VENEZUELA.

HL Deb 02 March 1903 vol 118 cc1043-88

*LORD TWEEDMOUTH

My Lords, I rise to call attention to the contents of the Blue-book lately published on Venezuela [Venezuela, No. 1, 1903] and to move for further Papers. I, make no apology for bringing this subject before your Lordships to-night, for I am but taking up the challenge thrown out by the noble Duke on the first day of the session, and doing so under the very conditions which he laid down. The House will remember that on the first day of the session the noble Duke deprecated very strongly any discussion taking place on the Address on the subject of Venezuela. He said, with the most perfect truth, that it was impossible that your Lordships could have mastered the contents of the Blue-book, which was only placed on the Table of the House on that day, and he added that it was desirable that you should have done so before you attempted to discuss the question. He also said he thought it would be best that the discussion should be postponed till the noble Marquess the Secretary of State for Foreign Affairs was in a position to make a complete statement with regard to the subject. Well, my Lords, I think that now, after nearly a fortnight has elapsed, those conditions have been fulfilled, and that both the House and the Foreign Office should be in a position to deal with this subject with full and ample knowledge. I must confess that I was filled somewhat with dismay at the chilly way in which the noble Duke received the congratulations of my noble friend beside me on the prospects of a settlement of the Venezuelan question. My noble friend Lord Spencer congratulated the House the other night that, if I may use words that have now become a classic phrase, "we had muddled through," or in some other way got through the Venezuelan mess, and had come out on top. The noble Duke protested against any such idea. He said that no settlement had yet been arrived at. that we had only made one short step on the road to settlement, and that the whole subject was still full of difficulties, doubts, and possible dangers. "So," said the noble Duke, "I cannot accept your congratulations."

I am inclined to agree with the noble Duke that there is absolutely no cause for congratulation with regard to this matter. It seems to me to have been a sorry enterprise with very inadequate results. Here you have two of the greatest Powers in Europe setting out to collect debts by force from a miserable bankrupt South American Republic, torn with civil dissensions. You seize the fleet of that Republic, you sink two of its ships, you bombard its forts, for two months you blockade its coast line, and at the end of that you get a miserable fraction of the claims you have made, and Great Britain gets but a miserable fraction of that fraction—I think about one-fourteenth of what is given over—and the rest of your claims are referred to two different courts of arbitration, which at the present moment are by no means clear or explicit. Then you have the Leader of the House coming down and telling us that the horizon is full of clouds of doubt and difficulty, and that a settlement is still far off. That certainly is not a subject for congratulation, and I think that throughout the whole of the affair the only subject for congratulation is that apparently we have the good fortune in America to have a representative who, for tact and judgment, seems likely to follow in the footsteps of that great public servant and diplomatist, the late Lord Paunce-fote. At any rate, we can all join in congratulating Sir Michael Herbert on the recognition that his Sovereign has made of his ability. This question, I think, may be looked at from three different points of view. There is the point of view of Great Britain, of British claims and of British interests; there is the point of view of joint action between Great Britain and Germany; and there is the point of view of the United States of America and of our relations with that great Republic. I maintain that, from which ever point of view you look upon it, the policy of the Government has been unusual, ill-considered, rash, and likely to lead to misunderstanding and difficulty, if not danger. Let me take up those three different points of view seriatim. My first complaint is the utterly inadequate statement of British claims that has been given to the country. We have not the slightest idea what the amount of those claims are, and to whom they are to be paid. The only statement of the British claims that we have is best stated in the despatch of Lord Lansdowne to Mr. Buchanan on page 149 of the Blue-book. The noble Marquess writes— The British claims, as Count Metternich presumed, were capable of classification. Those on account of the recent cases of unjustifiable interference with the liberty and property of British subjects, including the shipping claims, would rank first. Claims for injury to British property during the late revolution, and that which placed President Castro in power, would come next; and in the third place the claims of the bondholders. The despatch goes on— His Majesty's Government did not, however, desire, in their demands upon Venezuela, to draw a distinction between the various categories. Their object was to obtain a general settlement, and they were of opinion that to advance one class of claims, or at this stage to specify any particular amount, would diminish the chance of securing, in all cases, the reparation which they considered to be justly due. Surely in that vanishes the theory that the bondholders are not benefited by the action of the Government. We have heard it stated again and again that the bondholders were not included in the view of His Majesty's Government.

Now, what are these bondholders? In the next despatch the noble Marquess the Foreign Secretary goes into the question of the representations of the Disconto Gesellschaft, and categorically says that a settlement of these claims was part of the arrangement which His Majesty's Government were prepared to support. Let us see the sort of business which this Disconto Gesellschaft transacted with Venezuela. The last loan advanced by the Disconto Gesellschaft, which is essentially a German company, was in 1896. It then underbid all the other French and English houses and offered to advance to Venezuela fifty million francs at five per cent. interest, and paid to the Venezuelan Government eighty francs for every hundred francs of nominal value. On that otter they obtained the loan. I am also informed that at that time the English and French houses would only do business at twenty or thirty per cent. interest, allowing sixty francs for every hundred of nominal value. The business of the bondholders is very much like that of ordinary money- lenders, and it seems to me that people who embark in commercial enterprises with, or lend money to, a country like Venezuela should do so on their own responsibility. It is a pure gamble, and the people who go into it take that into consideration when they make offers for such loans. I maintain that what are included in the second and third rank claims of the British Government are claims which, certainly do not warrant any resort to force whatever, and really do not warrant anything very strong even in the way of representation. Then I come to the first-class claims, which I frankly admit are of a totally different nature. They may be grouped under three heads (1) maltreatment and arrest of British subjects: (2) detention, and, I think, in one ease, destruction of a British vessel: and (3) violation of British territory. These, of course, are serious offences, and the first hundred pages or so of the Blue-book set out clearly the details, but I think that anybody who carefully reads through those pages will admit that at any rate there is, in some cases, a presumption that there is something to be said on the Venezuelan side, and that there may be some ground in some of these cases for the charge that the injured persons were or had been carrying on smuggling operations or had been engaged in the illicit introduction of arms into the territory of Venezuela. Indeed, in the summary of the statement of eases contained in this Blue book I find suggestions of this very fact, and the temptations to smuggling in Venezuela are no doubt very great. In that country there is a very high tariff, and, as we have been told, there have been a succession of revolutions.

I would remind the House that one of the Articles of the Constitution of the Venezuelan Republic lays down that a Venezuelan subject is not liable to any penalty for bearing arms against the Venezuelan State, supposing it can be shown that that act is due to political motive. That seems to me to be a very strong encouragement to the use of arms within the Republic, and to the introduction of arms from without. I myself was in Trinidad not very long ago, and remember being told that this smuggling and illicit introduction of arms was very frequent from Trinidad, and, still more, from the Dutch Island of Curaçoa. Another point with regard to these claims. I want to know whether you can apply to them the sort of test that the Germans apply to their first-class claims. In Despatch No. 153 on page 155 of the Blue-book it is stated— The Imperial Government, however, attach importance to the following point, viz., that the German War claims, under paragraph (a), which has already been thoroughly investigated, and has been presented to the Venezuelan Government for the amounts declared, shall not be subjected to fresh examination at the hands of this Commission. Now, my Lords, the Germans say that the reason they desire their first-class claims to be excluded from any question of arbitration is that they have already been thoroughly investigated. Can it fairly be said that anything like the same amount of investigation has been applied to the British first-class claims? I venture to think not, and indeed there is absolute proof of that fact within the pages of the Blue-book. These offences were of recent origin. They began in the year 1901 and lasted to the end of June, 1902, and a curious fact is that the noble Marquess himself on November 26th of that year put the sum of £10,000, as the probable valued amount of these claims, and yet two months later is willing to take £5,500 in full discharge of them. That certainly seems to me to give a strong prima facie ease for the opinion that these claims had not been fully investigated, and that no proper value had been fixed on them. Then there is the question of the violation of British territory. That arose in connection with the small island of Patos. We claim that island. It is an island without houses on it, and where, apparently, you can get neither water, food, nor shelter. The Venezuelans also claim it, and one case of violation of British territory which is set down against Venezuela is that a Venezuelan gunboat seized a Venezuelan boat for smuggling within the waters of this island. We ought to have been given more information as to our claim in this connection.

Leaving the British claims, which have certainly not been sufficiently examined, though in their nature they were of sufficient importance to justify the use of force, although I do not admit that they were of a nature to justify co-operation with another European Power in obtaining redress by force, I come to the question of our co-operation with Germany. Here we were combining with a Power—a friendly Power, a great European Power, a kindred Power—whose claims were totally different from our claims, whose methods were different from our methods, whose idea of policy was different from our idea of policy, and whose ulterior objects with regard to that part of the world were different from ours. Take the German claims. In Despatch No. 136 on page 146, it is stated that— The German Government recognised that there was a sharp distinction between the character of the British and German first-line. claims. And so, indeed, there was. Ours were for offences against the person, against British ships and against British territory. Their first-class claims arose out of the Venezuelan civil war in 1898-1900, amounting approximately to 1,700,000 bolivares, and they are similar to the English second-class claims. Again, [would point out that Germany, differing from us in that respect, is most careful to state in each class of claims the total amount of their value. I think I may fairly contend that the difference between the British and German claims is marked indeed, and I may claim the assent of the noble Marquess himself to that by taking the words of his own despatch. But then, my Lords, there is the question of method, which I need not go into very deeply. I would only quote the destruction of the two Venezuelan gunboats and the bombardment of St. Carlos as showing the extreme difference of method between the action of the two countries.

