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CHILE.

MESSAGE OF THE PRESIDENT TO THE CONGRESS. Flle No. 825.032-1.

[The message of the President, Don Ramón Barros Luco, was read to the Congress June 1, 1911, and transmitted to the Secretary of State June 10 by the American minister, Mr. Fletcher. The following is the only passage referring to the United States:]

[Translation.) Our relations with the United States of America tend to grow more close and consolidated each day; the development of our common economic and industrial interests will contribute greatly to this end. The marked respect which the Government of that country has shown for ours in honoring the memory of our representative in Washington' has awakened the most sincere gratitude of the nation.

The Fourth International Conference of the American States which was held in Buenos Aires in July and August of last year accomplished a very interesting work, following strictly the program which the interested Governments had previously approved. Its deliberations concerned themselves with matters of common interest for American States, and its resolutions, adopted unanimously, obeyed principally the proposition of uniting them in a policy of solidarity which should assure the peace of the continent. All contentious subjects were eliminated from the program; the debates were held in an atmosphere of cordiality which favored the adoption of resolutions of real international importance.

PARTICIPATION OF CHILE IN THE CORRESPONDENCE CONCERN

ING THE BOUNDARY DISPUTE BETWEEN ECUADOR AND PERU.

(See Ecuador. Boundary dispute between Ecuador and Peru.)

ASYLUM SOUGHT AT THE AMERICAN CONSULATE AT IQUIQUE BY THE PERUVIAN CONSUL GENERAL; TEMPORARY REFUGE GRANTED.

(See Mexico; Protection of Chinese, etc.; instruction No. 616 of Nov. 8, 1911.)

i The late minister, Don Aníbal Cruz, who died Dec, 18, 1910. See Foreign Relations, 1910, pp. 136-137.

ARBITRATION OF THE CLAIM OF ALSOP AND COMPANY, AN

AMERICAN CORPORATION, v. CHILE, AWARD."

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The American Ambassador to Great Britain to the Secretary of State. No. 1738.]

AMERICAN EMBASSY,

London, July 11, 1911. Sir: Referring to my telegram concerning my receipt to-day at the foreign office of His Majesty's decision and award in the Alsop case, I hasten to forward the original of this decision and award as executed in triplicate. Another of the originals was handed in my presence simultaneously to Mr. Edwards, the Chilean minister. As stated in the telegram, the award is for 2,275,375 bolivianos; and the claim of the United States that the value of the original debt, with interest, should be calculated in gold is denied. I have, etc.,

WHITELAW REID.

Award pronounced by His Majesty King George V as amiable compositeur

between the United States of America and the Republic of Chile in the

matter of the Alsop claim. Whereas by a protocol dated the first day of December, 1909, the Government

of the United States of America and the Government of the Republic of Chile resolved that as they had not been able to agree as to the amount equitably due to the claimants in the Alsop case they would submit the whole controversy to His late Majesty King Edward VII as an Amiable Compositeur to determine the amount equitably due to the said claimants;

and Whereas on account of his untimely death His late Majesty was not able to

carry out the duty which he had undertaken ; and Whereas at the request of the two Governments We agreed to act in place

of His late Majesty ; and Whereas We determined to designate a commission to study the papers sub

mitted to Us on either side and submit a report to Us for Our consideration

as to the amount equitably due to the said claimants; and Whereas We appointed for that purpose Our right trusty and right well-beloved cousin Hamilton John Agmondesbam,

Earl of Desart, K. C. B., a member of the permanent court of arbitration; Our right trusty and well-beloved William Snowden, Baron Robson, G. C. M. G.,

a lord of appeal in ordinary and a member of Our most honourable privy

council; and Our trusty and well-beloved Cecil James Barrington Hurst, C. B., of the

Middle Temple, barrister-at-law, assistant legal adviser to Our principal

secretary of state for foreign affairs; and Whereas the said commission have submitted unto Us for Our consideration the

following report: May it please Your Majesty:

On the 1st December, 1909, the Government of the United States of America and the Government of the Republic of Chile entered into the following protocol submitting to His late Majesty what is known as the Alsop Claim against the Republic of Chile:

PROTOCOL.

The Government of the United States of America and the Government of the Republic of Chile. through their respective plenipotentiaries, to wit: Seth Low Pierrepont. charge d'affaires of the United States of America, and Agustin Edwards, minister of foreign affairs of Chile, who, after having communicated to each other their respective full powers, found in good and due form, have agreed upon and concluded the following

1 Continued from Foreign Relations, 1910, pp. 138–189.

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meest be creo as if such documents evidence, con The decis ! His B: tanie Maesty shall be accepted as Snal and binding upon the two Gore. Decis

In toes not the code is plein tertiaries of the taited States sad Chile bare sissa tbe above protocol bath in the English and Spanish languages, and here

de in dapicale, at the city of Santiago, this first day of neder, 19. (SEAL)

SETH LOW PURTRENNT.

