so distinctly assumed and so forcibly maintained by them, in reference to the tonnage and other taxes imposed upon American commerce at the Isthmus of Panama. The 'commercial tax,' as it is called, appears to be a mere technical evasion of an objectionable nomenclature, but this unworthy evasion does not change the fact that the exaction falls upon those interests which alike by treaty stipulations and formal contract have been exempted from such impositions.

"In 1856 the naval officer in command of our Pacific squadron received orders to resist by force, if necessary, the collection of the tonnage taxes which this Government declared to be illegal. I refer you to Mr. Marcy's No. 29 of 31 December, 1856, to Mr. Bowlin, upon this point. I will send your No. 13 with its accompaniments and with a copy of this instruction to the Navy Department, with a request that, if a renewal of the orders of 1856 be requisite, in view of the lapse of time and change in the personnel of officers in command, such measures may be taken as will secure the protection of the interests of our citizens on the isthmus, to which they are entitled under the solemn guaranties of the government of New Granada."

Mr. Seward, Sec. of State, to Mr. Burton, min. to Colombia, Feb. 27, 1862,
MS. Inst. Colombia, XVI. 30.

See, also, Mr. Seward, Sec. of State, to Mr. Corwine, Jan. 17, 1862, 56 MS.
Dom. Let. 215.

"A tax has been levied, called a commercial tax, the object and intent of
which is to require a bonus for doing commercial business in the State
of Panama. This tax by some unusual and illegitimate construction
has been made to apply to the Pacific Mail Steamship Co.. the Panama
Railroad Co., U. S. Mail Steamers, Vanderbilt &c. The P. M. S. S. Co.
have paid it under protest. Mr. Nelson, agent for the P. R. R. Co., &
U. S. Mail Steamers, has also paid it under protest. I learned from the
British consul a few days ago that the governor of Panama had informed
him that he would not enforce its execution. I have no official advice
from the governor on the subject; but expect to learn his views and
intentions at an early day. I have advised those interested not to pay
another dollar, until the question is settled by our Government." (Mr.
McKee, U. S. consul at Panama, to Mr. Burton, U. S. min. at Bogota,
April 21, 1862, enclosed with Mr. Burton's No. 34, July 11, 1862.)
"You will instruct the consuls of the United States within your jurisdic-
tion to advise the parties interested not to pay the commercial tax'
which is being attempted to be collected from them under the Panama
law of August 29, 1855, and in such cases as they have already paid it
under protest, to make reclamation therefor." (Mr. Seward, Sec. of
State, to Mr. Burton, min. to Colombia, Aug. 28, 1862, MS. Inst. Colom-
bia, XVI. 43.)

"Having examined the subject referred to in your No. 95, in connection
with your previous despatch No. 13, upon the same question. I am sat-
isfied that the views which you originally expressed are correct; that
the commercial contribution levied by the State of Panama is only
the substitution, under a different name, of an impost which this Gov-
ernment has uniformly held to be unconstitutional and illegal, under
the public guarantees of the Republic of New Granada, and that for all
such exactions paid under protest, this Government reserves the right

of future reclamation. With the State of Panama as an integral part of the Colombian Republic we have nothing to do. It rests with the Government of Colombia to enforce in the States under its jurisdiction respect to the plighted faith of the supreme authority." (Mr. Seward, Sec. of State, to Mr. Burton, min. to Colombia, April 9, 1864, MS. Inst. Colombia, XVI. 93.)

"After diligent inquiry I cannot learn that any unjust or unequal taxes have been recently levied, and certainly no complaint of any has been made to me.' (Commander G. H. Preble, U. S. N., to Mr. Burton, min. at Bogota, July 15, 1865, enclosed by Mr. Burton with his No. 190, Aug. 11, 1865, MS. Desp. from Colombia.)

"I have to acknowledge the receipt of your despatches, Nos. 125 and 126,-dated, respectively, October 17th and 22d last, with their enclosures, the first of which relates to the protests of the Pacific Mail Steamship Company against the payment of the Commercial Tax' imposed by the State of Panama on that company, and, the second, to the demand made by a Colombian official at Aspinwall, for the payment of the same tax, by all vessels of the United States discharging freights at that port.

"The subject will receive the early consideration of this Department, and your proceedings in that connection were quite proper and meet my approbation."

Mr. Seward, Sec. of State, to Mr. Burton, min. to Colombia, Jan. 10, 1865,
MS. Inst. Colombia, XVI. 116.

With his No. 125, referred to by Mr. Seward, Mr. Burton enclosed copies, received from Mr. McKee, United States consul at Panama, of the protests entered in the consulate by agents of the Pacific Mail S. S. Co., from Oct. 19, 1859, to May 14, 1862, against the payment of the commercial contribution," as well as copies of certain receipts on which no protests were entered. (MSS. Dept. of State, Desp. from Colombia.) With his No. 126, also referred to by Mr. Seward, Mr. Burton enclosed a correspondence in relation to a demand for payment of tonnage taxes by vessels discharging freight at Colon. This demand was made under art. 123 of the Colombian Custom House Law of May 9, 1864. Mr. Burton reported that the Colombian Minister of Foreign Relations had in a private interview informed him that it was not the intention of the Colombian Government to insist on the collection of the duty, the minister in this relation referring to an executive decree of Aug. 18, 1864, suspending the operation of art. 123 as to the free ports of the Republic. (MSS. Desp. from Colombia.)