Now I come to the question of the policy of the two countries. The noble Duke opposite and the Prime Minister alike have explicitly accepted the Monroe Doctrine. Germany has never accepted such a doctrine. [make no complaint of that. It is perfectly open for Germany to think that America has no right to keep a sort of hold on the South American Continent and to allow no European nation to acquire territory within it. But the basis of the policy is totally different, and we know perfectly well that recently Germany has had her ships of war cruising round the northern, coasts of South America, and that they have been making surveys of that part of the sea and coast on behalf of their Government. I do not know what the truth of the matter is—perhaps the noble Marquess can tell us—but, at any rate, the report is very current in the United States of America that with regard to these very claims the German Government within the last few months offered to pay all the claims of German subjects against Venezuela and cancel all the obligations of that Government to Germany and German subjects, provided the President of Venezuela would grant them permission to occupy the Island of Margarita as a naval station. That is a sufficient proof of the difference between the object of this country and that of Germany, and yet, there being all that difference of method and of policy, we have our Government entering into a compact with Germany on these lines (I am quoting from Despatch No. 136), viz:— As to the joint execution of measures of coercion, the German Government recognised that there was a sharp distinction between the character of the British and German "first-line" claims; nevertheless, the two claims ought to stand or fall together, and we ought to exclude the possibility of a settlement between Venezuela, and one of the two Powers without an equally satisfactory settlement in the ease of the other. Each Government ought, therefore, to come to an understanding before it embarked upon a project of coercion that neither Government should be at liberty to recede except by mutual agreement; and before common action was initiated, we ought to come to a distinct agreement to this effect. I told Count Metternich that it seemed to me only reasonable that if we agreed to act together in applying coercion, we should also agree that each should support the. other's demands, and should not desist from doing so except by agreement. Later on in these despatches you will find that the blockading Powers are to continue their co-operation before the Hague Tribunal. It does seem to me that it was a rash and ill-advised action to bind ourselves with a Power differing so much from us in aim and object, not only to the danger of our relations with the United States of America, but even of our understanding with the German Empire itself on account of the likelihood of differences of opinion arising in the execution of this contract.

Let me come to the position of this country with regard to America. It is the policy of all parties in this country to be on the best possible terms with the great English-speaking race on the other side of the Atlantic, and surely it was liable to cause misconception on the part of the United States of America when they find England co-operating in this way with Germany in that part of the world. Suspicion must have been heightened by the fact that you never took the trouble to tell the United States of America that you were going to enter into this course of action. The fact comes out as clear as daylight from these Papers. We were told by Lord Cranborne the other day in the House of Commons that the Government were aware, as far back as the beginning of 1902, that they were contemplating the necessity of adopting measures of coercion against Venezuela. On July 23rd, 1902, (Despatch No. 109), the noble Marquess, the Foreign Secretary, states- The German Ambassador spoke to me to-day about the state of affairs in Venezuela. I told His Excellency that we had various causes of complaint against the Venezuelan Government, and that we intended to obtain satisfaction for the claims of British subjects. We should be quite ready to confer with the German Government with a view to joint action. Then, on August 8th, we find the Foreign Office asking the advice of the Admiralty with regard to operations to be taken in these waters, and on August 11th, we have the answer of the Admiralty, in which it was pointed out that the time of year was not suitable to operations in South American waters, and that the month of November was the earliest time that a blockade should begin. Then the despatch from the Admiralty to the Foreign Office winds up— Should His Majesty's Government as a matter of policy consider it desirable to adopt the suggestion of the German Ambassador, that the two Powers concerned should take part in a joint naval demonstration, their Lordships consider that a blockade in Venezuelan waters would be the best method of giving effect to it. There you have, in the months of July and August, conferences going on as to whether there should be a blockade or not, the method of the blockade, and the agreement with Germany to co-operate in it, yet not one word appears in this Blue-book to show that the United States Government knew anything about it till November 11th, when the noble Marquess wrote to Sir Michael Herbert announcing.

the fact and requesting him to tell Mr. Hay. On November 13th, you have the answer of Mr. Hay acknowledging the communication, and saying that the United States Government, although they regretted that European Powers should use force against Central American countries, could not object to their taking steps to obtain redress for injuries suffered by their subjects, and so forth. That does seem to me to show a strange want of consideration of the susceptibilities of the American people. I should like to have a little more information on the subject. The case I have been putting is the case as it appears from the Blue-book, but when I take the statements of various Ministers I am at a loss to make these utterances correspond. On February 7th, Lord George Hamilton stated that in July last we took steps to ascertain that the measures proposed by us would in no way alienate the good feeling of the American Government and the American people. On February 13th, at Liverpool, the Prime Minister stated that the Government of the United States had been from the beginning taken into our confidence with regard to every stage of the proceedings; and on February 19, in the House of Commons, Lord Cranborne said that no formal intimation was made to the American Government in regard to the co-operation of the two Powers,† but that each of them had at different times informed the American Government that they might be compelled to resort to coercive measures against Venezuela. If Lord George Hamilton and Mr. A. J. Balfour are correct in what they stated, I want to know why we have not got the text of the communications that passed between His Majesty's Government and the Government of the United States before November 11th. On the other hand, if I am to accept the statement of the Under Secretary as correct, that again is contrary both to the Blue-book and to the statements of the two Ministers I have mentioned, because he represents that the British Government and the German Government each said that they were going to do something or other in Venezuela, but did not say they were going to co-operate together. It shows very little confidence in the Government of a great friendly Power not to tell them what you proposed to do in the matter. I should like some clear and full statement from the noble Marquess as to what exactly did take place in regard to communications between His Majesty's Government and the Government of the United States, and which of the three different stories is correct.

The noble Marquess may say that "after all it is very easy to criticise what we have done, but what better thing could have been done? "I am not. afraid to suggest what I conceive would have been a better policy. It seems to me that when on July 23 the German Ambassador came to the noble Marquess and suggested this idea of co-operation, the noble Marquess might very well have said that it was not the intention or the habit of the British Government to cooperate with any European Power in American waters. That would have been a very natural and reasonable course to have taken. Or the noble Marquess might have taken a leaf out of the book of the noble Earl who sits below the Gangway. In 1895 Lord Rosebery had to deal with a state of affairs very similar to that which occurred in regard to Venezuela. I do not say that they were identical, but they were very similar. I refer to what was known as the Hatch incident in Nicaragua. I think that Mr. Hatch was in the British Consular Service, and that he and some British subjects were ill-treated and turned out of Nicaraguan territory. What did Lord Rosebery do on that occasion? He made communications to the American Government stating that he was going to bring force to bear on Nicaragua, and that he had no ulterior object whatever except to obtain redress for these particular injuries. Then their principal port Corinto was seized and held by us until redress was given for the outrages committed by the Nicaraguan Government, until, I think, the sum of 15,000 dollars was paid in compensation. That was a perfectly successful operation. Why was it successful? It was successful because the noble Earl acted alone, and, in the second place, because he made a complete communication of his intentions, to the American Government. At that time I think there was a President in office who was disposed to press the Monroe Doctrine even more strongly than the present President is, and yet, so far as I am aware, throughout the whole of those proceedings in Nicaragua we never heard the words Monroe Doctrine at all.

The particular points on which I desire to press for further Papers are as follow. First, I ask that I should be given a full statement of all the British claims and their value, with the names of the persons on whose behalf they are made and to whom compensation is to be paid. Then I should like to have information as to the exact state of affairs with regard to the island of Patos, and a Paper giving the full return of the cost to this country of the blockade of the Venezuelan coast; and, lastly, I ask for Papers containing the communications, if any, which passed between us and the Government of the United States of America and which are not contained in this Blue-book. There is just one other small point with regard to these Papers to which I should like to refer. In this Blue-book are contained the whole of the Papers which were to be found in the White Paper of last session, presented just as the House was about to adjourn, and on which I think there was a statement from the noble Marquess in this House, and a short debate in the other House. It is rather curious that from that White Paper there were two despatches omitted which, I think, were very necessary to the proper understanding of the Venezuelan case at that time. The one is the despatch from the noble Marquess to Mr. Buchanan on November 26, 1902, from which two extracts are given in the Blue Book (Nos. 153 and 154) and the other the despatch or the memorandum communicated by M. Cambon on November 28, 1902, which was the caveat entered by the French with regard to the priority of claims. These were very important papers, and I cannot understand why they should have been omitted when papers were included up to December 2. It seems to me that the action of His Majesty's Government in regard to this question has been ill-considered and rash. I hope the noble Marquess can put a different complexion on their action, and I am sure nobody will be gladder if he can do so than we on this side of the House.

