In respect to the third class of claims, viz: those based upon contract, including for the most part those of bondholders and investors whose investments have been guaranteed by the defaulting government, the few authorities who discuss this question appear to be divided in their opinions, with a majority opposed to forcible collection. The right of a state to use coercive measures in the collection of debts of this nature is asserted, e. g., by Hall, Phillimore, and Rivier; but it is denied by Calvo, Pradier-Fodéré, Rolin-Jaequemyns, F. de Martens, Despagnet, Kebedgy, and Nys.34

It is argued, on the one hand, that the public faith, the so-called "honor of the prince," is particularly engaged in the case of contracts of this nature, inasmuch as a government cannot be sued without its own consent; that creditors may have no other means of redress than that of appealing to the government of the state to which they owe allegiance; that stock in the public debt held even by an enemy is exempt from seizure and its interest payable even in time of war; and that states, being in legal theory free and independent and having no common superior to control or check them in any way, each state has therefore the legal right of deciding for itself when its rights have been invaded and of determining the conditions under which it may use force for any purpose whatsoever.35

On the other hand, it is urged that hazardous loans and investments should be discouraged as much as possible; that those making them

4 Hall, §86, pp. 277-279; Phillimore, ii, pt. v, ch. 3, pp. 26-30; Rivier, i, liv, iv, ch. 2, §20, pp. 272–273; Calvo, i, §205, p. 350; Pradier-Fodéré, i, §405, pp. 620 623; Rolin-Jaequemyns in R. D. I., t. i (1869), pp. 145 ff.; F. de Martens in R. D. I., t. xix, p. 386 and in a recent pamphlet, entitled Par la Justice vers la Paix; Despagnet, Cours, §258; Kebedgy in R. D. I. P., t. i, p. 261, and Nys, ii, p. 225.

On April 17, 1903, the publicist Calvo, then representing the Argentine Republic at Paris, addressed a circular letter to a number of leading authorities on international law, asking for their views on the question raised by the Drago note. Of the ten opinions published in the Revue de Droit International (see R. D. I. for 1903, pp. 597– 623), six (those of Passy, Moynier, Campos, Férand-Giraud, Weiss and Olivecrona) were in substantial agreement with the principals of the Drago note. Four (those of Westlake, Holland, Charmes and Fiore) were more reserved. While apparently not in absolute disagreement with the principles of the Drago note, they held either that it needed qualification or that the question was undecided. For a brief analysis of these opinions, see Percy Bardwell in the Green Bag for July, 1906, pp. 378-379.

35 Such is, e. g., the argument of G. W. Scott in the North American Review for October 5, 1906, pp. 603–604.

do so, as a rule, with a full knowledge of the risks incurred and in the hope of exceptionally large returns; that the natural penalty of a failure on the part of a state to fulfill its obligations is a loss of credit; that foreigners cannot expect to be preferred to native creditors; that coercive measures for the collection of bad debts are never employed except against weaker states and are likely to be used as a pretext for aggression or conquest; and that

it is an inherent qualification of all sovereignty that no proceedings for the execution of a judgment may be instituted or carried out against it."

The views of British and American statesmen are not in complete harmony on this important subject, although the general policy of Great Britain and the United States has been substantially the same.37 The English view, as stated by Lord Palmerston, in 1848, in a circular addressed to representatives of Great Britain in foreign countries, insists that the question as to whether such claims are to be made subject of diplomatic negotiation is

for the British government entirely a question of discretion, and by no means a question of international right.

With a view, however, of discouraging the investment of British capital in hazardous loans to foreign governments and of encouraging investment in profitable undertakings at home,

the British government has hitherto thought it the best policy to abstain from taking up as international questions the complaints made by British subjects against foreign governments which have failed to make good their engagements in regard to such pecuniary transactions. But he intimates that such loss might become so great as to make a change of policy on the part of the British government advisable. These views of Lord Palmerston were reaffirmed by Lord Salisbury in January, 1882, and by Premier Balfour in December, 1902.38

36 Señor Drago in note, cited above.

37 Except for the British intervention in Mexico, Egypt and Venezuela. But in all these cases those representing the government of Great Britain denied that they intervened primarily for the sake of the bondholders.

38 For the text of this circular, see Hall, note on pp. 278–279 (3d ed.), and Phillimore ii, t. v, ch. 3, pp. 27-28. In 1861, Lord John Russell, in a communication to Sir C. I. Wyke, stated that "it has not been the custom of Her Majesty's government, although they have always held themselves free to do so, to interfere authoritatively on behalf of those who have chosen to lend their money to foreign governments."

The policy of the United States39 in dealing with claims based on contracts was thus stated by Secretary Fish in 1871:

Our long-settled policy and practice has been to decline the formal intervention of the government except in cases of wrong and injury to person and property such as the common law denominates torts and regards as inflicted by force, and not the result of voluntary engagements or contracts.

In cases founded upon contract, the practice of this government is to confine itself to allowing its minister to exert his friendly good offices in commending the claim to the equitable consideration of the debtor without committing his own government to any ulterior proceedings."

In 1881, Secretary Blaine laid it down as "a rule of universal acceptance and practice" that a person

voluntarily entering into a contract with the government of a foreign country or with the subjects or citizens of such foreign powers, for any grievance he may have or losses he may suffer resulting from such contract, is remitted to the laws of the country with whose government or citizens the contract is entered into for redress."

