Report from Her Majesty's Minister at the Court of Denmark, on the Negotiation for the Redemption of the Sound Dues.

My Lord,

Mr. Buchanan to the Earl of Clarendon.

London, March 22, 1857. I HAD the honour, in my despatch of the 15th instant, to transmit to your Lordship the General Treaty concluded at Copenhagen on the previous day, for the redemption of the Sound dues; and in the hope that it may be useful to your Lordship, I shall now draw up, as briefly as I can, a narrative of the circumstances under which the negotiation for that object has been carried on, since the Government of the United States, in 1855, gave notice of their intention to terminate their Commercial Treaty with Denmark, and to resist the payment of Sound dues by American vessels after it shall have expired, there being no other Convention or Treaty between the two countries acknowledging the right of Denmark to levy these dues. In consequence of these proceedings on the part of the United States, the Danish Government invited Her Majesty's Government to authorize a Delegate from Great Britain to attend a Conference at Copenhagen, for the purpose of considering whether it might not be possible to abolish the Sound dues entirely, on the principle of a pecuniary compensation to be granted to Denmark by all maritime States; and your Lordship having been pleased to select me for this duty, and the Governments of Austria, Belgium, France, Holland, Oldenburg, Prussia, Russia, Spain, and of Sweden and Norway, having also named Delegates to take a part in the proposed negotiation, and the Governments of Hanover, Mecklenburgh, and the Hans Towns, having intimated an intention to do so, the first Conference was held at Copenhagen on the 4th January, 1856.

The Danish Commissioner on that occasion explained that the revenues of the Sound Custom-house were of two kinds, namely, the Sound dues which are levied on merchandize, according to the revised tariff of 1841, and the dues levied upon shipping, which are also of two classes, the one under the name of Light dues being set apart for the maintenance of the light-houses and buoys in the Sound and Belts, and the other, called "Expedition dues," being fees levied for the purpose of defraying the expenses of the Custom-house. For the abolition of the last of these sources of revenue, the Danish Commissioner stated that his Government could, of course, claim no compensation, as a Custom-house establishment would no longer be required if the object of the negotiation was obtained. With respect to the Light dues, he proposed that the charge for redeeming them should fall on each State, according to the average annual amount of Light dues which its vessels may have paid in the years 1851, 1852, and 1853; but with regard to the Sound dues levied on merchandize, he expressed an opinion that a more equitable arrangement would be, that each State should be assessed for a sum which would redeem one half of the average annual amount of the dues levied on its exports, and one half of those levied on its imports during the same period, on their passage through the Sound or Belts.

The Danish Commissioner having thus explained the general principles of the arrangement by which his Government were of opinion that the redemption of the Sound dues might be effected, he placed before the Conference several tables compiled from the books of the Custom-house, showing the average annual amount of dues levied on the exports and imports of each State in the years 1851, 1852, and 1853; and also the average annual amount which would be obtained by assigning to each the half of the dues levied on its exports, and the half of those levied on its imports in those years. From these tables it [218] B2

appeared that the average annual amount levied on imports to Great Britain was 639,650 rigs-dollars, and upon exports from Great Britain, was 582,800 rigs-dollars; and that were the Danish proposal adopted of assessing each State according to one-half of the dues levied on its imports, and on one-half of those levied on its exports, the annual sum to be redeemed by Great Britain would amount to 611,225 rigs-dollars. From another table, it appeared that the average annual amount of the shipping dues, including those for fees, paid by British vessels in the years 1851, 1852, and 1853, was 70,493 rigs dollars—thus making the total sum annually levied on the commerce of Great Britain amount to 681,718 rigs-dollars, or about 75,7307.; and it was shown that if the dues were redeemed at 4 per cent., or 25 years' purchase, the capital to be received by Denmark would amount to 60,913,225 rigs-dollars; and the share of this compensation money chargeable to Great Britain for the dues levied on merchandise in the Sound alone, would amount to 15,280,625 rigs-dollars, and for those on shipping to 1,762,325 rigs-dollars, making together 17,042,950 rigs-dollars, or about 1,893,0001.

As these sums were declared to be exorbitant by some members of the Conference, who, from their instructions, felt themselves at liberty to express an opinion on the subject, the Danish Commissioner explained that in submitting to the Conference the tables which he had prepared for their use, he had made no proposal, but had merely placed before them information on the accuracy of which they might rely as the basis of an arrangement for the redemption of the Sound dues. He promised also to furnish other tables extending the annual average of the Sound revenues over a wider range of years; and before the Conference separated, he informed them that he would be able to make a specific statement, at their next meeting, as to the terms on which the Danish Government would consent to abolish the dues.

