enemy may not be intercepted if they happen to be carried by a neutral vessel and addressed to a neutral consignee could not fail to have this result. 51. His Majesty's Government have noted with sincere satisfaction the intimation contained in the concluding passages of the United States note of the intention of the United States to undertake the task of championing the integrity of neutral rights. The first act of this war was the unprovoked invasion by the enemy of neutral territory that of Belgium-which he was solemnly pledged by treaty to protect. The occupation of this territory was accompanied by abominable acts of cruelty and oppression in violation of all the accepted rules of war, atrocities the record of which is available in published documents; the disergard of neutral rights has since been extended to naval warfare by the wanton destruction of neutral merchant ships on the high seas, regardless of the lives of those on board. In every theater and in each phase of the war has been visible the same shocking disregard by the enemy of the rights of innocent persons and neutral peoples. His Majesty's Government would welcome any combination of neutral nations, under the lead of the United States, which would exert an effective influence to prevent the violation of neutral rights, and they can not believe that they or their allies have much to fear from any combination for the protection of those rights which takes an impartial and comprehensive view of the conduct of this war and judges it by a reasonable interpretation of the generally accepted provisions of international law and by the rules of humanity that have hitherto been approved by the civilized world. APPENDIX. CASES OF THE MAGICIENNE," THE 66 1. The Magicienne was captured on the 27th of January, 1863, about 400 miles from the Cape Verde Islands, while on a voyage to Matamoras. She was taken to Key. West and released on March 2, the district attorney of the United States stating that he could see nothing in the depositions, invoices, and other papers on which to base a demand for condemnation or even for a certificate of probable cause of seizure. On April 3 Lord Lyons was instructed to ask for compensation, and did so in a note to Mr. Seward, dated April 22. In reply, Mr. Seward admitted that compensation ought to be made. The course of procedure suggested by Mr. Seward was adopted, and ultimately the compensation was fixed at $8,645. No suggestion was made that any other mode of redress was open to the injured party or that it was not a case where compensation should be asked for through the diplómatic channel. On the contrary, the admission that the seizure was illegal was made by the United States, and Mr. Seward himself admitted that compensation should be made. 2. The Don José was a small British schooner of 35 tons, which was captured on July 2, 1863, off Cuba, when on a voyage to Habana. She was released on July 15 because the district attorney was unable, on examination of the ship's papers and of the depositions of the 84610°-H. Doc. 2111, 64-2, pt 2—13 witnesses, to find any grounds on which to file a libel against the vessel. On January 2, 1864, Lord Lyons wrote a note to Mr. Seward, pointing out that the seizure appeared to have been one of a very unjustifiable character, and saying that he hoped that the United States Government would have no difficulty in admitting that compensation was due. Mr. Seward, in his reply, admitted that the case seemed to be a strong one. On May 18 Lord Lyons again pressed for compensation, and based his claim upon the ground that the United States law officer could find no ground for bringing the case before the prize court, and that it must be presumed that the court, if the case had come before it, would, in the execution of its duty, have awarded costs and damages. Mr. Seward promised to give the matter attentive consideration. He does not appear to have suggested that the claimant could himself have applied to the prize court for compensation, or to have challenged the point urged by Lord Lyons that it was the failure of the United States authorities to bring the case before the prize court which deprived the court of the opportunity of awarding redress. 3. The case of the Labuan gave rise to a voluminous diplomatic correspondence. She was a British steamer which was seized by the United States steamer Portsmouth on February 1, 1862, when lying off the mouth of the Rio Grande within the limits of the port of Matamoros and probably therefore within the territorial waters of Mexico. She had landed a cargo of British goods and was loading a cargo of cotton and other articles. Copies of the reports which Lord Lyons had received as to this case were given to Mr. Seward privately with a suggestion that the United States Government might perhaps think it advisable to release the vessel and give her compensation without subjecting the vessel to judicial proceedings. In another unofficial communication Mr. Seward admitted that a perusal of the information in the Navy Department had not satisfied him that the capture was legal, but preferred that nothing should be done until a judicial decision had been given. The official correspondence that ensued dealt mainly in its earlier stages with the contention urged by Her Majesty's Government that unless