U. S. Senate Speeches and Remarks of Carl Schurz/The Geneva Award

The Senate, as in Committee of the Whole, resumed the consideration of the bill (S. No. 7) for the creation of a court for the adjudication and disposition of certain moneys received into the Treasury under an award made by the tribunal of arbitration constituted by virtue of the first article of the treaty concluded at Washington the 8th of May, A. D. 1871, between the United States of America and the Queen of Great Britain, the pending question being on the amendment of Mr., which was to strike out section 12, commencing on line 13, the following words:

Mr. SCHURZ. Mr. President, the debate on the so-called Geneva award bill has so far mainly turned on the point whether the insurance companies, as such, should be entitled to any share of the money awarded to us by the Geneva tribunal and paid us by Great Britain.

It seems to me that the question before us is not exclusively a question between the Government of the United States and its citizens. It is a question resulting from a great international transaction, one of the most important of our times. The settlement of our differences with Great Britain by arbitration was a most solemn proceeding, which was hailed the world over as an epoch of progress, and is to stand as an example to mankind. That is the light in which we held it up ourselves.

The distribution of the money awarded to us by the tribunal of arbitration is to be the final consummation of that solemn proceeding, and it is therefore a matter of the highest interest not only to ourselves, but in a certain sense to all the parties concerned in that arbitration and to civilized mankind generally. Our dealings with the money paid to us should be marked not only with the utmost fairness to our own fellow-citizens, but by the strictest regard to our obligation in the spirit of the decision made by the international tribunal at Geneva. Only in this way can we secure the full fruit of the arbitration policy to mankind, maintain our national honor, and serve our true interests.

Now I desire the Senate to mark one important feature of this business. There is a certain relation between the treaty of Washington and the proceedings and decision of the Geneva tribunal, which in the performance of the last act closing up the whole transaction we ought never to lose sight of. It is of the highest importance. The treaty of Washington laid down certain rules governing the duties of neutrals, rules not until then generally recognized. The decision of the Geneva tribunal was the first authoritative construction of the meaning of those rules, and that decision defines what acts or omissions shall be specifically considered as establishing the liability of a neutral, violating those rules, for damages, and also what classes and items of losses incurred by a belligerent nation itself or suffered by the subjects of a belligerent government in consequence of the violation of those rules shall enter into the computation of and in the award for such damages. Thus these two things, the rules laid down in the treaty of Washington and the decision of the Geneva tribunal, together constitute the great precedent, the rule, or the law, as far as rule and law can be established by precedent, which may be expected to govern the settlement of future international differences of a similar kind.

Now the question for us to decide is this: shall we recognize the precedent as established by the treaty of Washington and by the Geneva decision combined by a strict adherence to the spirit of the latter? Is it our interest, is it our duty to do so?

First. Let me say a few words upon the question of interest.

The situation and the natural policy of the United States are such that we may expect to remain neutral in the great international conflicts of the world. The United States are emphatically the great neutral power of the earth, and the interests of the United States therefore

are emphatically the interests of a neutral power. Now, the treaty of Washington has enlarged, or more strictly defined, the duties of neutrals compared with formerly recognized rules. That is not to the advantage of neutrals. But the Geneva decision in construing those rules has restricted the specific liability of neutrals for non-fulfillment of neutral duties by act or omission to certain narrow and well-defined limits. And that is for the advantage of neutrals. It is therefore the manifest interest of the United States that those limitations be confirmed and sanctioned as clearly and strictly as possible, and in every way that we can confirm and sanction them. We should, having our interests as neutrals in view, by our own acts, especially by the disposition of the money awarded to us, testify that we consider those limitations strictly binding, that we know exactly and confirm what the indemnity was paid for, because our own acts will certainly be used as precedents in future cases in which we may be a party as neutrals and other powers may be parties as belligerents.

Now, the question arises, what are those limitations of the liability of neutrals in similar cases, as fixed by the decision of the Geneva tribunal, and for what was the award of money made to us? The representatives of the United States presented before that tribunal a long list of claims, partly of a national and partly of a private character. The national claims were composed of the following: First, claims for the prolongation of the war and the addition of a large sum to the cost of the war; second, claims for the losses incurred by the transfer of a large portion of the American commercial marine to the British flag; and, third, claims for the national expenditure in the pursuit of cruisers. These claims were thrown out by the arbitrators; in fact the United States themselves declared that they had submitted those claims only for the purpose of obtaining the opinion of the tribunal of arbitration upon them. The tribunal therefore decided that for such losses a neutral shall not be liable in a similar case.