The Conference met again on the 2nd of February, 1856.

From the new tables which were submitted to them, it appeared that the average annual revenue from the Sound dues levied on merchandise in nine. years, 1842 to 1847, and 1851 to 1853 (the intervening years having been omitted on account of the war with Prussia), amounted to 2,098,561 rigs-dollars, and the average annual sum levied during the same period on shipping, as Light dues, amounted to 150,018 rigs-dollars, or together to 2,248,579 rigs-dollars, or about 249,8441., which sum, if redeemed at 4 per cent., or 25 years' purchase, would amount to 56,214,475 rigs-dollars.

The Danish Commissioner, however, announced the readiness of his Government to accept a sum of 35,000,000 rigs-dollars as a compensation for the total abolition of the Sound dues, and he proposed that each State represented in the Conference should become responsible to Denmark for the portion of that amount assigned to it in a table submitted to the Conference, and of which a copy is inclosed herewith.* He expressed at the same time a hope that the Conference would consider that the proportion for which each State ought to be assessed, had been ascertained with sufficient accuracy in the tables laid before them at their previous meeting, showing the actual annual amount of dues paid on the imports and exports of each State in the years 1851, 1852, and 1853.

According to this proposal of the Danish Government, the share of the compensation to be provided by Great Britain amounted to 10,126,855 rigsdollars, or 1,125,2061.; and with regard to the correctness of the data on which this calculation was made, I may observe that I have been assured by the Danish Commissioner that he would willingly open the books of the Sound Customhouse for examination; and I have also ascertained that two Governments who called in question the fairness of the shares assigned to them, were subsequently satisfied with the explanations and statements furnished by the Danish Government in support of the accuracy of their statistics.

Some weeks after the Danish proposal had been submitted to the Conference, the Governments of Russia, Oldenburg, and of Sweden and Norway, notified their intention to accept it as a fair and equitable arrangement; and as it soon afterwards appeared probable that considerable delay might occur before any general arrangement could be entered into, the Delegates of these States signed a Protocol on the 9th of May, 1856, with the Danish Commissioner,

*See "Correspondence relative to the Sound Dues," presented to Parliament by Command of Her Majesty, 1856, page 36.

recording their acceptance of the proposal of his Government, subject to the condition that it should also be accepted by the other States represented in the Conference of the 2nd of February.

A new question had, however, arisen, in which Her Majesty's Government, and the Governments of Hanover, the Hans Towns, and Mecklenburgh, took a warm interest, as to whether the transit dues on routes between the North Sea or the Elbe and the Baltic ought not to be reduced or abolished simultaneously with the Sound dues; and in conformity with instructions from your Lordship, I informed the Danish Minister for Foreign Affairs that Her Majesty's Government would consider an important modification of the transit dues to be a necessary consequence of the redemption of those levied in the Sound. The assurances which I received in reply were satisfactory, although the Danish Government were not disposed to admit that the two questions were connected.

In the meanwhile, Her Majesty's Government were of opinion that serious objections might be made by Parliament to employing a large sum of money drawn from the general revenues of the country for a purpose which might appear, at first sight, merely intended to relieve the burthens incidental to a particular branch of trade; and they endeavoured to ascertain, before entering on the consideration of the Danish proposal, whether it might not be possible to remove some of the inconveniences incidental to the Sound dues, by arranging for their collection at the port of delivery or of shipment. It was shown, however, by the Danish Government, and acknowledged by that of Prussia, with whom a plan for the purpose had originated, that such an arrangement would be entirely impracticable.

Under these circumstances, Her Majesty's Government came to the conclusion that the only possible manner of meeting the question at issue, was either to consent that British vessels should continue to pay the Sound dues in the event of American vessels ceasing to do so, or, by accepting the Danish proposal, to arrange for the abolition of the dues on the principle of an indemnity to be granted to Denmark.