the United States Government were going to maintain that the capture was justifiable and valid, it was unreasonable to expose the parties interested to the delay and the expense of judicial proceedings. The United States Government, however, insisted that the case must take its course in the prize court, and in the circumstances Her Majesty's Government could only acquiThe trial took place on May 20 in the district court at New York, when the immediate release of vessel and cargo was ordered and the question of damages against the captors reserved for consideration. The subsequent official correspondence was occupied chiefly with the delays in getting the damages assessed. As early as April 9, 1863, Mr. Seward wrote to Lord Lyons a note reviewing the whole correspondence, in which he said, "I freely admit that I believe the claimants entitled to damages and costs," but he maintained that it was regular and legal to wait for the court to decree them, and that the court would decide the question with more exact justice than could the executive Government. The period which elapsed before the prize court dealt with the damages payable certainly justified the complaints which Lord Lyons was instructed to make, for the decree esce. awarding $141,902 was not issued until March, 1868, more than six years after the capture, nor was the sum paid until a further period of over two years had elapsed. 4. The case of the Saxon also gave rise to a voluminous diplomatic correspondence, but I am at a loss to know what ground there can be for citing the action of Her Majesty's Government in this case as a precedent for maintaining the right of a Government to ignore the prize court and to claim compensation through the diplomatic channel. The Saxon was seized on October 29, 1863, by the U. S. S. Vanderbilt while lying at anchor off Penguin Island, on the coast of South Africa. Some confusion occurred at the time of capture, and the mate of the Saxon was shot dead by an officer of the Vanderbilt. The vessel was sent to New York and arrived there on December 22. Some doubt seems to have arisen as to why the vessel had been captured, and Lord Lyons was instructed by Lord Russel early in 1864 to ask the United States Government either to direct the immediate release of the Saxon, with proper compensation to the owners, or at least to explain the ground on which her seizure and detention were supposed to be justified. Meanwhile further information had come into the possession of Her Majesty's Government, and on February 15 Lord Lyons was instructed, on the advice of the law officers of the Crown, that Her Majesty's Government saw no ground for seeking to withdraw the case from the jurisdiction of the prize court. On March 7 Judge Bettes, in the district court at New York, decreed the restitution of the vessel and cargo free of all costs, charges, and expenses, reserving for future consideration the question of probable cause of seizure. Lord Lyons was subsequently informed that Her Majesty's Government saw no reason to complain of this sentence. They understood the question of damages still to be open, but they were not prepared to say that if these should be refused there would, in the peculiar circumstances of the case, be any necessity for an official complaint on their part. The only suggestion which Her Majesty's Government made through the diplomatic channel as to payment of compensation was a request that some relief might be granted to the widow of the mate of the Saxon who was shot by an officer of the Vanderbilt, but the request was refused with asperity. On the 10th of May our Government addressed a communication to England to inquire whether it had decided "to repudiate their promise respecting the treatment of these vessels which in good faith has been relied on by this Government." THE SECRETARY OF STATE TO THE BRITISH AMBASSADOR. DEPARTMENT OF STATE, Washington, May 10, 1916. EXCELLENCY: I have the honor to acknowledge the receipt of your excellency's note of April 22, 1916, in which you refer to the fact that your Government in December last promised not to detain certain vessels belonging to the American Transatlantic Co. unless they should carry contraband pending the decision of the British prize court in the cases of the steamer Hocking and the steamer Genesee, which also belong to this company, and in which you state that Sir Edward Grey has instructed you to inform me that the vessels which have not been seized can no longer enjoy immunity from seizure unless certain assurances respecting their use are given by the company. These vessels are owned by an American corporation organized under laws which presumably are similar to British laws respecting incorporation. In the name of this corporation these vessels were registered under the American flag in accordance with laws which, it is understood by this Government, are similar to British laws governing registration of vessels under the British flag. Under the laws of the United States the American Transatlantic Co. is regarded as a citizen of the United States and must doubtless be so regarded in accordance with the custom of nations. British prize-court decisions in relation to the ownership of different kinds of property, including vessels, appear to make it clear that a British corporation is British in