Moved, "That an humble Address be presented to His Majesty for further Papers relating to Venezuela."'—(The Lord Tweedmouth).

*LORD AVEBURY

My Lords, I confess I am surprised at the attacks which have been madeon His Majesty's Government with reference to the Venezuelan business. It is obvious from the Papers that have been published that the Government has exercised great patience and forbearance. If action had not been taken it is certain that neither the lives nor the property of British subjects would have been safe. I am, however, somewhat puzzled as to the distinction made between the various claims for the settlement of which the Government of Venezuela is equally responsible. The question whether foreign governments who have borrowed money in this country are to be permitted to break their obligations towards their creditors with impunity is one of great importance in view of the enormous sums of money which have been lent to them by British investors. Personally, I am not interested in the Venezuelan Debt, butam speaking as President of the Corporation of Foreign Bondholders, an institution which was founded in London some thirty years ago with the special object of protecting the interests of the holders of foreign bonds in this country. In illustration of the magnitude of the interests involved it may be mentioned that the Corporation has been instrumental in effecting settlements of debtsag-gregating in round numbers the gigantic sum of £1,000,000,000. Of course the bonds which represented this vast sum of money were not all held by British investors; far from it, but still the amount is enormous, and the subject of great importance.

Now, what are the reasons adduced against the Government for supporting the just rights of English investors? In the first place, it is sometimes said that the whole nation ought not to be put To expense for the benefit of a part. A fortiori, then, no individual Englishman is entitled to support or redress. Moreover, it must be remembered that the Government get3 a substantial part of its revenue from income tax and stamps on foreign bonds. A foreign Government defaults and insists on a large reduction of its obligations. New bonds are then issued, and the interest in arrear is funded into the new securities, the value of which is probably greatly depreciated. The British Government, however, demands the payment of stamp duty on the par value of the new securities, and I am sorry to say that in many cases the funds to defray this charge come out of the pockets of the unfortunate bondholders instead of being provided by the defaulting Government. Surely those who contribute so largely to the revenue of this country are fairly entitled to receive support from their own Government. Another erroneous impression is that the rate of interest on most foreign loans is exorbitant, and that this is especially so in the case of the external debts of the Central and South American Republics. That was so formerly in some cases, but as matters now stand it will be found, on the contrary, that the rates of interest for which these States are now liable is quite for reasonable. In the case of Venezuela, for instance, the interest on the 1881 Loan has only been paid (that is, during the time that Venezuela has not suspended payments altogether) at the rate of 3 per cent., while on the 1896 Loan the rate is 5 per cent., the average being less than 4 per cent. Costa Rica, some years ago, sealed down the rate to 2½ per cent. on three-fourths of her external debt and to 3 per cent. on the remainder, while Guatemala reduced her rate to 4 per cent. Not one of these three States, is, however, at the present time paying their external creditors anything at all. Colombia, who after a suspension of payments lasting for three and a half years has just announced the resumption of remittances, is only called upon to pay at the rate of 1½ per cent., rising to a maximum of 3 per cent. Nicaragua, Paraguay and Uruguay are, I am glad to say, honourably fulfilling their obligations, the rates of interest paid being in the case of Nicaragua 4 per cent., and of Paraguay 1½ per cent., rising to 3 per cent. respectively, whilst Uruguay pays 3½ per cent. on by far the greater part of its external debt, a small portion bearing 5 per cent. interest. I may confidently say that the bondholders are always ready to act reasonably and not demand more than any State can properly afford to pay without retarding its development, or crippling the hands of its Government. It is notorious also that a great many of the defaulting countries are in the habit of paying a high rate of interest on their internal debts, while the claims of their external creditors are treated with cynical indifference and their prior rights entirely disregarded.

Now is there any reason to suppose that the charge for interest imposes an unduly heavy burden; Let us compare the position of Venezuela with some other countries. In round figures the debt of France per head of the population is £29, and the proportion of revenue devoted to its service is approximately 34 per cent. In Italy the debt per head is £16, and the proportion of the revenue applied to its service is 33 per cent. Or let us take some South American countries. The debt per head of Uruguay amounts to more than £27, and 50 per cent. of the revenue is devoted to its service. In Argentina it may be rockoned that the Federal Debt per head is about £13, and that the proportion of revenue applied to debt service is not far short of 40 per cent. There are, of course, also many debts for which the Argentine Provinces are responsible which, if included, would increase these figures considerably. When we turn to Venezuela we find that the debt per head is only about £3 10s. The revenue of Venezuela in normal times amounts to about £2,000,000, while the sum required for interest and sinking fund on the external loans is a little over £200,000. It is clear, therefore, that there is no reason why Venezuela should not meet her engagements. It is not the wealth, but the will, that is wanting. If, however, it could be shown that some temporary reduction was imperative I am sure the creditors would give the position their careful consideration.

Has there, then, been in the case of Venezuela any action on the part of the creditors which could fairly detract from their rights or deprive them of sympathy? Quite the reverse. So far as the 1896 loan is concerned, the bonds were chiefly issued to railway and other companies for the settlement of guarantees which had been allowed by the Government of Venezuela to get hopelessly in arrear, and for the redemption of these same guarantees in the future. The companies submitted to very heavy reductions of their claims; but before the bonds had been in their possession for two years, or thereabouts, Venezuela defaulted in the payment of the interest. As regards the English loan of 1881 I should have thought the Government of Venezuela would have regarded its payment as a sacred duty, inasmuch as this debt originated in money borrowed by Venezuela to win her independence. Venezuela has never, indeed, denied its responsibility, but, from experience in the past, I am afraid that this will not afford much consolation to those who have trusted her. During the sixty-nine years that have elapsed since Venezuela became an independent State it is reckoned that the external loans contracted in this country have been in default for nearly forty years, and that, during the same period, the Republic has compelled the bondholders to accept five separate arrangements, undereach of which they have had to submit to large sacrifices of their rightful claims.

In the attitude of His Majesty's Government towards these defaulting States there seems to me to have hitherto been an extraordinary anomaly and that is the distinction which is apparently drawn between an individual and a group of individuals. The idea seems to be that if the property of an individual is interfered with the whole power of England is to be employed to obtain redress, but if a number of persons are interfered with their rights and property may be arbitrarily taken away, and it is considered wrong to insist on reparation. I confess I see no logic or justice in this. Why, moreover, in the case of the Venezuelan negotiations has a discrimination been made between what are called the second and third-rank claims? In the prior rank there appear to be included the claims of certain industrial companies against the Venezuelan Government, whilst in the last rank is placed the external loan of 1896, which, as I have already said, was issued principally to pay off debts due from the Venezuelan Government on account of guarantees owing to railway companies and other industrial enterprises, amongst which were three English concerns. These companies, as I am informed; still hold the bonds they took in settlement of their claims, and it is very difficult to understand why the fact of their having accepted them should cause them to be relegated to an inferior category. Because these companies are now, as it were, merged in the general group of individuals known as the "bondholders"—instead of being confronted with the Venezuelan Government in an isolated and individual capacity, is surely no justification for drawing a distinction to the disadvantage of the former claimants.

It will be remembered that in certain countries where defaults have occurred International Debt Councils have been established, for instance, in Turkey, Greece, and Egypt. Why should not the same principle be extended to other defaulting States? There may be—in some cases, no doubt, there have been—circumstances which have rendered the payment of the full interest impossible. In the case of Turkey an assignment of certain revenues has been given, and these revenues are directly administered and collected by the representatives of the bondholders. This arrangement is honourable to all concerned, and it is the refusal on the part of Venezuela and other similar defaulting States to give any adequate guarantees that really is dishonourable.

I am not quite clear what are the precise intentions of His Majesty's Government in the Venezuela matter, but I sincerely hope that the question of the settlement of the external loans will be referred with other claims to the Hague Tribunal. Indeed, unless this is done it appears to me that the result of their action will have been to have put a large number of foreign creditors before our main English claims, and the English investors will be even worse oft' than they were before. It is to be hoped, also, that the United States Government will recognise that the Monroe claim involves a certain responsibility. The Central American States cannot expect to be protected from annexation unless they are prepared to fulfil their engagements. The flagrant repudiation of their responsibilities has long been a disgrace to several of the American Republics; it has seriously interfered with their own prosperity and has compromised and lowered the credit of neighbouring countries which, like Brazil and Chile, have faithfully fulfilled their obligations. We have now a great opportunity of terminating a state of things which has cost many millions to English investors, and has involved great loss to the defaulting countries themselves. If the settlement of the external debts of Venezuela is referred to the Hague Tribunal, I doubt not that the creditors would cheerfully accept any honourable and reasonable settlement of their just rights. If His Majesty's Government decide to adopt this course they would greatly benefit thousands of English investors who are now unjustly defrauded; they would at the same time benefit Venezuela herself; they would rescue her from her present degradation, and restore her to an honourable position among civilised nations.

