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Cornell University Library 
 JX 238.V43 1910 
 
 The case of the United States oj A^w' 08 
 
 3 1924 017 548 136 
 
Cornell University 
 Library 
 
 The original of this book is in 
 the Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924017548136 
 
Permanent Court of Arbitration at The Hague 
 
 UNITED STATES-VENEZUELA ARBITRATION 
 
 PROTOCOL OK FEBRUARY 13, 1909 
 
 The Case 
 
 OF 
 
 The United States of America 
 
 ON BEHALF OF THE 
 
 Orinoco Steamship Company 
 
 AGAINST 
 
 The United States of Venezuela 
 
 With Maps 
 
 WASHINGTON 
 
 GOVERNMENT PRINTING OFFICE 
 
 J910 
 
CASE OF THE UNITED STATES ON BEHALF OF THE ORINOCO STEAMSHIP 
 
 COMPANY AGAINST THE UNITED STATES OF VENEZUELA BEFORE 
 
 THE PERMANENT COURT OF ARBITRATION AT THE HAGUE. 
 
 INTRODUCTORY STATEMENT 
 
 The protocol between the United States and Venezuela of Feb- 
 ruary 13, 1909, provided for the submission to arbitration before the 
 Permanent Tribunal at The Hague of three claims against the 
 Republic of Venezuela, the claim of the Orinoco Steamship Com- 
 pany, the United States and Venezuela Company, and the claim 
 of the Orinoco Corporation and its predecessors in interest. Inas- 
 much as it was felt by Mr. Buchanan, the High Commissioner on 
 the part of the United States, and Dr. Guinan, the Minister for 
 Foreign Affairs of Venezuela, the negotiators of the protocol, that 
 an amicable adjustment of the claims of the United States and 
 Venezuela Company and of the Orinoco Corporation and its pred- 
 ecessors was both desirable and practicable provided time were 
 allowed for the further study and discussion of these two cases, 
 specific provision was made for the amicable adjustment of these 
 two cases during the period of five months from the date of the 
 signature of the protocol. 
 
 Owing to the complicated questions of law and fact involved in 
 the two cases and the delays necessitated by communication among 
 the various parties in interest, it was found necessary twice to ex- 
 tend the time allowed by the protocol for the settlement of these 
 cases by mutual agreement between the two Governments. b 
 
 The protracted and friendly negotiations in regard to these two 
 claims terminated in the signature of two protocols dated, respec- 
 tively, August 21, 1909, and September 9, 1909, which embody 
 the adjustment of the claims of the United States and Venezuela 
 Company and of the Orinoco Corporation upon terms at once sat- 
 
 See protocol of February 13, 1909, Article XII, Appendix, p. 3. 
 b See Appendix, p. 86. 
 
4 INTRODUCTORY STATEMENT. 
 
 isfactory to the parties in interest and honorable to both Govern- 
 ments." 
 
 Upon the date of the signature of the protocol of settlement in 
 the case of the Orinoco Corporation, the United States Minister 
 at Caracas, in pursuance of telegraphic instructions from the 
 Department of State, addressed a note to the Venezuelan Minister 
 for Foreign Affairs expressing the peculiar gratification of the 
 Government of the United States at the happy settlement of 
 that longstanding and vexations controversy and making 
 
 "renewed suggestion of the hope of the State Department that 
 the United States of Venezuela will see its way to make a satis- 
 factory adjustment of the Orinoco Steamship Company case, which 
 is now the only case remaining for arbitration under the Protocol 
 of February 13, 1909." 
 
 To this the Venezuela Minister for Foreign Affairs made a most 
 friendly and courteous response, concluding, however, with the 
 statement that 
 
 "in regard to the case of the Orinoco Steamship Company, which 
 was absolutely terminated by the arbitral award of the Honorable 
 Doctor Barge, the views of the two Governments being so widely 
 divergent, and it not appearing probable that the Government of 
 the United States will cease to insist on its position in that matter, 
 the Government of the Republic deems that the only possible 
 solution of the matter is to conform to the provisions in regard 
 thereto of the Protocol agreed upon on February 13th last." 6 
 
 This courteous refusal on the part of the Government of Vene- 
 zuela to consider the amicable adjustment of the claim of the 
 Orinoco Steamship Company leaves the United States no alter- 
 native but to present this claim to the Permanent International 
 Tribunal at The Hague in accordance with the provisions of 
 Article I of the Protocol of February 13, 1909. That Article 
 reads as follows: 
 
 Article I. 
 
 With respect to the first of these claims, that of the Orinoco 
 Steamship Company, the United States of Venezuela has upheld 
 the immutability of the arbitral decision of Umpire Barge, ren- 
 dered in this case, alleging that said decision does not suffer from 
 any of the causes which by universal jurisprudence give rise to its 
 
 a For texts of protocols of settlement, see Appendix, pp. 23 and 28. 
 b For complete text of these notes see Appendix, pp. 7315-1316. 
 
INTRODUCTORY STATEMENT. 5 
 
 nullity, but rather that it is of an unappealable character, since 
 the compromis of arbitration can not be considered as void, nor 
 has there been an excessive exercise of jurisdiction, nor can the 
 corruption of the judges be alleged, nor an essential error in the 
 judgment; while on the other hand, the United States of America, 
 citing practical cases, among them the case of the revision, with 
 the consent of the United States of America, of the arbitral awards 
 rendered by the American-Venezuelan Mixed Commission created 
 by the Convention of April 25, 1866, and basing itself on the cir- 
 cumstances of the case, considering the principles of international 
 law and of universal jurisprudence, has upheld not only the admis- 
 sibility but the necessity of the revision of said award; in conse- 
 quence of this situation, William I. Buchanan and Doctor Fran- 
 cisco Gonzalez Guinan, in the spirit that has marked their con- 
 ferences, have agreed to submit this case to the elevated criterion 
 of the ARBITRAL TRIBUNAL created by this Protocol, in 
 the following form : 
 
 The ARBITRAL TRIBUNAL shall first decide whether the 
 decision of Umpire Barge, in this cas.e, in view of all the circum- 
 stances and under the principles of international law, is not void, 
 and whether it must be considered so conclusive as to preclude a 
 reexamination of the case on its merits. If the ARBITRAL 
 TRIBUNAL decides that said decision must be considered final, 
 the case will be considered by the United States of America as 
 closed; but on the other hand, if the ARBITRAL TRIBUNAL 
 decides that said decision of Umpire Barge should not be con- 
 sidered as final, said ARBITRAL TRIBUNAL shall then hear, 
 examine and determine the case and render its decision on the 
 merits. 
 
 It will be observed that in accordance with the terms of this 
 article, two questions are submitted to the Permanent Tribunal 
 at The Hague. They are, in the precise language of the pro- 
 tocol : (1) Whether the decision of Umpire Barge, in view of all the 
 circumstances and under the principles of international law, 
 is not void, and whether it must be considered so conclusive as 
 to preclude a reexamination of the case on its merits. (2) If 
 the arbitral tribunal decides that said decision of Umpire Barge 
 should not be considered as final, said arbitral tribunal shall 
 then hear, examine and determine the case and render its decision 
 on the merits. 
 
 Although the protocol thus clearly defines the two questions at 
 issue, the question of the revision of the Barge award and the ques- 
 tion as to the merits of the claim as they may be determined de novo 
 by this tribunal, it will at once be perceived that the two questions 
 
6 INTRODUCTORY STATEMENT. 
 
 do not lend themselves to separate and distinct treatment. It is 
 impossible to understand — much less discuss — Dr. Barge's decision 
 and the question of its revision without first thoroughly under- 
 standing the merits of the case as presented to Dr. Barge. It is 
 impossible to point out the plain departure of the learned umpire 
 from the terms of the protocol which defined his jurisdiction and 
 controlled the exercise thereof, to call attention to what are believed 
 to be the numerous and essential errors of law and fact committed 
 by the learned umpire without a thorough and complete under- 
 standing of the law and the facts of the case which the two Gov- 
 ernments had placed before him for decision. It will be necessary, 
 therefore, briefly to review the claim of the Orinoco Steamship 
 Company and the questions therein involved which were presented 
 to the United States and Venezuela Mixed Commission of 1903. 
 
 The statement will be narrative in form and generally chrono- 
 logical in arrangement, and no effort will be made at this time to 
 argue the law or marshal the facts. 
 
 THE PHYSICAL GEOGRAPHY OP THE ORINOCO." 
 
 A glance at the map of Venezuela will show that the Orinoco 
 River with its great navigable tributaries and its vast network 
 of minor affluents is not only the great doorway of Venezuela, 
 but, as has been aptly said, " one of the great commercial doorways 
 of South America." * 
 
 Of the 1,552,741 square kilometers which constitute the total 
 area of Venezuela, which exceeds the combined area of Germany, 
 France, Italy, The Netherlands, Belgium, Switzerland, and Ireland, 
 some 949,430 square kilometers, which is about twice the area 
 of Spain, form the drainage basin of the Orinoco, while its Delta 
 alone embraces 20061 square kilometers. When it is remembered 
 that the Orinoco is 2373 kilometers long, of which 1930 kilometers 
 are reckoned as navigable, and that its navigable tributaries 
 connect with the navigable affluents of the Amazon, some idea 
 of its present and potential importance as an avenue of transporta- 
 
 With reference to the statements here made, see Appendix: The Physical Geog- 
 raphy of the Orinoco River, p. 1 197 et seq. 
 
 & See Church's South America, Appendix, p. 1 2 1 1 . 
 
INTRODUCTORY STATEMENT. 7 
 
 tion may be obtained, particularly in a region in which the railway 
 mileage is a negligible quantity, the entire railway mileage of 
 Venezuela in 1903 amounting to only 842 kilometers." ; 
 
 If the Orinoco is the doorway to Venezuela, the Macareo and 
 Pedernales channels of the Orinoco River are the key to the door, 
 and whoever controls the navigation of these channels holds the 
 key to the commercial treasure-house of Venezuela, ^peaking in 
 the terms of commerce, the Macareo and Pedernales channels are the 
 Orinoco. The accuracy of this statement is demonstrated by the 
 following facts : The vast volume of the Orinoco is discharged into 
 the Atlantic through numerous mouths which find their way to 
 the sea through the delta of the river which, spreading out like a 
 fan, has a coast line of approximately 180 English miles between 
 the Boca Grande and the most northerly mouth, the Vagre. 
 The Boca Grande, or main mouth of the Orinoco, flows fourteen 
 to fifteen feet at low water, with a rise of about three feet. The 
 passage of the bar is at all times difficult and in bad weather dan- 
 gerous even for ocean going steamers. 6 
 
 Nevertheless, the bar of the Orinoco (Boca Grande) is at all 
 seasons of the year navigable for sea-going craft. The river itself, 
 however, although navigable for vessels of fifteen feet draft as far 
 as Ciudad Bolivar during the season of high water from June 
 to October, shoals during the dry season at numerous points, 
 particularly at Panapana Pass, 16 miles below Ciudad Bolivar, so 
 as to render navigation impossible during the greater portion of 
 the year for the ocean-going vessels which alone can safely enter 
 via the Boca Grande. These considerations dispose of the Boca 
 Grande as a commercial channel under present conditions. 
 
 a These statistics as regards Venezuela are taken from the handbook of the Bureau 
 of the American Republics with regard to Venezuela, prepared by N. Veloz Goiticoa, 
 Secretary of the Bureau, published at Washington in 1904. See pp. 15, 21, 23, and 
 474. See also South America, An Outline of its Physical Geography, by Col. George 
 Earl Church, Section: The Orinoco and its Basin, reprinted Appendix pp. 121 1 ; British 
 Sailing Directions, 1903, section on the Orinoco River, pp. 107 to 115, reprinted 
 Appendix pp. 1197. Also see maps of Venezuela and of the Delta of the Orinoco 
 accompanying the case of the United States. 
 
 6 See British Sailing Directions, p. 1197 supra, and Report of the Commandeijpf 
 the U. S. S. DOLPHIN to the Secretary [of the Navy, Appendix, p. 12 13, descrjbjpg 
 the passage of the bar of the Orinoco. 
 
8 INTRODUCTORY STATEMENT. 
 
 Of the smaller channels of the Orinoco only two, the Macareo 
 and Pedernales channels, are of commercial importance. The 
 Macareo bar shows a depth of ten feet at low water, and the 
 Pedernales bar a depth of eight feet. This is entirely adequate 
 for river steamers which, although incapable of navigating the 
 Boca Grande and its sea approaches would, if once they could 
 effect an entrance to the river proper, find therein sufficient water 
 for navigation all the year around. The Macareo and Pedernales 
 channels combined with the quiet and 'land-locked waters of the 
 Gulf of Paria provide safe and constant access to the Orinoco. 
 
 Moreover, as a glance at the map will show, the passage from 
 Trinidad, the port of distribution and transshipment, to Ciudad 
 Bolivar, the commercial metropolis of the Orinoco valley, is 
 much shorter via the Macareo and Pedernales channels than via 
 the Boca Grande. In brief, because the Macareo and Pedernales 
 channels afford at all times the safest and shortest avenue to the 
 Orinoco River ports, and during a large part of the year the only 
 avenue for vessels of commercial importance, a monopoly of the 
 navigation of these channels is for all practical purposes a mo- 
 nopoly of the navigation of the Orinoco. 
 
 THE HISTORY OF THE NAVIGATION OF THE ORINOCO SINCE 1 869. 
 Period from i86g to 1875. 
 
 The commercial importance of the control of navigation on 
 the Orinoco and the ease and certainty with which absolute con- 
 trol may be obtained and held through the control of navigation 
 via the Macareo and Pedernales channels has been fully realized 
 by the various governments of Venezuela within the last half 
 century. So completely has this been true that the history of 
 the control of the navigation of the Orinoco is in large part the 
 history of Venezuela. 
 
 By the law of May 14, 1869, a Venezuela threw open the naviga- 
 tion of the Orinoco to the commerce of the world. The invitation 
 thus given was accepted in good faith by an American company 
 (the Venezuela Steam Transportation Company) which was in- 
 
 °For text of this law see Appendix, p. 982. 
 
INTRODUCTORY STATEMENT. 9 
 
 corporated in the State of New York on the very day on which 
 the Venezuelan law was passed. The company at once estab- 
 lished steamship communication between Port of Spain, Trini- 
 dad, and Ciudad Bolivar, and shortly afterwards entered upon the 
 up-river traffic between Ciudad Bolivar and Nutrias. Hardly had 
 this navigation been established, however, before the vessels en- 
 gaged therein were detained and damaged by both parties to a civil 
 war which had broken out and which was only terminated by the 
 inauguration of the constitutional presidency of General Guzman 
 Blanco February 20, 1873. The termination of hostilities how- 
 ever brought no relief to the American company; its vessels 
 were prevented from resuming navigation of the Orinoco by the 
 Venezuelan Executive who had been given by the law of May 17, 
 1873, large discretionary powers with regard to the opening and 
 closing of customs houses and the general regulation of com- 
 merce."' This law was followed by the law of June 6, 1874, ap- 
 proving certain preferential contracts which had been made by the 
 Executive with General Juan Francisco Perez and which amounted 
 to all intents and purposes to the granting to General Perez of 
 the exclusive right to the navigation of the Orinoco. b 
 
 Since the Venezuelan Government not only declined to allow 
 the vessels of the American company to resume navigation, but 
 had granted a practically exclusive concession to others for the 
 navigation of the Orinoco River, nothing remained for the American 
 Company but to sell its vessels to its successful rivals and retire 
 from the field. 
 
