separate nationality, still it deprived her of certain revenues, which became irrevocably vested in the United States. "A public creditor, like a private creditor, has a general right to receive payment out of the property, income, or means of his debtor. A special pledge of this or that source of revenue, of this or that direct tax, or indirect tax, when made by a government, renders such source of revenue, like a mortgage or deed of trust given by a private individual to his creditor, a specific lien, a fixed incumbrance, which the government ought not, in justice to the creditor, to abolish, lessen, or alienate, until the debt has been satisfied. But a public creditor, like a private one, even as to debts not secured by hypothecation of specific property or other express lien, ought not to deprive himself of the means of payment; as the two governments, that of Texas and of the United States, abundantly indicated, as well by the compact of annexion as by that for the change of boundaries. "I waive, therefore, as irrelevant to the present object, all inquiry as to what Congress ought to do in the premises, in consequence of the absorption, by the United States, of the revenues from duties of imposts and tonnage, which might have accrued to the Republic of Texas if she had not consented to become one of the United States of America." In 1854, while these questions were still pending, and while a bill was under consideration in Congress for their adjustment, an English holder of a Texas bond, issued in July, 1839, brought a claim against the United States for the payment thereof before the mixed commission organized under the convention between the United States and Great Britain of February 8, 1853, for the settlement of claims of citizens or subjects of the one country against the Government of the other. Mr. Hornby, the British commissioner, held that the claim should be allowed. On the other hand, Mr. Upham, the American commissioner, maintained that the commission had no jurisdiction of the subject. The indebtedness of Texas was, he said, "a distinct subject of agreement by the terms of the union;" the United States and Texas, as was shown by the act of 1850, the report of Mr. Corwin, the opinion of Mr. Cushing, and the pending legislation, were acting in concert to cause the debts to be paid; whether the United States should "be liable for this indebtedness," he did not feel "called upon to decide;" the tendency of the opinion of Mr. Cushing, so far as his views could be gathered, was to establish such liability in part; it was clear that Texas was not exonerated from the debt, and the United States had manifested a strong disposition to bring about its adjustment; but there was nothing to show that the subject was within the jurisdiction of the commission; it had not been brought to the notice of either Government, or made a matter of correspondence or difficulty between them, or included in any list of unsettled claims at the date of the convention; it therefore did not appear to be within the intent of either contracting party as a matter to be acted upon by the commission." The umpire dismissed the claim, it being for transactions with the independent Republic of Texas prior to its admission as a State to the United States." By an act of Congress of Feb. 28, 1855, it was provided that, in lieu of the $5,000,000 payable to Texas in 5 % stock under the act of 1850, the Secretary of the Treasury should pay to the creditors of the late Republic, who held "such bonds, or other evidences of debt for which the revenues of that Republic were pledged;" as were found by Mr. Corwin in the report approved by the President Sept. 13, 1851, or by Mr. Cushing in his opinion of Sept. 26, 1853, to be within the act of 1850, the sum of $7,750,000, to be apportioned among the holders pro rata, the interest on such debt to be determined by the then existing laws of the State of Texas. "It has been reported that the existing Government has contracted a considerable debt. Full particulars should be ascerFiji debts. tained as to this debt, the amount of the principal and interest, the circumstances under which it has been contracted, the persons from whom it has been borrowed, the validity of the engagements entered into with them, the manner in which the money so obtained has been expended, and the precise extent of the obligations which would have to be assumed in respect of this debt by the future government of Fiji if the islands should be annexed to the British Crown. It will, of course, be understood that Her Majesty's Government could not consent to make the revenues of this country liable in any way for this debt, or to charge upon them any portion of the cost of the local government, or of maintaining order within the Islands." Earl of Kimberly, Colonial Secretary, to Commodore Goodenough, R. N., and Mr. Layard, British consul in Fiji, Aug. 15, 1873, C. 983, April, 1874, p. 6, instructing them to report upon the question of the proposed annexation of the Fiji Islands. "II. Liabilities. "6. I have directed the accounts of the former Governments to be closed to the 10th of October, the date of cession; and all then outstanding revenue as it comes in to be applied to the reduction of the obligations unpaid at that date. It will, therefore, be some short time before the precise amount of the liabilities outstanding at the date of @S. Ex. Doc. 103, 34 Cong. 1 sess. 406–409. Moore, Int. Arbitrations, IV. 3591–3594. €10 Stats. 617-619. See Lawrence's Wheaton (1863), 54, note; Dana's Wheaton, §30, note 18. The following Congressional documents may be consulted in regard to the Texas debts: S. Ex. Doc. 29, 28 Cong. 2 sess.; S. Mis. 72, 32 Cong. 1 sess.; H. Mis. 17, 33 Cong. 2 sess.; S. Mis. 1, 34 Cong. 3 sess.; S. Mis. 198, 35 Cong. 1 sess. cession can be ascertained; but Mr. Thurston has supplied me with an approximate statement of the liabilities computed to the 30th of September, 1874, a copy of which I inclose. This document, although susceptible of alteration to some small extent, is no doubt sufficiently accurate for all practical purposes, and will enable Her Majesty's Government to decide the general principles upon which they will be prepared to deal with these obligations. The account shows a total liability of 87,631 7., and the various claims may be divided into four classes: (1) Amount due to debenture holders. *(2). Amount due to Fiji Banking Company. "(3) Amount due to Government officials and servants for salaries and wages. "(4) Amount due to merchants and tradespeople for stores and supplies. 