Therefore, after a favourable report had been made upon a part of the subject submitted to the examination of a Committee of the House of Commons, I informed the Danish Government confidentially, in conformity with instructions from your Lordship, that Her Majesty's Government were disposed to accede to the arrangement which their Commissioner had proposed at the Conference of the 2nd of February, and to conclude a Convention with Denmark for that purpose, subject to a future decision of the British Parliament, on condition that the entire freedom of the navigation of the Sound and the Belts should be granted to British vessels from and after the 1st day of April next, and that from and after that date, British vessels and their cargoes should not be subject to the payment of any dues or tolls whatever, or to any detention whatever in passing through the Sound and Belts; that the existing light-houses and buoys should be maintained without any charge to British vessels; that the pilot establishments should be kept up without its being compulsory on British vessels to take pilots, and that these establishments should hereafter be improved and increased as might be necessary, without any charge to British commerce; and it was also proposed by Her Majesty's Government that an arrangement should be made for the reduction of the transit dues on routes through Danish territory between the North Sea or the Elbe and the Baltic.

Her Majesty's Government, in submitting a proposal for this purpose to the Danish Government, considered that they could only justly require the abolition of such a proportion of the transit dues as could be fairly considered to have been intended to protect the Sound Custom-house; and it appeared to them that the arrangement which Denmark had concluded with Prussia respecting the Hamburgh and Berlin Railway afforded the means of arriving at a correct opinion upon this subject. On all the routes between the North Sea, or the Elbe, and the Baltic, a transit duty of 5 skillings Hamburgh currency, or 16 skillings Danish currency, was levied on every 100 lbs. of merchandise; but on the route from Hamburgh to Berlin the duty was fixed at 1 skilling Hamburgh currency on 100 lbs.; and it was evident that the 4 additional skillings levied on other routes were intended to protect the Sound Custom-house, because it is stated in the Convention with Prussia that the low duty of 1 skilling on 100 lbs. shall be maintained only while Prussia continues to levy a transit duty equal to the 4 additional skillings levied on other railways in Denmark, upon

all goods coming from Hamburgh to Berlin, and forwarded from thence for shipment at Stettin.

Her Majesty's Government, therefore, claimed that the transit duty on all routes of communication between the North Sea, or the Elbe, and the Baltic, through Danish territory, should be reduced to the rate of 1 skilling Hamburgh currency per 100 lbs., and that the exemptions existing on these routes should be maintained.

The only part of the conditions on which Her Majesty's Government were willing to accede to the arrangement for the redemption of the Sound dues to which the Danish Government objected, was that with reference to the transit trade, an influential portion of the Cabinet being of opinion that a Treaty stipulation restricting the future action of the Government upon this subject for ever, would be inconsistent with the dignity of the King and the independence of the country; but as Her Majesty's Government made the condition a sine quâ non of their consenting to redeem the Sound dues, a draft of Convention, embodying all their proposals, was eventually agreed to by the Danish Government at a Council of State held in October last. The question had, however, occasioned a serious ministerial crisis, which lasted for some days, and M. Andræ, the Minister of Finance, was not present at the Council which adhered to the draft of Convention, having placed his resignation in the hands of the King.

In addition to the transit duty on the routes between the North Sea, or the Elbe, and the Baltic, 6 per cent. on the amount of the duty had been hitherto levied as fees to meet the expense of its collection, a practice which is general in all Danish custom-houses; and the Danish Government, after explaining that an arrangement was about to be adopted for the general suppression of these fees, proposed that they should continue to be levied on the transit trade until the contemplated arrangement for their general abolition should be carried into effect.

In the month of October, therefore, of last year, the Danish Government announced that they were ready to sign a Convention with Her Majesty's Government, granting, on the terms above-described, the freedom of the Sound to British vessels, and the reduction of the transit dues on overland routes to 1 skilling Hamburgh currency, or 16 skillings Danish currency, per 500 lbs. of merchandize; and consenting that the proportion of the 35,000,000 rigs-dollars assigned to Great Britain should be converted into sterling money at 9 rigs-dollars to the 17., the exchange of the day being much less favourable to Her Majesty's Government.