 Thus ended the first period in the history of the navigation 
 of the Orinoco River. 
 
 The diplomatic negotiations between the United States and 
 Venezuela growing out of this incident covering a long period 
 of years, the arbitration which finally ensued, the award of the 
 arbitrators making tardy compensation to the Venezuela Steam 
 Transportation Company for the damages sustained, may be 
 
 a For text of law of May 17, 1873, see Appendix, p. 987. 
 
 b For full text of this law and the contracts with General Pere? , see Appendix, p. 993. 
 
IO INTRODUCTORY STATEMENT. 
 
 mentioned here, although they fall chronologically within the later 
 periods of the history of the navigation of the Orinoco. 
 
 Period from 1875 to 180 1. 
 
 The history of the second period of the navigation of the 
 Orinoco is replete with decrees declaring and raising blockades, 
 opening and closing ports and custom houses, and granting 
 various concessions for navigation." The first of these which 
 it is worth while to notice at present is the law of May 20th, 1882* 
 approving the contract between the Executive and General 
 Lino Duarte Level, which, in Article 18 bears incidental, but 
 not the less eloquent witness to the importance attached to the 
 navigation between Trinidad and Ciudad Bolivar in the specific 
 permission which it grants to the concessionaire to carry cattle 
 to Trinidad, and to take on coal there, but without taking on any 
 cargo. 
 
 The Law of July 7th, 1883,° approving the contract between 
 the Executive and Mr. Luis Vallenilla, provides, that the con- 
 cessionaire "shall have the exclusive privilege of navigation on the 
 Macareo, Pedernales,Vagre, Cocuima, and any other navigable chan- 
 nels of the Orinoco, all other steam or sailing vessels being obliged 
 to enter said river by the Boca Grande or the Boca Navios." 
 The duration of this contract was fixed for a term of five years 
 and it is followed by a resolution of February 16, 1886, d setting 
 forth that Mr. Vallenilla, the concessionaire, had complained of the 
 intrusion of the Steamer Bermudez upon the Macareo channel in 
 its voyages to Ciudad Bolivar, and directing that the owners of 
 the Bermudez be notified "of the prohibition against said steamer 
 passing, in its voyages to Ciudad Bolivar, through the Macareo 
 channel." 
 
 On October 25, 1886, however, we find an executive decree 
 purporting to found itself on Law 6 e of the Code of Hacienda, 
 which without referring to the Vallenilla contract of 1883 throws 
 
 a See Appendix, p. 999. 
 
 b For text of law of May 20th, 1883, see Appendix, p. 1012. 
 
 c For text of this law, see Appendix p. 1024. 
 
 d For text of this resolution, see Appendix, p. 1026. 
 
 e For text of Law 6 of the Code of Hacienda of 1886, see Appendix, p. 1028. 
 
INTRODUCTORY STATEMENT. II 
 
 open to all vessels, native or foreign, the navigation of all of the 
 mouths of the Orinoco, thus ending the second period in the 
 navigation of the Orinoco. 
 
 Period from 189 1 to 1894. 
 
 By the law of July 9, 1891, the Venezuelan Congress ratified 
 the contract concluded between the Executive, acting through 
 the Minister of Fomento, and Mr. Pedro Manuel Olaechea whereby 
 the Government grants to Olaechea "the exclusive right, for a 
 period of twenty years, to navigate by steam the Guanare, Cojedes, 
 Portuguesa" and Masparro rivers, and guarantees to him free 
 navigation for his line of steamers from Ciudad Bolivar to the 
 mouths of the Uribante." 
 
 In other words, this is an exclusive concession for a term of 
 twenty years of the so-called up river navigation of the Orinoco 
 from Ciudad Bolivar to the head of commercial navigation. This 
 contract came by various mean assignments, as will appear later, 
 into the hands of the Orinoco Steamship Company, the present 
 claimant. 
 
 About a year after the granting of the Olaechea contract cov- 
 ering the exclusive franchise for the up-river navigation, the 
 Government of Venezuela made absolutely clear its position with 
 regard to the status of the navigation of the lower Orinoco. John 
 H. Dialogue & Son, an American firm of Camden, New Jersey, 
 under date of November 1, 1892, addressed the following inquiry 
 to the Department of State : 
 
 Sir: Will you please obtain information as to the following — 
 We propose to build vessels for transportation purposes from the 
 United States to Angostura on the Orinoco River; to make the 
 connection as direct as possible and to avoid unnecessary expense, 
 it is desirable to utilize the navigation of the Bayous of the Orinoco 
 River which afford the most convenient route; we understand that 
 these Bayous are occasionally navigated by vessels carrying the 
 British flag, and it is quite probable that they are open to flags of 
 other Nations, but is would be very satisfactory to us, before 
 entering into large expense, to know that they are open to all 
 flags and especially the American, and that, that condition would 
 
 "For text of this contract, see Appendix, p. 1030. 
 
12 INTRODUCTORY STATEMENT. 
 
 likely be permanent. If you can kindly procure through our 
 Minister at Caracas an assurance to that effect or any other 
 information relating thereto, it would enable us to proceed with 
 our enterprise without hesitation." 
 
 This inquiry was duly brought to the attention of the Vene- 
 zuelan Government through official channels, and the Venezuelan 
 Minister for Foreign Affairs made reply in a letter addressed to the 
 American Minister at Caracas dated December 22, 1892. b In this 
 letter the Minister for Foreign Affairs said that he had consulted 
 his colleague, the Minister of Fomento, who had replied that 
 
 after a careful search in the archives of this Ministry, there has 
 been found in reference to this question, only the concession which 
 was granted by the National Government to Messrs. C. C. Fitz- 
 gerald and George Turnbull, in their contract of September 22-nd. 
 1883, and of the same month in the year 1886, respectively (the 
 first being void) , of the right to navigate the Orinoco and its tribu- 
 taries, said contractors binding themselves not to obstruct navi- 
 gation, which should be free to all. 
 
 The Minister for Foreign Affairs adds on his own behalf: 
 
 In transcribing the foregoing for the knowledge of the Legation, 
 and, as a definite answer, which I have the honor to give to the 
 note of the 21-st. ultimo, I think it well to observe also that, in the 
 "Libro Amarillo" for 1887 (page 43) there is inserted an Execu- 
 tive Decree, given the 25-th. October, 1886, by virtue of which, 
 "vessels navigating the Orinoco, both foreign, and therefore obliged 
 to end their voyage at the port of Ciudad Bolivar, as well as 
 National ones, which are allowed to continue navigating further 
 up the Orinoco and its tributaries, shall be allowed to enter said 
 river by any of the mouths of the Delta, and to return, likewise, 
 by any of them, both being subjected to the laws XVI and XVIII 
 and others, of the Codigo de Hacienda." 
 
 This answer was duly transmitted to Messrs. Dialogue & Son. c 
 Under date of January 12, 1893, the Venezuelan Executive, 
 through the Minister of the Interior, entered into a contract with 
 one Alejandro Mantilla for the establishment and maintenance 
 of steam navigation between Ciudad Bolivar and Maracaibo. 
 This contract imposes various duties upon the concessionnaire and 
 provides that he shall be entitled to various exemptions and 
 
 See Appendix, p. 1038. 
 
 * For full text of this letter, see Appendix, p. 1040. 
 
 c For letter of transmittal, see Appendix, p. 1041. 
 
INTRODUCTORY STATEMENT. 1 3 
 
 benefits, particularly a Governmental subsidy and exemption 
 from import duties. By Article V the Government agrees 
 
 not to grant to any other line of steamers to be established in the 
 future any of the benefits and exemptions contained in the present 
 contract, this being in compensation for the services to be rendered 
 by the enterpise to both national and private interests." 
 
 This contract, which was to have had a term of fifteen years, 
 appears for some reason never to have been ratified by the Vene- 
 zuelan Congress. It is, however, worthy of careful peflisal in 
 connection with this case both on account of its resemblance 
 to and difference from the Grell contract, the basic contract 
 under which the Orinoco Steamship Company claims, and which 
 was granted only a little over a year later. 
 
 Under date of July 1, 1893, the Venezuelan Executive, being 
 duly empowered, promulgated a decree closing the Macareo and 
 Pedernales channels to vessels engaged in foreign trade. The 
 gist of this decree is contained in the first and second articles, 
 which read as follows: 6 
 
 Art. 1 . Vessels engaged in foreign trade with Bolivar City may 
 only pass through the Boca Grande of the Orinoco River, the 
 Macareo and Pedernalles Channels being reserved for the coasting 
 trade, and navigation of the other channels of the said river being 
 absolutely prohibited. 
 
 Art. 2. In order that the commerce of Bolivar City may not suf- 
 fer any disturbance in its mercantile operations, permission is 
 granted solely to the lines of steamers now running along the 
 Macareo and Pedernales Channels, in order that, in view of the 
 nautical conditions of the vessels composing them, which do not 
 permit them to navigate the Boca Grande, they may continue this 
 traffic through the Macareo and Pedernales Channels until Decem- 
 ber 31 next, a period which the Government deems sufficient to 
 enable the owners of said lines to alter their vessels so as to fit 
 them for navigation as required by the provisions of this Decree. 
 
 This decree was at once transmitted to • the Department of 
 State by the American Minister in Caracas in the following letter 
 dated July 10, 1893:° 
 
 Sir: I have the honor to transmit herewith a copy and trans- 
 lation of a decree of the Venezuelan Government, dated the 1st 
 instant, relative to the navigation of the Orinoco River. It closes 
 
 o For full text, see Appendix, p. 104.4. 
 
 b For full text of this decree see Appendix, p. 1047. 
 
 'See Appendix, p. 1048. 
 
14 INTRODUCTORY STATEMENT. 
 
 all of the channels of that river to foreign commerce, except the 
 Boca Grande, reserving the Macareo and Pedernales channels for 
 the coasting trade, and absolutely prohibiting the navigation of 
 its' other channels. 
 
 I understand that the only American line at present running 
 between the United States and Ciudad Bolivar is the Thebault 
 line, of New York, whose steamer already passes through the Boca 
 Grande. The Department, however, in its instruction, No. 308, 
 of November 4, 1892, transmitted to this legation a copy of a let- 
 ter from John H. Dialogue & Son, of Camden, N. J., in which they 
 stated ^hat they proposed to build vessels to run between the 
 United States and Angostora (Ciudad Bolivar) , and that to make 
 the connection as direct as possible, and to avoid unnecessary 
 expense, they desire to utilize the navigation of the bayous of the 
 Orinoco, which afforded the most convenient route. Before 
 entering upon large expense they desire to know whether these 
 different channels of the Orinoco were open to all flags, and espe- 
 cially the American, and whether that condition was likely to be 
 permanent. The minister of foreign affairs replied, December 22, 
 that by the executive decree of October 25, 1886, either domestic 
 or foreign vessels were allowed to enter the Orinoco by any of its 
 mouths. 
 
 The shortest course for steamships proceeding from the United 
 States is to pass westward of the island of Trinidad and enter the 
 Orinoco by the Pedernales or Macareo channels. These channels, 
 I am informed, admit vessels of a draft less than about 14 feet, 
 and for vessels of that class are safer entrances x than the Boca 
 Grande. 
 
 When the Department of State advised Messrs. John A. Dia- 
 logue and Son of this decree this firm responded under date of 
 July 29th, 1893:" 
 
 that the vessel in which we have taken such an interest and 
 which we built in our yard, was built especially for the naviga- 
 tion of the Orinoco River through the mouths adjacent to Port 
 of Spain, and the vessel is utterly unfit to navigate the principal 
 mouth, and there is no possible way of altering her to make her 
 suitable, for such navigation; this steamer was built with the 
 assurance of the Venezuelan Government, that these mouths 
 would be open to navigation by American vessels, contained in the 
 Department's letter of January nth, to you, copy of which has 
 been sent us. 
 
 They added a request for the Department to use its good offices 
 to secure such a modification of the decree of 1893 as would permit 
 American vessels already built "to navigate the bayous adjacent 
 
 a For full textof this letter, see Appendix, p. 1049. 
 
INTRODUCTORY STATEMENT. 1 5 
 
 to Port of Spain." The Department in response to this request 
 took the matter up informally through the American Minister 
 with the Venezuelan Foreign Office but without result, as will 
 later appear. 
 
 It will be remembered that the second article of the decree of 
 July 1, 1893, closing the Macareo and Pedernales channels to the 
 foreign trade permitted the lines of steamers then engaged in the 
 navigation of these channels to continue such navigation until 
 December 31, 1893, a period deemed sufficient by the Government 
 to enable the owners of these vessels to fit them for navigation via 
 the Boca Grande. Under date of January 8, 1894, upon the 
 petition of the Venezuelan Joint Stock Company "Red Star of 
 the Orinoco " this permission was extended to December 31, 1894. 6 
 
 On the 17th day of January, 1894, trie Minister of the Interior, 
 duly authorized by the Venezuelan Executive entered into a 
 contract with Ellis Grell, and it is this contract which lies at the 
 basis of the present claim. This contract reads as follows: 
 
 The Congress of the U. S. of Venezuela, upon examination of 
 the Contract concluded in this city on the 1 7th of January of the 
 present year between the Minister of the Interior of the U. S. 
 of Venezuela, duly authorized by the Chief of the National Execu- 
 tive, on the one part; and on the other, Edgar Peter Ganteaume, 
 Attorney for Ellis Grell, transferred to the Venezuelan Citizen 
 Manuel A. Sanchez, and of the additional article to the same Con- 
 tract dated 10th of May instant, the tenor of which is as follows: 
 
 Dr, Feliciano Acovedo, Minister of the Interior of the U. S. of 
 Venezuela, duly authorized by the Chief of the National Execu- 
 tive, on the one part; and Edgar Peter Ganteaume, Attorney for 
 Ellis Grell, and in the Tatter's name and representation, who is 
 resident in Port of Spain, on the other part, upon the concurrent 
 vote of the Government Council, have concluded the Contract set 
 out in the following articles : 
 
 Art. 1. Ellis Grell undertakes to establish and carry on navi- 
 gation by steamers between Ciudad Bolivar and Maracaibo within 
 the term of six months reckoned from the date of this Contract, 
 and in such manner that at least one fortnightly trip shall be 
 made, touching at the ports of La Vela, Puerto Cabello, Ea 
 Guaira, Guanta, Puerto Sucre and Carupano, with power to 
 extend the line to any of the ports of the Republic open to com- 
 merce. 
 
 °See Department's letter of September 20, 1894, Appendix, pp. 1055. 
 
 6 For text of the resolution granting this extension see Appendix, p. 1057. 
 
i6 
 
 INTRODUCTORY STATEMENT. 
 
 Art. 2. The steamers shall navigate under the Venezuelan 
 flag. 
 