See, also, Mr. Seward, Sec. of State, to Mr. Burton, min. to Colombia, Feb. 10, 1865, MS. Inst. Colombia. XVI. 126; and Nov. 12, 1866, id. 207. Approval was expressed of the action of Rear Admiral Thatcher, in directing the commanding naval officer at Panama, in case an attempt should be made by the Colombian Government, after making a respectful remonstrance to the authorities of the Isthmus, to resist the collection of the tonnage tax by force if necessary, consulting at the same time the United States consul at Panama. It was stated, however, that there was "reason to believe that the Colombian Government will not persist in the measure which would necessitate the extreme proceedings contemplated." (Mr. Seward, Sec. of State, to Mr. Welles, Sec. of Navy, Feb. 10, 1867, 75 MS. Dom. Let. 235.)

"It has been intimated to the Department from a source likely to be well informed, that the New Granadian GovernCapitation tax. ment has imposed a capitation tax of two dollars on all persons embarking at Panama for California. It is hoped however, that the information may not be correct. If, upon inquiry, you should ascertain that it is, you will remonstrate against it in terms which will leave no doubt that this government considers it adverse to the spirit, at least, of the treaty of the 12th of December, 1846. It is true that citizens of the United States are by that treaty placed upon the same footing only as citizens of New Granada in regard to the transit of the Isthmus of Panama, but, inasmuch as the numbers of our citizens who cross that Isthmus for the purpose of proceeding to California greatly exceeds those of New Granada, while the tax would bear lightly upon the New Granadians it would be onerous to citizens of the United States and incompatible with that freedom of transit which it was the intention of the treaty to secure to us as an equiva lent for our guaranty of the neutrality of the isthmus. You will accordingly intimate that it is the expectation of this government that the tax referred to or any other in contravention of the spirit of the treaty will be discontinued. The New Granadian Government has certainly derived and will continue to enjoy sufficient benefits, both directly and indirectly, from the trade and intercourse between our Atlantic coast and California by the way of the Isthmus, to dispense with a tax of the character referred to even if there were no treaty. You may assure them, however, that if, under existing circumstances, the tax shall be exacted, it will lead to great irritation in this country."

Mr. Clayton, Sec. of State, to Mr. Foote, min. to Colombia, Jan. 9, 1850,
MS. Inst. Colombia, XV. 139.

See, in this relation. Mr. Everett, Sec. of State, to Mr. Conrad, Sec. of War,
Nov. 18, 1852, 41 MS. Dom. Let. 93.

The tax above referred to was imposed under an ordinance passed Nov. 6,
1849, by the legislative assembly of the State of Panama. The ordinance
took effect Jan. 1, 1850. It imposed a tax of $2 per capita on all pas-
sengers embarking or disembarking in that State. In reply to the pro-
test made through Mr. Foote, the New Granadian minister of foreign
affairs declared that the national Government could not interfere to
prevent the execution of the law by the State authorities. Under it,
the Pacific Mail S. S. Co. paid to the State of Panama, in 1850–1853,
about $122,000, each payment being made under protest. (Mr. Cass,
Sec. of State, to Mr. Jones, min. to Colombia, April 30, 1859, MS. Inst.
Colombia. XV. 268.)

The Pacific Mail S. S. Co. presented a claim for reimbursement to the mixed commission under the claims convention between the United States and New Granada of Feb. 10, 1857, which was extended by the convention of Feb. 10, 1864. The claim was referred to the umpire, Sir Frederick Bruce, who observed in his decision that "a large portion" of the amount" was recovered by the company from the passengers." As to the legal aspects of the case, he said that the company did not appear

to have taken any steps to test the validity of the law, and that the failure to take such steps before the Colombian tribunals constituted a serious objection to the claim. As to the allegation of the claimant that the tax was a violation of Art. XXXV. of the treaty of 1846, Sir Frederick declared that "the tax, if a violation of the treaty at all, is a violation of the spirit and not of the letter of that instrument. He also stated that it did not appear that the United States "addressed any representations to the supreme government at Bogota denouncing the proceeding as a violation of the treaty." He therefore rejected the claim, without prejudice to the rights of the claimant, should the United States decide to make a demand for redress. In the course of his opinion he remarked that the Supreme Court of New Granada, in afterwards deciding a similar law to be invalid, put its decision on constitutional and not on treaty grounds. (Moore, Int. Arbitrations, II. 1412-1415.)

The opinion was incorrect in saying that the United States had not com-
plained to New Granada that the tax was a violation of the treaty.
(Mr. Seward, Sec. of State, to Mr. Stanbery, At. Gen., Nov. 14, 1866,
74 MS. Dom. Let. 382.)

