they will bring this sum; but if, under favorable circumstauces, they should, it would leave £110,000 to be made out of other property in their hands or under their control. There is no other property mentioned in the settlement, and it will remain for Mr. Morse and Mr. Gibbs to show where the property is that Fraser, Trenholm & Co. have under their control, out of which this sum is to be made, before anything can come to the United States under this agreement. I hope I may be disappointed, but my belief is that they have not now got sufficient property in their hands or under their control, undisposed of, belonging to the late so-called confederate government, to realize this sum, much less anything over and above it for the United States. I am quite prepared to hear that Fraser, Treuholm & Co. claim that all confederate property here in England, withou, regard to its location or the person in whose possession it may be, is under their controlt and that they have the right to have it sold to pay them the £150,000 conceded by Mr. Morse and Mr. Gibbs to be due them. This seems to be foreshadowed in the remark made by Mr. Hull their solicitor, to Mr. Morse, as communicated in his letter to me, a copy of which is enclosed, that "*. we should get that property under the settlement they were making." Now, this property is certain guns, made for the confederate government, and now in possession of Fawcett, Preston & Co., not in the possession or in point of fact under the control of Fraser, Trenholm & Co. If this proves to be the case, then this firm will not only have all the property in their hands out of which to pay themselves this enormous sum, but all the confederate property in England. They may be able in this way to pay themselves in full the amount allowed them in the settlement, to say nothing about the suit pending in chancery for a discovery and general account, involving all Fraser, Trenholm & Co.'s dealings and transactions with the so-called confederate government from the commencement of the rebellion down to the time of filing the bill. In the other suit which we have for the cotton brought by the Aline, there is about £40,000 involved, the whole of which we claim; and there is no good reason for saying that we shall not have it all decreed to us upon a final hearing, when the case with all the evidence and facts are fully before the court, if not by the vice-chancellor at least by the chancellor or House of Lords, on our appeal which we have a right to make. The one-half part, or about £20,000 sterling, or $100,000, is conceded to the United States, even by the vice-chancellor's opinion, as one-sided and as tequitable as it is. This much is certain, and it is secured to us by three freeholders as security for its payment. This settlement discontinues or attempts to discontinue and wipe out both these suits, compels us to pay all our own costs in their prosecution, and hands over the whole of this money, as well the £20,000 conceded and secured to us as the other portion to Fraser, Trenholm & Co. So I read the agreement, or settlement; and so 1 understand Fraser, Trenholm & Co. construe it. I have received a letter from Mr. Morse in reply to the one I wrote to him on the 15th instant, and partly in reply to one I wrote to him on the 17th instant, about another case which he has assumed to control. I do not find that he explains in the least this most unjust and extraordinary settlement, or gives any satisfactory reason for making it, but seems fully in accord with Fraser, Trenholm & Co. in enforcing and carrying it out, and having the suits dismissed before I can be advised from the department. My solicitors also received on Monday the following notice from the solicitors of Fraser, Trenholm & Co.: |