 Art. 3. The Contractor undertakes to transport free of charge, 
 the mail bags which may be placed on board the steamers by the 
 Authorities and merchants through the respective post-offices; 
 the steamers thereby acquiring the character of mail steamers, 
 and, as such, being exempted from all national dues. 
 
 Art. 4. The Contractor shall draw up a tariff of fares and 
 freights with the advice and consent of the Government. 
 
 Art. 5. The Company shall receive on board each steamer a 
 Government employee with the character of "Fiscal" appointed 
 by the Minister of Finance with the object of watching the han- 
 dling of the mails and other fiscal interests. 
 
 The Company engages also to transport public employes when 
 in commission of the Government at half the price of the tariff, 
 provided that they embark under an express order signed by the 
 Minister of Finance or by Presidents of the States. Military men 
 on duty and troops shall be carried for one fourth of the tariff 
 rates. The Company undertakes also to carry gratis, materials 
 of war, and at half freights all other goods which may be shipped 
 for account and by order of the National Government. 
 
 Art. 6. The General Government undertakes not to concede 
 to any other line of steamers any of the benefits, concessions and 
 exemptions contained in the present Contract as compensation 
 for the services to be rendered by the Company both to National 
 and private interests. 
 
 Art. 7. The Government of Venezuela will pay to the Con- 
 tractor a monthly subsidy of four thousand bolivars (4,000) pro- 
 vided the conditions of the present Contract are duly carried out. 
 
 Art. 8. The National Government agrees to exempt from the 
 payment of import duties all machinery, effects and implements 
 which may be imported for the use of the steamers, and all other 
 materials necessary for their repair, and, shall also permit the 
 steamers to supply themselves with coal for fuel and provisions 
 for the subsistence of their crews in the ports of Curacao and 
 Trinidad. 
 
 Art. 9. The Company shall have the right to cut from the Na- 
 tional forests wood for the construction of steamers or necessary 
 buildings, and for fuel for the steamers of the line. • 
 
 Art. 10. The officers and crew of the steamers as also the wood- 
 cutters and all other employes of the Company shall be exempt 
 from military service except in cases of International war. 
 
 Art. 11. The steamers of the Company shall enjoy in all the 
 ports of the Republic the same exemptions and preferences as are 
 enjoyed under the law by the steamers of lines established with 
 fixed itinerary'. 
 
 Art. 12. Until the Government shall have finally designated 
 the ports at which merchandise from abroad shall be transshipped 
 
INTRODUCTORY STATEMENT. I 7 
 
 and the requisite installations shall have been made, the steamers 
 of this line shall be allowed to call at the ports of Curacao and 
 Trinidad, and any steamer coming from the last named island 
 shall also be permitted to navigate the Macareo and Pedernalles 
 channels of the Orinoco river subject to the formalities which by 
 special order will be imposed by the Minister of Finance in order 
 to prevent contraband, for the safeguard of fiscal interests; to all 
 which conditions the Contractor agrees beforehand. 
 
 Art. 13. This contract shall remain in force for fifteen years, 
 reckoned from the date of its approbation, and may be transferred 
 by the contractor to another person or corporation upon previous 
 notice to the Government. The transfer shall not be made to any 
 Foreign Government. 
 
 Art. 14. Questions and controversies which may arise with 
 regard to the interpretation or execution of this Contract shall be 
 resolved by the tribunals of the Republic in accordance with its 
 Laws, and shall not in any case give occasion for international 
 reclamations. 
 
 Two copies of this contract of the same tenor and effect were 
 made in Caracas the seventeenth day of January, 1894. 
 
 (S'g'd) Souciano Acovedo. 
 
 (S'g'd) Edward P. Ganteaume. 
 
 Additional Article. Between the Minister of the Interior of 
 the U. S. of Venezuela and Citizen Manuel A. Sanchez, Assignee 
 of Mr. Ellis Grell, have agreed to modify the eighth article of the 
 contract made on the 1 7th day of January of the present year for 
 the coastwise trade navigation between Ciudad Bolivar and Mara- 
 caibo in the following terms : 
 
 Art. 8. The Government undertakes to exempt from the pay- 
 ment of import duties, the machinery, effects and implements 
 which may be imported for the steamers, and all other materials 
 destined for the repairs of the steamers; and until the Govern- 
 ment shall have established the points of transport and coaling 
 ports, the Contractor shall be permitted to take coal and provi- 
 sions for the subsistence of his crews in the ports of Curacao and 
 Trinidad. 
 
 Caracas: ioth June, 1894. 
 
 (S'g'd) Jose R. Nunez. 
 
 (S'g'd) M. A. Sanchez. 
 
 I 73OI 10 2C 
 
1° INTRODUCTORY STATEMENT. 
 
 Decrees : 
 
 Sole Art. The present Contract is approved in all its parts. 
 Given in the palace of the Federal Legislative Body, in Caracas, 
 the 26th day of May, 1894, — 8 3 r d year of Independence and 36th 
 of Federation. 
 
 " (Signed) 
 
 Vicente Amengual, President of Senate. 
 J. Francisco Castillo, President of Ch. Deps. 
 Francisco Pimentel, Secretary of Senate. 
 J. A. Bosa, Secretary Chamber of Deputies. 
 "Federal Palace in Caracas, June 8, 1894. 
 "Let this Contract be executed and its execution looked after. 
 " (Sgd.) Joaquin Crespo. 
 
 (Countersigned) JosE R. Nunez, 
 
 Minister of the Interior." 
 
 Notwithstanding the fact that by virtue of the Executive Decree 
 of July 1, 1893, vessels engaged in the foreign trade with Ciudad 
 Bolivar were confined to the Boca Grande, the Macareo and Peder- 
 nales channels being reserved for the coasting trade, it will be 
 observed that Article XII of this contract provides that until the 
 Government designates ports of transshipment and makes the 
 requisite installations, the steamers of the concessionnaire are per- 
 mitted to call at Curacao and Trinidad and are permitted to 
 navigate the Macareo and Pedernales channels between Trinidad 
 and Ciudad Bolivar. By Article VI the Government binds itself 
 "not to concede to any other line of steamers any of the benefits, 
 concessions and exemptions contained in the present Contract as 
 compensation for the services to be rendered by the Company 
 both to National and private interests," and Article XIII provides 
 that the contract shall remain in force for fifteen years from the 
 date of its approbation. In other words, the Grell contract read 
 in connection with the decree of July 1 , 1 893 , secures to the con- 
 cessionnaire, unless and until certain ports of transshipment shall 
 have been finally designated and the requisite installations shall 
 have been made, the exclusive right to navigate the Macareo and 
 Pedernales channels of the Orinoco between Trinidad and Ciudad 
 Bolivar. Thus under the Grell contract read in connection with 
 the decree of 1893 the concessionnaire held the key to the naviga- 
 tion of the Orinoco for a term of fifteen years. 
 
INTRODUCTORY STATEMENT. 1 9 
 
 The concession had hardly been signed before it was construed 
 in this sense. It will be remembered that under date of January 8, 
 1894, the Executive on petition of the " Red Star of the. Orinoco " 
 had extended the time granted the lines then navigating the 
 Macareo and Pedernales channels between Trinidad and Ciudad 
 Bolivar to fit their vessels to navigate via the Boca Grande until 
 December 31, 1894, but on February 24, 1894, upon the petition 
 of Ellis Grell, the Venezuelan Executive, through the Minister of 
 the Interior, " by virtue of the concessions and exemptions granted 
 in the contract concluded with him on January 17 " declared " null 
 and void the foregoing resolution of the 8th of said month, whereby 
 a special extension was granted to the steamship lines carrying on 
 traffic between Bolivar City and Trinidad through the Macareo 
 and Pedernales channels, in order that they might continue carry- 
 ing on this traffic until December 31, 1894." 
 
 When the Grell contract first came before the Chamber of the 
 Deputies of the Venezuelan Congress for consideration, the report 
 of the Permanent Committee on the Interior recommending the 
 congressional approval of the contract was rejected (Session of 
 April 17, 1894)." 
 
 The next day, however, the report was returned to the commit- 
 tee from which it emanated in order that it might be presented 
 anew to the Chamber in accordance with the rules, 6 and later on 
 during the session of April 23, 1894, the Chamber voted approval 
 of the contract on the first reading. The second reading was 
 ordered on May 9, 1894/ and the third reading on May 11, 
 
 1894- e 
 
 The debates in the Chamber of Deputies in regard to the ap- 
 proval of the concession show nothing of interest beyond the follow- 
 ing excerpts, which are taken from a speech of Deputy General Jorge 
 
 a For a report of the proceedings in the Venezuelan Congress relative to the Grell 
 contract, see Appendix, pp. 1066 et seq. 
 
 b For report of proceedings of the Chamber of Deputies of April 18, 1894, see 
 Appendix, p. 1072. 
 
 c For report of proceedings of this date see Appendix, p. 1074. 
 
 « See Appendix, p. 1076. 
 
 « See Appendix, p. 1078. 
 
20 INTRODUCTORY STATEMENT. 
 
 Anderson during the session of April 23, 1904, in which General 
 Anderson opposed the approval of the concession : 
 
 " This contract requires to be studied much and very thoroughly 
 because it is being granted to a company of Englishmen * * * 
 Now, Venezuelan ship owners are not allowed to navigate in the 
 Macareo channel, and the English are. ****** I am 
 impressed by the aggravating circumstance that the contractor 
 has a right to establish himself at Trinidad or Curacao and not in 
 our ports ***** The exclusive navigation by the Eng- 
 lish in the Macareo channel, granted to the English at any time, 
 will give rise to an international claim." 
 
 Dr. Sanchez, who also opposed the approval of the concession in 
 
 a speech delivered at the session of May 9, 1894, spoke in part as 
 
 follows : 
 
 In the first place, "the steamship line may supply itself with 
 coal and provisions for its consumption in the ports of Trinidad 
 and Curacao," while the other coasting vessels take on coal from 
 the ports of the nation. 
 
 "Until the Government specifies the port of transshipment in 
 the Republic, the steamers may transship in the islands of Curacao 
 and Trinidad," so that they may do so in these foreign ports 
 during the whole period of the concession. 
 
 In the Senate the Grell contract met with no opposition, being 
 read and approved for the third time at the session of May 22, 1894. 
 The Journals of Debates of the Senate for the year 1894 were not 
 published. a 
 
 Up to this time no specific penalty appears to have been pro- 
 vided for infringing the provisions of the decree of July 1, 1893, 
 closing the Macareo and Pedernales channels to foreign trade, but 
 under date of June 6, 1894, a decree was enacted imposing a fine 
 of five thousand bolivares upon the captain of any infringing vessel 
 for the first offense, and subjecting the vessel to forfeiture upon a 
 second offense. 6 
 
 But the monopoly in the navigation between Ciudad Bolivar 
 and Trinidad via the Macareo and Pedernales channels thus created 
 by the combined effect of the decree of July 1 and the Grell con- 
 tract and buttressed by this last decree imposing a penalty for its 
 
 a For minutes of proceedings in the Senate relating to the Grell contract, see Appen- 
 dix, p. 1098. 
 
 b For text of this decree see Appendix, p. iioi. It will be noted that this decree 
 antedates the Congressional approval of the Grell contract by two days. 
 
INTRODUCTORY STATEMENT. 21 
 
 violation was not to go unchallenged. George F. Carpenter, an 
 American citizen, captain of the steamer Bolivar, which was owned 
 by the General Steamship Company, of Wilmington, Delaware, 
 which had previously participated in the navigation between 
 Trinidad and Ciudad Bolivar via the Macareo and Pedernales 
 channels, brought proceedings before the High Federal Court to 
 test the legality of the decree of July i and the validity of the 
 Grell concession. His claim, as stated by the High Federal Court 
 in its opinion, was based upon these contentions: 
 
 "The General Steamship Co. of Wilmington, Del., U. S. A." of 
 which he claims to be a representative, being authorized by the 
 laws of Venezuela, carried on commerce between Bolivar City and 
 the Island of Trinidad, which commerce is carried on almost 
 exclusively through the Macareo and Pedernales channels, since 
 the other mouths of the Orinoco offer great difficulties to the 
 navigation of vessels which, like the Bolivar, owing to the nature 
 of their commerce, for the transportation on the river, are flat 
 boats and cannot enter through " Boco Grande;" but that by 
 decree of July i, 1893, The Executive ordered: That foreign com- 
 merce might only be carried on through Boca Grande, reserving 
 the Macareo and Pedernales channels for coasting trade, and 
 absolutely prohibited navigation in the other channels of the 
 river, thus rendering it impossible for the company to carry, on 
 commerce through said channels between Bolivar City and Trini- 
 dad, while permitting Ellis Grell to do so by virtue of his contract 
 concluded with the Government on January 17, last, which con- 
 tract constitutes in his opinion a monopoly of the commerce 
 between Bolivar City and Trinidad granted to Grell, for the rea- 
 son that the difficulties of navigation through Boca Grande are 
 too great for boats like the Bolivar, whose sea-going conditions 
 render them capable only of passing through Macareo and Peder- 
 nales, this constituting an attack against the freedom of industry 
 guaranteed by No. 8 Article 14 of the constitution in force, and 
 also contradicting Article 1 of Law 14 of the Treasury code, 
 "which opens up Bolivar City, among other ports, to import and 
 export trade without any restriction whatever. "■" 
 
 The High Federal Court, however, had no difficulty in dis- 
 posing of these contentions and holding that the Government of 
 Venezuela had a perfect right both under international and 
 municipal law to exclude foreign commerce from the Macareo and 
 Pedernales channels. The court does not even notice in terms 
 
 «For text of the opinion of the Special Commission and of the decision of the High 
 Federal Court, see Appendix, p. 11 10. 
 
22 INTRODUCTORY STATEMENT. 
 
 Mr. Carpenter's contentions with regard to the invalidity of the 
 Grell contract as constituting a practical monopoly of the entire 
 navigation of the Orinoco. 
 
 These proceedings were duly transmitted to the Department 
 of State by the American Minister at Caracas, and the Depart- 
 ment under date of September 20, 1894, advised Messrs. Dialogue 
 & Son that "the validity of the decrees closing all the mouths 
 of the Orinoco River to foreign commerce except the Boca Grande 
 has been sustained by the 'Alta Corte Federal,' or Superior Federal 
 Court of Venezuela." The full text of the court decision was 
 given publicity by the Department of State in the Foreign Rela- 
 tions of the United States for 1894," and the status of the naviga- 
 tion of the Orinoco River was, as the Department had reason to 
 suppose, definitively settled for the life of the Grell concession. 
 
 The status of the Grell concession was further recognized in 
 1895 by two decrees granting special permission to certain vessels 
 to go from Trinidad to Ciudad Bolivar via the Macareo and 
 Pedernales channels on special occasions. The resolution of 
 June 6, 1895, reads as follows: b 
 
 Resolved : 
 
 The President of the Republic, in Council of Ministers, has 
 seen fit to grant the permission requested for the steamer Socorro, 
 belonging to the "Red Star of the Orinoco" Company, to pass 
 four times, carrying passengers, through the Macareo and Peder- 
 nales channels, starting from Ciudad Bolivar and stopping twice 
 at Trinidad, on an excursion which it will make in the service of 
 the Manoa Company via the Orinoco delta. 
 
