of its condition, would go far to secure us against future suspensions

of specie payments.

Congress, in my opinion, possess the power to pass a uniform bankrupt law applicable to all banking institutions throughout The United States, and I strongly recommend its exercise. This would make it the irreversible organic law of each bank's existence, that a suspension of specie payments shall produce its civil death. The instinct of self-preservation would then compel it to perform its duties in such a manner as to escape the penalty and preserve its

life.

The existence of banks and the circulation of bank paper are so identified with the habits of our people, that they cannot, at this day, be suddenly abolished without much immediate injury to the country. If we could confine them to their appropriate sphere, and prevent them from administering to the spirit of wild and reckless speculation by extravagant loans and issues, they might be continued with advantage to the public.

But this I say, after long and much reflection: If experience shall prove it to be impossible to enjoy the facilities which wellregulated banks might afford, without at the same time suffering the calamities which the excesses of the banks have hitherto inflicted upon the country, it would then be far the lesser evil to deprive them altogether of the power to issue a paper currency, and confine them to the functions of banks of deposit and discount.

Our relations with foreign Governments are, upon the whole, in a satisfactory condition.

The diplomatic difficulties which existed between the Government of The United States and that of Great Britain at the adjournment of the last Congress have been happily terminated by the appointment of a British Minister to this country, who has been cordially received.

Whilst it is greatly to the interest, as I am convinced it is the sincere desire, of the Governments and people of the two countries to be on terms of intimate friendship with each other, it has been our misfortune almost always to have had some irritating, if not dangerous, outstanding question with Great Britain.

Since the origin of the Government we have been employed in negotiating treaties with that power, and afterwards in discussing their true intent and meaning. In this respect, the convention of April 19, 1850,* commonly called the Clayton and Bulwer Treaty, has been the most unfortunate of all; because the two Governments place directly opposite and contradictory instructions upon its first and most important article. Whilst, in The United States, we believed that this Treaty would place both Powers upon an exact

* Vol. XXXVIII. Page 4.

equality by the stipulation that neither will ever "occupy, or fortify, or colonize, or assume or exercise any dominion" over, any part of Central America, it is contended by the British Government that the true construction of this language has left them in the rightful possession of all that portion of Central America which was in their occupancy at the date of the Treaty: in fact, that the Treaty is a virtual recognition on the part of The United States of the right of Great Britain, either as owner or protector, to the whole extensive coast of Central America, sweeping round from the Rio Hondo to the port and harbour of San Juan de Nicaragua, together with the adjacent Bay Islands, except the comparatively small portion of this between the Sarstoon and Cape Honduras. According to their construction, the Treaty does no more than simply prohibit them from extending their possessions in Central America beyond the present limits. It is not too much to assert, that if in The United States the Treaty had been considered susceptible of such a construction, it never would have been negotiated under the authority of the President, nor would it have received the approbation of the Senate. The universal conviction in The United States was, that when our Government consented to violate its traditional and timehonoured policy, and to stipulate with a foreign Government never to occupy or acquire territory in the Central American portion of our own continent, the consideration for this sacrifice was that Great Britain should, in this respect at least, be placed in the same position with ourselves. Whilst we have no right to doubt the sincerity of the British Government in their construction of the Treaty, it is at the same time my deliberate conviction that this construction is in opposition both to its letter and its spirit.

Under the late Administration negotiations were instituted be tween the two Governments for the purpose, if possible, of removing these difficulties; and a Treaty having this laudable object in view was signed at London on the 17th October, 1856, and was submitted by the President to the Senate on the following 10th of December. Whether this Treaty, either in its original or amended form, would have accomplished the object intended without giving birth to new and embarrassing complications between the two Governments, may perhaps be well questioned. Certain it is, however, it was rendered much less objectionable by the different amendments made to it by the Senate. The treaty, as amended, was ratified by me on the 12th March, 1857, and was transmitted to London for ratification by the British Government. That Government expressed its willingness to concur in all the amendments made by the Senate with the single exception of the clause relating to Ruatan and the other islands in the Bay of Honduras. The Article in the original Treaty, as submitted to the Senate, after reciting that these islands and their

inhabitants "having been, by a convention bearing date the 27th day of August, 1856, between her Britannic Majesty and the Republic of Honduras, constituted and declared a free territory under the sovereignty of the said Republic of Honduras," stipulated that "the two contracting parties do hereby mutually engage to recognize and respect in all future time the independence and rights of the said free territory as a part of the Republic of Honduras."

Upon an examination of this Convention between Great Britain and Honduras of the 27th August, 1856, it was found that, whilst declaring the Bay Islands to be "a free territory under the sovereignty of the Republic of Honduras," it deprived that Republic of rights without which its sovereignty over them could scarcely be said to exist. It divided them from the remainder of Honduras, and

gave to their inhabitants a separate Government of their own, with legislative, executive, and judicial officers, elected by themselves. It deprived the Government of Honduras of the taxing power in every form, and exempted the people of the islands from the performance of military duty, except for their own exclusive defence. It also prohibited that Republic from erecting fortifications upon them for their protection-thus leaving them open to invasion from any quarter; and, finally, it provided "that slavery shall not at any time hereafter be permitted to exist therein."

