project by impounding all the water in the river at a point higher up.1

Scarcely was the ink dry on the approval of the right of way of the American company before it was writing to the Department of State calling attention to the Mexican claims for water diversion in the El Paso Valley, and suggesting that the United States ought to "subsidize a company to furnish the water," to wit, the Rio Grande Dam & Irrigation Company. From this time on, until the Government entered suit, the American company and its British successor bombarded the Department of State with requests for a subsidy and thinly disguised threats to turn the El Paso Valley into a desert and render useless the Government's proposed international dam unless the Government surrendered at discretion.

Dr. Boyd makes the position of the company perfectly plain in his letter to the Secretary of State, of June 26, 1896, when he says:

"Owing to the present appropriation of the entire flow of the Rio Grande (the river being unusually low for this season of the year) for irrigation in the Mesilla Valley in New Mexico, the river is wholly dry at El Paso, a condition that must obtain each year during the dry season as soon as this company's storage dam at Elephant Butte has been completed, unless we allow sufficient water from our storage reservoir to pass down the river or our main canals for the irrigation of the El Paso Valley, which would necessitate our having to abandon the construction of a considerable portion of our high-level canals intended for the irrigation of large blocks of mesa lands in New Mexico that must indirectly come under our control, and consequently be a source of profit to this company.

"The completion of our main dam at Elephant Butte will create such a very large reservoir that we will practically be able to impound the whole of the flood waters of the Rio Grande, and as this company has acquired (by lease) the Rio Grande Dam & Irrigation Co.'s rights, as secured under Territorial charter of incorporation, and by virtue of the dam sites and reservoir rights, and right of

1 Prospectus, Rio Grande Irrigation & Land Co. p. 243; Testimony of Gen. Anson Mills and Mr. J. 1901; Appendix to the Answer, pp. 419, 420; Gen. to Hon. J. P. Heatwole, M. C., February 18, 1901;

425.

Appendix to the Answer, H. McGowan, February 6, Anson Mills, Commissioner Appendix to the Answer, p.

2 Mr. Edwin C. Roberts to the Secretary of State, March 4, 1895. Appendix to the Answer, p. 199.

3 See The Secretary of the Interior to the Secretary of State, June 11, 1896, transmitting a letter from The Rio Grande Irrigation & Land Company (Ltd.), to the Secretary of the Interior, of April 10, 1896, Appendix to the Answer, p. 228; Mr. N. P. Allison to the Secretary of the Interior, June 24, 1896, Appendix to the Answer, p. 232; Mr. Nathan E. Boyd to the Secretary of State, June 26, 1896, Appendix to the Answer, p. 233; The Secretary of State to Mr. Nathan E. Boyd, July 9, 1896, Appendix to the Answer, p. 234; and Mr. A. Simpson Slater to the Secretary of State, December 9, 1896, Appendix to the Answer, p. 275.

way, finally approved by the Secretary of the Interior on February 1, 1896, under the provisions of sections 18 to 21, act of March 5, 1891 (26 Stat. 1095), we are advised that we have the right to appropriate and utilize for irrigation in New Mexico the whole of the waters capable of being impounded in the Elephant Butte Reservoir. Such being the case, this company alone is in a position to supply sufficient water for the irrigation of the El Paso Valley, and in view of the enormous amount of capital your Government would have to expend in constructing a dam at El Paso in order to store so much of the flood waters of the Rio Grande (if any) as may at certain times of the year escape from reservoir through our spillway, we respectfully suggest that the most economical way of satisfying the Mexican claim will be for your Government to subsidize this company on condition that we supply sufficient water for the irrigation of the Mexican lands, the Mexicans paying an annual water rent of say $1.50 per acre for every acre irrigated, this company taking over and keeping in good repair the existing (Mexican) canal.

"We are informed that the Mexican Government, or rather the State of Chihuahua, is prepared to levy a special local land tax, to cover the annual water rent, providing your Government, by a subsidy or otherwise, purchases for the Mexican farmers from this company a perpetual water right to their 80,000 acres, or thereabouts, of irrigable land."1

This complaisant attitude on the part of the claimant company continued even after the Government's suit was brought. Under date of December 14, 1897, Col. W. J. Engledue, Chairman of the British Company, wrote the Acting Secretary of State, enclosing a copy of an address which he had made the preceding day at a stockholders' meeting of the company. He states in his letter that he has

"endeavored to justify to the public our belief that your Government is not antagonistic to British capital nor opposed to our plans for the colonization and development of the Rio Grande Valley.""

In the course of his remarks, Colonel Engledue states the reasons "for anticipating a substantial subsidy from the United States." In doing this he recited the grounds of Mexico's claim which he said "has placed the United States Government in a very awkward position."" The Rio Grande was "the only possible source af water supply." Mexico had "raised her claim for damages to $22,000

1 Mr. Nathan E. Boyd to the Secretary of State, June 26, 1896. Appendix to the Answer, pp. 233-234.

2 Col. W. J. Engledue to the Acting Secretary of State, December 14, 1897. Appendix to the Answer, p. 344.

8 Address of Col. Engledue, December 13, 1897. Appendix to the Answer,

p. 349.

4 Id., p. 350. 5 Id.

000, and finally prevailed upon the State Department to institute proccedings against the company," but the company had reason

"to believe the United States Government to be the reverse of unfriendly as, notwithstanding the justice of Mexico's urgent demands and pressing claims, the Attorney General did not authorize the injunction suit until the beginning of the flood season, when the company's works would have been suspended for the time being, in any event, thereby avoiding, as far as possible, unnecessary injury to the company.