 A similar resolution dated June 25, 1895, is couched in the 
 
 following language: ° 
 
 Resolved : 
 
 In view of the request of citizen Jose Afanador, in which he 
 asks permission for the steamer Boyacd, now being fitted out at 
 Trinidad, of Venezuelan nationality, of plain construction, of 
 40 tons' capacity, owned by Ramon Real, to pass one single time 
 through the Macareo channel toward Ciudad Bolivar, with the 
 ballast of coal necessary for the safety of the vessel, the Consti- 
 tutional President of the Republic has seen fit to order that the 
 permission requested be granted. 
 
 a See Foreign Relations of the United States, 1894, pp. 796-800. 
 6 For text of this decree see Appendix, p. 11 20. 
 c For text of this decree, see Appendix, p. 1 121. 
 
INTRODUCTORY STATEMENT. 23 
 
 Equally instructive is the following resolution dated July 14, 
 1896: 
 
 Resolved : 
 
 In view of the petition presented to this Bureau by Mr. Federico 
 Rafael Hart, proposing to the National Executive to establish 
 navigation by steamers from the Island of Trinidad to the ports 
 of Guiria, Yaguaraparo, and Agua Clara, and finding that said 
 proposed contract is in open conflict with the contract already 
 concluded with Mr. Ellis Grell for the navigation between Bolivar 
 City and Maracaibo, with the privilege of extending the line to 
 the open ports of the Republic, the President of the Republic, in 
 a Cabinet meeting, has seen fit not to grant said petition. 
 
 By this time the Grell concession had been regularly conveyed 
 by duly executed transfers, after the previously requisite notice 
 had been given to the Government of Venezuela, to the Com- 
 pafiia General Venezolana de Navegacion, and this company duly 
 entered upon the performance of the various obligations imposed 
 upon it as such transferee, and having provided itself with three 
 steamers suitable for the navigation in question and various other 
 property necessary to the business of a common carrier of pas- 
 sengers and freight, engaged in such business, and continued to be 
 engaged therein until on' or about the twelfth day of December, 
 1898. 
 
 At this time the exclusive franchise for the navigation of the 
 Macareo and Pedernales channels between Trinidad and Ciudad 
 Bolivar, constituted as it was by the Grell contract, in connection 
 with the decree of July 1, 1893, and granted by the Executive, 
 approved by Congress, fortified by a punitive decree, sustained 
 by the decision of the highest tribunal in Venezuela, and repeatedly 
 recognized in the practical administration of governmental affairs, 
 appeared to offer a solid basis for the investment of capital. 
 
 In the latter part of the year 1898, the entire share capital of 
 the Compania General Venezolana de Navegacion, together with its 
 rights in the Grell contract concession, the steamers and all the 
 other tangible property and assets of this company, including its 
 book accounts against the Venezuelan Government and others, 
 were purchased by and transferred to the Orinoco Shipping and 
 Trading Company, Limited, which association had been organized 
 under the English Companies Acts of 1862 to 1893, and duly 
 
24 INTRODUCTORY STATEMENT. 
 
 registered in the office of the Registrar of Joint Stock Companies, 
 London, England, on the 14th day of July, 1898. The Orinoco 
 Shipping and Trading Company, Limited, was organized for the 
 express purpose of taking over the franchise and business of the 
 Compania General Venezolana de Navegacion and other similar 
 properties in Venezuela. A perusal of its memorandum of associa- 
 tion will show that its powers were ample for the object in con- 
 templation." 
 
 Although the Orinoco Shipping and Trading Company, Limited, 
 was, as has been stated, for business reasons organized under the 
 English Companies Acts, nevertheless ninety-nine per cent, of 
 its entire capital stock and bonded indebtedness was subscribed 
 and paid for by American citizens, and was at all times during 
 the life of the company owned by native born citizens of the 
 United States. 
 
 The transfer from the Compania General Venezolana de Nave- 
 gacidn to the Orinoco Shipping and Trading Company, Limited, 
 was made with the requisite previous notice to the Government 
 of Venezuela and approved by that Government, as is evidenced 
 by the Resolution of October 18, 1898, granting to the Orinoco 
 Shipping and Trading Company 
 
 upon its organizing as cessionary of the contract concluded by 
 the National Government with Ellis Greel on January 17, 1894, 
 the period of one year from this date within which to establish the 
 bi-weekly navigation between La Guaira and Maracaibo as referred 
 to in Article I of the said contract, the said company not to be 
 entitled to the subsidy ,of 4000 bolivars stipulated in the same 
 contract until the bi-weekly service to which this Resolution 
 relates is begun. b 
 
 Later on by the Resolution of the 4th of September, 1899,° the 
 time allowed the company for the establishment of navigation 
 between La Guaira and Maracaibo was extended for a further 
 period of six months 
 
 in consideration of the grave injuries which, on account of the 
 political agitation of the country during recent years, have been 
 suffered by all enterprises established in Venezuela, owing to 
 
 a For the text of the memorandum of association of the Orinoco Shipping and Trad- 
 ing Company, Limited, see Appendix, p. 153. 
 
 b For text of this resolution, see Appendix, p. 11 23. 
 c For text of this resolution, see Appendix, p. 1124. 
 
INTRODUCTORY STATEMENT. 25 
 
 which circumstance the said company has not been able to fulfill 
 the obligations stipulated in the article of the contract referred to ; 
 and in view of the very important and valuable services rendered 
 by the said company to the National Government, the President 
 of the Republic has seen fit to resolve : 
 
 In the meantime the Orinoco Shipping and Trading Company, 
 Limited, had purchased outright the assets of the Orinoco Red 
 Star Line including its rights under the Olaechea contract ap- 
 proved on July 9th, 1891, between the Executive and Mr. Pedro 
 Manuel Olaechea for the exclusive navigation of certain up-river 
 tributaries of the Orinoco. By this purchase the Orinoco Ship- 
 ping and Trading Company, Limited, added to its franchises 
 covering the navigation between Trinidad and Ciudad Bolivar 
 on the lower river the Olaechea concession of 1891 already re- 
 ferred to, which covered the exclusive navigation of certain 
 important up-river tributaries of the Orinoco. Under the new 
 management the up-river steamers were operated in conjunction 
 with those plying upon the lower river, and the whole system 
 was placed upon a business-like and efficient basis." This pur- 
 chase also included the ships and other tangible property of the 
 Orinoco Red Star Line, including its book accounts against the 
 Government of Venezuela. There was due and owing to the 
 Orinoco Red Star Line from the Venezuelan Government when 
 taken over by the Orinoco Shipping and Trading Company, 
 Limited, the sum of 101 163.42 pesos venezolanos, equal, at 
 exchange 1.30 pesos per dollar, to $77,818.01 for services ren- 
 dered, the bills and vouchers for which were then and should 
 be now in the possession and control of the Government of 
 Venezuela. The Orinoco Shipping and Trading Company con- 
 tinued to render services as required by its contract to the Gov- 
 ernment of Venezuela when requested by its duly authorized 
 officers, but owing to the revolutionary and other disturbances 
 the vessels of the company were from time to time detained or 
 seized and in certain cases were greatly damaged or wholly de- 
 stroyed by officers of the Government of Venezuela or by soldiers 
 and others under their command. Detailed accounts of these 
 
 "See Mr. Olcott's affidavit, Appendix, p. 1304. 
 
26 INTRODUCTORY STATEMENT. 
 
 detentions, seizures, and of the destruction of the company's 
 property, together with statements showing the amount of moneys 
 due for services rendered and damages sustained, were rendered 
 to the proper officials of the Government of Venezuela, together 
 with full proofs and vouchers necessary to substantiate the accu- 
 racy and justice of these claims. 
 
 On May io, 1900, there was found to be due and owing to 
 the Orinoco Shipping and Trading Company on these various 
 accounts, «as shown by detailed statements rendered to the 
 proper officials of the Venezuelan Government with vouchers 
 and proofs accompanying the same, the sum of six hundred and 
 nineteen thousand seven hundred and fifty-two 27/100 pesos, 
 equal at exchange 1.30 per dollar to the sum of four hundred and 
 seventy-six thousand seven hundred and thirty-two and 50/100 
 dollars ($476,732.50), or together with the $77,818.01 due on 
 account of the Orinoco Red Star Line, a total in U. S. currency 
 of five hundred and fifty-four thousand five hundred and fifty 
 and 51/100 dollars ($554,550.51), on account of which there had 
 been paid by the Venezuelan Government the sum of one thou- 
 sand one hundred and fifty three and 86/100 dollars ($1,153.86) 
 cash and salt bonds issued by the United States of Venezuela 
 equal to twenty thousand four hundred dollars ($20,400.00) 
 American currency, leaving a balance due and payable on the 
 tenth day of June, 1900, of five hundred and thirty- two thousand 
 nine hundred and ninety-six and 85/100 dollars ($532,996.85) 
 American currency. 
 
 Under these circumstances a balance of $532,996.85 being then 
 due from the Venezuelan Government to the Orinoco Shipping 
 and Trading Company, an agreement for the settlement of this 
 outstanding indebtedness was reached between Richard Morgan 
 Olcott, the Managing Director of the Orinoco Shipping and Trad- 
 ing Company, Limited, who was fully empowered to act in this 
 connection, and General Cipriano Castro, then President of the 
 Republic of Venezuela. This agreement was embodied in two 
 documents executed, practically simultaneously, on May 10, 1900, 
 by Dr. Felix Quintero, Minister of the Interior of the United 
 States of Venezuela, representing President Castro and duly 
 
INTRODUCTORY STATEMENT. 27 
 
 authorized for this purpose, and Mr. Olcott." In Mr. Olcott's 
 petition of May 9, 1900 (the day before the execution of the 
 document embodying the terms of settlement already agreed on) , 
 and his accompanying memorandum, he sets forth the damages 
 sustained and services rendered by his company. He says in his 
 petition : 
 
 For the reasons stated I hope that, as a partial compensation for 
 the numerous services rendered by the company and the conse- 
 quent losses and damages, the National Government, in its spirit 
 of justice, will grant me an extension of six years more of the 
 navigation contract which has been assigned to my company, as 
 approved by the Federal Legislative. Body on May 26, 1894. I 
 also hope that the National Government will excuse me from 
 carrying on traffic between the port of La Guaira and Maracaibo 
 and intermediate ports, it being understood that my company 
 shall in future receive the treatment of the most favored line when 
 it sees fit to carry on this traffic voluntarily. b 
 
 In response to this petition the Venezuelan Government issued 
 the following decree signed by Dr. Quintero: 
 
 Resolved : 
 
 Whereas, Mr. Richard Morgan Olcott, Attorney and Manager 
 of the Orinoco Shipping and Trading Co., Lt., has applied to 
 the National Government for an extension of six years longer of 
 the navigation contract under date of June 10, 1894, of which he 
 is Concessioner, and, considering the reasons to be just on which 
 said 'company founds its requests, the Chief Magistrate of the 
 Republic has seen fit to order: 
 
 1 . The Navigation contract approved by the Federal legislative 
 body on May 26, 1894, concluded between this Ministry and the 
 citizen Manuel S. Sanchez, and of which the Orinoco Shipping 
 and Trading Co., Lt. is now Concessioner, is hereby extended for 
 six years longer. This extension shall date from the day on 
 which the period fixed in Article 13 of said contract expires. 
 
 2. The Concessionary Company shall be obliged, within a pe- 
 riod of twelve months from today, to make 12 voyages annually, 
 at least, between the Island of Trinidad and the Venezuelan ports 
 of its eastern itinerary and La Guaira. 
 
 3. The Concessioners are exempted from the obligation of es- 
 tablishing navigation from La Guaira to Maracaibo and relin- 
 quish the subsidy of 4,000 Bolivars stipulated in Article 7 of the 
 same. With regard to the navigation to Maracaibo the National 
 Government promises to accord to the company represented by 
 Mr. Richard Morgan Olcott the treatment of the most favored 
 navigation lines in case this company should desire to establish 
 traffic to said port in future. 
 
 "See Mr. Olcott's affidavit,Appendix, p. 1304. 
 b For text of this petition see Appendix, p. n 28. 
 
25 INTRODUCTORY STATEMENT. 
 
 In further fulfillment of the arrangement of settlement agreed 
 on between General Castro and Mr. Olcott, Dr. Quintero and 
 Mr. Olcott entered into the following contract of settlement: 
 
 Dr. Felix Quintero, Acting Minister of the Interior, duly author- 
 ized by the Chief Magistrate of the Republic, party of the first part, 
 and Richard Morgan Olcott, attorney and manager (director) 
 of the Orinoco Shipping and Trading Company Ltd., party of the 
 second part, have privately agreed on the following: 
 
 Article i. Richard Morgan Olcott, in the name of the Ori- 
 noco Shipping and Trading Company Dd., [acknowledges as 
 settled] every claim, debt, and other right whatsoever which 
 he may have against the Venezuelan Government for services 
 rendered by the vessels, employees, and agents of said company 
 to the General or State Governments, or for loss, deterioration 
 or any other impairment of said vessels, or for any other injuries 
 or losses which the company may have sustained, whether caused 
 by Government forces, revolutionary forces, or otherwise, up to 
 the present, and for all services which the company may continue 
 to render to the General or State Government up to July i next. 
 
 Article 2. The Venezuelan Government gives to the company 
 represented by Mr. Richard Morgan Olcott, as compensation on 
 the above-mentioned accounts, the sum of 200,000 bolivars in 
 coin as follows: 
 
 a) 100,000 bolivars received to-day in cash by Mr. Richard 
 Morgan Olcott to his satisfaction. 
 
 b) 100,000 bolivars'to be paid to him according to an agreement 
 to be reached by the parties on the date stipulated by decree of 
 April 23 last regarding claims arising from injuries caused during 
 the war or otherwise. 
 
 Article 3. Richard Morgan Olcott agrees to all the foregoing 
 in his representative capacity. 
 
 Article 4. Doubts and controversies which may arise regard- 
 ing the interpretation and execution of this contract shall be 
 decided by the Venezuelan courts in accordance with the laws of 
 the Republic, and in no case shall they give rise to international 
 claims. 
 
 Done in duplicate of one tenor and a single effect, at Caracas, 
 on May 10, 1900. 
 
 Felix Quintero. 
 Richard Morgan Olcott. 
 
 On the same day the Minister of the Interior directed a letter 
 to the Secretary of the Treasury reciting this contract and direct- 
 ing the payment of the one hundred thousand bolivars required to 
 be paid in cash in accordance with the terms of the contract. This 
 letter was duly honored by the Secretary of the Treasury, who 
 
INTRODUCTORY STATEMENT. 29 
 
 paid Mr. Olcott the first hundred thousand bolivars, and on its 
 part the Orinoco Shipping and Trading Company, Limited, in 
 good faith marked as settled and balanced upon the company's 
 books of account its claim against the Venezuelan Government of 
 $53 2 >996.85, above referred to. 
 
