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United States and New Granada, and without an infringement of the chartered rights of the Panama Railroad Company," and added: "Were there no treaty stipulations on the subject, an attempt to enforce this decree against the United States could not be viewed otherwise than an unfriendly act on the part of New Granada, and would be resisted as a wrong; but the treaty with New Granada is regarded as a barrier against such an attempt and will justify effective resistance to it."

Mr. Marcy, Sec, of State, to Mr. Bowlin, min. to Colombia, July 3, 1856, MS.
Inst. Colombia, XV. 220. See, also, same to same, confidential, July 3,
1856, id. 227; and Mr. Marcy to Mr. Hoadley, Pres. Panama R. R. Co.,
June 17, 1856, 45 MS. Dom. Let. 336.

In case an attempt should be made to apply the decree to the United States mails, the United States consul at Aspinwall was instructed to "protest in the most solemn and emphatic manner against it and warn them [the New Granadian authorities] of the serious consequences which must inevitably follow." (Mr. Marcy, Sec. of State, to Mr. Fletcher, consul at Aspinwall, Sept. 3, 1856, 20 MS. Desp. to Consuls, 396.)

See, also, Mr. Marcy, Sec. of State, to Gen. Herran, Colombian min., Dec.

22, 1856, MS. Notes to Colombia, VI. 57; President Pierce, annual message, Dec. 2, 1856; Mr. Cass, Sec. of State, to Gen. Herran, Sept. 10, 1857, MS. Notes to Colombia. VI. 71.

See the forcible statement of the subject in Mr. Cass, Sec. of State, to Mr.
Jones, min. to Colombia, April 30, 1859, MS. Inst. Colombia, XV. 268.


§ 347.

By a law of May 25, 1835, the privileges of free ports were granted by the Colombian Government to the districts of Panama and Porto Bello, for the term of 20 years. By a law of June 2, 1849, however, customs duties on the Isthmus were abolished indefinitely. National duties were thus done away with on the Isthmus, and the imposition of taxes was confined to the State of Panama, which, during and after 1850, levied direct taxes in the shape of a monthly "commercial contribution."

For. Rel. 1885, 227; Mr. Cass, Sec. of State, to Mr. Jones, min. to Colombia,
April 30, 1859, MS. Inst. Colombia, XV. 268.

"No taxes should be paid by citizens of the United States in Colombia which
are not made to apply equally to Colombian citizens and to the citizens
or subjects of all other nations." (Mr. Seward, Sec. of State, to Mr.
Burton, min. to Colombia, Feb. 10, 1865, MS. Inst. Colombia, XVI.

The President of Colombia having dissolved the national congress and proclaimed the existence of a state of civil war, it was reported that the authorities of the State of Panama were levying extraordinary taxes on "the citizens of that State, including all domiciled United States citizens," with a view to use the proceeds in carrying on war against the federal government. Although citizens of the United States enjoyed in Colombiano lawful exemption from ordinary and equal taxes," it was

said to be by no means clear that they could be legally or justly sub-
jected to the payment of extraordinary taxes or contributions to the
Government of a State for the purpose of resisting and, as it would now
seem, absolutely overthrowing the federal union of Colombia, to which
Government the United States are bound to guarantee a constitutional
control, regulated by treaty with the United States, of the international
railroad transit across the Isthmus of Panama." The situation, how-
ever, was declared to be imperfectly understood, and, for the time being,
it was said that citizens of the United States might decline to pay the
taxes and contributions above referred to, except under protest. (Mr.
Seward, Sec. of State, to Mr. Sullivan, min. to Colombia. June 13, 1867,
MS. Inst. Colombia, XVI. 221.)

For a circular issued by the Colombian consulate general at New York,
Aug. 7, 1871, in relation to the dispatch of vessels to the free ports of
Colombia, see Mr. Abert to Mr. Fish, Sec. of State, Aug. 17, 1871, MS.
Misc. Let.

The Colombian Government having appointed an inspector at Aspinwall [Colon], who required all vessels desiring to trade on the Atlantic coast of Panama, first to visit that port and obtain a license and an approval of their manifests of cargo, for which a fee of $5 was exacted, the United States commercial agent at Aspinwall advised masters of American vessels to refuse to comply with the requirement. The reason given for the measure was the necessity at the time of inspecting manifests, so as to prevent the carrying of contraband to the insurgents at Antioquia. The action of the commercial agent was not approved, the Department of State observing that Art. XXXV. of the treaty of 1846 did not include "the right of unrestricted trade between the Atlantic ports of the State of Panama."

Mr. Fish, Sec. of State, to Mr. Thorington, com. agent at Aspinwall, Jan. 24, 1877, 84 MS. Desp. to Consuls, 635.'