But certain classes of private claims were also thrown out: First, claims for the enhanced payment of insurances, that is to say for the war premiums generally; secondly, for prospective earnings of vessels destroyed; and, thirdly, for gross freights. The tribunal therefore decided that for losses of a private nature belonging to these three classes a neutral shall not be liable in a similar case.

What claims then were decided by the tribunal to be valid as against a neutral for violation of the rules laid down in the treaty of Washington? They were the following: Those for the value of vessels captured or destroyed by cruisers circumstanced like the Alabama, the Shenandoah, and the Florida; those made for cargoes of vessels so captured and destroyed; those made for net freights, and for personal losses, and wages of officers and seamen within certain limitations. These were all of the nature of private losses, losses suffered by private individuals, with the exception of two or three transports chartered by the Government, which, however, fall also under the same head of &ldquo;property destroyed.&rdquo; For these losses money was awarded to us, and for nothing else in the world. That is the record of the Geneva tribunal. Such losses, then, as decided by the Geneva tribunal, constitute in similar cases the liability, and the whole liability, of a neutral violating his duties under the three rules of neutral obligation laid down in the treaty of Washington.

Now, sir, I ask shall we recognize that decision with all its strict limitations, and sanction it as a precedent to rule in future in similar cases? I submit that it is our interest, our manifest interest as the great neutral power of the world, to do so. But we can do so only by adhering in the distribution of the money awarded to us distinctly in consideration of such private losses with the utmost strictness to the spirit of the Geneva decision, and above all things by guarding very carefully against the slipping in of any vague notion of national loss and national indemnity, as is claimed by a nation from its conquered enemy, in construing for ourselves the decision of the Geneva tribunal. If we permit the idea of national loss and a national indemnity in that sense to slip into our own construction of the Geneva decision, we shall establish a precedent for ourselves which, upsetting the limitations decided upon at Geneva, will become, nay is certain to become, very troublesome to us if we ever as a neutral become in future involved in a similar difficulty.

It is demanded by us by the committee that the insurance companies who by the United States were brought forward as legitimate claimants before the Geneva tribunal, and whose claims entered into the computation of losses upon which the award was made to us, shall be excluded from the distribution of the money so to us awarded and paid. It is claimed that the Government of the United States, having received the money awarded by the Geneva tribunal, may distribute that money as it pleases, without respect to the claims upon the computation of which the money was awarded, or that the Government may keep the money altogether in the Treasury as if it were a national indemnity obtained by war. Indeed the exclusion of the underwriters can scarce be defended upon any other theory. To make it clear, let me use this illustration. There were before the Geneva tribunal double claims, so called, mostly arising in this way: An insurance company claimed for a vessel lost, and the original owner of the vessel claimed for the same vessel lost. The double claims were of course as such rejected, but the single claims were allowed. That is to say, the amount claimed for the value of the vessel was once, but not twice allowed in the computation of damages. Now we are asked to say that the original owners cannot claim for that vessel

because they were compensated by the insurance company, which is true, and the insurance company cannot claim for that vessel because they were compensated by the war premiums which they received. But the vessel was lost; it entered into the computation on which the award was made; upon that award the money was paid to us. For the vessel so lost we received the money. What shall we do with that money? We are not to pay the owner, because he was paid by the insurance company. We are not to pay the insurance company, according to the theory of the committee, because that insurance company was paid by the war premiums. Whom are we to pay? Are we to keep the money in our own Treasury? That certainly is not what it was given for. But who are the losers, who are to be compensated, according to the theory of the committee? Those who paid the war premiums. And yet the Geneva tribunal expressly decided that for war premiums no damages could be claimed. Upon what theory in the world, then, can we throw out these claims? Upon no other, but that we received the indemnity as a national indemnity, just as we would have extorted from a conquered enemy, which we can dispose of just as we please; that the Government may keep or expend the money, not as a trust fund awarded to it upon a special ground and for a special purpose, but as national property obtained, not for private losses, but for a national grievance. That is the theory of the committee. You need only to look at the proceedings and at the decision of the Geneva tribunal to arrive at once at the conclusion that this upsets the whole theory of the Geneva decision itself, with all its limitations as to the principles on which the liability of neutrals in similar cases is defined and determined. We may not care about the legal rights of the insurance companies, but we ought to care about the position the Government of the United States takes in this transaction, and the important precedent it establishes by its construction of the Geneva decision, which is much more important than all the private interests involved in this case.

I insist, therefore, that it is the evident, the manifest, and the imperative interest of the United States, as a neutral power, strictly to regard in the distribution of the award the claims and the rights of the claimants upon the computation of which the award was made by the Geneva tribunal and the money was paid to us; and it is equally evident that it cannot be done if the claims of insurance companies or any other class of claims which were not excluded by the Geneva tribunal, but distinctly recognized in the basis of computation, are arbitrarily thrown out by ourselves upon the vague theory of a national indemnity in place of a fund received in trust for private claimants.