THE SECRETARY OF STATE FOR FOREIGN AFFAIRS (The MARQUESS of LANSDOWNE)

My Lords, I was glad to notice that, in spite of the critical tone of the speech of the noble Lord opposite, he did not follow an example which has been set him in some quarters, by taking us to task for having cooperated with Germany, merely on the ground that under no circumstances should we be excusable if we took joint action with that Power. I have always felt that the idea of allowing our sensitiveness over incidents which took place during the South African war to influence our attitude to such an extent was greatly to be deprecated. I should have regretted any action on the part of His Majesty's Government which might have had the effect of increasing the estrangement produced between the two nations by the events to which I have just referred. The noble Lord told us, however, that we should have done better had we taken action alone, and he referred to the precedent of Nicaragua. There is this difference between the two cases—that, to the best of my belief, in the Nicaragua case no European Lower invited us to co-operate with them. In this case we were approached by Germany; and I cannot help thinking that the noble Lord has not sufficiently taken into account the great practical inconvenience which would have resulted if Germany and Great Britain, having each of them made up their mind to resort to measures of coercion, had proceeded to those measures separately and without a previous understanding. A blockade is not a very simple or agreeable enterprise; but the troubles incident to a blockade would surely have been immensely increased if Great Britain and Germany had each of them undertaken separately and without previous understanding coercive operations against Venezuela. It is not difficult to imagine some of the results of such isolated action. I have the greatest respect and admiration for sailors; but it is pretty well known that they are not always very easy to hold in hand, and that the spirit of emulation prevails very strongly in their breasts. I ask your Lordships to consider what might have been the result if, when we were blockading Venezuelan ports or seizing Venezuelan gunboats, German ships of war had been simultaneously blockading the same ports and starting in pursuit of the same gunboats. I cannot help thinking that the results might not have been altogether edifying, except perhaps to the Venezuelans. The blockade took place under a prearranged scheme; each Power took its own sphere of operations; and the result was that, within a fortnight, the Venezuelan Government, who had turned a deaf ear to our remonstrances, proposed to us that our disputes should be settled by arbitration.

The main count of the noble Lord's indictment is, however, not so much that we associated ourselves with Germany in this enterprise, as that what I may call the Articles of Association between the British and the German Governments were carelessly and rashly drawn up. We are told, in particular, that we were guilty of grave imprudence when we agreed with the German Government that, once we had embarked upon measures of coercion neither Government was to be at liberty to recede without previous agreement with the other. That objection seems to me a strange one. I cannot conceive, either in private or in public life, that when two parties embark together upon a difficult and troublesome enterprise it should not be upon an honourable understanding that they are not to desert one another in the middle of it. I do not know what would be thought of the reputation of a private individual who. in such circumstances deserted his associate. I am sure the reputation of a great Power which made terms for itself in the middle of an enterprise of this kind would not gain by such conduct. But the very fact that we were honourably bound to go through with this business rendered it, no doubt—and I freely admit it—necessary for us to consider carefully upon what terms the joint enterprise should be undertaken. The noble Lord has reviewed these terms and made various criticisms upon them. In the first place, he took the British claims and examined them clause by clause. He admitted that in principle the claims for outrages upon British shipping were claims which it was our duty to enforce; but he suggested that some of them were of a suspect character. All I can say, is that even supposing it could be shown that one of those unfortunate schooners had contraband goods on board, that was no justification for the abominable and outrageous treatment which the owners and crew of those vessels received at the hands of the Venezuelan authorities.

Then the noble Lord called attention to the fact that in the early stages of the correspondence we mentioned £10,000 as the value of the first rank claims, and that at a later stage we reduced that sum in £5,500, which in his view is a proof of the untrustworthiness and unsoundness of the whole of this class of claims. It was not very easy at first to check these claims and revise them. They were checked and revised by our Minister at Caracas: and the result was that, wishing not to ask for a shilling more than was strictly due to us, we asked for the smaller sum. The larger sum mentioned was asked for at a time when we were not yet in the full possession of the facts, and when it was necessary to mention an outside limit. Then the noble Lord suggested that all the other claims were virtually the claims of the bondholders: during the discussion on the Address the noble Earl opposite (Earl Spencer), saying something to the same effect, told us he could understand pressing for the payment of shipping claims, but that the other claims were of the nature of bondholders' claims. That is a complete misapprehension. What were the other claims which we speak of as second-class claims? They were claims for injury to and wrongful seizure of property, for the plunder of business premises, and offences of that kind. They were also claims for services rendered and unpaid for, for contracts entered into for the performance of works with the Venezuelan Government which never have been met by the Venezuelan authorities.

Let me give your Lordships illustrations of the first class of these claims. There is a case of a British subject resident in one of the Venezuelan outports who, owing to the bombardment by the Government squadrons, was compelled to leave his home and seek safety in Might. On his return he found that his house had been plundered by the Venezuelan troops, and that his clothes and personal effects and live stock to the value of some £240 had been carried off. There is another case of a British, subject settled for some years at Rio Grande, and owning an estate on which he cultivated tea and coffee. He was arrested, his house was pillaged, and a large amount of his property stolen. Now I ask your Lordships whether we were to take the line of saying that we have the right to demand compensation when British subjects are beaten, or stripped, or landed on a desert island, as some of the crews of these vessels were—that we were to come to then rescue—but that when it comes to injury to property, and the plundering of premises and so forth, then we were to sit with our hands folded and tell the sufferers they must shift for themselves. We are often told that British enterprise is being ousted from the markets of foreign countries, and I am afraid that it would be ousted with a vengeance if His Majesty's Government were to proclaim to the world their complete indifference to the maltreatment of their subjects in cases of this sort. That is not the line which is taken by the Governments of other countries; and I should be sorry if we were to fall behind them in that respect.

Now I will say one word on the claims of the bondholders. I observe a disposition to speak, to say the least of it, in disparagement of the bondholders and their claims. I am bound to say that I feel great compassion for the bondholders; and I think that in this case, and in many other cases, they have been abominably treated by the Powers to which they have made advances. But we have throughout placed these bondholders' claims on a wholly different category from the shipping claims and the second-class claims. It seemed to us desirable that, if there was to be a settlement with the Venezuelan Government, that settlement should be of a general and comprehensive character; and we thought that it ought, if possible, to include some kind of arrangement with the bondholders. But our proposals with regard to the bondholders never went further than this—we proposed that if there was an arbitration the bondholders' claims should go to arbitration; and that if, on the contrary, there was a direct settlement by negotiation at Washington, then the Venezuelan Government should give us an undertaking that they would make a fresh arrangement with the bondholders. That was not an engagement of a dangerous or far-reaching character. We were better able to make that proposal because we knew that a scheme for such a fresh settlement with the bondholders had been drawn up by a Committee representing the interests of the British and German bondholders, and that that claim had actually been laid before, and received the approval of, the Venezuelan Congress. There was, therefore, every reason to look forward to a satisfactory settlement with the bondholders; and, in point of fact, President Castro never raised any objection to this particular proposal. If your Lordships will look at Article VI. of the Protocol (page 226 of the Blue-book), you will find that the Venezuelan Government have undertaken to enter into a fresh arrangement respecting the external debt of Venezuela, with a view to the satisfaction of the claims of the bondholders. I do not think we went an inch too far in supporting the bondholders' claims; and on the other hand I protest against the allegation that there was nothing between these claims and the shipping claims which we placed in the first rank.

Then the noble Lord referred to the difference between the British and the German claims, and complained of us because we associated ourselves with the German Government in demanding that the claims of both Powers should be simultaneously dealt with by "Venezuela. It is true that in some points the British and the German claims differed in their nature. We had, in the first place, claims for outrages on ships, which we placed in the first rank; and, in the second place, we had a great mass of claims for damage to property and the seizure of goods and for services unpaid, claims which we had not yet revised, and which we consequently placed in the second class. The Germans had no shipping claims, and therefore it was obviously impossible that they should have first-rank claims exactly corresponding with ours; but, on the other hand, they had claims which, in their eyes, were every whit as important and as strong as our shipping claims. Let me tell you what these claims were. They were claims for the exaction of forced loans, for the seizure of cattle, the plunder of houses, and the devastation of lands. And the German Government, in making these claims, desired it to be understood by the Venezuelan Government that these claims were not only pecuniary, but were also based on the ill-treatment of Germans by the Venezuelan authorities. I call your Lordships' attention to the fact that a certain portion of these claims had this peculiarity, that they had been revised by the German Government, and that they had been revised more than once; they had undergone examination at Caracas, and they had been subsequently taxed and considerably reduced at Berlin by the Legal Department of the German Foreign Office. It seems a perfectly natural thing that in respect to this set of claims the German Government should have laid it down that they declined to submit them to arbitration, but that, as regards the rest of their claims, they were ready to submit them to arbitration. It was indeed in support of these first rank claims that the German Government undertook to resort to coercion against Venezuela.

