New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1904-03-04
PRECEDENTF0R WARFARE
Repudiation of Principle Of Equality
far Creditor Nations.
London. February "a

o.
,C,.-.a,,- Ease IN the Alaska pleadings The
s,~ist,- Of the court Of arbitration In the
NenozJe,s case has been based upon principles
lesa down by him IN his closely reasoned ar
sr.,r.eut. IEe is complimented AZ once by the
English press for having vindicated the memory
81 the late sir Michael Herbert and for having
obtained from the International aToitrauoh
tribunal a rcpudiatioa Of Mr.. Bowen's views
senoctire the equality OF creditor nations. Tech
ricany the decision is a triumph TOT Lora
r.ansdowne. who protested against Mr.. Bowen's
contentious as quite al variance with interna-
t,orri practice and with principles Of equity"
The arbitrators have been close constructionists
of the protocols signed at Washington after the
agreements which put an end TO the blockade
The three allied powers. according 70 the formal
Judgment had obtained in their agreement With
fire Venezuelan government recognition o. the
sYs.tce OF their claims and had no intention OF
,,e7oupcinc the rights and privileged position
which they had acquired by becoming parties
70 tbe protocols" ut was 10 the blockading
,,ovverr~ remarks The Times" that Venezuela
offered special guarantees for the fulhlment OF
her encagarnents. and good faith, the tribunal
declared. made Il incumbent upon them 10 con-
s-rue the nhrase all claims in the pourparlers
a. confined 70 the claims Of the allies" This is
esvorsl,l,, commented upon as common sense
view Of the matter. and the arbitrator are
rrafsed for their sagacity in brushing aside II
relevant issues
The English censors. in their dislike OF Mt.
yovenrs abr7pt diplomacy. overlook some OF
the consequences which must follow this new
r~ecedeut In international law. one IS me
necessity for prompt employment OF naval force
by ALI creditor nations whenever the signA i
raised for an International process Of distrain'
FOR seht. II Germany. for example, decides TO
fH0--c =
6uras or any other Spanish-American country
. defeul:irr IN financial obligations. England
II ,,,,,.. af once foin in the begereut operations
tr order to rrotect the claims Of her own SUD
se-ts Otherwise Germany alone VIII acquire
d. facto the privileged position by virtue OF
Selling few customs vessels and firing shol'
a. q crumbTng Spanish American fort. ms Il
SO ,~s,+ical Inference which Is 70 be drawn
from tho Venezuela case Germany. Great
Britain and Italy united In the blockade ana
cid not lift Il until they had received preIereh-
tial treatment TO the extent OF a payment OF
S2S0eOO outright Not satisfied with this eN-
action. they demanded preferential treatment
Tor their remaining claims out Of the 30 per cent
Of the total income OF the ports Of La Guayra
and Puerto Cabello: and the arbitrator now
affirm that they are entitled 10 st. because they
had acquired priority Of rights by virtue OF the
holligerent operations whereas the neutral
powers merely retained their previous status
and had not obtained fresh rights Germany.
which secured $4,000 Of the first payment for
claims presented, but not examined. now enjoys
with England and Italy the distinction OF being
q preferred creditor all remaining claims.
This favored position is held with the sanction
~ the arbitrators Notwithstanding the explicit
declaration OF the Venezuelan government I'm the
agreement with the benigerent power that 1T
haf no IA or
cent VIII be given exclusively 10 meet the claims
mentioned in the recent ultimatums Of the al
lied powers and the unsettled claims Of other
nations that existed when the said ultimatums
were presented" The double preference created
by this so-called pacific blockade must influence
all creditor nations hereafter. They VIII all be
represented by gunboats or cruisers when debts
ere TO be collected.
From one point Of view this decision is 20 be
commended. i viii enforce the necessity for
honesty I'm dealing with foreign creditors since
debtor countries. especially in Spanish America,
viii be exposed TO combined attacks from Eu-
ropean sauadrons whenever they evade their
financial responsibilities. Neither the United
States nor any other maritime power can afford
10 keep its warships out Of action IL any foreign
nag covers an ultimatum aad A menace OF bonn
bard:nent or blockade. Every navy viii be rep
resented in the next process OF debt collecting.
since equality has ceased TO be equity and a
government which attempted 20 deal fairly with
all its creditors has been ordered by the Hague
Tribunal 10 recognize the superior legality and
more impressive morality OF physical force ana
20 accord preferential treatment 10 the bellig-
erent nations. The precedent may be strange
one 20 come from court established by a peace
congress. but q viii be a warning to defaulting
governments 10 pay their debts under penalty
nv he
ships Of al maritime nations. They may be
convinced tina; honesty is the best policy for
ratiOns FOR men. when they appreciate the
fun force OF the argument from the records Of
The international tribunal Of arbitration that
bombardment creates de factO preference and
that neutrality is nos p safeguard against de-
probation OF valid claims. Certainly moral OF
some kind needed enforcement when SO many
debtor countries were repudating their fnan-
ciol obligations an5 paying high rates Of in
terest.
On another ground the decision is more OBJ
sectionable II is "a warrant for de- facto pref
ereuce for tho claims q belligerent power
when there is no recognized system OF CLASH
hcation OF creditors liens. recollect thar Lord
Avebury. who. as the president Of the corpora
tiOn % foreign bondhoide-s. was instrumental
in efectiug settlements OF foreign debts ag-
Fregatinr S5oe0e0e.0. may be considered an
expert. complained thai there was neither logic
nor justice in the method Of classification
adopted by the British government IN arranging
i-s claims against Venezuela. one 81 his griev-
Hnces was that boudholde,s were Disseminated
against beoa-s- sue, Sad subasittel 20 conSid-
cradle losses and accoW@d bonds in settlement
OF guaranteed claims. whereas industrial COM
panies ans other claimants representing un-
guaranteed and unsettled enterprises were al
lowed = preference. he argued with much force
that the status 81 English investors with valid