Mr. HOWE. I do not mean to say anything by way of controverting the argument of the Senator from Missouri; but I wish to suggest to him one difficulty that occurs to my mind in the way of our protecting ourselves as a neutral power against the future operation of the three celebrated rules, by any possible distribution we can make of the fund now in our hands; and that difficulty is this: It is true, as the Senator says, that the tribunal decided against what were called indirect claims and measured our damages under the three rules by the estimated value of the property destroyed by the cruisers, with some little additions for other circumstances. But, if I remember aright, the tribunal made that decision throwing out the indirect claims, when one of the parties to the arbitration was insisting that no such claim was before the arbitrators, had not been submitted, and that they never had agreed in the treaty to submit any such claims. Now if it should turn out that the treaty did not submit to the arbitrators what were called the indirect claims, will any future power that may call us to account under the three rules hereafter be precluded from saying, &ldquo;I will not go into arbitration unless you do allow indirect claims to be considered by the tribunal?&rdquo;

Mr. SCHURZ. I do not think that contingency will arise. If I remember correctly, and I think I do, the tribunal did not decide that the indirect claims had never been before it. It is true that the agents of the British government insisted that they were not before the tribunal, but the tribunal passed an opinion upon the indirect claims as if they had been before it, throwing them out as not being entitled to consideration under the rules laid down in the treaty of Washington.

Mr. HOWE. The difference being this: it was the decision of a tribunal without jurisdiction if these claims had not been submitted. They had jurisdiction of whatever claims were submitted under the treaty; but one party insisted that these claims were not submitted under the treaty. They decided, to be sure, that if they had been submitted, they could not be allowed. If they had been submitted, it would be the decision of a court having jurisdiction; if they were not submitted, it was the decision of a court without jurisdiction.

Mr. SCHURZ. I think I could satisfy the Senator from Wisconsin by reading the opinion of the tribunal on this head. It was this:

So it appears that not upon the difficulty which had arisen between Great Britain and the United States, but upon principles of international law, including the rules laid down in the treaty of Washington, they came to the conclusion to rule out these claims. But I think that even if the Senator from Wisconsin were right in his apprehension, it would not militate against my argument; it would still be our interest, when there is a limitation of the liability of neutrals, authoritatively and expressly defined, to accept it and to abstain from doing anything to invalidate it.

Having discussed the question of interest, I now approach the question of duty; and I affirm that to distribute the money awarded to us by the tribunal and paid to us by Great Britain among the legitimate claimants whose claims were presented before the tribunal and upon a computation of which the award was made without arbitrarily excluding any class of claims, is on our part a duty of good faith generally; it is a duty of the Government of the United States to its own citizens; it is a duty to the arbitrators; and it is a duty to England.

Why is it a duty of good faith on our part? Because the Government of the United States, after all national claims had been thrown out, still brought forward the private claims of its citizens, and among them the claims of the insurance companies, representing that it wanted payment for them, in order to indemnify them out of the gross sum thus awarded. That the Government of the United States made that distinct representation appears from the language of its own agent before the Geneva tribunal; and here I wish to call the attention of the Senate to some declarations of Mr. Davis, the agent of the United States Government, which so far have not been quoted, and which I consider of the utmost significance and importance. Mr. Davis in his report to Mr. Fish, page 4 of the pamphlet edition of the protocol, said:

Mr. Davis in his last statement to the arbitrators accompanying certain revised and amended tables of claims, which had been criticised by the British agent, said:

Thus speaks the agent of the United States before the Geneva tribunal:

What does that mean? It implies, as the agent of the United States declared before the Geneva tribunal, that the United States would have to make up for the deficiency to the claimants if the award made by the Geneva tribunal should not prove sufficient for the purpose.

Again, the British agent had complained that the agent of the United States had prosecuted certain claims for injury to sailors who had not themselves made any claims, and in replying to this Mr. Davis said to the tribunal, and I wish the Senate to mark these words:

Thus the agent of the United States before the Geneva tribunal solemnly asserted that, among other claimants, the insurers would have the right to appear before the assessors and that their claims could not be denied even if they had so far neglected to file them.

Now, the tribunal did award a gross sum, and in his letter to the

Secretary of State, Mr. Davis, after relating that the neutral arbitrators and Mr. Adams were convinced of the policy of awarding a sum in gross, thus reports:

Thus the agent of the United States repeatedly declared before the tribunal that the money to be awarded was wanted not for the United States to be distributed by the Government in its discretion, arbitrarily, but for the satisfaction of private claims, inclusive of those of insurers. To repudiate such a declaration by our mode of distribution would be an act of bad faith of which no government which had self-respect ought to render itself guilty.