Your Lordships will find in the correspondence of 23rd December, that these German first rank claims were put fairly and fully before the Venezuelan Government; that on 1st January, President Castro accepted responsibility for these claims in principle; and that on 5th January, the two Governments required President Castro to declare not only that he accepted our demands in principle, but that if there were to be negotiations at Washington, those negotiations were to proceed on the assumption that the Venezuelan Government unreservedly accepted and agreed to be hound by the conditions which we had laid down. There was no mystery about these German first rank claims. They were put forward from the first; and, although the amount was larger than ours, they might have been settled by the Venezuelan Government in the course of a few hours. The noble Lord told us that we had bound ourselves to Germany, not taking sufficiently into account the sinister designs which he apparently attributes to that Power on the South American Continent. He spoke of a document—I never heard of it before, and [do not know from what quarter it reached him—which suggested that at the back of the action of the German Government was a desire to obtain a coaling station in Venezuela. I never heard of that. How far was it that we bound ourselves to go with the German Government? Thus far only, that both of us insisted upon the immediate settlement of the first rank claims, amounting altogether to £72,000 or,£73,000. For the rest, both Governments were prepared to accept either the decision of a mixed commission, on which the Venezuelan Government would be represented, or the decision of the arbitral tribunal of The Hague. I ask your Lordships whether that was a rash and imprudent bargain, tying us in "adamantine bonds" to Germany, and obliging us to persevere in our so-called alliance up to a point that might have involved us in the most disastrous consequences.

One word in reply to what the noble Lord said as to the manner in which in this controversy we have dealt with the United States Government. I hope I may be allowed to say that I do not yield to the noble Lord, or to any one in this House, in my desire that nothing should be done to give offence to the susceptibilities of the United States, or to indicate to them that we have any desire to impugn the Monroe Doctrine. With regard to the United States, we certainly in this matter cannot be accused of having run the, risk of alienating their sympathies by our conduct. It is true that we did not make our official reference to the United States Government until 11th November. That was, of course, some time before the actual issue of the ultimatum, and a considerable time before we actually resorted to coercive measures; but we had excellent reasons for knowing how the United States were likely to regard the question of our action in Venezuelan waters. The point had been raised, and raised in the most distinct manner, a few months before. When the German Government first considered the question of resorting to coercive measures they intimated to the American Government that, if the Venezuelan Government continued to decline settlement, it would have to be considered what measures of coercion should be used against it; and, my Lords, the German Government dotted the is, because they explained that, according to their ideas, those coercive measures should be of the following kind: "After the posing of an ultimatum, first of all the blockade of the more important Venezuelan harbours, principally the harbours of La Guayra and Puerta Cabello, would have to be considered as an appropriate measure of coercion." "If this measure," continued the German Note, "does not seem efficient we, would have to consider the temporary occupation on our part of different Venezuelan harbours, and the levying of duties in those places." There, my Lords, was a distinct intimation not only that coercion was intended, but that that coercion should take a particular shape.

THE EARL OF ROSEBERY

When was this?

*THE MARQUESS OF LANSDOWNE

11th December, 1901. What was the reply of the United States Government? The reply was embodied in a memorandum handed to the German Ambassador by Air. Secretary Hay. That memorandum begins by reciting an often quoted passage in a recently delivered message of President Roosevelt, which runs as follows. Speaking of the Monroe Doctrine the President further said— This doctrine has nothing to do with the commercial relations of any American Power save that it in truth allows each of them to form such as it desires. We do not guarantee any State against punishment if it misconducts itself, provided that punishment does not take the form of the acquisition of territory by any non-American Power. And then the writer of the memorandum continues— His Excellency the German Ambassador on his return from Berlin conveyed personally to the President the assurance of the German Emperor that His Majesty's Government had no purpose or intention to make even the smallest acquisition of territory on the South American continent or the adjacent islands. This voluntary and friendly declaration was afterwards repeated to the Secretary of State, and was received by the President and the people of the United States in that frank and cordial spirit in which it was offered. That remarkable memorandum was published in an American official paper, and was there for any of us to read who chose to pay attention to this matter. With so plain an indication as that of the policy of the United States Government there was no reason why we should have had any misgiving on the ground that objection might be anticipated in that quarter to measures of coercion resorted to by His Majesty's Government. We wished, however, to make assurance doubly sure; and on 11th November we instructed Sir Michael Herbert to inform the Secretary of State of our intentions, and we received, as we knew perfectly well we should receive, the answer that no objection was likely to be raised. Then the noble Lord was anxious for more information as to the character of the communications which, he had gathered, passed at different times between His Majesty's Government and the United States Government. The date on which the first official communication was made was, as I said a moment ago, on 11th November. It is quite true that that was not the only communication that passed between the State Department and the Embassy at Washington, or between the United States Embassy and the Foreign Office here. There have been constant communications—no doubt often of a very informal character, but still entirely sufficient when those who were engaged in them knew as well as we did that there was no room for misunderstanding on this subject; and I certainly am able to say that during the whole course of these negotiations not one single word was said or written by the United States Government which was not thoughtful and friendly and considerate towards this country. That is true of our relations with the United States Government. I think it quite possible that there may have been a section of public opinion in the United States, not, perhaps, sufficiently informed as to the facts of the case, which at one time took a different and somewhat excited view of the question; but now that matters have advanced as far as they have towards a settlement I shall remain sanguine that no one whose opinion is worth having in the United States will hold any other view with regard to the action and conduct of His Majesty's Government except that throughout the whole of these negotiations that conduct has been perfectly sincere and entirely above suspicion.

Towards the end of his speech the noble Lord referred to other matters about which he wished for information. He has put upon the Paper a notice of Motion for Papers. I gather that some of the points on which he desires to be informed are the full particulars of British claims, the question of the ownership of the island of Patos, the cost of the blockade, and also our correspondence: with the United States Government. As to the full statement of the British claims, I do not hold out any hope, at any rate in the near future, of being able to lay that return on the table. They have not been revised. Those which are coming in, and which we shall have to consider as they come in, will eventually be dealt with by a mixed commission, which, for all I know, may reject a great number of them. The question of the island of Patos is one which has at various times engaged the attention of the various Governments interested, and I am under the impression that our legal advisers are of opinion that our title to the island, founded as it is upon long prescription, is an excellent one. As to the cost of the blockade I do not know whether my noble friend behind me will be prepared to give information on that subject; but I am unable to agree, at present at any rate, to any general motion of this kind. I think I have a right to ask the noble Lord, if he does desire that other Papers should be supplied to your Lordships, that he should give us a full and accurate description of them; when he does so I shall be glad to consider his request.

THE EARL OF ROSEBERY

My Lords I was very anxious to avoid saying anything on this subject until I had had an opportunity of hearing from the Secretary of State his explanation, such as it is. For, after all, this massive but meagre and reticent Blue-book tells us very much that we do not particularly care to know and is singularly silent as to what we do particularly wish to know. I confess that the speech of the noble Marquess does not seem to me to vary very materially in character from this Blue-book. If, indeed, the word "Venezuela" could fee expunged out of the records of the present Government, it would be a very fortunate thing for them. We have not yet forgotten the humiliation of some years ago, to which I will not further refer, and I confess that in this matter—these proceedings against Venezuela—we do not show to any more advantage than we did on that occasion; and I think we are fortunate indeed to have extricated ourselves with no more detriment to our character and our reputation than we have done. Now, with regard to the general remarks that are made about claims in South America, I feel a very lively sympathy. I will not, indeed, go as far as my noble friend behind me, who has not been at the Foreign Office, and therefore doe-; not partake of that mysterious freemasonry which ties the tongues of those who have. But I strongly suspect that in the minds, though not in the tongues, of the majority of those who have occupied a position there, there is a very strong feeling that if a line of demarcation could be drawn round certain States which it would be invidious to name, and that some notice could be affixed to these limits to this effect, that those who went there or lent money there did so at their own peril, it would be a very great convenience to the Foreign Offices of Europe. I do not deny at all the gruesome character of some of the details contained in this Blue-book; but I should be very much surprised if, with a little pressure, the archives of the Foreign Office would not yield an almost similar record with regard to a number of other South American States. Therefore I think that when these States are governed, as we know they are, by a somewhat wild and natural Government, which is understood by those who partake of its blessings, but in no way resembles an European Constitution, it is not fair to urge the claims of those who have claims on these States as being in the same category as if they were urged against civilised European States. My noble friend Lord Avebury, with all the passion and all the pathos of a bondholder, took something of a different line.

*LORD AVEBURY

I have no interest whatever in the Venezuelan debt. I merely spoke as Chairman of the Corporation of Foreign Bondholders.

THE EARL OF ROSEBERY

I never said my noble friend had a farthing in the Venezuelan debt; but I heard his constant denial of the fact, and that made me think he might have some other South American securities.

LORD AVEBURY

Oh!

THE EARL OF ROSEBERY

My noble friend spoke, at all events, with the well simulated passion and pathos of the bondholder, such as well befits the President of the illustrious corporation over which he presides. But I confess that his speech, far from convincing me, added to the apprehension I already felt as to the policy of the Government. What did he say— Venezuela," he said "is a comparatively prosperous community. It ought to pay its debts. Its debt is only so much per head. Ah! that reasoning per head depends so very much on the quality of the head. My noble friend recited the finances of Venezuela in a manner which must have given gratification to any native of that State, if one had been within hearing, but which, I fear, is hardly borne out by actual statistics and facts. He alluded airily to the revenue of Venezuela as some £2,000,000 sterling, whereas it is certainly not more than 39,000,000 bolivars—and the bolivar is only equivalent to a franc—so that my noble friend will see that he cannot, by any process of arithmetic, make the revenue £2,000,000 sterling.

