lated that the claims or differences must be submitted to the judges and tribunals of the contracting country."

The general futility of this clause in so far as it seeks to attain the exclusive jurisdiction of local courts and the avoidance of diplomatic interposition, has been demonstrated by international practice.

One possible objection to the Porter proposition, which appears to have escaped general attention, lies in the fact that it actually sanctions the use of armed force in a class of cases in which the United States, and, on occasion, other powers, have declined, as a matter of policy, to intervene diplomatically.

§ 123. Relation Between Porter Proposition and Drago Doctrine.

It will be seen that this Hague convention for the limitation of the use of force in the collection of contractual debts, popularly known as the Porter proposition, is at once narrower and wider in scope than the Drago doctrine. It is narrower inasmuch as it recognizes the ultimate legality of the use of force. As a definite check upon the use of force in first instance, and an important extension of the principle of international arbitration, it is to be welcomed, for pacific blockades, threats of hostilities, and rumors of warlike preparations, have a most disturbing effect on international commerce, and as General Porter showed, the disposition of neutral states to refuse to recognize pacific blockade leads to the more effective blockade of actual war, and as Mr. Roosevelt on a number of occasions has stated, the seizure of custom houses easily leads to a more permanent occupation of territory.

Moreover, the interruption of the commerce of the debtor nation diminishes its means and opportunities to pay the very debts for which the hostilities are undertaken and acts unfairly toward creditors of other nations. Many of these difficulties will now be avoided.

The Porter proposition is wider in scope than the Drago doctrine in that its provisions apply to all contractual debts, whereas Dr. Drago confined his policy to claims arising out of the non-payment of public loans. Nevertheless, doubt has been raised, both in the sub-committee of the Conference and since then, as to the meaning of "contractual debts.1

1A full discussion of these doubts and possible interpretations is contained in Moulin, op. cit., 308-320. See also article by G. W. Scott, 2 A. J. I. L. 90–93.

Without entering into the various interpretations to which the term is subject, it seems clear that it does include public loans.

There is a class of cases, however, of the "contractual" nature of which there may be some doubt. When a contract has been concluded between a government and an individual for the carrying on of some public work, it has happened that a subsequent act of the legislature, acting not as a business fiscus but as a sovereign, diminishes the contractor's rights under the contract. National courts, as, for example, the United States Court of Claims, have held that the two functions which the government possesses as a fiscus and as a sovereign are distinct, and that the United States when sued in the one character cannot be made liable for acts done in the other:

"Whatever acts the government may do, be they legislative or executive, so long as they be public and general, cannot be deemed specially to alter, modify, obstruct or violate the particular contracts into which it enters with private persons."

The question arises whether these distinctions of national law which exclude the case mentioned from the category of contractual debts will be maintained by the international forum in the interpretation of the term "contractual debts." It has been observed that Foreign Offices in dealing with the Latin-American Republics have on occasion. considered it as a violation of the contract, and an arbitrary measure, thus to reduce the contractor's rights by a subsequent legislative act.2 It seems reasonable to assume that this will be the interpretation of the term "contractual debt" by an international court.

$124. Public Bonds Before Arbitral Tribunals.

Bond cases have come before international tribunals on several

1 Deming v. United States, 1 Ct. Cl. (1865), 190–191; Jones and Brown v. United States, 1 Ct. Cl. (1865), 384–399; Wilson v. United States, 11 Ct. Cl. (1875), 513–522; 28 Op. Atty. Gen. 123 (Wickersham), holding that the government might as a matter of grace and equity, relieve the contractor from unduly harsh burdens. French courts have held the government liable for breach of contract by an act of legislation.

2 If the act of legislation is general, affecting equally all similar contracts between private individuals, it would seem that the U. S., by the decisions of its own courts, is constrained to decline interposition based upon alleged violation of law, but that it would be justified in exercising good offices in requesting relief for its citizen from unexpected burdens cast upon him by legislation.

occasions. Very little light is thrown upon the subject by the results of these arbitrations, except as by their dicta the commissions express the opinion that governments have the right to press the claims of bondholders of a foreign debt, though they generally admit that in practice such claims are not diplomatically presented. As a general rule, however, jurisdiction has been declined-usually for the reason that governments are not in the habit of presenting such claims diplomatically and because of the unwillingness of commissions to assume that they were intended to exercise jurisdiction in the absence of express words in the protocol.1 It has been so held even where the protocol provided for the settlement of "all claims." 2 The Colombian Bonds decision, rendered by Sir Frederick Bruce, Umpire, was severely criticised by Commissioner Little in the Aspinwall case before the United States-Venezuelan commission of December 5, 1885. He held, with Commissioner Findlay (Andrade dissenting), that the inclusive term "all claims" embraced bond claims. This case constitutes one important exception, prior to the Venezuelan Arbitrations of 1903, to the general rule that jurisdiction over bond claims is not exercised by international commissions.3

1 Overdue Mexican coupons, Du Pont de Nemours (U. S.) v. Mexico, July 4, 1868, Moore's Arb. 3616. Opinion by Wadsworth; Zamacona concurred. See dictum of Thornton, Umpire, in Widman (U. S.) v. Mexico, July 4, 1868, Moore's Arb. 3467.