character regardless of what the political nationality of its shareholders may be. This Government has observed that in a recent case a British prize court, applying an apparently well-established rule, condemned a vessel flying the German flag and refused an application of neutral claimants to establish that they were the beneficial owners of the vessel, owning the entire capital stock of the nominal owners, a subsidiary concern established according to the laws of Germany. The court ruled that the fact sought to be proved would not benefit the claimants. This Government has also cbserved that the British authorities. have in several instances requisitioned vessels flying the British flag, although the entire beneficial interest in them was owned by Amer ican citizens, and in connection with requests on the part of such beneficial owners for the release of such vessels the British Government apparently has taken the position that the vessels, flying the British flag and being owned by British corporations, must, of course, be regarded as British and not as American vessels. It appears, therefore, from different cases of the character just mentioned that the British judicial and administrative authorities have, as a rule, attached no importance to beneficial ownership in determining the nationality of the vessels owned by corporate organizations, but have uniformly proceeded on the theory that nationality in each case must be determined by the flag the vessels fly or by their corporate ownership. On the other hand, the British authorities in now seeking to condemn the ships of the American Transatlantic Co., which are owned by an American corporation and fly the American flag, on the ground, as they state, that they believe these vessels to be entirely, or to a large extent, enemy owned, apparently attach great importance to beneficial ownership and no importance to the flag or corporate ownership. In this relation it should be observed that the company has presented to this Government evidence to show that all the company's stock is owned by American citizens. This Government has no information that the stock is not so owned. Having in mind these and other facts as well as the applicable principles of international law, the seizure of these vessels appeared to this Government arbitrary and unwarranted. However, after having informed the British Government to that effect, this Government decided to let the matter rest after receiving from the British Government a promise that they were, in the language of a note addressed by Sir Edward Grey to the American ambassador at London, "willing not to capture the remaining ships of the company, unless they were found to be carrying contraband, until the prize court has given a decision in the cases which are now pending, provided, of course, that the proceedings in court are not unduly prolonged by the defendants." The owners of the vessels have informed the department that they have complied strictly with the British Government's conditions, and the department has no information to the contrary. If any one of these vessels should carry contraband, the British Government would be warranted in exercising their belligerent right to detain such vessel. But the carrying of contraband by one of these vessels would, of course, furnish no legal justification for interference with other vessels carrying innocent cargoes, and the observance by the British Government of the express language of their promise respecting the immunity of these vessels would prevent any such interference. I observe from your note that you have been instructed by Sir Edward Grey to inform me that "the immunity from capture at present enjoyed by the American Transatlantic Co.'s vessels can only be continued provided that an assurance is given by the company that the vessels will not trade with Scandinavia or Holland." Under these circumstances, before giving further consideration to the matters referred to in your note I would like to be informed whether, as would appear from your note, it is the intention of the British Government to repudiate their promise respecting the treatment of these vessels which in good faith has been relied on by this Government and by the owners of these vessels. I am, etc., ROBERT LANSING. The real significance of these incursions upon the commercial rights of neutrals upon the "high seas" were greatly accentuated by the publication of the recommendations of the entente conference held in Paris in June, 1916, in the matter of trade after the war. These resolutions called forth adverse criticism from such men as Ambassador Francis, who declared there was no reason why better commercial relations should not exist between us and European commercial nations, speaking especially for the trade with Russia. Continuing, he said: That end can not be accomplished, however, if the principles of resolutions of the economic conference of the allies at Paris last June are confirmed and carried out. Those resolutions, while inspired by the desire to prevent a revival of economic supremacy, as it were, of the countries with which the allies are at war, are at the same time a discrimination against commerce with all neutral countries, many of which have been supplying the allies with requirements for a successful prosecution of the |