AGISTIX EDWARDS Your Majesty has been pleased at the request of the parties to the reference to consent to act as arbitrator in place of His late Jajestr. The duty which Your Majesty bas been pleased to undertake is one of pronouncing an awan! which shail do substantial justice between the parties without attaching too great an importance to the technical points which may be raised on either side. This is what we conceive to be the function of an "amiable compositeur."

In accordance with the terms of the protocol, cases have been submitted to Your Majesty by both the above-named Governments. These cases are very voluminous and elaborate, and the United States Government annexes three volumes of appendices.

The arguments put forward are, in relation to some matters, of a very technical character, and in relation to all matters are elaborated at great length.

The Cnited States case runs into 332 pages their countercase into 198 pregtis, and there are, as stated above, three volumes of appendices.

The Chilean case is of 54 folio pages, the countercase of $35 folio pages, but, the material documents being quoted over and over again in the cases and countercases, only a short appendix of documents is annexed.

Your Majesty has been pleased to do us the honor of directing us to give our consideration to the whole matter and to report to Your Majesty thereon.

It was necessary for us for this purpose to consider and weigh the arguments set out in these books, and this occupied a considerable time, but we are glad to be able to state that in our judgment the issues raised and our conclusions can be set out for the consideration of Your Majesty in a comparatively small compass.

The firm of Alsop & Co. was registered in Chile, its seat of business being in Valparaiso, but it was composed of American citizens. The claim arises out of an agreement made with the Government of Bolivia so long ago as the year 1876.

In that year the firm was in liquidation and through its liquidator, a Mr. Wheelwright, entered into arrangements with the Government of Bolivia for the settlement of a debt arising out of previous transactions between that Government and one Pedro Lopez Gama, a Brazilian citizen, which debt had been assigned to Alsop & Co.

These arrangements were set out in the form of a contract between the Bolivian Government and Wheelwright, called herein for convenience of reference the Wheelwright contract, and it is in respect of the unfulfilled obligations of Bolivia under that contract, which obligations are alleged by the United States Government both to have fallen upon and to have been specifi. cally undertaken by the Government of Chile, that the claim arises which has been submitted for the decision of Your Majesty.

The amount of the claim put forward by the United States Government on behalf of Alsop & Co. is for the sum of $2,803,370.36.

The Chilean Government admit that they have assumed Bolivia's liability under the Wheelwright contract to a limited extent by a treaty entered into between the two States in 1904 and have offered the payment of a certain sum in respect of the claim. This sum has been refused by the United States Gorernment as being insufficient to satisfy either the just claim of Alsop & Co. on Bolivia or Chile or the liability which Chile has herself undertaken on behalf of Bolivia.

The claim has now been the subject of discussion and controversy between the Governments of the United States and of Chile for more than 25 years, and the failure to arrive at any conclusion acceptable to both Governments has induced them to invite Your Majesty to pronounce an award which both parties have undertaken to accept as final and binding upon the two Governments.

It has already been stated that the object of the Wheelwright contract was to provide for the payment of a debt from the Government of Bolivia to Alsop & Co, as the assignees of Gama, who had been involved in various transactions of a complicated nature with the Government of Bolivia, resulting in that Government's admission that there was due a capital sum of 835,000 bolivianos and certain arrears of interest thereon.

The contract itself states that it is “for the consolidation and amortization of the credits which he (Wheelwright) has pending against the State."

It is important to notice that, though the Wheelwright contract was made with the Government of Bolivia, it is against the Government of Chile that the Alsop claim is now put forward by the Government of the United States.

Bolivia admitted by this contract that she was then indebted to Alsop & Co. in the sum of 835,000 bolivianos and agreed that the debt was to carry interest at the rate of 5 per cent per annum, not compoundable. The contract provided for the liquidation of this debt by giving Wheelwright the right to the sums by which the Bolivian share of certain customs receipts might exceed 405,000 bolivianos annually and also by giving him the right to work the Government silver mines in the coast department of Bolivia for a term of 25 years upon the terms that the Government share of the proceeds of the mines should be retained by him and applied in reduction of the debt.

At the time of this contract these customs dues were collected in Peruvian territory, at the port of Arica, which was the natural port of access to a large part of the territory of Bolivia, and an arrangement was in force between the two Republics under which the customs duties levied at the port were divided between them, and no further duties were levied at the Bolivian frontier on goods going to that country. Under this arrangement Bolivia took a fixed annual sum of 405,000 bolivianos as her share, the balance, whatever its amount, going to Peru. Bolivia was, however, dissatisfied with the arrangement, and had given notice to terminate it; she hoped that under any new agreement her income from this source would be increased, and it was this anticipated increase which she agreed to apply toward the liquidation of the Alsop claim.