 The second hundred thousand bolivars due the Orinoco Shipping 
 and Trading Company, Limited, in accordance with the terms of 
 the settlement of May 10 was to be paid " according to an agree- 
 ment to be reached by the parties on the date stipulated by decree 
 of April 23 last regarding claims arising from injuries caused during 
 the war or otherwise." The decree of April 23 here referred to 
 sets forth that it is the prime duty of the Government to restore 
 peace, and points out that the state of war then existing had 
 resulted in economic paralysis which could not be ended at once 
 even by the restoration of peace, and, therefore, provides that no 
 claims either of natives or foreigners should be considered " until 
 six months after the decree in which the Chief Executive of the 
 Nation shall declare peace restored." a 
 
 For the sake of clearness the chronological order of narration 
 will be abandoned long enough to say that a decree of January 
 24, 1 90 1, provides as follows: b 
 
 Art. 1. The period of six months referred to in the Executive 
 Decree of April 23 of last year having expired today, and it conse- 
 quently being necessary to proceed to the study, consideration, and 
 decision of the claims which both natives and foreigners pretend 
 to hold against the nation on account of the war begun May 23, 
 1899, there is hereby created 
 
 A Board of Examination and Determination of Claims, composed 
 of three members, the duties of which shall be to examine and pass 
 upon the claims referred to. 
 
 ******* 
 
 Art. 3. The claims mentioned must be presented to the Board 
 of Examination and Determination of Claims within the period of 
 90 days from the date of this decree. Upon the expiration of this 
 period new application shall not be received unless the interested 
 party proves in a satisfactory manner that he has been prevented 
 by forces beyond his control. 
 
 ******* 
 
 Art. 5. The Board created by this decree and to be appointed 
 by separate resolution shall proceed to sit immediately. 
 
 a For text of this decree see Appendix, p. 1126. 
 
 b For the full text of this decree see Appendix, p. 1142. 
 
30 INTRODUCTORY STATEMENT. 
 
 Art. 6. The Minister of Finance and Public Credit is entrusted 
 with the enforcement of this decree. 
 
 A decree of July 4, 1901, provides as follows: 
 
 That, as determined, the claims against the Treasury arising 
 from the war begun May 23, 1899, amounted to 1,223,200 Bolivars, 
 this being the amount recognized, according to the report pre- 
 sented by the Board for the examination and determination of 
 claims on June 20 last. And 
 
 Considering : 
 
 That the present condition of the Treasury will not allow of 
 these claims being settled in cash, and until the next Constitu- 
 tional Congress meets in order to determine the manner in which 
 they are to be paid, 
 
 Decrees : 
 
 Art. 1. The Board for the examination and determination of 
 claims shall issue to each of the interested parties a certificate for 
 the amount which, according to the report of June 20 last, has 
 being acknowledged as due Mm after being approved by the Min- 
 ister of Finance and Public Credit. 
 
 Art. 2. The National Congress, to which notice shall be given 
 of the present decree at its next session, shall determine the 
 manner and form of payment of both principal and interest. 
 
 Art. 3. The Minister of Finance and Public Credit is entrusted 
 with the enforcement of this decree." 
 
 A resolution of July 16, 1901, fixes the terms of the certificates 
 in which payment should be made. 
 
 To briefly summarize regarding the deferred payment of 100,000 
 bolivares. The contract of May 10, 1900, required payment "on 
 the date stipulated by decree of April 23, 1900." That decree pro- 
 vides that no claims should be considered until six months after 
 the Executive "shall declare peace restored." The decree of 
 January 24, 1901, ascertained officially that "the period of six 
 months referred to in the Executive Decree of April 23rd * * * 
 expired to-day." 
 
 The second 100,000 bolivares has not yet been paid. Neverthe- 
 less, the decrees of July 4th and 16th, 1901, provide methods for 
 the payment of other claims less meritorious but more favored. 
 
 By the settlement of May 10, 1900, the Orinoco Shipping and 
 Trading Company had declared settled over half a million dollars' 
 worth of legitimate claims against the Government of Venezuela, 
 
 a See Appendix, p. 1148. 
 
INTRODUCTORY STATEMENT. 3 1 
 
 and had received in return a six-year extension of its exclusive con- 
 cession to navigate the Macareo and Pedernales channels between 
 Trinidad and Ciudad Bolivar, a hundred thousand bolivars in 
 cash, and the promise of a hundred thousand more to be paid 
 in accordance with an agreement to be reached with the Govern- 
 ment on the date stipulated in the decree of April 23. 
 
 Such was the situation when on October 5, 1900, the Venezuelan 
 Executive promulgated the following decree : 
 
 I, Cipriano Castro, Commander in Chief of the Armies of Vene- 
 zuela and Supreme Chief of the Republic, decree: 
 
 Article I. The decree of July 1, 1893, prohibiting the free navi- 
 gation of the Macareo, Pedernales, and other navigable channels of 
 the Orinoco River is hereby revoked. 
 
 Article II. The Minister of the Interior is charged with the en- 
 forcement of the present Decree. 
 
 Given, signed, sealed with the seal of the National Executive 
 and countersigned by the Minister of the Interior, in the Federal 
 Palace of the Capitol, at Caracas, on October 5, 1900. (90th year 
 of Independence and 42nd of Federation.) 
 
 (t- s.) Cipriano Castro. 
 
 Countersigned : 
 
 (h. s.) R. Cabrera Maeo, 
 
 Minister of the Interior. 
 
 Thus, with the stroke of a pen, without cause, without com- 
 pensation, without even a hearing, the Venezuelan Executive 
 revoked the exclusive right to navigate the Macareo and Peder- 
 nales Channels between Trinidad and Ciudad Bolivar, which con- 
 stituted the peculiar value of the Company's contract. 
 
 President Castro subsequently by his message of February 26, 
 1 90 1, submitted such of his executive acts as required ratification 
 to the National Constituent Assembly in the following language: 
 
 Citizen^M embers of the Constituent Assembly: 
 
 The decrees, resolutions, communications, and all documents 
 which have been required for the promulgation, execution, or ful- 
 fillment of the provisions and measures which I relate to you will 
 be found, in order that you may examine and consider them, in 
 the various numbers of the Official Gazette of the United States 
 of Venezuela, in whose columns, by decree of December 31, 1886, 
 in force, all documents are authentic and in force which may be 
 issued in the exercise of public authority, and they are effective 
 with respect to the rights and obligations of Venezuelans. 
 
32 INTRODUCTORY STATEMENT. 
 
 Thereafter on March 6 the Constituent Assembly ratified each 
 and all of the acts of the Executive by the following resolution : 
 
 The National Constituent Assembly declares : 
 i. General Cipriano Castro, leader and supreme director of the 
 Liberal Restorative Revolution, deserves well of his country. 
 
 2. General Cipriano Castro, as Chief Magistrate of the Nation, 
 deserves public confidence. 
 Therefore it resolves : 
 
 i . To grant, as it does grant, solemn approval to each and all 
 of the acts which said person has performed as Supreme Leader of 
 the Liberal Restorative Revolution and as Chief Executive of the 
 Nation. 
 
 2. The present resolution, signed by all the members of the 
 National Constituent Assembly, shall be presented to the merito- 
 rious General Cipriano Castro by a special committee. 
 
 Given at the Federal Legislative Palace at Caracas on March 6, 
 1 90 1 (90th year of independence and 43rd of Federation). 
 
 J. P. Rojas Paul, 
 
 President. 
 Santiago Briceno, 
 
 1st Vice President. 
 Jose; O. Aguilera, 
 
 2nd Vice President. 
 
 Notwithstanding the promulgation of the executive decree of 
 October 5, 1900, the Orinoco Shipping and Trading Co., Lim- 
 ited, having therefore fully performed the obligations on its part 
 required to be performed by and under the contract of June 
 8, 1894, and with the object and purpose of fulfilling its obligations 
 under article two of the contract of May 10, 1900, for the exten- 
 sion or prolongation of the original contract-concession, on April 
 2, 1 90 1, began and subsequently completed one voyage between 
 the Island of Trinidad and La Guaira, touching at Venezuelan ports 
 according to the itinerary of the East coast, the vessel despatched 
 on the second of April having reached Port of Spain, Trinidad, on 
 her return trip on the 1 2th of the same month. Thereafter this 
 vessel, being the only steamer available for such service owned or 
 that could be acquired by the company, was temporarily with- 
 drawn for the purpose of necessary repairs. After notice of inten- 
 tion to withdraw the steamer for such purpose had been given 
 to the proper officials of the Venezuelan Government and no ob- 
 jection had been made to such action, and the repairs having been 
 completed, the following communication on the subject was 
 addressed and mailed to the Minister of the Interior, at Caracas/viz: 
 
introductory statement. 33 
 
 "Port of Spain, Trinidad, 
 
 "December ioth, 1901. 
 "To H. E. the Minister of the Interior, Caracas. 
 "Mr. Minister: 
 
 "According to the settlement effected by us on the ioth day 
 of May, 1900, printed in the Official Gazette, and in consideration 
 of the same, it was resolved that the Company should complete 
 by May ioth, 1902, twelve trips between the Island of Trinidad 
 and La Guaira, touching at Venezuelan ports, according to the 
 itinerary of the East Coast. On^the 2nd of April last, as we 
 officially notified you, we started to fulfil this contract, and made 
 one voyage, reaching Carupano on the 3rd, Cumana and Guanta 
 on the 4th, and La Guaira on the 5th of the same month of April. 
 On the return trip the itinerary was as follows : — Left La Guaira 
 on the 9th April, arrived at Guanta on the ioth, Cumana on 
 the same day, Carupano on the nth and Trinidad on the 12th of 
 the same month. It became apparent during the above-men- 
 tioned trip that we should have to make some repairs to the only 
 steamer owned, or that could be acquired by us, and now available 
 for that service; and, as it was impossible to make the repairs 
 (which included the supplying of new boilers and new parts of 
 machinery) here, we were obliged on the 26th April ult., to despatch 
 her to Dundee, Scotland, to her original builders. These necessary 
 repairs have cost us over £8,000 (bolivares 200,000) ; and they will 
 soon be completed, when she will be able to fulfil Clause 2 of the 
 Resolution of ioth May, 1900, and complete the balance of twelve 
 trips between Trinidad and La Guaira. 
 
 "Before starting, however, our steamer on the accomplishment 
 of this contract, we desire to inquire if your Government will 
 guarantee us immunity from the seizure of our steamer from any 
 Venezuelan source. 
 
 "The failure to receive a reply from you — a reply conveying 
 the assurance requested — by the first day of January next, would, 
 in our view, exonerate us from complying with that clause in the 
 Contract. 
 
 "The loss of our steamer Nutrias, and the practical destruction 
 of our steamer Vencedor, both on Government account, warrant 
 our asking your kind protection for the steamship Manzanares, 
 which, if damaged, or lost, would cause us irreparable injury. 
 " (S'g'd) p. p. R. Morgan Olcott. 
 
 "Thomas A. Turner." 
 
 17301— 10 3c 
 
34 INTRODUCTORY STATEMENT. 
 
 To this communication said Minister of Foreign Affairs replied 
 as follows: 
 
 Caracas, 16th December, iooi. 
 " To the Director of the Orinoco Shipping and Trading Company, 
 Ltd., Port of Spain: 
 " For the information of your Company I remit to you herewith 
 a copy of No. 8,412 of the Official Gazette, in which you will find 
 published the Resolution dictated on the 14th instant and which 
 annuls that of the 10th May, 1900, relative to certain concessions 
 granted to the Orinoco Shipping and Trading Company, Limited. 
 " God and Federation. v 
 
 "(S'g'd) J. A. Velutini." 
 
 The resolution of December 14, 1901, therein referred to reads 
 
 as follows : 
 
 Resolved : 
 
 The Orinoco Shipping and Trading Company, Limited, having 
 failed to perform the obligations contained in Article 2 of the con- 
 cession granted by Executive Resolution of May 10, 1900, accord- 
 ing to which obligations it was to make at least twelve annual 
 trips between the Island of Trinidad and the ports of its itinerary 
 as far as La Guaira, the said company having made only one single 
 voyage up to the present, this failure to fulfill being injurious to 
 commerce and to the Government, the Resolution of May 10, 1900, 
 is hereby revoked, and the extension and other benefits therein 
 granted are declared null and void. 
 
 Let this be communicated and published. 
 
 By the National Executive : 
 
 J. A. VELUTINI. 
 
 Notwithstanding this resolution of December 14, 1901, revoking 
 the extension of the Grell contract granted to the Orinoco Shipping 
 & Trading Company by virtue of the Resolution of May 10, 1 900, the 
 Company continued to the best of its ability, in spite of almost 
 insuperable obstacles growing out of the revolutionary difficulties 
 which existed, to discharge its duties under the concessions it 
 rightfully held from the Venezuelan Government. The revolu- 
 tionary conditions existing along the Orinoco- soon reached a 
 stage requiring formal recognition by the Venezuelan Govern- 
 ment and on June 28, 1902, President Castro issued a decree, of 
 which articles 1 and 2 read as follows: 
 
INTRODUCTORY STATEMENT. 35 
 
 Article i . As a result of the occupation of Ciudad Bolivar by 
 rebellious forces, navigation on the waters of the Orinoco is 
 hereby prohibited, the extent of coastline embraced within the 
 mouths of said river is blockaded, and the ports of Guiria and 
 Cano Colorado are closed to commerce and navigation. 
 
 Article 2. The port of La Vela de Coro is likewise declared 
 blockaded. 
 
 By virtue of article 4 of the same decree vessels which had 
 already been despatched to the blockaded ports were granted 
 certain periods from the date on which the decree was communi- 
 cated to the various foreign governments to enter the blockaded 
 ports and discharge their cargoes. 
 
 On July 19, 1902, b the port of Carupano was added to those 
 declared to be blockaded by the decree of June 28, 1902. On 
 August 23, 1902, the blockade of Carupano was raised. On 
 March 7, 1903, the blockading decree of June 28, was declared to 
 be in full force and effect, and the ports of Guanta and Carupano 
 were added, to the list of those under blockade, d and on March n, 
 1903, the blockade declared by the decree of March 7th was form- 
 ally raised. 6 . 
 
 Although the decree of October 5, 1900, had destroyed the exclu- 
 sive concession of the Orinoco Shipping & Trading Co., Limited, for 
 navigation between Ciudad Bolivar and Port of Spain, Trinidad, ad- 
 vantage was not actually taken of this revocation by the competi- 
 tors of the Orinoco Shipping & Trading Co., until August 2, 1902, 
 when the ship "Rescue " was cleared by the Venezuelan authorities 
 in Trinidad for the Orinoco River ports via the Macareo Channel. / 
 From this time on, notwithstanding the blockade of Ciudad 
 Bolivar and other Orinoco River ports on June 28, 1902, which 
 was not raised until March 11, 1903, the vessels of the competitors 
 of the Orinoco Shipping & Trading Co., were constantly permitted 
 to clear for Ciudad Bolivar and other Orinoco River ports with the 
 assistance and approbation of the Venezuelan Consul at Trinidad, 
 
 "For text of this decree see Appendix p. 1154 
 
 6 For text of this decree see Appendix p. 1156. 
 
 c For text of this decree see Appendix p. 1158. 
 
 d For text of this decree see Appendix p. 1159. 
 
 e For text of this decree see Appendix p. 1161. 
 