2 Colombian Bond cases, Riggs, Oliver, Fisher (U. S.) v. Colombia, Feb. 10, 1864, Moore's Arb. 3612-3616. In the case of Gibbes before the 1857 and 1864 U. S.Colombian commissions (Moore's Arb. 1398, 1410) an assigned bond was the subjectmatter of the claim; the jurisdictional question does not appear to have been raised. 3 Venezuelan Bond cases, Aspinwall, Executor of G. G. Howland et al. (U. S.), v. Venezuela, Dec. 5, 1885, Moore's Arb. 3616-3641. This claim was dismissed by the mixed commission under the convention of April 25, 1866. The findings of this commission were reopened because of the alleged fraud of the arbitrators. Under a strict construction of the protocol, Bates, Umpire, dismissed the Texas Bond cases before the British-U. S. Commission of Feb. 8, 1853, Moore's Arb. 3594. One reason was that they had not been treated by Great Britain as a subject for diplomatic interposition. The decision is criticised by Westlake, I, 77-78, citing Dana in Dana's Wheaton. § 30, n. 18. Jurisdiction was exercised by the Mexican commission of 1868 over a stolen bond, Keller (U. S.) v. Mexico, July 4, 1868, Moore's Arb. 3065, on the ground of fraudulent destruction of specific property having a definite value and certain assurances by the government. See also Eldredge (U. S.) v. Peru, Jan. 12, 1863, Moore's Arb. 3462. The failure to fulfill the obligations of a bond issued for supplies was held not an "injury to property" by the U. S.-Mexican Commission of 1868 (Manasse

Before the Venezuelan commissions, sitting at Caracas, four bond claims were presented, with various decisions. In the case of the Comp. Générale des Eaux de Caracas (Belgium),1 Venezuelan bonds payable to bearer had been issued to the corporation for certain public works. From the decision it would seem that the general rule of nonenforcement of bond claims may be held not applicable where the bonds are issued in payment of property rights transferred to the government. Although many of the stockholders were not Belgians, an award was made with the peculiar provision that the money should be deposited in a Belgian bank and the bonds paid on being turned in. The production of the bonds naturally was made a necessary condition for the making of an award, so where, in the case of Ballistini (France), the original bonds were not produced, the claim was dismissed, Paul, Commissioner, in a dictum giving expression to the usual rule of the non-enforcement of bond claims before international commissions. In the case of Boccardo (Italy),3 where national bonds were delivered to claimant in payment for articles furnished and were never transferred by him, judgment was rendered on the authority of the Aspinwall case before the Venezuelan Commission of 1885. The fourth case, Jarvis (U. S.), was dismissed because the service and the supplies for which the bonds were issued (by a temporary dictator of Venezuela) were furnished to an unsuccessful revolution, which had not been recognized by the government of the United States, and hence presumably they were not valid obligations of Venezuela.

5

In the recent case of Canevaro (Italy) against Peru, Italy based its claim upon the fact that Peru had refunded its internal debt by issuing consolidated bonds at a greatly reduced rate, and that bonds of this internal debt held by Italian subjects by assignment were

case, Moore's Arb. 3463), although the failure to pay for supplies furnished under contract had been so construed.

1 Comp. Générale des Eaux de Caracas (Belgium) v. Venezuela, March 7, 1903, Ralston, 271-290.

2 Ballistini (France) v. Venezuela, Feb. 27, 1903, Ralston, 503-506.

3 Boccardo (Italy) v. Venezuela, Feb. 13, 1903, cited in note to Ralston, 505 (not reported). See, however, the brief statement given by Mr. Ralston in his address before the International Law Association, 24th Rep. 193-194.

4 Jarvis (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 145–151.

Canevaro (Italy) v. Peru, April 25, 1910, 6 A. J. I. L. (1912), 746, 752.

thereby unlawfully reduced in value. The Hague Tribunal supported the contention of Peru that the internal debt did not become external by its assignment to aliens, and that alien transferee-holders were in no better position than national holders of the bonds. Various claims of French and other citizens and corporations against Chile, based upon bonded indebtedness guaranteed upon guano deposits ceded by Peru, were submitted to the tribunal sitting at Lausanne, the awards upon which were rendered July 5, 1901.1 By the protocol of Feb. 2, 1914 between France and Peru, it was agreed to submit to arbitration the claim of the widow Philon-Bernal and other bondholders of the loan of 1870.2

$125. The United States and Central-American Loans.

The United States, in its endeavor to be consistent with the maintenance of the Monroe Doctrine and with the declaration of President Roosevelt that that doctrine could not be used by any nation of this continent to shield it from the consequences of its own misdeeds, has at times been placed in the most delicate position when foreign nations have attempted to seek redress for the alleged violation of international rights. So, in the settlement of numerous difficulties between European nations and Latin-American states arising out of pecuniary claims the United States has had an active interest. Especially where the occupation of American territory seemed imminent, the United States, by virtue of its responsibilities under the Monroe Doctrine, has felt called upon to undertake what may be called friendly intervention to prevent such occupation and yet satisfy the creditor nations.

President Roosevelt, in his message to Congress of Dec. 5, 1905, stated these embarrassing conditions, pointing out at the same time. the method by which relief from this critical situation could be most equitably and practically secured. In his message he said:

"Our own government has always refused to enforce such contractual obligations on behalf of its citizens by an appeal to arms. It is much to be wished that all foreign governments would take the same view. But they do not, and in consequence we are liable at any time to be brought face to face with disagreeable alternatives. On the one hand, 1 Descamps and Renault, Rec. int. des traités du xx siècle, 1901, p. 188 et seq. 241 Clunet (1914), 1440-1442.