The origin of the Government silver mines, of which the proceeds were to be applied to the same purpose, was as follows: Under the Bolivian mining law the discoverer of a mine was entitled to two, sometimes three, “estacas," or plats, of certain size, which were first marked off along the reef or lode. Another “estaca " of 60 by 30 meters was then marked off, and was Government property. The right to work these small mines was given to the firm of Alsop & Co., upon the terms that 60 per cent of the net proceeds were to go to the firm as a reward for its labors and 40 per cent was to be regarded as the share of the Government, but was to be retained by the firm and applied in liquidation of the debt.

Early in the year 1879, less than three years after the making of the Wheel. wright contract, war broke out between Chile and Bolivia, and the coast Prov. ince of Bolivia rapidly passed into the military occupation of the former Republic. Shortly afterwards Peru also became engaged in the conflict, and by June, 1880, the port of Arica had passed into the possession of the Chilean Government.

The result of the war, therefore, was that both the sources to which Alsop & Co. were entitled to look for the money which would pay their debt had passed out of the control of Bolivia into the possession of Chile, and in Chile's possession they still remain. Her military occupation of the coast province of Bolivia was rendered permanent by the pact of indefinite truce of 1884 between Bolivia and Chile, and this military occupation was definitely converted into sovereignty by the treaty of peace of 1904. Subject to a future plebiscite, Arica was transferred from Peru to Chile by the treaty of Ancon, 1883.

The debt admitted by Bolivia in 1876 as due to Alsop & Co. has never been paid, and though it is not alleged by the United States of America that the conquest of Arica and of the coast province would of itself affect the indebtedness of Bolivia or transfer the liability to Chile, it is contended by them that, on other grounds, the firm of Alsop & Co. are now entitled to recover the amount of their claim from Chile.

These grounds are (1) that Chile appropriated to her own use the proceeds of the customhouse at Arica, thereby preventing any money coming to Bolivia which Alsop & Co. might claim under the Wheelwright contract to be applicable to the repayment of the debt; (2) that Chile prevented Alsop & Co. from working the Government silver mines in the coast province in the way they were entitled to work them by applying Chilean law in the province from the date of the military occupation, and thereby subjecting Alsop & Co. to more onerous terms than would have been the case under Bolivian law; and (3) that from time to time Chile undertook to pay the claim.

The Government of the United States of America began to put forward the claim of Alsop & Co. as a good claim against the Government of Chile from a comparatively early date, though it is only recently that the claim bas assumed its present shape and magnitude. The United States, however, so far as concerns the original debt, admitted in 1876 by the Government of Bolivia (viz, 835,000 bolivianos, carrying interest at 5 per cent), also allege that Bolivia is still the debtor.

The Republic of Bolivia is not a party to the submission of the matter to Your Majesty, and can not be bound by the result, but her standpoint is that her liability has been entirely transferred to Chile as a result of her loss of the coast province and of the arrangements concluded between her and Chile.

Chile, on the other hand, repudiates liability for the claim altogether, so far as the claim is based on her appropriation of the Arica customs or on the application of Chilean law to the province she had conquered; and so far as the claim against her is based upon her undertakings to pay, she maintains that it is a matter in which she is only liable to the extent of the provision made in the treaty between her and Bolivia, and that to that extent she is and always has been ready and willing to pay Alsop & Co., but that the amount offered has been refused.

Before passing to a detailed examination of the claim it is desirable to state that in 1890 a claims commission was appointed to deal with the various outstanding claims between Chile and the United States of America, but the commission was unable to deal with the Alsop claim within the time at its disposal. This commission was revived in 1894, and the Alsop clam was again brought before it, but was disallowed on the ground that Alsop & Co. had no locus standi, not being included within the term “ corporations, companies, or private individuals, citizens of the United States," as the firm had been organized as a partnership under Chilean law, and had thereby become a juridical entity possessing Chilean nationality. The labors of the commission therefore failed to bring about a settlement of the dispute, and it now comes before Your Majesty to determine the amount, if any, which is equitably due to the claimants, the representatives of the former partners of the firm of Alsop & Co., Dow in liqaidation, all of whom are alleged to be citizens of the United States.

The Chilean Government, in the case presented to Your Majesty, again suggest that, as the firm was registered in Chile, and is a Chilean company, their grievances can not properly be the subject of a diplomatic claim, and that the claimants should be referred to the Chilean courts for the establishment of any rights they may possess.

We hardly think that this contention is seriously put forward as preclud. ing Your Majesty from dealing with the merits of the case. It would be inconsistent with the terms of the reference to Your Majesty, and would practically exclude the possibility of any real decision on the equities of the claim put forward.

The remedy suggested would probably be illusory, and, so far from removing friction, an award in this sense, transferring the real decision from an impartial arbitrator with full powers to the courts of the country concerned, which in all probability have no sufficient power to deal equitably with the claim, could afford no effective solution of the points at issue or do otherwise than increase the friction which has already arisen between the two States.

We are clearly of opinion, looking to the terms of reference and to all the circumstances of the case, that such a contention, if intended to be seriously

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