*LORD AVEBURY

That was an exceptional year. Surely the average should be taken.

THE EARL OF ROSEBERY

It was an exceptional year; the first year that showed a surplus for the last ten years. In all the other years there had been a deficit of 10,000,000 bolivars, or £400,000 a year, which is hardly likely to encourage the Venezuelan bondholders. But let us pursue my noble friend's argument further. He said that Venezuela was well able to pay its debts; and I waive that question for a moment to look at other States which are borrowing money at comparatively low rates of interest. Look at Uruguay and Costa Rica. I mention these with fear and trembling in this House. He says they pay nothing at all.

*LORD AVEBURY

Uruguay is paying regularly.

THE EARL OF ROSEBERY

Very well; it was Guatemala and Costa Rica. They pay nothing at all. What is the irresistible effect of this argument? If we are to pursue his course of policy, we ought now to engage in bombarding Guatemala and Costa Rica. If my noble friend had ever been at the Foreign Office and had read the despatches that come from South America, he would not have been there a month without very materially modifying his views on the policy to be pursued towards South American States. That is what I have to say as to the general question of South American claims as put forward by my noble friend. But the case as portrayed by the Blue-book is one which is, I think, exceedingly damaging to the Government, apart from general considerations such as those I have indicated. We know now that it was in the middle of December, 1901, that the German Government first proclaimed the policy of exacting penalties from Venezuela. It was on July 23, that the historic interview took place between the noble Marquess the Secretary of State and Count Metternich. On July 29, an ultimatum was sent to Venezuela. Several months afterwards there was a communication to the United States: and two days after that, I think, or about the same time, another ultimatum was sent to Venezuela. Well, then we come to November 13, which is a very striking date, because it was then for the first time that the nature of the German claims was communicated to his Majesty's Government, which has promised joint action until those claimd were satisfied—that is to say, the interval between July 23, when joint action was agreed upon, and November 13 was spent by His Majesty's Government under the bond of an agreement to exact the German claims without knowing what those claims were. I do not think that His Majesty's Government have any particular reason to complain in that matter, because, as far as I understand the Blue book—and the Bluebook is singularly defective in some of its statements—the British claims were never really detailed until January 13. The noble Marquess the Secretary of State airily mentioned the sum of £600,000 as the British claim which, according to agreement, was one which the Germans were bound to sustain. Fortunately, all these agreements went into thin air under the pressure of events. On November 7 we have a final ultimatum delivered to the Venezuelan Government; and the noble Marquess says that, after a fortnight's blockade, the Venezuelan Government came to our views. But I think the blockade was somewhat more effective than he makes out, because on. 10th December we seized their ships, and on 13th December the United States intervened with their proposition. From the moment the United States intervened, the question entered into the region of diplomacy, and whether a few more fishing vessels were seized or not matters, very little to the course of events.

But what is extraordinary in this regard is this—that His Majesty's Government seem to have been constantly laying down large principles, from which if I read the Blue-book rightly, they were afterwards compelled to recede. The noble Lord has just told us that he put the bonds into a separate category of claims; but, if I read the despatch of 17th November correctly, I see that His Majesty's Government did not, however, desire, in their demands upon Venezuela, to draw a distinction between the various categories. Their object was to obtain a general settlement. The noble Lord says, however, that that was not the object of the Government, as they had put the bondholders into a separate category of their own, and the understanding between Germany and Great Britain was that they should not lay down their arms until the claims of the first rank were satisfied. There is nothing of this in the despatch of 17th November. On the contrary, they say— His Majesty's Government quite concur in the view that, if joint action against Venezuela is undertaken, it should be maintained until the demands of both Governments, as finally agreed upon, are satisfied. I see nothing about the first grade or the second grade, or about the bondholders being relegated to the background. It is a perfectly clear statement of the case that until the claims of both Governments are satisfied they shall continue their joint action, and that in the consideration of those claims no distinction of category shall be observed. Well, of course we know that they receded from that point.

Then we come to another principle which was laid down no less than three times in the Blue-book, and to which I confess I lend a general adhesion, only that it so very soon vanishes from our view under the influences that affected the policy of His Majesty's Government. Over and over again the noble Marquess says that Great Britain was claiming as much as Germany, that there was a claim for £600, 000 which was produced in the month of January. One would have thought that that was not an excessive claim, but nothing comes of it; and I find in all the transactions in which His Majesty's Government have been engaged with the German Government, the ultimate result is that one receives £68,000 and the other £5,500. That represents very much the proportion of benefit received under the understanding by His Majesty's Government and the German Government. Mark you, I do not blame Germany for that; I blame His Majesty's Government; and I think that if there had been a little more equality of result to some of the agreements entered into with the German Government, the relations of the two countries would have been more full of mutual respect than perhaps they are at present. Well, that is another principle from which we receded. Then, on December 16, the German Ambassador and the noble Marquess held a conclave together at which they agreed that the first proposal of arbitration should be refused; I informed his Excellency that the Venezuelan proposal, as it stood, was unacceptable. and so on. Now comes a remarkable and very interestering fact. The Cabinet met that very day, and later in the afternoon the noble Marquess was able to inform the German Ambassador that the Cabinet had overruled him and were determined to have arbitration. I think it was one of the most curious episodes I have ever seen. In the Blue-book, page 177, under date December 18, 1902, we read. I informed the United States Charge d'Affaires this afternoon that the Cabinet had decided at its last meeting on the 16th to accept in principle the idea of settling the Venezuelan dispute by arbitration, and we had since ascertained that the view of the German Government was in accord with our own. That again was one of the instances in which the first principles of the Secretary of State were overruled by the course of events, in this case by the Cabinet. The last occasion on which we can say that the same thing occurred was when the Government declined that Mr. Bowen should be accepted as Ambassador from Venezuela, which shortly afterwards they reconsidered and accepted. Then the Blue-book ends with an absolute agony of telegrams as the pressure of public opinion increases and the meeting of Parliament approaches. I remember very well that on Saturday, February 14th, there was to be a Cabinet, to settle the King's Speech, which was adjourned till Monday, February 16th; and it does not need a magician to see that it was the absolute determination of the Cabinet that they should have the good news of the settlement of the dispute by some means or another to announce in the King's Speech to Parliament that caused the postponement of the Cabinet for those two days. But, at any rate, no one can read the almost pathetic succession of telegrams that passed between the Foreign Office and Washington during the first fortnight in February without seeing that the Cabinet had then taken affairs into its own hands, and had insisted upon a settlement.

There was one point of my noble friend's speech that the noble Marquess left entirely unnoticed—that was as to the utterances of his colleagues and subordinates with reference to this question. There is, for example, Lord George Hamilton. Lord George Hamilton is a very important Minister, or, perhaps, to speak more accurately, a Minister who has held many important posts. He usually speaks in the sympathetic seclusion of Ealing, which is, I believe, the principal town in his constituency; and it was with a feeling of alarmed apprehension that we learnt that he was about to speak at Bradford, When he got to Bradford the country was in a state of great tension with regard to this business, and therefore we watched the utterances of Lord George Hamilton with an attention which was somewhat unusual. He said— In July last we took steps to ascertain that the measures proposed by us would in no way alienate the good feeling of the American Government and the American people. Well, July was not December, 1901, when the German Government approached Washington; and it was not November, when the British Government approached Washington. Two months later"—that would be, I suppose, in September—"the German Government informed us that they were exactly in the same position as we were. It was July when the German Government gave that declaration. I really think that the Foreign Secretary ought to coach his colleagues better when the yare going to speak on these subjects. Then he ended by a detail of the advantages of this policy, which appeared to consist in this—that the German and the British Press had exchanged some rough home truths, which would show that in future Great Britain was not to be insulted with impunity, and that a sort of rough-and-tumble had occurred, which would be eminently beneficial to the allies against Venezuela. My Lords, that is all very well between schoolboys, but it is not the way in which great nations come to harmonious relations. If I might venture to offer advice to the Government it is this—that for the future it should confine Lord George Hamilton to Ealing.

Now we have at last the long-promised, explanation of the Government on these two important points, their special relations with the United States, and their alliance with Germany. What is the explanation of their relations with the United States? There was no formal, announcement till November 11; but in the meantime there was an understanding—to speak colloquially, a sort of exchange of winks with the American. Ambassador—which was eminently satisfactory to both parties. An exchange of winks is not the way in which two great nations treat one another on occasions of this kind, more especially on an occasion like this, when you are dealing; with the very tenderest point of American susceptibilities, and one which we, having declared our adhesion to and acceptance of, are bound to respect with all the formality and all the courtesy in our power. The noble Marquess told us that they knew perfectly well what the view of the American Government was, because the German Government had approached the Government of Washington in 1901, and had ascertained their view categorically and in detail.

*THE MARQUESS OF LANSDOWNE

The United States Government had published it.

THE EARL OF ROSEBERY

I do not see how that affects my argument. My point is that it is not for the Government of Great Britain to approach Washington through the medium of Germany, which is the only way they did approach them.