The representatives of the United States at the third Pan-American conference, which met at Rio de Janeiro during the months of July and August, 1906, were given the following instructions:

It has long been the established policy of the United States not to use its armed forces for the collection of ordinary contract debts due to its citizens by other governments. We have not considered the use of force for such a purpose consistent with that respect for the independent sovereignty of other members of the family of nations, which is the most important principle of international law and chief protection of weak nations against the oppression of the strong. It seems to us that the practice is injurious in its general effect upon the relations of nations and upon the welfare of weak and disordered states, whose development ought not be encouraged in the interests of civilization; that it offers frequent temptation to bullying and oppression and to unnecessary and unjustifiable warfare. We regret that other powers, whose opinions and

39 For the opinions of American statesmen on this head, see Moore's and Wharton's Digest, $916, 918, 995-998; and §§231-232, respectively.

"Moore's Digest, vi, §995, p. 710. cf. Wharton, ii, §231, p. 656. "Wharton's Digest, ii, pp. 658-659. But exceptions have been made in cases where diplomacy furnished the only means of redress, as in case of non-performance of a government contract, or arbitrary confiscation of vested rights, or of annulment of charters or concessions. For examples, see Moore's Digest, vi, §§918, 996 and 997 and Wharton, ii, §232. "International commissions have frequently allowed claims based on the infraction of rights derived from contracts where the denial of justice was properly established," Moore, p. 718.

sense of justice we esteem highly, have at times taken a different view and have permitted themselves, though we believe with reluctance, to collect such debts by force. It is doubtless true that the non-payment of public debts may be accompanied by such circumstances of fraud and wrongdoing or violation of treaties as to justify the use of force. This government would be glad to see an international consideration of the subject which shall discriminate between such cases and the simple nonperformance of a contract with a private person, and a resolution in favor of reliance upon peaceful means in cases of the latter class.

It is not felt, however, that the conference at Rio should undertake to make such a discrimination or to resolve upon such a rule. Most of the American countries are still debtor nations, while the countries of Europe are the creditors. If the Rio conference, therefore, were to take such action it would have the appearance of a meeting of debtors resolving how their creditors should act, and this would not inspire respect. The true course is indicated by the terms of the program, which propose to request the second Hague conference, where both creditor and debtors will be assembled, to consider the subject."

It will thus be seen that whereas Great Britain has, generally speaking, refrained from diplomatic intervention in such cases purely from motives of policy or expediency, the United States appears to have been restrained, to a certain extent at least, by principle and by a regard for what it believed to be the law of nations.

When we turn to international practice, which is, generally speaking, the basis of international law, we find, it is true, a considerable number of instances not merely of pacific or diplomatic interposition, but of actual armed intervention on financial grounds, as e. g., in Mexico Egypt, Portugal, Nicaragua, Venezuela, and in Turkey. But a closer scrutiny and reflection will not fail to convince us that these cases are altogether exceptional and only serve to prove that the ordinary everyday rule is that of non-intervention.

It is obvious that the question of the forcible collection of all claims of a pecuniary nature (we are not speaking of diplomatic intervention or interposition) must be decided in accordance with the principles governing the intervention of one state in the internal affairs of another.

The subject of intervention is one of great difficulty and complexity. This arises from the fact that there exists nowhere else within the wide range of international relations such an apparent conflict between politi

42 From President Roosevelt's recent message to Congress of December 4, 1906.

cal theory or fundamental principles on the one hand and actual international practice on the other. The whole modern or Grotian system of international law rests upon the doctrine of the absolute legal equality and complete independence of fully sovereign states. This presupposes full liberty of action on the part of each sovereign within his own sphere or jurisdiction and non-interference in the external or internal affairs of other sovereigns. The rule or doctrine of non-intervention is therefore a necessary corollary of the doctrine or principle of the complete equality and independence of sovereign states and is a fundamental principle of international law.

But international law is supposed to rest upon international practice as well as upon fundamental principles, and when we turn to examine the actual practice of sovereign states, and especially that of the great powers during the nineteenth century, we find numerous examples of armed intervention on all sorts of grounds and pretexts. Intervention on grounds of morality or humanity, e. g., to put an end to great crimes and slaughter or to various forms of cruelty and oppression (as in the case of religious persecution), to prevent the extermination of a race or a needless diffusion of blood, to assure the triumph of right and justice, etc.; intervention on grounds of policy or interest, e. g., to secure the balance of power or maintenance of political equilibrium in Europe, to enforce protection of the persons and property of citizens or subjects of the intervening state, to prevent the spread of political heresy or revolution, to advance the interests of civilization, etc.; interventions on so-called legal grounds, for the sake of self-preservation, to prevent or terminate the unjustifiable or illegal intervention of another state, to enforce treaties of guarantee or fundamental principles of international law: these are some of the grounds or pretexts which have been advocated as sufficient causes for armed intervention in particular cases.

Authorities on international law have always differed widely in their opinions as to what constitute legal or justifiable grounds for intervention or whether, indeed, there exists any such right at all. The only approach to unanimity is in respect to the right of self-preservation which is, properly speaking, not a law at all in the ordinary sense of that term as applied to positive rules and regulations, but is a fundamental right or principle which underlies and takes precedence of all