Had Honduras ratified this Convention, she would have ratified the establishment of a State substantially independent within her own limits, and a State at all times subject to British influence and control. Moreover, had The United States ratified the Treaty with Great Britain in its original form, we should have been bound "to recognize and respect in all future time" these stipulations to the prejudice of Honduras. Being in direct opposition to the spirit and meaning of the Clayton and Bulwer Treaty as understood in The United States, the Senate rejected the entire clause, and substituted in its stead a simple recognition of the sovereign right of Honduras to these islands in the following language: "The two Contracting Parties do hereby mutually engage to recognize and respect the Islands of Ruatan, Bonaco, Utila, Barbaretta, Helena, and Morat, situate in the Bay of Honduras, and off the coast of the Republic of Honduras, as under the sovereignty and as part of the said Republic of Honduras."

Great Britain rejected this amendment, assigning as the only reason that the ratifications of the Convention of the 27th August, 1856,* between her and Honduras, had not been "exchanged, owing to the hesitation of that Government." Had this been done, it is stated that "Her Majesty's Government would have had little difficulty in agreeing to the modification proposed by the Senate,

• Vol. XLVI. Page 158.

which then would have had in effect the same signification as the original wording." Whether this would have been the effectwhether the mere circumstance of the exchange of the ratifications of the British Convention with Honduras, prior in point of time to the ratification of our Treaty with Great Britain would, "in effect," have had "the same signification as the original wording," and thus have nullified the amendment of the Senate, may well be doubted. It is, perhaps, fortunate that the question has never arisen.

The British Government, immediately after rejecting the Treaty as amended, proposed to enter into a new Treaty with The United States, similar in all respects to the Treaty which they had just refused to ratify, if The United States would consent to add to the Senate's clear and unqualified recognition of the sovereignty of Honduras over the Bay Islands the following conditional stipula tion: "Whenever and as soon as the Republic of Honduras shall have concluded and ratified a Treaty with Great Britain, by which Great Britain shall have ceded, and the Republic of Honduras shall have accepted, the said islands, subject to the provisions and conditions contained in such Treaty."

This proposition was, of course, rejected. After the Senate had refused to recognize the British Convention with Honduras of the 27th August, 1856, with full knowledge of its contents, it was impossible for me, necessarily ignorant of "the provisions and conditions" which might be contained in a future Convention between the same parties, to sanction them in advance.

The fact is, that when two nations like Great Britain and The United States, mutually desirous as they are, and I trust ever may be, of maintaining the most friendly relations with each other, have unfortunately concluded a Treaty which they understand in senses directly opposite, the wisest course is to abrogate such a Treaty by mutual consent, and to commence anew. Had this been done promptly, all difficulties in Central America would most probably ere this have been adjusted to the satisfaction of both parties. The time spent in discussing the meaning of the Clayton and Bulwer Treaty would have been devoted to this praiseworthy purpose, and the task would have been the more easily accomplished because the interest of the two countries in Central America is identical, being confined to securing safe transits over all the routes across the isthmus.

Whilst entertaining these sentiments, I shall nevertheless not refuse to contribute to any reasonable adjustment of the Central American questions which is not practically inconsistent with the American interpretation of the Treaty. Overtures for this purpose have been recently made by the British Government in a friendly spirit, which I cordially reciprocate; but whether this renewed effort

will result in success I am not yet prepared to express an opinion. A brief period will determine.

With France our ancient relations of friendship still continue to exist. The French Government have in several recent instances, which need not be enumerated, evinced a spirit of good will and kindness towards our country which I heartily reciprocate. It is, notwithstanding, much to be regretted that two nations whose productions are of such a character as to invite the most extensive exchanges and freest commercial intercourse, should continue to enforce ancient and obsolete restrictions of trade against each other. Our commercial Treaty with France is, in this respect, an exception from our Treaties with all other commercial nations. It jealously levies discriminating duties both on tonnage and on articles, the growth, produce, or manufacture of the one country, when arriving in vessels belonging to the other.

More than forty years ago, on the 3rd March, 1815,* Congress passed an Act offering to all nations to admit their vessels laden with their national productions into the ports of The United States upon the same terms with our own vessels, provided they would reciprocate to us similar advantages. This Act confined the reciprocity to the productions of the respective foreign nations who might enter into the proposed arrangement with The United States. The Act of 24th May, 1828,† removed this restriction, and offered a similar reciprocity to all such vessels, without reference to the origin of their cargoes. Upon these principles our commercial Treaties and arrangements have been founded, except with France, and let us hope that this exception may not long exist.

Our relations with Russia remain, as they have ever been, on the most friendly footing. The present Emperor, as well as his predecessors, have never failed, when the occasion offered, to manifest their good will to our country; and their friendship has always been highly appreciated by the Government and people of The United States.

With all other European Governments, except that of Spain, our relations are as peaceful as we could desire. I regret to say that no progress whatever has been made, since the adjournment of Congress, towards the settlement of any of the numerous claims of our citizens against the Spanish Government. Besides, the outrage committed on our flag by the Spanish war-frigate Ferrolana on the high seas, off the coast of Cuba, in March, 1855, by firing into the American mail-steamer El Dorado, and detaining and searching her, remains unacknowledged and unredressed. The general tone and temper of the Spanish Government towards that of The United States are much to be regretted. Our present Envoy Extraordinary * Vol. II. Page 985. Vol. XV. Page 1032.