7. I observe in the statement that two sums of 665 7. and 520 7. for the amount short paid on salaries during the ad interim Consular Government are put down amongst the liabilities. But I think that these sums should be struck out altogether. The salaries were reduced in March last, because it was estimated by Commodore Goodenough and Mr. Consul Layard that such a step was necessary to bring the expenditure of the Government within the receipts. The necessity for such a step has been proved by the result. Notwithstanding these reductions the revenue has been unequal to the expenditure, and the reductions, which might perhaps have been claimed if the revenue had proved sufficient to cover them, should not now be recognized amongst the liabilities of the Government. "8. As regards the remainder of the claims, it must be borne in mind that they have all accrued since 1871, and that the lenders practically trusted for the repayment of their advances to the success of the so-called Constitutional Government. That experiment has proved a complete failure. The security upon which the money was lent has therefore become valueless, and if the cession of the country had not been accepted by Great Britain, not a fraction of these liabilities would ever have been recovered by the Government creditors. It appears to me, therefore, to be competent for Her Majesty's Government with perfect equity to decide upon the manner in which these liabilities shall be dealt with, and that any amount received by the creditors of the late Government should be looked upon by them as so much recovered of a worthless debt-so much rescued, as it were, from the wreck of a losing venture. Viewed in this light, I do not think that the British Government is in any way called upon to give the creditors of the collapsed Fijian Government the full amount of their claims. For example, the 51,400 7. of the 10 per cent. Government debentures, which is the first item in the list of liabilities, only realized 40,502 7., whilst the next item on the list, 6,940 Z., is interest on the nominal debt at 10 per cent. calculated to the 30th ultimo. If the attempt to establish constitutional government had proved successful, the creditors might fairly have claimed to be paid according to the letter of their bond; but the experiment having collapsed, it would be preposterous for them now to expect to be paid by Great Britain the risk premium and high rate of interest which they might fairly have claimed if they could have recovered it from the Fijian Government. "9. I would suggest that the four classes into which I have divided the creditors of the late Fijian Government might be dealt with upon the following liberal principles: Classes 1 and 2, the debenture holders and the bank, might be repaid the amounts actually advanced in each case, with the simple interest at the rate of 5 per cent. per annum. The arrears of salaries and wages due to Class 3 might, I think, be paid in full without interest; and the commercial and trade accounts found, upon full inquiry, to be due to Class 4, might be paid less 10 or 15 per cent. abatement the amount charged in such cases being probably based upon a liberal calculation of the risks involved in the transaction. "10. If the accompanying statement of liabilities were adjusted upon this principle the amount of indebtedness would be reduced from 87,6317. to about 71,0007. or 72,000l. “III. Fiji Bank Charter. 11. A copy of this document will be found attached to the report of Commodore Goodenough and Consul Layard already laid before Parliament. The Charter was granted on the 13th of August, 1873, by the King and his Ministers, the Constitution of 1871 being declared in the deed to have been at that time abrogated. The validity of the instrument may therefore, I think, fairly be questioned. It contains also some provisions which are inadmissible in a British Colony, such as a monopoly of banking for fourteen years, and exemption from taxation for a similar period. "12. I venture to recommend, therefore, that this Charter should not be recognized by Her Majesty's Government. The Company might, however, be allowed to retain so much of the 10,000 acres promised to them as they have actually been placed in possession of, and a charter might be given to them such as is usually granted to Banking Companies in Crown Colonies on their complying with the ordinary conditions." Sir Hercules Robinson, Governor, to Earl of Carnarvon, Colonial Secretary, "II. Liabilities. "5. In the next place, with respect to the liabilities incurred by the persons who administered the so-called Government of Fiji before the cession, I concur very generally with Sir H. Robinson's view of the relation in which the new Colonial Government stands toward those who had dealings with Thakombau's Governments, and the course which should be taken in respect of their claims. "6. You will cause it to be very clearly understood that Her Majesty's Government and the Colonial Government absolutely and entirely decline to admit that they are necessarily under any obligation to take up the liabilities incurred by those who have purported to administer the affairs of the Islands. No claim of the kind preferred by way of demand or as of right can for a moment be entertained, and to prevent any possible misconception of such a question it may be desirable to relieve the Government from any attempts to press such claims by passing an Ordinance declaring that no action shall lie against the Crown or the Colonial Government in respect of liabilities incurred by the late King or by any persons not in the employment of the Crown or the Colonial Government. 7. But although I think it necessary to define in the strongest manner the refusal of Her Majesty's Government to accept, or allow the Colonial Government to accept, any direct liability or obligation connected with the acts of persons for whom it has been in no way responsible, I am nevertheless of opinion that it will be for the credit of the newly constituted Government that voluntarily, and as an act of grace, it should offer to undertake the payment of so much of the debts incurred before the cession as after proper inquiry it may appear just and fair for it to assume. As Sir H. Robinson has pointed out, it will be necessary for this purpose to examine carefully all claims put forward, and as at present advised, I am of opinion that the four classes of the creditors of the so-called Fijian Government may be dealt with on the general principles laid down in paragraph 9 of his despatch of 20th October. But with regard to the time and manner in which any such payments are to be made, the Government of Fiji must reserve to itself the fullest discretion. 8. I am disposed to think that the best course will be for you to notify publicly, as soon as convenient after your assumption of the Government, that while the Government of Fiji declines to be responsible for any debts or liabilities incurred by or in the name of Thakombau or any other persons purporting to represent any Government of Fiji prior to the cession, it is nevertheless willing to consider any proofs that may be brought forward of money or supplies having been actually provided for public purposes; but the persons so applying to be reimbursed must be made clearly to understand that it will rest entirely with the Colonial Government (subject, if necessary, to a reference to the Secretary of State) to decide in each case whether the sum claimed, or a part of it, should be paid, and if so, at what time and in what manner the payment shall be made." Earl of Carnarvon, Colonial Secretary, to Sir A. H. Gordon, governor of Fiji, |