In 1876 a correspondence took place at Bogota, between the diplomatic representatives of the United States, France, Germany, and Great Britain, and the Colombian minister of foreign affairs, with respect to the custody of the papers of foreign vessels entering the free ports of Colon and Panama. The correspondence grew out of the enactment of the Colombian statute, No. 60, of 1875, which (arts. 3 and 5) required such vessels to deliver their registers to Colombian officials. By a note of Señor Ancizar, Colombian minister of foreign affairs, of July 27, 1876, the conflict of the statute with the treaty obligations of Colombia in regard to the freedom of the ports of Colon and Panama and the Isthmian transit was recognized; and it was agreed that, until the law should be modified by the Colombian Congress, the registers of foreign vessels should be deposited with their respective consuls or, in case of absence, with the consul of a friendly power.

Mr. F. W. Seward, Act. Sec. of State, to Mr. Dichman, min. to Colombia, Aug. 23, 1878, MS. Inst. Colombia, XVII. 43. This instruction particularly refers to the case of the American schooner Lorine, and the alleged arbitrary action of the Colombian authorities with regard to her.

Subsequently, the Department of State expressed regret that, in spite of the diplomatic agreement of 1876, the execution of the law of 1875 was "likely to be persevered in." (Mr. Evarts, Sec. of State, to Mr. Dichman, min. to Colombia, Feb. 4, 1879, MS. Inst. Colombia, XVII. 71.) As to the conclusion of a protocol providing for the deposit of ships' papers with the consuls, whereupon the law of 1875, though it remained unrepealed, was regarded by the Colombian Government as a dead letter, see Mr. Evarts, Sec. of State, to Messrs. Shipman, Barlow, Larocque & Macfarland, June 14, 1879, 128 MS. Dom. Let. 449.

"This Government is of the opinion that the position of the free ports of Panama and Colon as mere stations on one of the world's most important highways should demand a simpler and less rigid enforcement of customs rules against the vehicles of mere transient passage than may be requisite to protect the fiscal interests at ports of entry. It is deemed that the mutual concessions and guarantees under which the transit was established entitle all those who honestly and pacifically use it to exceptional facilities, which may not be needed, or be even proper at other ports. It would be very much to be regretted if a contrary course should prevail in conflict with the true interests of Colombia herself, no less than of those who avail themselves of the privileges incidental to the transit.”

Mr. Frelinghuysen, Sec. of State, to Mr. Scruggs, Mar. 6, 1883, MS. Inst.
Colombia, XVII. 329.

Sept. 25, 1885, the Colombian Government issued a decree, in execution of law 53 of 1884, establishing on Dec. 1, 1885, custom houses at Panama and Colon, and imposing on importations into the Republic the same customs duties as at other ports, less 40 per cent. It was also announced that the same customs regulations would be enforced at Colon and Panama as at other ports. The United States, while observing that the guarantee of Art. XXXV. of the treaty of 1846 was "limited to equal treatment of American goods with those of native Colombians or of the most favored nation, with an exemption from customs duties in the case of merchandise, etc., passing over the transit to countries beyond," and did not impose on Colombia a "treaty obligation to make Colon and Panama free ports," said that the "whole tenor" of the article was that nothing should be allowed "to hinder the free transit of persons and goods passing over the Isthmus, from ocean to ocean, to countries beyond," and that "should the collection of duties on imports into Colombia at Aspinwall [Colon] and Panama be enforced in such a way as to hamper the stipulated free transit this Government would feel bound to complain.”

Mr. Bayard, Sec. of State, to Mr. Jacob, min. to Colombia, Nov. 3, 1885, For.
Rel. 1885, 223; Mr. Porter, Assist. Sec. of State, to Messrs. Lazarus &
Co., Oct. 31, 1885, id. 229. See, also, For. Rel. 1885, 226-228.

Aug. 27, 1855, the legislative assembly of the State of Panama passed an act imposing a tax of 20 cents a ton on Tonnage taxes. steamers and 40 cents a ton on sailing vessels resorting to the ports of Colon and Panama. By a decree of the executive of Panama, British mail steamers were exempted from these duties. Under the circumstances, the Department of State, in a note to the Colombian minister at Washington, Oct. 23, 1855, protested against the duties, both as a violation of Art. XXXV. of the treaty of 1846, guaranteeing a free transit across the Isthmus, and as a violation of Art. VI., prohibiting discriminating duties.

Meanwhile, the Executive Power of New Granada, by a resolution of October 14 (or Oct. 11), 1855, passed with the unanimous consent of the council, declared that the law of the State of Panama (Aug. 27, 1855) was inapplicable to the ports of Colon and Panama. Information of this action of the national authorities was conveyed to the Department of State by General Herran, the Colombian minister at Washington, Oct. 26, 1855, and was received by the Department with "great gratification." A similar expression of satisfaction was made to Mr. Bowlin, United States minister at Bogota, who had, in the absence of instructions, exerted himself to secure the adjustment of the question with the Government of New Granada.