*THE MARQUESS OF LANSDOWNE

. We approached them ourselves before, any coercive measures were adopted.

THE EARL OF ROSEBERY

But not before any measures of coercion had been concerted; you had framed every measure of coercion long before you approached the United States Government. And what I say is this, whether it be well to read in the newspapers what the United States Government has said to the German Government or not, it is not in accordance with the comity of nations, it is not in accordance with the relations which ought to sway the Governments of London and of Washington, that the British Government should feel the pulse of Washington through the moans of the German Government, and should abstain from formal communication with the United States Government until long after they had framed every measure of coercion categorically. I frankly say that, for my part, I wish to dismiss this ignominious and pitiable transaction as quickly as possible from my memory just as I wish to, and have dismissed the former episode of Venezuela from my memory also. The only reason for which it interests me, or, I suppose, any one now, is in regard to the effect which it may have on our relations with Germany and with the United States. I cannot believe, whatever may be thought by the noble Marquess as to the effect of his policy on the United States, that it can be a happy one. I cannot believe that the United States will be satisfied by an approach of this character, so long delayed, when it might so easily have been made beforehand. I hope with all my heart that, as the noble Duke the President of the Council said the other night, the relations of the United States with this country were never better than they are at present. I have often heard those sentiments uttered after dinner, and I always rejoice to hear them. But, if the relations of the United States and of His Majesty's Government are as good as they have ever been, it is no thanks to His Majesty's present Administration.

Now we come to the question of Germany; and that is a very delicate matter. The noble Marquess says it would have been quite impossible to do anything but what we did. "How could you have had," he said, with a touch of playful humour, "two ships chasing the same fishing-boat, one ship bearing German colours and the other the flag of the British?" He said there would have been terrible complications. But it seems to me the whole argument of the noble Marquess rests on this—that the operations against Venezuela must necessarily have been simultaneous in their nature. If Venezuela is so wealthy as my noble friend behind me seems to think, there would have been ample opportunity after the Germans had conducted their operations to put some pressure for our own part on the sponge which had not yet been squeezed dry; at any rate, it would have been open to us to take the line of France, of Belgium, and, I think, of other Powers, and to have given notice that in any warfare that might take place between Venezuela and Germany our interests in the matter should be in no way affected. lean imagine the Foreign Minister, when approached by the German Ambassador on 23rd July, saying— There is nothing that I wish so much as good relations between our two countries; there is nothing I should desire so much as harmonious co-operation between Germany and Great Britain. There is no reason why that co-operation should not take place on some future occasion; but your Excellency must be. aware, belonging to a nation so proud and delicate on the point of national honour, that there are circumstances, there are words said and written in heat, which cannot be wiped out in a moment, and I honestly think it would be in the interests of the good relations of both Powers that we did not act together on the present occasion. I do not say that that would have been the policy which the noble Marquess need have followed. He may have been unaware of the feeling caused in Great Britain, not merely by articles and caricatures in the German Press, but by speeches of responsible German statesmen, He may not have been aware of the feeling, but it was his business to be aware of it. All I can say is this, that if we are to look in the future of our foreign relations to enterprises and alliances conducted as this has been and as others have been in other parts of the world by predecessors of the noble Marquess, I confess I feel more gloomy about those relations than I otherwise would be justified in feeling. It is no secret to anyone except the Prime Minister, who said he was not aware whether or not other nations regarded us with a feeling of antipathy and jealousy, that there is on the continent of Europe a cherished hostility to this country, partly; unreasonable, partly, as I think, due to the action of His Majesty's Ministers themselves. I think that, had they placed their case in the Boer War before Europe in an authoritative manner, it would have been well for this country and well for Europe. I ventured to put forward that view in December, 1901; and I remember a Minister, if I am not mistaken, my noble friend the Scottish Secretary, who, alluding to this idea of the Ministry issuing a diplomatic circular, giving a history of the events which led up to the war as we British saw them, said it was the greatest nonsense he had ever heard in his life.

I have a great respect for my noble friend the Scottish Secretary, and in matters appertaining to his own Department I bow my head before him. But I cannot help remembering that it was the almost invariable, at any rate the constant, practice of Prince Bismarck when he was engaged in any enterprise, in which he wished to conciliate the opinion of Europe, to use the method of the diplomatic circular; and, paying every homage to my noble friend the Scottish Secretary, I cannot help thinking that the authority of Prince Bismarck in foreign affairs is even greater than his. I do not say that by such a method you could have convinced the stipendiary authorities who infected the Press of some countries in Europe; but I do say that you could have convinced many thoughtful minds, minds which weigh judicially things laid before them, minds of great influence which were led away by the ex parte statements of the Press of Europe, and which gave their important and valuable suffrage against us. I put aside, too, the utterances of some of our Ministers which were ill-calculated to conciliate or secure the affections of the countries of Europe. But I am not disposed to blame altogether our conduct and our Ministers. I am only saying that our conduct and the conduct of our Ministers was not free from responsibility in this matter. But I do hold that, to whatever cause the feeling may be due—I have constantly said it in this House—the antipathy, the rancour, the jealousy of Europe, which I think by a different course of conduct might have been conciliated, constitute a very serious danger to our Government and to our country. I do hope this, that, having escaped in this mostill-advised enterprise from the consequences which might naturally have been reaped from the relations of Great Britain to Germany and the United States, we shall pause, and pause long, before we embark in any similar engagement.

THE LORD PRESIDENT OF THE COUNCIL (The Duke of DEVONSHIRE)

My Lords, I scarcely think this is the opportunity on which we can profitably enter into a discussion of what ought to have been the course which should have been followed by our Government and Statesmen in explaining to the Governments and nations of Europe our exact position in regard to the Boer War. I scarcely think that your Lordships came down to the House to-night prepared to enter into a discussion of that character in connection with the Venezuelan negotiations. I should be quite unable to follow the noble Earl in a good deal of the somewhat minute, and I venture to think somewhat captious, criticism which he made after, apparently, a very minute study of the Papers which are contained in this Blue-book. I shall certainly not attempt to follow him in the controversy into which he entered with my noble friend, Lord Avebury, as to what ought to be the attitude of our Government in regard to foreign bondholders. But I cannot help observing that the noble Earl appeared, if I followed him correctly, to lay down a somewhat singular line of policy which, in his opinion, ought to be observed in our dealings in the future with a number of States in South America which he described, in language that I should have thought hardly befitted a late Prime Minister and Foreign Secretary, as uncivilised and barbarous. So far as I could gather from the somewhat obscure remarks of the noble Earl on that subject, it is his opinion that a mark ought to be placed against the names of certain of these uncivilised and barbarous states, and that everybody ought to have fair warning that any negotiations and transactions into which they might enter with them would be transactions that would be entered into at their own peril. I do not think that that is a policy which has ever been held by any responsible Minister in this country, and I do not think it was the policy to which he himself adhered when he was responsible for the affairs of this country.

I am quite unable to follow the noble Earl into all the detailed criticism which he made on these despatches He said, however, that we entered into this matter knowing nothing whatever about the extent or the character of the German claims. As my noble friend the Foreign Secretary has said this evening, we were perfectly aware more than a year ago of the extent of the German claims of the first rank. We knew their amount; and as to the claims other than those of the first rank, cither German or English, all that we have ever asked is that they should be submitted to examination. It was only in respect of the first rank claims that either the German or our own Government demanded immediate satisfaction. Then the noble Karl complained that the. Germans had obtained a very much larger sum than we have done. All, I think, we are concerned to know is that we have obtained satisfaction for those claims which were included in the first rank, and that we have received the whole of the amount which we have ever asked should be paid irrespective of arbitration. It seems to me to be a matter of perfect indifference to us whether the German claims of the same character, but in their opinion and in ours ranking equally in the first rank, were of a larger amount than ours or were not.

THE EARL OF ROSEBERY

Then why did the Foreign Secretary stipulate that the British and German Governments should receive an equal sum?

THE DUKE OF DEVONSHIRE

That may have been a proposal which was once put forward in order to establish perfect equality of action between the two Governments; but after consideration it was thought better, and I think wisely thought better, that we should confine our demand for immediate payment to those claims which were held to be in the first rank. Then the noble Earl raised some question, which I am afraid I did not entirely follow, as to the Despatch No. 198 in the Blue-book, in which my noble friend the Foreign Secretary stated that the Cabinet had decided at its last meeting, on the 16th, to accept in principle the idea of settling the whole dispute by arbitration, and that we had since ascertained that the view of the German Government was in accord with our own. The noble Earl seems to think that there is something entirely inconsistent in that declaration with something which had preceded it in the Blue-book. He went so far as to assert, on what authority I do not know, that my noble friend had been overruled by the Cabinet. When the first proposal for arbitration was made to us by the United States Government on behalf of Venezuela, that proposal was one for referring the whole of the dispute between us to arbitration. We thought at the time, and continued to think, that that was a proposal we could not accept, inasmuch as there was a certain proportion of our claims which we did not think it would be possible to refer to arbitration. At no time have the Government ever demurred in principle to the reference of the second portion of those claims to arbitration. I fail entirely to understand how the noble Earl finds any fault with this part of the transaction. The noble Earl referred to some speeches made by our colleagues, and he made a great point of an inaccuracy which he considers he has detected in the speech of Lord George Hamilton, as to the date when the communications were entered into with the United States Government. Whether that communication took place in June or November, what is the point to which the noble Earl's criticism is directed?

