scinding existing contracts and forming new ones, without any regard to vested rights, no progress will be made in the construction of canals or of other permanent and expensive works for transportation.

The United States, acting in behalf of their citizens, object to this system of confiscation, and they do not doubt but that they will have the concurrence of all other powers who have similar interests in these vastly important measures. What the United States demand is, that in all cases where their citizens have entered into contracts with the proper Nicaraguan authorities, and questions have arisen, or shall arise, respecting the fidelity of their execution, no declaration of forfeiture, either past or to come, shall possess any binding force unless pronounced in conformity with the provisions of the contract, if there are any, or if there is no provision for that purpose, then unless there has been a fair and impartial investigation in such a manner as to satisfy the United States that the proceeding has been just and that the decision ought to be submitted to.

Without some security of this kind, this government will consider itself warranted, whenever a proper case arises, in interposing such means as it may think justifiable, in behalf of its citizens who may have been or who may be injured by such unjust assumption of power.

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I am, &c.,

LEWIS CASS.

57.-Mr. Cass to Lord Napier.

DEPARTMENT OF STATE, Washington, November 8, 1858.

MY LORD: I have had the honor to receive the copy which your lordship did me the favor to send me of Lord Malmesbury's dispatch to your lordship of August 18, in reference to Sir William Ouseley's mission, and have submitted it to the consideration of the President. From the statement of Lord Malmesbury that the British Government has no remaining alternative but that of "leaving the Cabinet of Washington to originate any further overtures for an adjustment of these controversies," it is quite obvious that the position of the President on this subject is not correctly understood by Her Majesty's Government. Since the announcement by your lordship in October, 1857, of Sir William Ouseley's special mission, the President has awaited not so much any new proposition for the adjustment of the Central American questions as the statement in detail which he had been led to expect of the method by which Sir William Ouseley was to carry into effect the previous proposition of the British Government. To make this plain, your lordship will pardon me for making a brief reference to what has occured between the two governments in respect to Central America since the ratification of the Clayton-Bulwer treaty of 1850.

While the declared object of that convention had reference to the construction of a ship canal, by the way of San Juan and the lakes of Nicaragua and Managua, from the Atlantic to the Pacific Oceans, yet it avowed none the less plainly a general principle in reference to all practicable communications across the isthmus, and laid down a distinct policy by which the practical operation of this principle was likely to be kept free from all embarrassment. The principle was that the interoceanic routes should remain under the sovereignty of the states through which

they ran, and be neutral and free to all nations alike. The policy was, that in order to prevent any government outside of those states from obtaining undue control or influence over these interoceanic transits, no such nation should "erect or maintain any fortifications commanding the same, or in vicinity thereof, or should occupy or fortify or colonize or assume or exercise any dominion over Nicaragua, Costa Rica, the Mosquito coast, or any part of Central America."

So far as the United States and Great Britain were concerned, these stipulations were expressed in unmistakable terms, and in reference to other nations it was declared that the contracting parties in this convention engage to invite every state with which both or either.have friendly intercourse to enter into stipulations with them similar to those which they have entered into with each other. At that time the United States had no possessions whatever in Central America and exercised no dominionthere. In respect to this government, therefore, the provisions of the first article of the treaty could operate only as a restriction for the future, but Great Britain was in the actual exercise of dominion over nearly the whole eastern coast of that country, and in relation to her this article had a present as well as a prospective operation. She was to abandon the occupancy which she already had in Central America, and was neither to make acquisitions or erect fortifications or exercise dominion there in the future. In other words, she was to place herself in the same position, with respect to possessions and dominion in Central America, which was to be occupied by the United States, and which both the contracting parties to the treaty engaged that they would endeavor to induce other nations to occupy. This was the treaty as it was understood and assented to by the United States, and this is the treaty as it is still understood by this government. Instead, however, of giv ing effect to it in this sense, the British Government proceeded in 1851, only a few months after the signature of the treaty, to establish a new British colony in Central America under the name of the "Bay Islands"; and when this government expressed its great surprise at this proceeding and at the failure of Great Britain to comply with the terms of the convention, Her Majesty's Government replied that the Islands already belonged to Great Britain at the date of the treaty, and that the convention, in their view of it, interfered with none of their existing possessions in Central America, but was wholly prospective in its character and only prevented them from making new acquisitions. It is unnecessary to do more than simply refer to the earnest and able discussions which followed this avowal, and which show more and more plainly the opposite constructions which were placed upon the treaty by the two governments.