 / See Appendix, Record, pp. 410, 571, and certificate from Harbor master Saunders, 
 P- 455- 
 
36 INTRODUCTORY STATEMENT. 
 
 although this Consul persistently declined to approve or assist 
 the clearing of the vessels of the Orinoco Shipping & Trading Co., 
 which by such discrimination suffered large losses during the 
 months from June to November of the year 1902, before they were 
 enabled temporarily to resume navigation under the American 
 flag. 
 
 In the meantime the difficulties of the Orinoco Shipping & 
 Trading Company growing out of the interference with and deten- 
 tion of its steamers, the failure on the part of the Venezuelan 
 Government to pay the second installment of 100,000 bolivares 
 due under the contract of May 10, 1900, the annulment of the 
 valuable exclusive franchise owned by the Company and the 
 revocation of the six years extension of this franchise, and the 
 discriminatory refusal of the Venezuelan Consul at Trinidad to 
 permit the clearance of the Company's vessels, had been made 
 the subject of repeated representations on the part of the Orinoco 
 Shipping & Trading Company to the British Government, since 
 the company was organized under the British companies' acts, 
 *and to the United States Government, since American citizens 
 owned 99% of its stock. 
 
 Under date of November 8, 1900, the British Foreign Office 
 wrote to Mr. Olcott, the managing director of the Orinoco Shipping 
 & Trading Company as follows:" 
 
 Sir: With reference to your letter of the 26th ultimo respecting 
 your Company's Concession of the right of exclusive navigation 
 of the Macareo and Pedernales Rivers, I am directed by the 
 Marquess of Salisbury to inform you that Her Majesty's Charge 
 d'Affaires at Caracas has reported by telegraph that he and the 
 United States Representative, have made friendly representations 
 to the Venezuelan Government on the subject of the decree de- 
 claring the navigation of those rivers to be free. 
 I am, Sir, your most obedient, humble Servant, 
 
 (Sgd) Martin Gosselin. 
 
 R. Morgan Olcott, Esq., 
 
 Orinoco Shipping & Trading Company, 
 
 155, Fenchurch Street, E. C. 
 
 "See Appendix Record p. 382; see generally Appendix Record, pp. 381 to 391. 
 
INTRODUCTORY STATEMENT. 37 
 
 Later, however, under date of January 15, 1901, the British 
 Foreign Office addressed the following communication to the 
 Company: 
 
 [45] Sir, With reference to your letter of the 5th. instant re- 
 specting the claim of your Company to the exclusive navigation 
 of the Macareo and Pedernales rivers, I am directed by the 
 Marquess of Lansdowne to express His Lordship's regret that 
 after full consideration of the matter he does not consider it to be 
 one in regard to which Her Majesty's Representative can properly 
 be instructed to take diplomatic action. 
 
 I am, Sir, Your most obedient, humble Servant, 
 
 (Signed) Martin Gosseun. 
 
 The Secretary, Orinoco Shipping & Trading Company, 155, 
 Fenchurch Street, E. C. 
 
 This decision was adhered to by the Foreign Office in another 
 letter, dated February 6, 1901. 6 
 
 On account of this attitude of the British Government, which 
 would not seem to be unnatural in view of the fact, as before 
 stated, that the British nationalty of the Orinoco Shipping & 
 Trading Company was purely accidental and technical, 99% of its 
 stock being owned by native-born American citizens, the equitable 
 owners of the Company decided to re-organize under an American 
 charter and, accordingly, on January 31, 1902, the Orinoco Steam- 
 ship Company was duly incorporated in accordance with the pro- 
 visions of an act of the Legislature of the State of New Jersey, 
 entitled "An Act concerning Corporations (Revision of 1896.)" 
 The American stockholders of the Orinoco Shipping & Trading 
 Company who subscribed, paid for and at all times owned at least 
 99% of its total capital stock and bonded indebtedness, were 
 Alfred B. Scott, J. Van Vechten Olcott, and R. Morgan Olcott, 
 and the stockholders who subscribed for and still own the entire 
 capital stock of the Orinoco Steamship Company are Alfred B. 
 Scott, J. Van Vechten Olcott, R. Morgan Olcott, Levi S. Tenney 
 and Duncan B. Cannon, all citizens of the United States and of the 
 State of New York. 
 
 a See Appendix, Record, p 385. 
 
 b For text of this letter see Appendix, p. 387. 
 
 cSee Appendix, pp. 127. 
 
38 INTRODUCTORY STATEMENT. 
 
 The articles of incorporation of the Orinoco Steamship Com- 
 pany, which are elsewhere set forth in full," authorizes the Orinoco 
 Steamship Company, among its other corporate powers, to acquire 
 and take over as a going concern the business carried on by the 
 Orinoco Shipping & Trading Company, Ltd., of London, England, 
 and all the assets and liabilities of the proprietors of that business 
 owned, used, acquired or incurred in connection therewith. On 
 April 1 6, 1903, the Orinoco Steamship Company was duly regis- 
 tered in Venezuela in accordance with the provisions of the Vene- 
 zuelan Code of Commerce regarding the registration of joint stock 
 companies, 6 and the transfer from the Orinoco Shipping and 
 Trading Company to the Orinoco Steamship Company was like- 
 wise registered on June 16, 1903. This registration and trans- 
 fer were duly published in the Gaceta Municipal No. 191 of 
 May 2, 1903. The claim of the Company was duly presented 
 by the Government of the United States to the United States 
 and Venezuela Mixed Commission, which met at Caracas 
 June 14, 1903, under the provisions of the protocol of Febru- 
 ary 17, 1903. The result of this arbitration was disastrous to 
 the Company for reasons which will be made apparent in the 
 next section of this case and inasmuch as it was no longer possible 
 for the Company to fulfill its obligation under its contract on ac- 
 count of the persistent refusal of the Venezuelan officials in Trini- 
 dad to permit the clearance of its vessels, it was compelled to sell 
 its steamers for the best price obtainable and retire from business. 
 Naturally, the only customer in a position to purchase the steam- 
 ers and other property of the company at any price was one who 
 had secured in advance the approval of the purchase by the Vene- 
 zuelan Government and, therefore, although Ellis Grell, who was in 
 treaty for the purchase of the. Company's steamers, had indicated 
 his willingness to pay the sum of $200,000 therefor, he ascertained 
 after a hasty trip of investigation to Caracas that a favored pur- 
 chaser had already been selected by the Venezuelan Government 
 and that it was inexpedient for others to attempt to enter the 
 field and he so advised Mr. Olcott, the President of the Orinoco 
 
 "For text of articles of incorporation, see Appendix, Record, p. 145. 
 6 For text of certificate of registration, see Appendix, p. n 64. 
 
INTRODUCTORY STATEMENT. 39 
 
 Steamship Company." Nothing remained to be done but to sell 
 to the purchaser selected by the Venezuelan Government at the 
 best price obtainable and, accordingly, the steamships and other 
 properties of the Company representing a cash outlay of over 
 $700,000 were sold to Dalton & Company, of Ciudad Bolivar for 
 the sum of $1 60,000 cash. A Company was then formed at Ciudad 
 Bolivar by Dalton & Co. , known as La Linea de Vapores del Orinoco, 
 in which General Cipriano Castro, then President of Venezuela, 
 was a large stockholder. b This Company duly became the assignee 
 of a contract concluded on March 28, 1904, and duly ratified by 
 the Venezuelan Congress on April 18, 1904, the salient provisions 
 of which are as follows: 
 
 Art. 1 . Angel Maria Corao, representing and holding a power of 
 attorney from General Manuel Corao (who will hereafter be called 
 the Contractor), agrees to establish, within six months from the 
 date on Which this contract takes effect, a steamship line for the 
 navigation of the Orinoco and its affluents and sub-affluents Apure, 
 Meta, Arauca, Apurito, Caura, Masparro, Portuguesa, and Cojedes. 
 The steamers of this line may extend their service to the port of 
 La Guiara. 
 
 ******* 
 
 Art. 4. The vessels of the line shall travel under a Venezuelan 
 flag and may touch at Trinidad or Curacao in order to take on 
 supplies and to coal. 
 
 ******* 
 
 Art. 6. The National Government shall enjoy a rebate of fifty 
 per cent on the passenger and freight rates, and the troops and 
 officers embarked by the Government on the steamers of the line 
 shall pay only one-third of the schedule fare. 
 
 ******* 
 
 Art. 10. The National Government authorizes the vessels of 
 the line to navigate on all the mouths of the Orinoco, especially 
 those of Macareo and Pedernalles. 
 
 Art. 1 1 . The vessels of the line shall be exempt from any 
 National tax. 
 
 Art. 12. The employees of the line shall be exempt from mili- 
 tary service, except in case of international war. 
 
 Art. 13. All materials, articles, and supplies needed by the 
 Contractor for the establishment and use of the steamship line 
 shall be exempted by the Federal Executive from the payment 
 of import duties, but at all events the Contractor must previously 
 state to the Ministry of Finance what the articles are which he 
 
 <* See affidavit of Mr. Olcott, Appendix, p. 1304. 
 6 See affidavits, Appendix, p. 1 265 et seq. 
 
4-0 INTRODUCTORY STATEMENT. 
 
 intends to import, and said Ministry shall, with a knowledge of 
 the case, issue the necessary orders. 
 
 Art. 14. The steamers of the line may take from the National 
 forests such timber as they may need as fuel or for any other 
 purpose, but in no case shall they trade therein. 
 
 Art. 15. This contract is exempted from the payment of 
 recording fees. 
 
 Art. 16. The duration of this contract shall be fifteen years 
 from the date on which the President of the Union places his " Let 
 it be executed" on the decree by which the National Congress 
 approves the present contract, and during this period of time the 
 National Government shall not make equal or similar concessions 
 to those in this contract, to any person or company for the estab- 
 lishment of navigation lines between the points embraced by the 
 line which owes its origin to the present contract. 
 
 With the approval of the Corao contract the third period in the 
 history of the navigation of the Orinoco ended. 
 
 THE CASE BEFORE THE MIXED COMMISSION OF 1903. 
 
 The claim of the Orinoco Steamship Company against the 
 Government of Venezuela was submitted to the United States 
 and Venezuela Mixed Commission established by virtue of the 
 protocol of February 17, 1903. Article 1 of this protocol reads 
 as follows : 
 
 Article I. 
 
 All claims owned by citizens of the United States of America 
 against the Republic of Venezuela which have not been settled by 
 diplomatic agreement or by arbitration between the two Govern- 
 ments, and which shall have been presented to the commission 
 hereinafter named by the Department of State of the United 
 States or its Legation at Caracas, shall be examined and decided 
 by a mixed commission, which shall sit at Caracas, and which 
 shall consist of two members, one of whom is to be appointed 
 by the President of the United States and the other by the Presi- 
 dent of Venezuela. 
 
 It is agreed that an umpire may be named by the Queen of 
 the Netherlands. If either of said commissioners or the umpire 
 should fail or cease to act, his successor shall be appointed forth- 
 with in the same manner as his predecessor. Said commissioners 
 and umpire are to be appointed before the first day of May, 1903. 
 The commissioners and the umpire shall meet in the city of Cara- 
 cas on the first day of June, 1903. The umpire shall preside over 
 their deliberations, and shall be competent to decide any question 
 on which the commissioners disagree. Before assuming the 
 functions of their office the commissioners and the umpire shal 
 take solemn oath carefully to examine and impartially decide, 
 
INTRODUCTORY STATEMENT. 41 
 
 according to justice and the provisions of this convention, all 
 claims submitted to them, and such oaths shall be entered on the 
 record of their proceedings. The commissioners, or in case of their 
 disagreement, the umpire, shall decide all claims upon a basis of 
 absolute equity, without regard to objections of a technical nature, 
 or of the provisions of local legislation. 
 
 The decisions of the commission, and in the event of their dis- 
 agreement, those of the umpire, shall be final and conclusive. 
 They shall be in writing. All awards shall be made payable in 
 United States gold, or its equivalent in silver." 
 
 Mr. Bainbridge, the Commissioner appointed by the United 
 States, and Dr. Grisanti, the Commissioner appointed on the part 
 of Venezuela, having disagreed both as to the jurisdiction of the 
 Mixed Commission to entertain the claim and as to the merits, the 
 entire claim was referred to the Umpire, Dr. Harry Barge, for 
 decision. The claim of the Orinoco Steamship Company embraced 
 the following items as stated in the opinion rendered by the umpire : h 
 
 1st: $1,209,700.05 as due for damages and losses caused by the 
 Executive Decree of October 5th, 1900, having this decree annulled 
 a contract-concession celebrated on May 26th, 1894; 
 
 2nd: 100,000 bolivares, or $19,219.19 overdue on account of a 
 transaction celebrated on May 10th, 1900; 
 
 3rd: $149,698.71 for damages and losses sustained during the 
 last revolution, including services rendered to the Government of 
 the Republic; 
 
 4th: $25,000 for counsel fees and expenses incurred in carrying 
 out said claims ; 
 
 In view of the peculiar phraseology of the protocol giving the 
 Commission jurisdiction over all claims "owned by citizens 
 of the United States of America," in connection with the diplo- 
 matic history of the claim, the umpire declared that the two gov- 
 ernments had expressly intended to contract themselves out of 
 the ordinary rule of international law which requires that the 
 claims presented by a nation on behalf of its citizens must be 
 national in their origin as well as national in their ownership at 
 the time of presentation. The umpire therefore took jurisdiction 
 of the case as is indicated by the following passage in his opinion : 
 
 and therefore it may safely be understood, that it was the aim 
 of the high contracting parties, that claims as these, being at the 
 moment of the signing of the Protocol owned by citizens of the 
 United States of North America, should fall under the jurisdic- 
 
 «For text of protocol of February 17, 1903, see Appendix, p. 89. 
 
 b For text of the opinion of the umpire see Appendix, Record, p. 686. 
 
42 INTRODUCTORY STATEMENT. 
 
 tion of the Commission instituted to investigate and decide upon 
 the claims the high contracting parties wished to see settled, 
 
 and therefore the jurisdiction of this Commission to investigate 
 and decide claims owned by citizens of the United States of North 
 America at the moment of the signing of the Protocol has to be 
 recognized, without prejudice, naturally, of the judicial power of 
 the Commission and its duty to decide upon a basis of absolute 
 equity when judging about the rights the transfer of the owner- 
 ship might give to claimant against third parties, 
 
 for all which reasons the claims presented to this Commission 
 on behalf of the American Company "The Orinoco Steamship 
 Company" have to be investigated by this Commission . and a 
 decision has to be given as to the right of the claimant Company 
 to claim what it does claim, and as to the duty of the Venezuelan 
 Government to grant to the claimant Company what this Company 
 claims for. 
 
 The umpire then proceeded to the examination of the first and 
 most important item in the plaintiff's claim, namely, the claim 
 for $1,209,700.05 for damages caused by the Executive Decree 
 of October 5* 1900, throwing open the Macareo and Pedernales 
 channels to general navigation. As to this he said most truly 
 
 the main question to be examined is whether the Venezuelan 
 Government by said contract gave a concession for the exclusive 
 navigation of said channels of said river, and whether this con- 
 cession of exclusive navigation was annulled by said Decree. 
 