The Government, Colonel Engledue said, had conceded Mexico's claims by bringing suit,

"which apparently leaves the United States no option but to indemnify Mexico or arrange with this company to supply water to the Mexican lands; and it is now proposed that the United States Government should subsidize the company to the extent of $250,000 (£50,000) a year for 20 years As Mexico has now raised her claim against the United States to $25,000,000, it may be safely assumed that the authorities will at an early date take steps to finally settle the matter by subsidizing the company.""

**

The Government was, therefore, confronted on the one hand by Mexico's claims founded in justice, if not in law, to the extent of the actual damage which the Mexican inhabitants of the El Paso Valley had sustained by interference with their prior water rights, and on the other hand by a company, whose purpose, in the language of a memorandum prepared by the Interior Department, was "contrary to natural and inalienable rights, to reason, to justice, and to the laws of the land." The requirements of justice were plain. The question remained as to the ground for an appeal to the courts on the part of the national Government in view, first, of Attorney General Harmon's opinion holding that Mexico had no legal rights under the treaties or international law, and, second, of the division of authority under the United States Federal system between the state or territory and the nation, according to which questions of prior appropriation of water are matters for state or territorial jurisdiction, and, finally, of the indeterminate state of the law of water rights at that time and the peculiar jurisdictional difficulties sure to arise in attempting to apply the law of prior appropriation between parties resident in different states and different nations. The matter was brought

4 Memorandum of the Assistant Attorney General, being Enclosure 2 to the letter from the Secretary of the Interior to the Secretary of State, December 19, 1896. Appendix to the Answer, p. 279.

to a head by a note of the Mexican Minister to the Secretary of State, of August 4, 1896.1

The "Flaming Prospectus."

The Mexican Minister wrote the Department enclosing a petition presented by Don Andrés Horcasitas,2 on behalf of the Mexican inhabitants of the El Paso Valley, in which Senor Horcasitas requested the Mexican Government to ask the Government of the United States to secure the suspension of the work of the Rio Grande Irrigation & Land Company, Limited, the claimant company herein, on the ground that this work was a violation of Article III of the Treaty of Guadalupe Hidalgo. Senor Horcasitas referred to the negotiations under way between the two Governments looking toward the erection of an international dam at El Paso for the equitable distribution of the waters of the Rio Grande, enclosed a copy of claimant's prospectus, and pointed out that the efforts of the two governments would be fruitless if the Rio Grande Irrigation & Land Company (Ltd.) was permitted to erect its dam at Elephant Butte in accordance with its prospectus. Senor Horcasitas said:

"If the proposed Boyd Dam is built, the international dam, which the inhabitants of Ciudad Juarez have petitioned for, as the only remedy for their already desperate situation, will be rendered useless, as there is no doubt that the accumulation of the waters of the Rio Bravo at the former dam will not leave even a small quantity for the second dam, and my clients will find themselves subjected to the unavoidable necessity of abandoning their homes, or of buying the water which is so indispensable to their existence, at the price that any speculating company may be pleased to fix.''

SECRETARY OLNEY RAISES THE QUESTION OF NAVIGABILITY.

The question of bringing suit against the claimant company was handled by Secretary of State Olney personally, as is shown not only by the internal evidence of the correspondence of the Department of State but by the memorandum in his own handwriting attached to the note from the Mexican Minister of December 29, 1896, in which the Minister informed the Secretary of State that his Government had authorized him to sign the convention then under consideration between the United States and Mexico providing for the international

1 The Mexican Minister to the Secretary of State, August 4, 1896. Appendix to the Answer, p. 235.

2 Petition of Andrés Horcasitas, June 22, 1896, being enclosure 1 of the letter of the Mexican Minister to the Secretary of State, August 4, 1896. Appendix to the Answer, p. 235.

3 Id., p. 236.

dam and the equitable distribution of the waters of the Rio Grande. In his own handwriting, Secretary Olney endorsed on this note:

"M. Romero might be written to in this sense: A draft of convention as proposed would be exceedingly valuable and would probably greatly facilitate subsequent negotiations. But it must be added that in preparing to enter into negotiations the department has found the subject embarrassed by greatly perplexing complications arising out of reservoirs, dams, etc., either already built or authorized through the concurrent action of the Federal and State authorities. Just what legal validity is to be imputed to such grants of authority or in what way existing structures completed or begun are to be dealt with are questions under careful investigation and which must be disposed of before the United States will be in a condition to negotiate.

"R. O."

The two endorsements by the Second Assistant Secretary of State which follow this memorandum establish its authorship beyond doubt. They read:

"SECOND ASSISTANT SECRETARY,
"December 30, 1896.

"DEAR CRIDLER: This is pen work, and the fullness of the Secretary's note makes a type draft superfluous.

"A. A. A." 2

"SECOND ASSISTANT SECRETARY,
"December 30, 1896.

"MR. BLANDFORD: Please take the Secretary's direction.

“A. A. A.'' 8

The Secretary's memorandum was incorporated verbatim into the formal reply of the Department of State to the Mexican Minister of January 4, 1897, and the very same day Secretary Olney, in a letter to General (then Colonel) Mills, initiated the correspondence which led to the institution of the suit against the claimant company on the ground that the company's proposed dam and reservoir would impair the navigability of the Rio Grande.

In this letter, Secretary Olney informs Colonel Mills that the Secre

1 Memorandum of Secretary of State Richard Olney, attached to the note from the Mexican Minister to the Secretary of State, December 29, 1896. Appendix to the Answer, p. 281.

2 Memorandum of Second Assistant Secretary of State Alvey A. Adee, attached to the note from the Mexican Minister to the Secretary of State, December 29, 1896. Appendix to the Answer, p. 281.

3 Id., p. 281.

4 The Department of State to the Mexican Minister, January 4, 1897. Appendix to the Answer, p. 283.