Why is it a duty of the Government to its own citizens? The Government of the United States called upon its citizens to present their claims. They did so, beginning in 1863. The insurance claims were among the first presented. They were among the very claims that the President had proposed in his message the Government should acquire by purchase, thus exercising an indirect pressure upon the Government of Great Britain, which had some effect in bringing on a renewal of negotiations. Upon the ground of these claims we demanded indemnity from Great Britain. Had there been no private claims there would have been no indemnity, for all the national claims had been thrown out. Had there been no insurance claims, there would not have been so large an indemnity, for the insurance claims constituted a very important part of the list of claims upon which a computation for the award was made. Having received indemnity for the satisfaction of private claims, how can the Government now appropriate a single farthing of that money to itself or to any arbitrary use, as long as any legal private claim so preferred, so urged, so used in the computation upon which the award was made and for which the money was paid, remains unpaid? It cannot unless the Government repudiates its duty to its citizens.

Why is it a duty of the Government to the arbitrators? The Government of the United States presented these claims, and among them the insurance claims, before the arbitrators as true and valid claims, leading the arbitrators to believe that they were presented in perfect good faith. We maintained them against the adverse criticism of England, and our agent insisted that the gross sum to be awarded should be large, because otherwise the United States might be called upon to make up to the private claimants what the arbitrators failed to give. Now, how in the world can the Government throw out and refuse to pay a class of claims upon the justice of which the United States insisted before the arbitrators, and for the satisfaction of which the arbitrators thereupon awarded a gross sum? Certainly we cannot do so without an insult to the arbitrators themselves.

Lastly, I say it is our duty to England, and why is it so? There has been so strong a feeling against England on account of the losses suffered by the depredations of the confederate cruisers that those very vessels were often called &ldquo;English pirates.&rdquo; England paid fifteen and a half millions, all that was awarded by the tribunal, to satisfy the amount of private damages suffered by the citizens of the United States in consequence of her negligence in fulfilling her duties as a neutral; and England has a right to expect that by the distribution of the money paid the private claimants shall be satisfied and their feelings of private injury removed. She might have insisted upon a board of assessors if she had desired to do so; and in that board of assessors she herself would have been represented and exercised an influence and made sure that every legitimate private claim would be paid. Now, mark you, it was at the desire of the United States that the award of a gross sum was made, to which England consented. Can we now in distributing that sum in gross, without having England represented here, as she would have been in a board of assessors, refuse to pay any private claimant that England would have been obliged to pay had the distribution been remitted to a board of assessors? Certainly we cannot if we want to be just to England. Our moral obligation to distribute this money among the private claimants, for the satisfaction of whose claims it was distinctly awarded by the tribunal and paid by Great Britain, is at least equal to the obligation of England to pay that gross sum when it was awarded by the Geneva tribunal.

These, sir, are the reasons which induce me to insist that the money paid to us by Great Britain should be used in satisfying the legal private claims for the satisfaction of which that money was awarded by the tribunal of arbitration and paid by Great Britain without any arbitrary distinction between the claims. I have not discussed whether the insurance companies or any owners of vessels who insured themselves have made or lost money during or in consequence of the war, simply because that has nothing at all to do with the merits of the case before us. I have shown that our obligation rests upon a basis quite different from that.

To distribute the indemnity among the claimants for whose satisfaction the money was awarded and paid to us, we are bound by every consideration of good faith, of national honor, of national interest, and of sound policy. We cannot refuse to do so; we cannot set up for ourselves rules and theories adverse to the representations advanced by our own agents at Geneva in support of the private claims upon which the award was made, and adverse to the theory upon which the arbitrators made their decision &mdash; we cannot do that I say without striking a fatal blow at the beneficent results of the

system of international arbitration so auspiciously inaugurated. Do you know what is going on at the present moment in England? The treaty of Washington and the arbitration is being bitterly assailed there on the ground that too much was yielded to the United States. Let it now be understood that the Government of the United States arbitrarily puts a construction upon the Geneva decision different from the obvious intention of the tribunal itself; that we presented and urged private claims upon one theory before the tribunal and then disposed of the money awarded in consideration thereof upon another theory, thus laying ourselves open to the suspicion of sharp practice, and we shall have furnished a most dangerous weapon to the enemies of this method of settling international difficulties. We may thus give the system of arbitration the finishing blow for a long time to come. And I would entreat Senators to consider well what they are doing in this case, for it is impossible to overestimate the importance of the question before us.