 An examination of the contract as a whole led the umpire to the 
 conclusion that it did "not show itself as a concession for ex- 
 clusive navigation of any waters, but as a contract to establish 
 a regular communication by steamers between the duly estab- 
 lished principal ports of the Republic." Examining the contract 
 in detail he found that Article XII simply gave permission for the 
 ships of the company leaving Trinidad to navigate the Macareo 
 and Pedernales channels, and that this permission "would only 
 have force for the time till the Government would have fixed 
 definitely the transshipment ports, which it might do at any mo- 
 ment, and till the necessary installations were made, and not for 
 the whole term of the contract, which according to article thirteen 
 would remain in force for fifteen years." 
 
 and whereas therefor it cannot be seen how this contract- 
 concession for establishing and maintaining in force for fifteen 
 years a communication between the duly established ports of 
 Venezuela, can be called a concession for the exclusive navigation 
 of the said channels, when the permission to navigate these chan- 
 nels was only annexed to, the permission to call at Trinidad and 
 
INTRODUCTORY STATEMENT. 43 
 
 would end with that permission, whilst the obligation to navigate 
 between the ports of Venezuela from Ciudad Bolivar to Maracaibo 
 would last; 
 
 ******* 
 What is called a concession for exclusive navigation of the men- 
 tioned channels is shown to be nothing but a permission to navi- 
 gate these channels, as long as certain circumstances should exist. 
 And whereas therefor the contract approved by Decree of the 
 8th of June 1894 never was a concession for the exclusive naviga- 
 tion of said channels of the Orinoco, and whereas the Decree 
 which reopened these channels for free navigation could not annul 
 a contract that never existed; 
 
 all damages claimed for the annulling of a concession for exclu- 
 sive navigation of the Macareo and Pedernales channels of the 
 Orinoco River must be disallowed. 
 
 The umpire then made the following very pertinent query : 
 
 Now whereas it might be asked, if the permission to navigate 
 by those channels, given to the steamer that on its coastal trip 
 left Trinidad, was not one of the "benefits, concessions and ex- 
 emptions " that the Government in article 6 promised not to con- 
 cede to any other line of steamers; 
 
 Arguing from what he declared to be the general purpose of 
 the contract, he reached the conclusion that 
 
 "the benefit and the exemption granted by this article was 
 not: to navigate by said channels, — but: to hold the character and 
 right of a coastal vessel notwithstanding having called at the foreign 
 port of Trinidad, — and as this privilege was not affected by the 
 reopening of the channels to free navigation, and the 'Govern- 
 ment by aforesaid Decree did not give any benefit, concession and 
 exemption granted to this concession to any other line of steam- 
 ers, a claim for damages for the reopening of the channels based 
 on article 6 cannot be allowed. It may be that the concessionary 
 and his successors thought that during all the 21 years of this 
 concession the Government of Venezuela would not definitely fix 
 the transshipment ports, nor reopen the channels to free nav- 
 igation, and those thoughts based a hope that was not fulfilled 
 and formed a plan that did not succeed; — but it would be a 
 strange appliance of absolute equity, to make the Government 
 that grants a concession liable for the not realized dreams and 
 vanished 'chateaux enEspagne' of inventors, promoters, solic- 
 itors and purchasers of concessions." 
 
 Throughout all of this discussion of %he question of the exclu- 
 sive character vel non of the concession the umpire appears to 
 have assumed that the contingency anticipated by article XII of 
 the concession had actually happened, namely, that the Govern- 
 ment had fixed definitely the transshipment ports for merchandise 
 
44 Introductory statement. 
 
 from abroad, and had made the necessary installations. It is 
 submitted, however, that there was no evidence before the learned 
 umpire upon which such an assumption could have been reason- 
 ably founded, and that such assumption is absolutely negatived 
 by the official decrees of the Venezuelan Government with regard 
 to the construction and establishment of the port of Cristobal 
 Colon, which are elsewhere set forth in full." 
 
 But the umpire was not content merely to decide that the con- 
 tract granted no exclusive concession for the navigation of the 
 Macareo and Pedernales channels. He proceeded to hold that 
 even if it were admitted that the reopening of the Macareo and 
 Pedernales channels to general navigation "might furnish a ground 
 to base a claim on (quod non)" Article XIV of the concession, 
 which provides that 
 
 Art. 14. Disputes and controversies which may arise with 
 regard to the interpretation or execution of this contract shall be 
 resolved by the tribunals of the Republic in accordance with the 
 laws of the nation, and shall not in any case be considered as a 
 motive, for international reclamations. 
 
 furnished a sufficient answer to any such claim, especially inas- 
 much as this article embodied the ordinary rule of international 
 law even in the absence of any special contract. The umpire 
 concludes this portion of his opinion with the following passage: 
 
 and whereas it has to be admitted that — even if the trick to 
 change a contract for regular coastal sendee into a concession for 
 exclusive navigation succeeded (quod non) — in the face of absolute 
 equitv the trick of making the same contract a chain for one party 
 and a screw-press for the other never can have success: — 
 
 it must be concluded that article 14 of the contract disables the 
 contracting parties to base a claim on this contract before any 
 other tribunal than that which they have freely and deliberately 
 chosen and to parties in such a contract must be applied the words 
 of the Honorable Mr. Findley, U. S. Commissioner to the claim 
 commission of 1889: "so they have made their bed and so they 
 must lay in it." — 
 
 Moreover, it was the opinion of umpire that "the law hath still 
 another hold " upon the present claimant growing out of the language 
 of Article XIII of the contract, which provides that the contract 
 "may be transferred by the contractor to another person or cor- 
 poration upon previous notice to the Government," and he there- 
 fore concluded his opinion in so far as it related to the claim based 
 
 oSee Appendix, pp. 1187-1196. 
 
INTRODUCTORY STATEMENT. 45 
 
 on the annulment of the exclusive concession to navigate the 
 Macareo and Pedernales channels with the following statement: 
 
 but whereas article 13 of the contract says that it might be trans- 
 ferred to another person or corporation upon previous notice to the 
 Government, whilst the evidence shows that this notice has not 
 been previously (indeed ever) given; the condition on which the 
 contract might be transferred not being fulfilled, the "Orinoco 
 Shipping and Trading Company, Limited ", had no right to transfer 
 it and this transfer of the contract without previous notice must 
 be regarded as null and utterly worthless ; 
 
 Wherefore, even if the contract might give a ground to the above 
 examined claim to "The Orinoco Shipping and Trading Company, 
 Limited" (once more quod mm), the claimant Company as quite 
 alien to the contract could certainly never base a claim on it. 
 
 For all which reasons every claim of the Orinoco Steamship Com- 
 pany against the Republic of the United States of Venezuela for 
 the annulment of a concession for the exclusive navigation of the 
 Macareo and Pedernales channels of the Orinoco has to be dis- 
 allowed. — 
 
 In this connection it might be well to refer again to the registra- 
 tion of the articles of incorporation of the Orinoco Steamship Com- 
 pany and of the transfer from the Orinoco Shipping and Trading 
 Company to the Orinoco Steamship Company in due form in 
 accordance with Venezuelan law under date of April 16, 1903.° 
 
 The umpire disallowed the claim for one hundred thousand 
 bolivars on three grounds: 
 
 First, 
 
 whereas nothing whatever of any arrangement, in accordance 
 with which it was stipulated to pay, appears in the evidence 
 before the Commission, it might be asked if, on the day this claim 
 was filed, this indebtedness was proved compellable; 
 
 Second, on account of the provisions of Article IV of the con- 
 tract of settlement of May 10 which is identical. with Article XIV 
 of the Grell concession, which provides that disputes and contro- 
 versies which may arise with regard to the interpretation or exe- 
 cution of the contract shall be submitted to the courts of Vene- 
 zuela and shall not be the subject of international reclamations 
 
 for which reason — in addition to everything that was said 
 already upon this question heretofore, — in questions on claims 
 based on a contract wherein such a stipulation is made, absolute 
 equity does not allow to recognize such a claim between such 
 parties before the conditions are realized, which in that contract 
 they themselves made conditiones sine qua non for the existence of a 
 claim ; 
 
 "See supra, p. 38; see also Appendix, p. 1164. 
 
46 INTRODUCTORY STATEMENT. 
 
 Third; because in his opinion the evidence showed that the 
 transfer of this claim from the Orinoco Shipping and Trading 
 Company to the Orinoco Steamship Company was never notified 
 to the Venezuelan Government, 
 
 and whereas according to Venezuelan Law, in perfect accord- 
 ance with the principles of justice and equity recognized and pro- 
 claimed in the codes of almost all civilized nations, such a transfer 
 gives no right against the debtor when it was not notified to, or 
 accepted by that debtor; 
 
 5jC 5j£ 5|C 5j* *P -T* *t* 
 
 and whereas, if the provisions of local legislation far from being 
 objections to the rules of absolute equity are quite in conformity 
 with those rules, it would seem absolutely in contradiction with 
 this equity not to apply its rules, because they were recognized 
 and proclaimed by the local legislation of Venezuela; 
 
 and whereas the transfer of credits from ' ' The Orinoco Shipping 
 and Trading Company" to "The Orinoco Steamship Company" 
 neither was notified to, or accepted by the Venezuelan Government, 
 it cannot give a right to a claim on behalf of the last named Com- 
 pany against the Government of Venezuela ; 
 
 for all which reasons the claim of the Orinoco Steamship Com^ 
 pany, Limited, against the Government of Venezuela based on the 
 transaction of May ioth, 1900, has to be disallowed. 
 
 In the next place the Company claims $147,038.79 at which sum 
 it estimates the damages and losses sustained during the last 
 revolution, including services rendered to the Government of 
 Venezuela, 
 
 now whereas this claim is for damages and losses suffered and 
 for services rendered from June 1900, whilst the existence of the 
 Company only dates from January 31st, 1902, and the transfer of 
 the credits of "the Orinoco Shipping and Trading Company, Lim- 
 ited," to claimant took place on the first of April of this same 
 year, it is clear from what heretofore was said about the transfer 
 of these credits, that all items of this claim based on obligations 
 originated before said April 1st 1902 and claimed by claimant as 
 indebtedness to the aforenamed Company and transferred to 
 claimant on said April 1st, have to be disallowed as the transfer 
 was never notified to or accepted by the Venezuelan Government. 
 
 As to the items dating after the 1st of April 1902 in the first 
 place the claimant claims for detention and hire of the steamships 
 "Masparro" from May 1st to September 18th 1902 (141 days) at 
 100 pesos daily = 14,000 pesos, and for detention and hire of the 
 steamship "Socorro" from March 21st to November 5th 1902 (229 
 days) 22,900 pesos, together 37,000 pesos equal to $28,461.53; 
 ******* 
 
 And whereas in this case it differs not that the transfer of the 
 steamers was not notified to the Venezuelan Government, as it 
 
INTRODUCTORY STATEMENT. 47 
 
 was no transfer of a credit, but as the credit was born after the 
 transfer, 
 
 * * * * * * * 
 
 and whereas it differs not whether claimant, — as the Government 
 affirms and as evidence seems clearly to show, — if not taking part 
 in the revolution, at all events favoured the revolutionary party, 
 because the ships were not taken and confiscated as hostile ships, 
 but were claimed by the Government, evidence shows, because it 
 wanted them for the use of political interests, and after that use 
 were returned to the owners ; for all these reasons there is due to 
 claimant from the side of the Venezuelan Government, a remunera- 
 tion for the service of the steamer "Masparro" and "Socorro" 
 respectively from May first to September 18th, 1902, (141 days) 
 and from April 1st to November 5th, 1902, (219 days, together 360 
 days) ; 
 
 ******* 
 wherefor for the detention and use of the steamers "Masparro" 
 and "Socorro" the Venezuelan Government owes to claimant 
 36,000 (thirty-six thousand) pesos or $27,692.31. 
 
 Dr. Barge then disallowed an item of $2,520.50 for repairs to 
 the Masparro and $2,932.98 for repairs to the Socorro on the ground 
 of insufficient evidence, and allowed an item of $308.00 for certain 
 supplies delivered to the Venezuelan authorities, disallowing a 
 further sum of $106.60 claimed on similar grounds because of 
 insufficient proof. A sum of $224.62 for transportation furnished 
 on the request of government officials is allowed. The item 
 claimed for the stoppage of the steamer Bolivar at San Felix 
 when Ciudad Bolivar fell into the hands of the insurgents was 
 disallowed on the ground that the acts of the Venezuelan Govern- 
 ment were legitimate under the circumstances. 
 
 The sum of $61,336.20 claimed for losses of revenue from June 
 to November, 1902, caused by the blockade of the Orinoco was 
 disallowed on the ground that the "so-called blockade in reality 
 was only a prohibition to navigate the river in order to prevent 
 communication with the revolutionists at Ciudad Bolivar." The 
 umpire further held that the Government had a right to discrimi- 
 nate between the vessels of the Orinoco Steamship Company and 
 other vessels, unless it were shown that such discrimination was 
 unwarranted, whereas in the view of the umpire the evidence 
 showed "that the Government had sufficient reasons to believe 
 claimant, if not assisting the revolutionists, at least to be friendly 
 and rather partial to them." The item was therefore disallowed 
 together with the item of $25,000 for counsel fees, which shared the 
 
4 8 INTRODUCTORY STATEMENT. 
 
 fate of the principal items of the claim to which it was only an 
 incident. 
 
 For all which reasons the Venezuelan Government owes to 
 claimant : 
 
 U. S. Gold, 
 for detention and use of the steamers "Masparro" 
 
 and " Socorro " 36,000 pesos or $27, 692. 31 
 
 for goods delivered for use of the Government. 308. 00 
 
 for passages "... 224. 62 
 
 Together total $28, 224. 93 
 
 While all the other items have to be disallowed. 
 
 Such was the decision of the umpire of the United States and 
 Venezuela Mixed Commission of 1903. 
 
 Dr. Barge's decision was rendered February 20, 1904. 
 
 The claimant company made seasonable protest to the State 
 Department of the United States and the Department, after due 
 deliberation and after making the very careful re-examination 
 of the merits of the case demanded by the respect due to the 
 decision of the Mixed Commission of 1903, instructed the Ameri- 
 can Minister at Caracas to endeavor to secure the consent of the 
 Government of Venezuela to the revision of the award in the 
 Orinoco Steamship Company case and the trial of the case abso- 
 lutely on its merits." 
 
 These instructions were carried out by the American Minister 
 in a note to the Venezuelan Minister for Foreign Affairs dated Jan- 
 uary 30, 1905, 6 and from that time until the date of the signature 
 of the protocol submitting the question of revision to The Hague 
 Tribunal this matter has been from time to time the subject of 
 diplomatic correspondence between the two Governments. The 
 grounds upon which the United States has asked such revision are 
 set forth in the instruction of the Department of State to Minister 
 Russell of February 28, 1907, a copy of which was enclosed in 
 Minister Russell's note of March 30, 1907, to the Venezuelan 
 Minister for Foreign Affairs. c That portion of the Department's 
 instruction treating of the Barge decision and explaining the grounds 
 upon which the United States asks its revision is as follows: 
 
 The claim of the steamship company was duly submitted to the 
 arbitral tribunal so constituted. The claim consisted of four items : 
 (1) For $1,209,701.05, which sum the claimant company reckoned 
 
 a For text of Department's cable see Appendix, p. 749. 
 6 For text of this note see Appendix, p. 749. 
 c For text of this note see Appendix, p. 798. 
 
