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 The Green Bag VOL. XVIII.

No. 7

BOSTON

JULY, 1906

CALVO AND THE " CALVO DOCTRINE" BY PERCY ON December 29, 1902, while interest in the enforcement of the claims of Great Britain, the German Empire, and Italy, against Venezuela was at its height, Luis M. Drago, the Minister of Foreign Affairs of the Argentine Republic, despatched a note to Senor Martin Garcia MeYon, Minister of the Argentine Republic to the United States, on the subject of the collection of public debts by force, which aroused widespread interest and brought to the attention of the people of the United States the name of the subject of this sketch to whom the origin of the doctrine embodied in the note was generally attributed. Senor Drago at the outset stated that he understood the origin of the disagreement to be, in part, the damages suffered by subjects of the claimant nations during the revolutions and wars that had recently occurred within the borders of Venezuela, and in part also, the fact that certain pay ments on the external debt of the nation had not been met at the proper time. To the latter phase of the question, the non payment of the public debt and the use of force by other nations to collect it, he de-voted his argument. He pointed out that in making a loan to a foreign state, a capitalist always takes into consideration the resources of the country and the probability, greater or less, that the obligations contracted will be fulfilled with out delay and makes his terms more or less onerous accordingly. One of the facts which he takes into consideration, claimed Senor Drago, is that he is entering into a contract with a sovereign entity, "and it is an inherent qualification of all sovereignty that no proceedings for the execution of a

BORDWELL judgment may be instituted or carried out against it, since this manner of collection would compromise its very existence and cause the independence and freedom of the respective government to disappear." He admitted that the amount of a public debt may be determined either by the tribunals of the country or by boards of arbitration, and that the payment of the entirety of such judgments is absolutely binding on the nation, but said it could in no wise be admitted that it should be deprived of the right to choose the " manner and the time of payment, in which it has as much inter est as the creditor himself, or more, since its credit and its national honor are involved therein." The elimination of forced execu tion, he urged, does not render public obligations valueless. "The State contin ues to exist in its capacity as such, and sooner or later the gloomy situations are cleared up, resources increased, common aspirations of justice and equity prevail, and the most neglected promises are kept." Guided by the above sentiments, Senor Drago continued, the Argentine people had felt alarmed at the knowledge that the failure of Venezuela to meet the payments of its public debt had been given as one of the determining causes of the use of force, and felt that "if such proceedings were to be definitely adopted they would establish a precedent dangerous to the security and peace of the nations of this part of America." He said that there had been a tendency of late in European opinion to turn towards South America as the field of conquest for the future and, accordingly, that it would give great satisfaction to the Argentine Republic to see adopted by the United