Mr. Marcy, Sec. of State, to Gen. Herran, Colombian min., Oct. 23, 1855,
MS. Notes to Colombia, VI. 50; same to same, Nov. 17, 1855, id. 52; Mr.
Marcy to Mr. Bowlin, Dec. 17, 1855, MS. Inst. Colombia, XV. 210; Mr.
Marcy to Gen. Herran, Dec. 22, 1856, MS. Notes to Colombia, VI. 57.

Although the National Executive, in overruling the action of the State of Panama, pronounced it to be antagonistic to "considerations of justice and good faith," a bill was afterwards introduced into the National Congress and was reported to have been passed to enforce the collection of the tonnage tax under national authority. The United States protested against this measure on the ground (1) that it was contrary to the clear import of the treaty of 1846; (2) that it was contrary to the solemn pledge given not only to the railroad company but to the whole world that vessels resorting to the ports of Colon and Panama, in connection with any road across the Isthmus, should be exempt from tonnage duties; (3) that it was a palpable violation of the rights of citizens of the United States who had embarked their capital in the railroad, and, besides constituting a breach of contract with the company, was injurious to the commerce of the United States. In view of the "strong features" of the case, the United States decided "to resist the collection of the tonnage tax on American vessels resorting to the harbors of Aspinwall and Panama, with freight or passengers for the railroad." At the same time the hope was expressed that the Congress of New Granada would repeal "their obnoxious law relative to tonnage as well as the equally obnoxious and still more extortionate law in respect to foreign mails."

Mr. Marcy, Sec. of State, to Mr. Bowlin, min. to Colombia, Dec. 31, 1856,
MS. Inst. Colombia, XV. 246.

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See, also, Mr. Thomas, Assist. Sec. of State, to Mr. Corwine, consul at Panama, Jan. 3, 1857, 20 Desp. to Consuls, 438; Mr. Cass, Sec. of State, to Mr. Dallas, min. to England, April 21, 1857, MS. Inst. Gr. Br. XVII. 72. Mr. Dallas was instructed to explain the demands of the United States to Lord Clarendon, should the latter refer to the subject in conversation.

June 27, 1857, the Congress of New Granada passed an act" recognizing the validity of the tonnage tax. . ., renewing it in fact, and directing the application of the proceeds to certain specified objects as a subsisting source of revenue." With reference to this statute, the Department of State said: "The decided opposition of this Government to the imposition of these taxes has been communicated to the Government of New Granada, and in addition it has likewise been made known that the attempt to collect a tonnage tax or a correspondence tax would be resisted by the United States. This determination was adopted and avowed by the late administration, and the President on full consideration concurs in its decision."

Mr. Cass, Sec. of State, to Gen. Herran, Colombian min., Sept. 10, 1857,
MS. Notes to Colombia, VI. 71.

This determination was again expressed, with reference to a report that a bill had passed the Colombian House of Representatives and was pending before the Senate to repeal the act of 1835, “which pledged an exemption from all tonnage duties in the cantons of Porto Bello and Panama, a pledge offered to the world in order to draw foreign capital and enterprise to the construction of a canal or railroad, and which was to continue in force for the term of twenty years from the opening of such route." It was understood that the passage of the bill would be followed by the imposition of the tonnage tax. (Mr. Cass, Sec. of State, to Gen. Herran, Colombian min., June 4, 1858, MS. Notes to Colombia, VI. 77.)

See, particularly, the full and able argu ent on the subject of the tonnage tax in Mr. Cass, Sec. of State, to Mr. Jones, min. to Colombia, April 30, 1859, MS. Inst. Colombia, XV. 268, with a list of previous diplomatic papers on the subject.

The preceding position of the United States is impliedly approved in Mr.
Black, Sec. of State, to Mr. Jones, Feb. 8, 1861, MS. Inst. Colombia,
XV. 314.

See, also, Mr. Seward, Sec. of State, to Mr. Vanderbilt, Pres., Atlantic &
Pacific S. S. Co., June 12, 1861, referring to a decision of the Supreme
Court of New Granada, adverse to the grounds assumed by the com-
pany in rel
tion to the illegality of the law of Panama of 19th Sep-
tember, 1857, concerning taxes." (54 MS. Dom. Let. 173.)

"I do not feel called upon to discuss at length the subject of the commercial tax levied by the State of Panama, as referred to in your No. 13, of the 27th December last, for, since the receipt of that communication, I have examined the instructions of my predecessors Secretaries Cass and Marcy, and I find no reason for reversing the policy

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