INTRODUCTORY STATEMENT. '49 
 
 as due for damages and losses caused by the executive decree of 
 October 5, 1900, said decree having, as the company affirmed, 
 annulled its exclusive concessionary right; (2) for 100,000 boli- 
 vars, or $19,219.19, overdue on account of the settlement contract 
 of May 10, 1900; (3) for $147,638.79, at which the claimant com- 
 pany estimated its damages and losses sustained during the revo- 
 lution and the value of services rendered by the company to the 
 Government of Venezuela; (4) for $25,000 for counsel fees and 
 expenses incurred in protecting and pursuing its rights. 
 
 The commissioners appointed by the United States and Vene- 
 zuela having disagreed, the claim was referred to the umpire, 
 Doctor Barge, who awarded $28,224.93 United States gold to the 
 claimant company, this being the amount which he found due for 
 services, etc., rendered the Venezuelan Government by the claim- 
 ant company subsequent to the transfer to the claimant of all the 
 rights of the shipping company. Doctor Barge rejected e all the 
 other contentions of the claimant, especially refusing to allow 
 damages for the annulment of the alleged exclusive concession held 
 by the shipping company. 
 
 After holding that he had jurisdiction over the case the umpire 
 rejected the first item in the claim of the company — the claim for 
 damages caused by the annulment of its exclusive franchise — on 
 three grounds: (1) Because in the opinion of the umpire, the con- 
 cession did not confer the exclusive right claimed by the company ; 
 (2) because Article XIV of the concession bars recovery before an 
 international tribunal, even although the exclusive right claimed 
 by the company existed, and even although Article XIV did not 
 prevent the umpire from taking jurisdiction of the case, for by 
 Article XIV the concessionary pledged himself not to submit any 
 dispute or controversy which might arise with regard to the inter- 
 pretation or execution of the contract to any but a Venezuelan 
 tribunal; (3) because the transfer from the Orinoco Shipping and 
 Trading Company to the claimant had never been notified to the 
 Government of Venezuela in accordance with the terms of Article 
 XIII of the concession. 
 
 The second item in the claim of the company for 100,000 bolivars 
 was rejected by the umpire, first upon the suggestion that it had 
 not been satisfactorily proved that the sum claimed was then due, 
 but principally upon two of the grounds already given for rejecting 
 the company's principal claim in regard to the exclusive franchise, 
 namely, on account of the provision of the contract binding the 
 companv to seek redress only in the local courts and because the 
 Venezuelan Government had not been notified of the transfer of 
 the claim from the Orinoco Shipping and Trading Company to the 
 present claimant. 
 
 Of the various sums, amounting in all to $147,638.79, which, 
 grouped together, constitute the third item in the company's 
 claim, the umpire allowed $28,224.93 and disallowed the remainder. 
 
 1 7301 — 10 4c 
 
50 INTRODUCTORY STATEMENT. 
 
 Of this amount about $60,000 appear to have been disallowed for 
 reasons going to the merits of the claim, and $49,978.76, practi- 
 cally all the remainder, were disallowed upon the ground that the 
 transactions upon which the claim for this sum was founded took 
 place prior to the transfer from the Orinoco Shipping and Trading 
 Company to the claimant, and the transfer had never been prop- 
 erly notified to the Venezuelan Government. 
 
 The item of $25,000 for counsel fees and expenses shared the 
 fate of the greater portion of the company's claim and was disal- 
 lowed. 
 
 It is a reexamination of this award before an impartial and 
 competent tribunal that the claimant now asks. 
 
 To this reasonable request that the case of the Orinoco Steam- 
 ship Company be reopened and that the case be submitted in its 
 entirety to an impartial and international reexamination the 
 Venezuelan Government sets up as a bar the fact that this decision 
 of the American- Venezuelan Mixed Claims Commission is final, and 
 that to reopen a decision of a court of arbitration would be to 
 disregard the finality of such decision. 
 
 To this there is an obvious and very reasonable reply, namely, 
 that a decree of a court of arbitration is only final provided the 
 court acts within the terms of the protocol establishing the juris- 
 diction of the court, and that a disregard of such terms necessarily 
 deprives the decision of any claim to finality. In this individual 
 case the protocol specifically stated that "the commissioners, or, 
 in case of their disagreement, the umpire, shall decide all claims 
 upon a basis of absolute equity, without regard to objections of a 
 technical nature or of the provisions of local legislation." 
 
 The equity meant is clearly not local equity — that is, not neces- 
 sarily the equity of the United States or the equity of Venezuela, 
 but the spirit of justice applied to a concrete question irrespective 
 ; of local statute, ordinance, or interpretation. 
 
 ,. Attention has already been called to the expressed terms of the 
 protocol defining the jurisdiction of the commission to be estab- 
 lished thereunder, and it will be recalled that all claims owned by 
 citizens of the United States against the Republic of Venezuela 
 were to be submitted which had not been settled by diplomatic 
 agreement or arbitration between the two Governments. It was, 
 furthermore, stated in express terms that these claims so owned, 
 unsettled, and outstanding should be " examined and decided " by 
 the mixed commission to be appointed. Nevertheless, in express 
 violation of the terms of the protocol, claims amounting in the » 
 aggregate to about $70,000, partially for money loaned and 
 admittedly due to the claimant company, partially for services 
 rendered by the claimant's vessel to the Venezuelan Government, 
 and for damages for the detention of such vessel, were disallowed 
 by the umpire. 
 _ To say that these claims should be rejected for lack of jurisdic- 
 tion would be as was said by Ralston, umpire, in the Martini case 
 
INTRODUCTORY STATEMENT. 5 1 
 
 (Ralstpns Report, p. 841), "equivalent to claiming that not 
 
 u * * claims were referred to (the commission), but only 
 such * * claims as have been contracted about previ- 
 
 ° US i^'i and m this manner and to tlj is extent only the protocol 
 could be maintained," and it is equally vicious in law and equally 
 disastrous in fact to the claimant to assume technical jurisdiction 
 over the claim and then disallow it, evidently on its merits, be- 
 cause of the clause in question, as the umpire did. For this 
 Government can never admit that a claim unpassed upon by a 
 Venezuelan court is not a claim which it has a right to protect 
 and enforce, and by protocol to submit to an international con- 
 vention to the end that such claim in its entirety be passed upon, or, 
 to quote the exact language of the protocol, be " examined and de- 
 cided" upon its merits irrespective of any contract or waiver which 
 the holder of the claim may, in his private capacity, have made 
 with the contracting government. 
 
 And not only did the" umpire in disallowing these claims upon 
 the ground of the Calvo clause, do violence to the terms of the pro- 
 tocol in the manner already stated, namely, by refusing to examine 
 them on their merits, but also by disallowing these claims he 
 violated the express provisions of the protocol that all claims sub- 
 mitted should be examined in the light of absolute equity "without 
 regard to objections of a technical nature, or of the provisions of 
 local legislation." 
 
 It is difficult to see how the umpire could more clearly have dis- 
 regarded the plainest principles of justice and equity than to dis- 
 allow the claims of the claimant upon the ground that it had 
 violated the Calvo clause in seeking redress by international 
 reclamation, when admittedly the defendant Government violated 
 every provision of the contract by totally annulling it. To quote 
 the language of the umpire, "in the face of absolute equity the 
 trick of making the same contract a chain for one party and a 
 screw-press for the other never can have success." (Ralston's 
 Report, p. 21.) And it is doubly difficult to understand the 
 reasoning by which one party to a contract may violate all its 
 terms by annulling it and yet refer to those very terms as existent 
 and measuring the rights of the claimant seeking redress. 
 
 Again the umpire disregarded the express terms of the protocol 
 above quoted when he gave as another reaspn for disallowing 
 these same claims, amounting to about $70,000, that either by the 
 terms of the contract with the company or by provision of Vene- 
 zuelan law it was necessary for the claimant to notify the Vene- 
 zuelan Government, the other party to the contract and the debtor, 
 of the transfer of the claims in question from the Orinoco Shipping 
 and Trading Company to the Orinoco Steamship Company, for a 
 clearer illustration could hardly be found of a stickling for techni- 
 calities and disregard of general equity than this ruling. Absolute 
 equity in Anglo-Saxon countries does not require the creditor to 
 notify the debtor of the transfer of a debt provided said transfer 
 
5 2 ' INTRODUCTORY STATEMENT. 
 
 does not injuriously affect the rights of the debtor, and absolute 
 equity does not mean the technical provision of the Venezuelan 
 law or the technical requirements of the contract between the 
 parties. Absolute equity assimilates knowledge to specific notice 
 according to the requirements of local legislation. Of the transfer 
 in question the Government had actual knowledge. 
 
 While this Government believes that such a disregard of the 
 express terms of the protocol justifies a reopening and a resub- 
 mission of the entire case to an impartial tribunal there are other 
 reasons which tend to discredit the judgment in its entirety. 
 
 The claimant always contended that the franchise granted by 
 the Grell contract was an exclusive franchise to ply between a 
 foreign port and Trinidad and to use at the same time the chan- 
 nels which were exclusively reserved to coastal trade. In other 
 words, the company was to engage in foreign commerce, but was 
 to possess at one and the same time the right to use certain chan- 
 nels which it would not have had the right to use but for the con- 
 cession: While this would in itself have been a considerable ad- 
 vantage, the benefit of the contract, according to the claimant, 
 consisted in the fact that the company was to possess the exclusive 
 right to navigate, to trade with foreign ports, and yet to use the 
 channels reserved to coastal trade, and that during the continuance 
 of the concession to the company no like privilege would be ex- 
 tended to any competing company. 
 
 In the opinion of the umpire the exclusiveness was not a matter 
 of law, but he overlooked the important and fundamental point 
 that the company was to exercise exclu dvely the right and privi- 
 lege specified in the concession until such time as the Venezuelan 
 Government should fix certain points of transshipment and make 
 the necessary installation. Supposing that the umpire was right 
 in his construction of the contract, which is not admitted, that 
 the exclusiveness claimed by the company did not exist in law, it 
 necessarily follows that the exclusiveness existed in fact, and the 
 company was therefore entitled to the exclusive right claimed 
 until' the Venezuelan Government divested that right by establish- 
 ing points of transshipment and making the necessary installations. 
 In other words, the fixing of these various points of transshipment 
 and the establishing of the necessary installations were made a 
 condition precedent to the deprivation of any exclusive right 
 which the company, as a matter of law or as a matter of fact, 
 enjoyed. 
 
 The judgment of the umpire, therefore, disregarding these 
 simple yet essential considerations is wholly unacceptable. He 
 did, indeed, take jurisdiction, but the error committed was so 
 gross and so palpable that this Government can not ask its citi- 
 zens to accept this judgment as a finality. 
 
 Although these contentions have been called at various times 
 to the attention of Venezuela and the request made courteously 
 and with confidence that the claimant's case ,in its entirety be 
 
INTRODUCTORY STATEMENT. ! tj/ 53 
 
 submitted to a reexamination before a competent and impartial 
 tribunal, the Venezuelan Government has interposed curtly tha^~. 
 "the decisions of the commissioners, and in the event of their dis-' 
 agreement, those of the umpire, shall be final and conclusive." 
 At the very moment and almost in the same breath that Vene- 
 zuela declared the finality of the judgments of the commission, she 
 has been busy protesting Belgian and Mexican awards, although 
 the protocols under which these two commissions were established 
 provided "the decisions of the commission, and in the event of 
 their disagreement, those of the umpire, shall be final and con- 
 clusive." It would appear, therefore, to a disinterested person, 
 that judgments in favor of Venezuela are final and conclusive, but 
 that judgments adverse to Venezuela are not final nor at all 
 conclusive. 
 
 In this conflict between theory and practice this Government 
 not unnaturally looks to the practice of Venezuela. 
 
 It is, however, apposite to call the attention of the Venezuelan 
 Government to the fact that the United States has granted on 
 various occasions the request that it now confidently makes ; that 
 the United States, at the request of Mexico, set aside an unjust 
 arbitral award, and that, as Venezuela may doubtless recall, at its 
 express and distinct request, the United States set aside the find- 
 ings of the United States and Venezuela Commission of 1886 and 
 appointed a new commission under a convention sighed in 1888, 
 whereby a saving resulted to Venezuela, amounting in the aggre- 
 gate, including interest, to nearly a million and a half dollars, as 
 compared with the findings jf the first commission. 
 
 In view, therefore, of the circumstances of the case and the 
 express violations of the terms of the protocol or errors in the 
 final award, arising through gross errors of law and fact, and in 
 the light of the history of both nations in the matter of arbitral 
 awards, this Government insists upon and confidently expects a 
 reopening and a resubmission of the entire case of the Orinoco 
 Steamship Company to an impartial and a competent tribunal." 
 
 It is respectfully, but none the less confidently, submitted on 
 behalf of the United States, that the record in this case affirma- 
 tively and conclusively shows that American citizens, represented 
 by the Orinoco Steamship Company, have on the faith of con- 
 cessions granted by the Government of Venezuela invested 
 more than seven hundred thousand dollars cash in the develop- 
 ment of navigation on the Orinoco; that these concessions were 
 arbitrarily revoked by the act of the Venezuelan Government 
 and the business of the claimant company was not only ham- 
 pered and finally destroyed, but the company was even compelled 
 to sell its tangible assets for an entirely inadequate sum and to 
 
 a For text of this note, see Appendix, pp. 766-797- 
 
54 INTRODUCTORY STATEMENT. 
 
 forego its expectation, reasonable and legitimate as measured by 
 actual experience, of profitable returns during a definite period 
 of years upon a valuable property. 
 
 The United States, on behalf of the Orinoco Steamship Company 
 requests the International Tribunal at The Hague to decide the 
 first question propounded by the protocol under which the present 
 case is submitted, namely, " Whether the decision of Umpire Barge, 
 in this case, in view of all the circumstances and under the prin- 
 ciples of international law, is not void, and whether it must be 
 considered so conclusive as to preclude a reexamination of the case 
 on its merits" by setting aside the decision so rendered by the 
 Umpire of the United States and Venezuela Mixed Commission of 
 1903 on account of its clear and palpable disregard of the terms 
 of the submission and the numerous and essential errors of law 
 and fact upon which it is founded. And the United States further- 
 more requests that this high Tribunal proceed in accordance with 
 the terms of the protocol to "hear, examine and determine the 
 case and render its decision on the merits." 
 
 Upon such examination the United States prays the Court for 
 an award in* favor of the United States in behalf of the Orinoco 
 Steamship Company in the sum claimed by the United States 
 before the United States and Venezuela Mixed Commission of 
 1903, namely, $1,401,539.05 in United States Gold or its equiva- 
 lent, with interest. 
 
 In support of this prayer the United States submits herewith 
 the documents and evidence on which it relies. 
 
 William Cullen Dennis, 
 
 Agent of the United States. 
 Frederic Duncan McKenney, 
 
 Counsel for the United States. 
 
 ■9 
 
12° 
 
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