In 1854 it was sought to reconcile these constructions and to terminate the Central American questions by the convention which was signed at London by the American minister and Lord Clarendon, usually designated the Dallas-Clarendon treaty. The terms of this treaty are, doubtless, familiar to your lordship.

It provides

1. For the withdrawal of the British protectorate over the Mosquito Indians, and for an arrangement in their behalf upon principles which were quite acceptable to the United States.

2. It regulated the boundaries of the Belize settlements within which Great Britain claimed to exercise certain possessory rights upon terms which, although not wholly acceptable to this government, were yet in a spirit of generous concession ratified by the United States Senate.

3. It provided for a cession of the Bay Islands to Honduras (in the

opinion of this government their rightful proprietor), but this concession was made dependent upon an unratified treaty between Great Britain and Honduras, whose terms were not officially known to this government, but which, so far as they had unofficially appeared, were not of a satisfactory character.

The Senate, therefore, in ratifying the Dallas-Clarendon treaty, felt obliged to amend it by striking out all that part of it which contemplated the concurrence of this government in the treaty with Honduras, and simply providing for a recognition by the two governments of the sovereign right of Honduras to the islands in question. Great Britain found itself unable to concur in this amendment, and the Dallas-Clarendon treaty, therefore, fell to the ground. It was clear, however, that the objections of the Senate to the Honduras treaty were not deemed unreasonable by Her Majesty's Government, because, in your lordship's interview with the President on the 22d October, 1857, your lordship "allowed that the articles establishing the administrative independence of the islands might have been larger than was necessary." "I had observed," you added, "the same impression in the correspondence of Mr. Wyke, Her Majesty's chargé d'affaires at Guatemala, who seemed to admit that a greater participation in the internal government might be granted to the authorities of Honduras," and you made "no doubt that Her Majesty's Government would entertain any reasonable sugges tions which might be offered to them in that sense."

And again, in your lordship's note to this department of November 30, 1857, you recognize the same probability "that the intervention of the Honduras Government in the administration of the islands may have been more limited than was necessary or even advisable."

Such was doubtless the opinion of Honduras, for as long ago as May 10, 1857, I was informed by your lordship that the treaty remained unratified "owing to some objections on the part of the government of Honduras," and that "Her Majesty's Government does not expect that the treaty in its present shape will be definitely sanctioned by that republic."

In view of the objectionable provisions of this convention with Honduras, and of its failure to be sanctioned by that republic, your lordship, by the authority of Lord Clarendon, informed me on the 6th of May, 1857, that Her Majesty's Government was prepared to sanction a new treaty, in respect to the Central American questions, which should in all respects conform to the Dallas-Clarendon treaty, as ratified by the Senate, except that to the simple recognition in the Senate's substitute for the second separate article of the sovereignty of Honduras over the Bay Islands there was to be added the following passage: "Whenever and so soon as the Republic of Honduras shall have concluded and ratified a treaty with Great Britain by which Great Britain shall have ceded and the Republic of Honduras shall have accepted the said islands subject to the provisions and conditions contained in said treaty." While this condition contemplated a new treaty with Honduras which might possibly avoid the objectionable provisions of the old one, yet it was quite impossible for the United States to become a party, either directly or indirectly, to a convention which was not in existence, or whose terms and conditions it could neither know nor control. For this reason I informed your lordship in my communication of May 29 that your lordship's proposition was declined by this government.

The attempts to adjust the Central American questions by means of a supplementary treaty having thus failed of success, and the subject not being of a character, in the opinion of the United States, to admit of

their reference to arbitration, the two governments were thrown back upon their respective rights under the Clayton-Bulwer treaty. While each government, however, had continued to insist upon its own construction of this treaty, there was reason to believe that the embarrassments growing out of their conflicting views of its provisions might be practically relieved by direct negotiations between Her Majesty's Government and the states of Central America.

In this way it seemed possible that, without any injustice to those states, the treaty might be rendered acceptable to both countries as well as operative for the disinterested and useful purposes which it had been designed to serve. The President, therefore, was glad to learn from your lordship, on the 19th of October, 1857, that Her Majesty's Government had "resolved to dispatch a representative of authority and experience to Central America, to make a definitive settlement of all the matters with regard to which the United States and England were still at variance, and who would be instructed," as your lordship believed, "to carry the Clayton Bulwer treaty into execution according to the general tenor of the interpretation put upon it by the United States, but to do so by separate negotiation with the Central American republics in lieu of a direct engagement with the Federal Government." This announcement could not fail to be received with satisfaction by the President, because it contemplated the substantial accomplishment of the very purposes in respect to the treaty which the United States had always had in view, and so long as these were accomplished he assured your lordship that "to him it was indifferent whether the concession contemplated by Her Majesty's Government were consigned to a direct engagement between England and the United States or to treaties between the former and the Central American republics; the latter method might, in some respects," he added, "be even more agreeable to him, and he thought it would be more convenient to Her Majesty's Government, who might, with greater facility, accede to the claims of the weaker party."