Attorney General Akerman, in 1871, advised that the tax, being actually,
though not ostensibly, levelled at citizens of the United States, defeated
the plain intent of the treaty. (13 Op. 547.)
"Unfortunately for the claimants, however, it [the opinion of Attorney
General Akerman] omits all notice of the principal point, which is
whether it would be proper for this government, in view of the strin-
gent terms of the 5th article [of the convention of Feb. 10, 1857], to
demand of Colombia payment of a claim which had been rejected by
the arbiter under the convention. It is true that Sir Frederick Bruce
declared that his decision was not to prejudice the rights of the claim-
ants. This declaration, however, must be regarded as extrajudicial
and as not imposing liability on Colombia. Under these circumstances
it is deemed advisable at least to defer a presentation of the case anew
to that government." (Mr. Fish, Sec. of State, to Mr. Cox, M. C.,
March 14, 1872, 93 MS. Dom. Let. 139.)

By an act of the provincial assembly of Panama of Nov. 17, 1853, superseding the ordinance above mentioned, a tax of 10 per cent. was levied on the profits on each passenger arriving at or departing from the coast at either side, and the sum of $10 was assumed as the "unalterable basis" of such profits.

The United States protested against this tax on the following grounds:

1. That, although New Granadians were nominally liable to it, it constituted practically a discriminating tax on foreign vessels, and especially upon vessels of the United States; that, according to the United States consul at Panama, the tax of 1849 was not in fact collected from New Granadian citizens; that there was no New Granadian vessel carrying passengers sailing to or from Panama; that the burden of the impost under consideration fell practically upon citiizens of the United States, though the guarantee of neutrality was given to exempt them from "such partial and oppressive exactions."

2. That the tax violated the stipulation for a "free" transit, besides arbitrarily assuming a certain standard of profit.

3. That it was opposed to what had been the well understood policy of New Granada, as shown by art. 34 of the charter granted to the Panama Railroad Company, May 29, 1850, which guaranteed that passengers, merchandise, and effects of every kind, transported across the Isthmus from ocean to ocean by the railroad, should be exempt from taxes and imposts, whether national, provincial, municipal or of any other species.

Mr. Marcy, Sec. of State, to Mr. Green, Feb. 16, 1854, MS. Inst. Colombia,
XV. 177.

April 4, 1854, Mr. Green wrote that the New Granadian minister of foreign
relations had "expressed it as the fixed determination of the Govern-
ment to remove every impediment to the full enjoyment of the rights
of transit across the Isthmus, according to concessions heretofore made;
and that this passenger tax should not be enforced because of its con-
flict with these resolutions." (Mr. Cass, Sec. of State, to Mr. Jones,
min. to Colombia, April 30, 1859, MS. Inst. Colombia, XV. 268.)

Oct. 26, 1854, the provincial assembly of Panama by a new law restored the more profitable tax of $2 per capita on passengers embarking in the Bay of Panama. The Supreme Court of New Granada, April 23, 1855, however, on motion of the Attorney-General, declared the provincial laws of Nov. 17, 1853, and Oct. 26, 1854, to be null and void, as unconstitutional.

Mr. Marcy, Sec. of State, to Mr. Bowlin, min. to Colombia, Feb. 3, 1855, MS.
Inst. Colombia, XV. 199; Mr. Hunter, Act. Sec. of State, to Mr. Bowlin,
July 31, 1855, id. 205; Mr. Marcy to Mr. Bowlin, Aug. 31, 1855, id. 207.
In the instruction last mentioned, Mr. Marcy, referring to the report that
the authorities of the State of Panama would, in spite of the decision
of the Supreme Court, renew the tax, intimated that the United States
would if necessary station a vessel of war at Colon and Panama to protect
American citizens and vessels from the exaction.

"If the exaction should be made of your captains and agents, it might, in
the first instance, be resisted, if there should be any means for judi-
cially testing its legality. The Department does not feel justified, how-
ever, either in directing the payment of the tax, or in advising a per-
emptory disregard to the local law imposing it. But if there should
be no means of testing the legality of the tax before the tribunals (as is
suggested above), the payment, if made by the officers or agents of the
company, should be accompanied in each case by a formal protest, until
the result of an application on the subject which the United States min-
ister at Bogotá has been instructed to make to the Government of New
Granada shall be known, or other measures shall be adopted by this
Government." (Mr. Marcy, Sec. of State, to Mr. Roberts, Pres. U. S.
Mail S. S. Co., N. Y., Sept. 3, 1855, 44 MS. Dom. Let. 299.)
See, in the same sense, Mr. Marcy, Sec. of State, to Mr. Davidge, Pres. Pac.
Mail S. S. Co., Aug. 7, and Aug. 28, 1856, 45 MS. Dom. Let. 432, 480.
See, also, Mr. Marcy to Mr. Davidge, Jan. 20, 1857, 46 MS. Dom. Let. 256.
See Mr. Cass, Sec. of State, to Gen. Herran, Colombian min., Sept. 10, 1857,
MS. Notes to Colombia, VI. 71.