A difference of opinion, however, existed as to the rate at which interest on the unpaid instalments of a terminable annuity should be calculated, if Her Majesty's Government should adopt that means of liquidating their debt to Denmark; and the Danish Government were able to show that they would be exposed to considerable loss and inconvenience if they accepted a lower rate than 4 per cent. However, while this point was under discussion, the Governments of France and Prussia, to whom the proposed Convention had been communicated, represented to Her Majesty's Government that so important an object as the opening of the Sound could not, in their opinion, be satisfactorily accomplished by the separate action of the maritime States, and that it ought rather to be effected by a General Treaty, to be concluded between a majority of these States and Denmark. Therefore, as they at the same time expressed a readiness to adopt the British draft of Convention as a basis for a General Treaty, they were requested to submit a draft of such a Treaty as they might deem desirable, to the consideration of Her Majesty's Government. A negotiation of some length having then taken place between Her Majesty's Government and the Cabinets of Paris and Berlin, a draft of the General Treaty which has just been concluded, was submitted by my French and Prussian colleagues, and myself, to the Danish Commissioner, at a Conference convoked for the purpose on the 3rd of February last, and the draft was received by him ad referendum. As it had been previously communicated to the different Governments which were represented at the Conference, several of the Delegates on this occasion intimated the readiness of their Governments to adhere to it, and the others expressed a belief that they would also shortly be authorized to do so. At this Conference, Delegates from Hanover, Mecklenburgh, and the Hans Towns were present, in addition to those of the States represented at the Conferences of 1856.

After the draft of the Treaty had been submitted to the consideration of the

Danish Government, various Conferences took place, at which it underwent amendments suggested by the Danish Commissioner and by other members of the Conference; and the Treaty, in its present form, was signed on the night of the 14th instant.

Having thus briefly recalled the various incidents of the long negotiation. which has been at length happily concluded, it may not be inexpedient that I should make a few observations on the different Articles of the Treaty, which will, I think, be found to secure, in the clearest terms and to the fullest extent, every object which Her Majesty's Government considered themselves entitled to claim, when they first submitted a draft of Convention to the Danish Government in the autumn of last year.

The first clause of Article I stipulates an entire cessation of the right of Denmark to levy any dues whatever on vessels passing through the Sound and the Belts from the North Sea to the Baltic, or vice versa, or to detain them on any pretext whatever. And although the King of Denmark's right to claim these dues from the vessels of States which are not parties to the Treaty is reserved, it is only on condition that some other manner of levying them may be adopted.

The Danish Government showed naturally great reluctance thus to grant the immediate and entire abolition of the Sound dues, by practically extending the concession to the vessels of States which were not parties to the Treaty; and several members of the Conference were of opinion that they would be justified in refusing it. But as Her Majesty's Government attached great importance to the question being set at rest for ever, and to the expediency of preventing the possibility of misunderstandings as to whether cargoes were liable to Sound dues or not, the Danish Government eventually, and principally from a deference to the wishes of Her Majesty's Government, decided to renounce entirely the right to levy dues on passing vessels in the Sound and Belts, and they therefore expressed a hope that they would be assisted by the good offices of the States represented in the Conference in establishing their claims for compensation against the maritime States which had not sent Delegates to the Conference, or, as in the case of Spain, whose Delegates had retired from the Conference before the signature of the Treaty.

The second clause of this Article may perhaps be considered unnecessary; but it was adopted with a view to render impossible the reimposition of the Sound dues indirectly, or in another form, upon vessels which might enter the harbours of Denmark after having passed the Sound or the Belts, or on their leaving Danish ports with that intention.

The 1st and 2nd sections of Article II secure the future maintenance of all the light-houses at present existing on the coasts of Denmark, and all the buoys and landmarks intended to facilitate the passage of the Sound and the Belts; and they also stipulate that the improvements and additions which the Danish Government promises to effect in them hereafter shall take place without any expense to foreign vessels.

The 3rd section of this Article provides for the maintenance of the pilot establishments, and secures the interests of foreign vessels, by stipulating that while the employment of pilots shall be optional, the pilots shall only receive for their services the same fees as are paid by Danish vessels.

The 4th section leaves open for ever to the private enterprise, whether of foreigners or of Danes, the towing service in the Sound, which had been hitherto practically a monopoly of the steam-vessels attached to the Sound Customhouse, in consequence, however, it is fair to add, of the lowness of the remuneration required for their services.

The 5th and 6th sections reduce the transit dues to 16 skillings Danish currency per 500 lbs. Danish weight, the former dues of 16 skillings per 100 lbs. having been levied on Hamburgh weight, which is 3 per cent. lighter. And while it is stipulated that no other tax whatever shall be claimed, thus abolishing the expedition dues, the exemptions existing on some routes are extended to all, thus establishing an uniform system of transit dues on all canals and railways passing through Danish territory; and it is also stipulated that any advantage or facility hereafter granted to one route shall be extended to all.

The 7th section of this Article is intended to secure the maintenance, in an efficient state, of certain lights on the coasts of Norway and Sweden, the Government of the latter country having received from Denmark a contribution