It is unnecessary to refer at length to what was said in this conversa tion, or to a second one on the same subject which your lordship had with the President on the evening of October 23; but there can be no doubt that in both interviews the expected mission of Sir William Ouseley (who it was understood had been selected as the plenipotentiary referred to), in connection with what your lordship indicated as his prob able instructions, was favorably regarded by the President. So much was this the case, that he gave your lordship his full assurance that should your lordship's announcement be confirmed by any official infor⚫mation such as he could use, he would change that part of his message which related to Great Britain, would encourage no attempt in Congress to annul the treaty while the mission was in progress, and nothing would give him greater pleasure, he said, "than to add the expression of his sincere and ardent wish for the maintenance of friendly relations between the two countries."

At the close of the second interview, he even went so far as to remark, in reference to the extended boundary claimed by Great Britain for the Belize (to which he had ever objected), that he could take no absolute engagement in this matter; but he would say this much, "that if the Bay Islands were fairly and handsomely evacuated, such a measure would have a great effect with him, and with the American people, in regard to the settlement of the other points at issue."

Sir William Ouseley arrived in Washington about the middle of No

vember, and on the 30th of November I received from your lordship an official statement in outline of the purposes of his mission.

On the 5th December, your lordship inclosed to me a copy of Lord Clarendon's dispatch of November 20, in which your lordship's previous statement was substantially confirmed, and in which it was further stated that "Sir William Ou.seley, during his visit to Washington, will, in pursuance of his instructions, have explained with the utmost frankness to the Government of the United States the nature of the instructions with which he is furnished, and your lordship, as the duly accredited organ of Her Majesty's Government, will have given similar explanations."

The objects of Sir William Ouseley's mission, as thus made known to the United States, were:

1. To provide for the transfer by Great Britain of the Bay Islands to the Government of Honduras; and in this transfer it was especially declared that the stipulations in the British treaty with Honduras were not to be rigidly adhered to. Sir William Ouseley, on the contrary, while requiring provisions to secure the vested rights of British subjects in the Bay Islands, was to be left at liberty to contract engagements with Honduras which should embody not only an unmistakable recognition of its sovereignty over these islands, but should allow of a more direct government and a more efficient protection over them by that republic than had been contained in the convention of 1856.

2. The second object of Sir William Ouseley's mission was the settlement of the question of the Mosquito protectorate with Nicaragua and Honduras. Whilst he was to provide for the compensation, the government, and the protection of the Mosquito Indians under the sovereignty of Nicaragua, this was to be done upon terms not less favorable than those which had received the approbation of the Senate in the DallasClarendon treaty. In no degree was the Indian reserve to trespass on the territory applicable to transit purposes..

3. The regulation of the frontier of British Honduras was to be effected by negotiation with the Government of Guatemala. Her Majesty's Government trusted to obtain from that republic a recognition of limits "which, if we may judge from previous communications on the subject, may be accepted in a spirit of conciliation, if not with absolute approval, by the President."

Such were the overtures communicated by your lordship's note to this Department of November 30, and which were again referred to in Lord Clarendon's note to your lordship of November 20, of which you inclosed to me a copy in your lordship's note of December 5. Inasmuch as the announcement of Sir William Ouseley's mission, with the explanation by your lordship of its general purposes, had been received with much satisfaction by the President, there were some expressions in this note of Lord Clarendon's which it was not easy to understand; but which, nevertheless, did not materially change the general character of the overtures. It was still stated in that dispatch "that the objections entertained in the United States to the construction placed upon that treaty by the British Government are, as every impartial person must admit, in a fair way to be removed by the voluntary act of the latter; and while the objects of Sir William's mission continued to be mentioned in only general terms, it was yet added that during his visit to Washington he will, in pursuance of his instructions, have explained with the utmost frankness the nature of the instructions with which he is furnished, and your lordship, as the duly accredited organ of Her Majesty in the United States, will have given similar explanations."