The British Embassy to the Department of State

No. 294


The British Embassy have the honour to refer to their memorandum No. 142 of the 29th January last with regard to the proposed settlement of British claims against the Nicaraguan Government.

The suggestion was made in this memorandum that it was advisable, in view of the drastic reduction made by the Commission in the claim of the London Bank of Central America, that this claim should be separated from the remaining items included in the “Legation claim”, and that the remaining items should be settled on the lines suggested by the Commission, the Bank claim being reserved for future settlement.

The Embassy was informed verbally by the Department on the 7th instant that the Commission was unwilling to agree to the separation of the Bank claims from the other claims, and had suggested the payment of a sum of £9,000.0.0. in cash and £1,000.0.0. in bonds in settlement of the whole Legation claim. The matter being somewhat urgent the British Government was informed by telegraph of this verbal reply, and the Embassy have now received instructions to inform the Department that, if the Nicaraguan Claims Commission are unable to consent to the separation of the Bank Claim from the others the British Government will have no alternative but to refuse the offer made by the Commission, reluctant though they are to adopt such a course. The result of this will presumably be that it will become necessary to deal with each claim separately, and His Majesty’s Government fear that an unfortunate impression may [Page 663] be produced when the situation is explained, as it will seem that the value of the Legation claim was damaged rather than enhanced by the exchange of notes on the subject between the British Minister and the Nicaraguan Government, which took place after a full investigation and discussion of the claims. If, on the other hand, the Bank claim was to be separated from the other items, the only result would be that this claim would have to be considered anew, the remaining items being settled, and this position would, in the opinion of the British Government, be much preferable to that which would result from the re-opening of the whole question of the Legation claim.

The British Government also find themselves unable to concur in the view which they understand is taken by the Commission of the Bank Claim. This claim was the subject of a very careful investigation, as a result of which it was reduced from the original figure of £80,000.0.0. to £10,000.0.0. with the object of facilitating a settlement. If it should become necessary to refer the claim to arbitration it might be difficult to avoid re-opening the question of its amount.

For the above reasons the British Government are most anxious to assent to any settlement of the Legation claim which could properly be accepted by them, having due regard to the interests of the claimants, and the British Embassy have been instructed to enquire whether the United States Government would not feel justified in using their good offices with a view to securing such a settlement, and thus taking advantage of the present opportunity for terminating this question.