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said to be by no means clear that they could be " legally or justly sub-
jected to the payment of extraordinary taxes or contributions to the
Government of a State for the purpose of resisting and, as it would now
seem, absolutely overthrowing the federal union of Colombia, to which
Governm 'nt the United States are bound to guarantee a constitutional
control, regulated by treaty with the United States, of the international
railroad transit across the Isthmus of Panama." The situation, how-
ever, was declared to be imperfectly understood, and, for the time being,
it was said that citizens of the United States might decline to pay the
taxes and contributions above referred to, except under protest. (Mr.
Seward, Sec. of State, to Mr. Sullivan, min. to Colombia, June 13, 1867,

MS. Inst. Colombia, XVI. 221.)
For a circular issued by the Colombian consulate general at New York,

Aug. 7, 1871, in relation to the dispatch of vessels to the free ports of
Colombia, see Mr. Abert to Mr. Fish, Sec. of State, Aug. 17, 1871, MS.
Misc. Let.

The Colombian Government having appointed an inspector at Aspinwall (Colon), who required all vessels desiring to trade on the Atlantic coast of Panama, first to visit that port and obtain a license and an approval of their manifests of cargo, for which a fee of $5 was exacted, the United States commercial agent at Aspinwall advised masters of American vessels to refuse to comply with the requirement. The reason given for the measure was the necessity at the time of inspecting manifests, so as to prevent the carrying of contraband to the insurgents at Antioquia. The action of the commercial agent was not approved, the Department of State observing that Art. XXXV. of the treaty of 1846 did not include “the right of unrestricted trade between the Atlantic ports of the State of Panama.”

Mr. Fish, Sec. of State, to Mr. Thorington, com. agent at Aspinwall, Jan.

24, 1877, 84 MS. Desp. to Consuls, 635. In 1876 a correspondence took place at Bogota, between the diplomatic representatives of the United States, France, Germany, and Great Britain, and the Colombian minister of foreign affairs, with respect to the custody of the papers of foreign vessels entering the free ports of Colon and Panama. The correspondence grew out of the enactment of the Colombian statute, No. 60, of 1875, which (arts. 3 and 5) required such vessels to deliver their registers to Colombian officials. By a note of Señor Ancizar, Colombian minister of foreign affairs, of July 27, 1876, the conflict of the statute with the treaty obligations of Colombia in regard to the freedom of the ports of Colon and Panama and the Isthmian transit was recognized; and it was agreed that, until the law should be modified by the Colombian Congress, the registers of foreign vessels should be deposited with their respective consuls or, in case of absence, with the consul of a friendly power.

Mr. F. W. Seward, Act. Sec. of State, to Mr. Dichman, min. to Colombia,

Aug. 23, 1878, MS. Inst. Colombia, XVII. 43. This instruction particularly refers to the case of the American schooner Lorine, and the alleged arbitrary action of the Colombian authorities with regard to her.

Subsequently, the Department of State expressed regret that, in spite of the

diplomatic agreement of 1876, the execution of the law of 1875 was “ likely to be persevered in." (Mr. Evarts, Sec. of State, to Mr. Dich

man, min. to Colombia, Feb. 4, 1879, MS. Inst. Colombia, XVII. 71.) As to the conclusion of a protocol providing for the deposit of ships' papers

with the consuls, whereupon the law of 1875, though it remained unrepealed, was regarded by the Colombian Government as a dead letter, see Mr. Evarts, Sec. of State, to Messrs. Shipman, Barlow, Larocque & Macfarland, June 14, 1879, 128 MS. Dom. Let. 449.

“This Government is of the opinion that the position of the free ports of Panama and Colon as mere stations on one of the world's most important highways should demand a simpler and less rigid enforcement of customs rules against the vehicles of mere transient passage than may be requisite to protect the fiscal interests at ports of entry. It is deemed that the mutual concessions and guarantees under which the transit was established entitle all those who honestly and pacifically use it to exceptional facilities, which may not be needed, or be even proper at other ports. It would be very much to be regretted if a contrary course should prevail in conflict with the true interests of Colombia herself, no less than of those who avail themselves of the privileges incidental to the transit.”

Mr. Frelinghuysen, Sec. of State, to Mr. Scruggs, Mar. 6, 1883, MS. Inst.

Colombia, XVII. 329.

It was

Sept. 25, 1885, the Colombian Government issued a decree, in execution of law 53 of 1881, establishing on Dec. 1, 1885, custom houses at Panama and Colon, and imposing on importations into the Republic the same customs duties as at other ports, less 40 per cent. also announced that the same customs regulations would be enforced at Colon and Panama as at other ports. The United States, while observing that the guarantee of Art. XXXV. of the treaty of 1846 was “limited to equal treatment of American goods with those of native Colombians or of the most favored nation, with an exemption from customs duties in the case of merchandise, etc., passing over the transit to countries beyond,” and did not impose on Colombia a "treaty obligation to make Colon and Panama free ports,” said that the “whole tenor" of the article was that nothing should be allowed “to hinder the free transit of persons and goods passing over the Isthmus, from ocean to ocean, to countries beyond," and that “should the collection of duties on imports into Colombia at Aspinwall (Colon] and Panama be enforced in such a way as to hamper the stipulated free transit this Government would feel bound to complain.”

Mr. Bayard, Sec. of State, to Mr. Jacob, min. to Colombia, Nov. 3, 1885, For.

Rel. 1885, 223; Mr. Porter, Assist. Sec. of State, to Messrs. Lazarus &
Co., Oct. 31, 1885, id. 229. See, also, For. Rel. 1885, 226--228.