THE EARL OF ROSEBERY

I will tell you at once. It was that I think that, in a matter affecting the Monroe Doctrine, our very first communication should have been to the United States Government.

THE DUKE OF DEVONSHIRE

We have the assurance, which I think the House will take from my noble friend, that he has been constantly in communication with the American Ambassador and the American Embassy upon this subject; and why the noble Karl should describe all communications which are not contained in a formal despatch as winks I do not know. My noble friend has informed the House this evening that we were from other sources in possession of knowledge that the United States Government would not consider any such measures as those we had in contemplation with the German Government as any infraction of the Monroe Doctrine, unless they were followed by annexations of territory. Under those circumstances, and when it was also in our power to keep the United States Government constantly informed of what the position of the matter was, I see very little object that there would have been in addressing a formal despatch to the United States Government until the time came which immediately preceded action. The noble Earl threw some little doubt upon a phrase I used the other day to the effect that our relations with the United States Government had never been better than they are now. He said if that were so it was no thanks to His Majesty's Government. I venture to think that if they are so, and if they remain so, it will be no thanks to the noble Earl himself. The noble Earl says that we have been trifling with the tenderest point in American politics. I want to know where the noble Earl finds any foundation for that statement except in his own imagination. Where throughout those despatches does he find the slightest trace of irritation, or susceptibility, or injury to the relations between the United States Government and ourselves? If in future our relations with the United States Government are to suffer from anything that has taken place in regard to this matter, I cannot conceive anything more likely to produce this result than the ingenious attempts of the noble Earl to prove that the Government of his country have disregarded the tenderest sentiments of the American people. I cannot help thinking that the noble Earl, even if he holds the opinion on this subject which it appears he has formed, would have done better to have allowed a longer interval to pass before he suggested that in the action His Majesty's Government have taken in this question they have in the slightest degree attempted to disparage or dispute the validity of the Monroe doctrine.

EARL SPENCER

I did not intend to add any words to the very able speech of Lord Rosebery, but the concluding remarks of the noble Duke render it desirable that I should do so. I have not understood that my noble friend (Lord Rosebery) attacked the Government for trifling with the United States except in this respect—that they neglected to do what the German Government did in an early communication with the American Government on this subject. I confess that it does seem to me a very remarkable thing that there is no comment made in despatches of an earlier date than in the official document of November 11, which the noble Marquess referred to. We now hear that private communications were made.

*THE MARQUESS OF LANSDOWNE

I did not intend to say, and I do not know that I did say, that the United States had been unofficially approached before November 11. The noble Lord suggested that the despatch of November 11 was the only one in which reference was made to communications between His Majesty's Government and the Government of the United States, and he contrasted that with the Prime Minister's statement that there had been frequent communications between the two Governments. I said that there had been frequent and constant communications both in London and at Washington, but I did not suggest that these frequent communications had taken place before November 11.

EARL SPENCER

Then I do not understand the statement of the Prime Minister. If these unofficial communications were not made until after November 11, I think my noble friend (Lord Rosebery) was perfectly right in contrasting the action of the Government with that of the German Government. I think that there has been a serious want of method in this matter, that it was contrary to the ordinary comity of nations, and that it should not have been done. It seems to me it is a very difficult thing for one Government to act with another unless they know they can support every claim made by that other Government, but I hardly think we have been told to-night that His Majesty's Government were conversant with all the claims of Germany. There is one consequence of saying we should follow in the wake of Germany, and following her claims, which I cannot help thinking is a very serious one. I should say it is a very dangerous and an entirely new doctrine that this country should use force for settling private debts in a foreign country. It is an entirely new proceeding that this should have taken place. The action of the Government is not consistently stated. Here is what the Under Secretary for Foreign Affairs said— I can frankly tell the House that it is not the claims of the bondholders that bulk largest in the estimation of the Government. I do not believe the Government would ever have taken the strong measures to which they have been driven if it had not been for the attacks by Venezuela upon the lives, the liberty, and the property of British subjects…. In my view the bondholders have conferred very great benefits on these South American Republics, and are entitled to protection from their own country; and if that be true of the bond holders it is still more true of those who have invested their money in great industrial enterprises, in that part of the world. That points to approval of Government policy for reparation to individuals who had lost money in a foreign State, hut the words of the Prime Minister are different.

He said— I do not deny, in fact I freely admit, that bondholders may occupy an international position which may require international action; but I look upon such international action with the gravest doubt and suspicion, and I doubt whether we have in the past ever gone to war for the bondholders, for those of our countrymen who have lent money to a foreign Government. It seems to me that the Government are incurring very grave responsibilities in the future, and may involve us in very great difficulties and dangers, if they are going to take up the question of the private debts of our people in foreign countries. I hold that my noble friend was fully justified in asking for further Papers. Surely the important Papers which were quoted or referred to by the Foreign Secretary must be included in some despatches from our Ambassadors at Berlin or Washington. It would have been of great importance to have had those Papers beforehand, and it is not sufficient to say that the United States Government have published them.

THE FIRST LORD OF THE ADMIRALTY (The Earl of SELBORNE)

Will the noble Lords try to get into their heads the idea that the claims which in one form or another His Majesty's Government have taken an interest in have been of three kinds. His Majesty's Government never contemplated any coercive measures against Venezuela in relation to the bondholders only. But they thought that, when a general settlement was going to take place before a tribunal with respect to the spoliation of the private property of British subjects, it was an excellent opportunity which ought not to be missed to arrange with the Venezuelan Government to deal at the same time with the vexed question of the bondholders. The noble Lords opposite have tried to make out that His Majesty's Government first of all made a hard and fast agreement for co-operation with Germany, and only tardily informed the United States. The fact is, the information was given to the United States before His Majesty's Government had finally settled upon the method of co-operation with Germany. In July His Majesty's Government agreed to discuss with Germany whether there should be co-operation. In November they informed the United States, and later in November the final terms of the co-operation with Germany were fixed. That is a totally different presentation of dates to that given by the noble Earl opposite.

THE EARL OF ROSEBERY

You sent an ultimatum to Venezuela on July 29.

THE EARL OF SELBORNE

I do not admit that description. That was a general warning. It was not a joint ultimatum. It was a purely separate transaction.

THE EARL OF ROSEBERY

I did not say it was a joint ultimatum. I said you sent an ultimatum.

*LORD TWEEDMOUTH

The noble Earl has now admitted that His Majesty's Government threw in the bondholders as a sort of extra make-weight for convenience sake.

THE EARL OF SELBORNE

I did not say "extra make-weight" at all.

*LORD TWEEDMOUTH

Then the bondholders were brought in as an addendum. I think that is a very dangerous precedent to have set. The noble Marquess the Secretary for Foreign Affairs stated in his despatch that none of the claims were to be treated differently. Therefore it may be argued that, for the protection of the bondholders, coercive measures have been applied.

*THE MARQUESS OF LANSDOWNE

In the despatch we argued for a general settlement, and we objected to the idea that we were to put forward only the one class of claims.

*LORD TWEEDMOUTH

The noble Marquess distinctly stated in the despatch that His Majesty's Government did not desire to draw any distinction between the various claims. Then the noble Earl has objected to the despatch of July 29 being called an ultimatum. The Prime Minister has called it "the first ultimatum to Venezuela," though it seems to me that "the first ultimatum" is a rather tortuous epithet.

THE EARL OF ROSEBERY

Read the last sentence of Despatch No. 110.

*LORD TWEEDMOUTH

In his despatch of July 29th, 1902, the noble Marquess says— You should intimate to the President and the Minister for Foreign Affairs, in unmistakable terms, that unless His Majesty's Government receive explicit assurances that incidents of this nature shall not recur, and unless the Venezuelan Government promptly pay to the injured parties full compensation wherever satisfactory evidence has been furnished to His Majesty's Government that such is justly due, His Majesty's Government will take such steps as may be necessary to obtain the reparation which they are entitled to demand from the Venezuelan Government in these cases, as well as for any loss to British subjects caused by the unjustifiable conduct of the Acting Venezuelan Consul at Trinidad, and on account of the railway claims. I think that may very fairly be described as an ultimatum.

THE EARL OF ROSEBERY

Hear, hear.

*LORD TWEEDMOUTH

The real object of the Motion was to secure a broad statement of the case against Venezuela and the case for the Government. As I do not think the situation would be improved in any way by taking a division, I will not put your Lordships to the trouble of dividing.

THE EARL OF ROSEBERY

I want to say one word of personal explanation. I never called the South American Republics barbarous, and I expressly disclaim the policy of drawing a line around such as were defaulting and warning people they could only go in at their peril. I said it was an idea that had occurred to the brain of the Foreign Office, but that it had never reached their tongue.

House adjourned at twenty minutes before Eight o'clock, till To-morrow, half-past Ten o'clock.