Aug. 27, 1855, the legislative assembly of the State of Panama

passed an act imposing a tax of 20 cents a ton on Tonnage taxes.

steamers and 40 cents a ton on sailing vessels resorting to the ports of Colon and Panama. By a decree of the executive of Panama, British mail steamers were exempted from these duties. Under the circumstances, the Department of State, in a note to the Colombian minister at Washington, Oct. 23, 1855, protested against the duties, both as a violation of Art. XXXV: of the treaty of 1846, guaranteeing a free transit across the Isthmus, and as a violation of Art. VI., prohibiting discriminating duties.

Meanwhile, the Executive Power of New Granada, by a resolution of October 14 (or Oct. 11), 1855, passed with the unanimous consent of the council, declared that the law of the State of Panama (Aug. 27, 1855) was inapplicable to the ports of Colon and Panama. Information of this action of the national authorities was conveyed to the Department of State by General Herran, the Colombian minister at Washington, Oct. 26, 1855, and was received by the Department with “great gratification.” A similar expression of satisfaction was made to Mr. Bowlin, United States minister at Bogota, who had, in the absence of ipsiructions, exerted himself to secure the adjustment of the question with the Government of New Granada.

Mr. Marcy, Sec. of State, to Gen. Herran, Colombian min., Oct. 23, 1855,

MS. Notes to Colombia, VI. 50; same to same, Nov. 17, 1855, id. 52; Mr.
Marcy to Mr. Bowlin, Dec. 17, 1857, MS. Inst. Colombia, XV. 210; Mr.
Marcy to Gen. Herran, Dec. 22, 1856, MS. Notes to Colombia, VI. 57.

Although the National Executive, in overruling the action of the State of Panama, pronounced it to be antagonistic to "considerations of justice and good faith,” a bill was afterwards introduced into the National Congress and was reported to have been passed to enforce the collection of the tonnage tax under national authority. The United States protested against this measure on the ground (1) that it was contrary to the clear import of the treaty of 1816; (2) that it was contrary to the solemn pledge given not only to the railroad compary but to the whole world that vessels resorting to the ports of Colon and Panama, in connection with any road across the Isthmus, should be exempt from tonnage duties; (3) that it was a palpable violation of the rights of citizens of the United States who had embarked their capital in the railroad, and, besides constituting a breach of contract with the company, was injurious to the commerce of the United States. In view of the “strong features” of the case, the United States decided “to resist the collection of the tonnage tax on American vessels resorting to the harbors of Aspinwall and Panama, with freight or passengers for the railroad.” At the same time the hope was expressed that the Congress of New Granada would repeal “their obnoxious law relative to tonnage as well as the equally obnoxious and still more extortionate law in respect to foreign mails.”

Mr. Marcy, Sec. of State, to Mr. Bowlin, min. to Colombia, Dec. 31, 1856,

MS. Inst. Colombia, XV. 246.
See, also, Mr. Thomas, Assist. Sec. of State, to Mr. Corwine, consul at

Panama, Jan. 3, 1857, 20 Desp. to Consuls, 438; Mr. Cass. Sec. of State,
to Mr. Dallas, min. to England, April 21, 1857, MS. Inst. Gr. Br. XVII.
72. Mr. Dallas was instructed to explain the demands of the United
States to Lord Clarendon, should the latter refer to the subject in

conversation. June 27, 1857, the Congress of New Granada passed an act "recognizing the validity of the tonnage tax ..., renewing it in fact, and directing the application of the proceeds to certain specified objects as a subsisting source of revenue.” With reference to this statute, the Department of State said: “The decided opposition of this Government to the imposition of these taxes has been communi

cated to the Government of New Granada, and in addition it has likeWTSO w heen made known that the attempt to collect a tonnage tax or a correspondence taser would be resisted by the United States. This determination was adopted and avowed by the late administration, and the President on full consideration concurs in its decision.”

Mr. Cass, Sec. of State, to Gen. Herran, Colombian nihain., Sept. 10, 1857,

MS. Notes to Colombia, VI. 71.
This determination was again expressed, with reference to a 1 report that a

bill had passed the Colombian House of Representatives and was pend-
ing before the Senate to repeal the act of 1835, " which ple dged an
exemption from all tonnage duties in the cantons of Porto Bello and
Panama, a pledge offered to the world in order to draw foreign capital
and enterprise to the construction of a canal or railroad, and which
to continue in force for the term of twenty years from the openind of
such route.” It was understood that the passage of the bill would be
followed by the imposition of the tonnage tax. (Mr. Cass, Sec. of Statyje,
to Gen. Herran, Colombian min., June 4, 1858, MS. Notes to Colombia

was

VI. 77.)
See, particularly, the full and able argument on the subject of the tonnage

tax in Mr. Cass, Sec. of State, to Mr. Jones, min. to Colombia, April 30,
1859, MS. Inst. Colombia, XV. 268, with a list of previous diplomatic

papers on the subject. The preceding position of the United States is impliedly approved in Mr.

Black, Sec. of State, to Mr. Jones, Feb. 8, 1861, MS. Inst. Colombia,

XV. 314.
See, also, Mr. Seward, Sec. of State, to Mr. Vanderbilt, Pres., Atlantic &

Pacific S. S. Co., June 12, 1861, referring to a decision of the Supreme
Court of New Granada, adverse to the grounds assumed by the com-
pany “in relation to the illegality of the law of Panama of 19th Sep-
tember, 1857, concerning taxes." (54 MS. Dom. Let. 173.)

“I do not feel called upon to discuss at length the subject of the commercial tax levied by the State of Panama, as referred to in your No. 13, of the 27th December last, for, since the receipt of that communication, I have examined the instructions of my predecessors Secretaries Cass and Marcy, and I find no reason for reversing the policy

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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 satisfied 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 Government 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

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