was

provided for the arbitration of differences, which left each state free to decide in each case whether it would invite arbitration, or, if invited, would accept it.

Somewhat superfluously the signatory powers in the First Hague Conference stipulated to "reserve to themselves the right to conclude * * * new agreements, general or special, with a view of extending the obligation to submit controversies to arbitration." The "epidemic" of arbitration treaties which followed the First Hague Conference showed the same hesitancy on the part of nations to give to arbitration a definite and unconditional jurisdiction. Of the fifty-odd treaties which were signed "with a view of extending the obligation" to arbitrate, only three or four made this method of redress obligatory upon the contracting powers. With these three or four exceptions, no definite subjects of international dispute were unconditionally segregated for settlement by arbitration. Each state reserved for its own decision, whenever a question of difference should arise, whether the particular question should be submitted. If at such time, which would ordinarily be a time of more or less. national excitement and feeling, the state should decide that it was compatible with its "vital interests," "national honor," "independence," or constitution" to arbitrate, then it might extend an invitation, or accept an invitation, to adjust the difference by arbitration. In short, neither the conventions of the First Hague Conference nor those which followed between particular states "extending the obligation" (except as noted) placed the slightest legal restriction upon the use of force in order to secure the settlement of an international dispute.

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Such was the situation which faced the Second Hague Conference when it convened. To overcome the hesitancy which all statesmen feel about solemnly binding their governments to obligatory arbitration, the subject was adroitly approached from another side. It has been arranged that the creditor states, who may from time to time feel the necessity of protecting their subjects against the delinquencies of debtor states, shall agree to give to arbitration a definite jurisdiction whenever a debtor state, with whom a dispute has arisen in respect to "dettes contractuelles," shows a willingness

to have the controversy settled by recourse to legal principles instead of armed force. A debtor state is protected by the law until it puts itself outside the law that is, outside of the three reasonable reservations of the present convention. When a debtor state in a dispute over "dettes contractuelles" (1) refuses or fails to respond to an offer to arbitrate, or (2) in case of acceptance makes impossible the formulation of the agreement necessary to an international arbitration, or (3) after the arbitration has taken place fails to carry out the award rendered, a creditor state may resort to armed force to compel a settlement of the controversy. As was pointed out by the eloquent delegate from Brazil, Señor Ruy Barbosa, in the subcommittee which had the American proposal under consideration, the reservations in this convention, expressly permitting the use of armed force, were only such as would necessarily be implied in any scheme of obligatory arbitration which should omit to state them expressly.

From its first introduction in the conference, the American proposal enjoyed the almost unqualified approval of the delegations of Germany, Great Britain, France, Japan, Russia, Italy, AustriaHungary, Portugal, and Spain. Nor was it entirely overlooked by these delegations that the convention embodied obligatory arbitration. The President of the Conference, M. Léon Bourgeois, whose attention has long been unremittingly given to advancing this form of arbitration, declared in the subcommittee: "The delegation of France will vote favorably on the proposal of the United States (surtout parce que nons y voyons un cas d'arbitrage obligatoire), especially because we see in it a proposition of obligatory arbitration." Baron Marschall von Bieberstein, the very able head of the German delegation, at once rose and declared that he did "not share this view" of the American project. This episode had particular interest because the convention, above all others before the conference of special solicitude to M. Bourgeois, was the one which proposed in direct terms the adoption of obligatory arbitration, and its defeat was largely due to the powerful objections made to it by Baron von Bieberstein, who contended that the states of the world were yet too inexperienced in arbitration to embark upon solemn

treaties of obligatory arbitration. Difference of opinion existed among the delegates as to whether the American proposal actually involved obligatory arbitration. Some days before the colloquy between M. Bourgeois and Baron von Bieberstein, M. Beldiman, of the Roumanian delegation, had asked in the subcommittee: "Is it not, indeed, strange that we should adopt this new convention providing obligatory arbitration in the very matters (public bonds) in which the honor of states and their vital interests may be in the highest degree concerned when we were unwilling to adopt the convention of 1899 on obligatory arbitration, which expressly excepted all questions touching the national honor and the vital interests of states?" Strangely enough the delegations of Belgium and Roumania alone supported this objection, although the obvious effect of the American convention is to fix absolutely the right of a debtor state to insist on the arbitration of the contractual claims of foreign subjects. Indeed, by the lack of those absolving phrases "national honor" and "vital interests," the present convention is more obligatory than the so-called obligatory arbitration conventions.

HISTORY OF THE AMERICAN PROPOSAL

Before noting some of the points in respect to the probable scope of the term "dettes contractuelles," it may be well to consider briefly the history lying back of and involved in the formulation of this

particular convention.

On December 18, 1902, it will be recalled, Great Britain, Germany, and Italy united in the use of armed force to compel the payment by Venezuela of the claims alleged to be due their respective subjects. While the hostilities were in progress and some of the custom-houses of Venezuela were being seized, Dr. Drago, the Argentine Minister for Foreign Affairs, addressed to the Argentine minister at Washington an instruction in which he said that inasmuch as "the origin of the disagreement" was due in part to "damages suffered by the subjects of the claimant nations during the revolutions and wars" which had recently occurred in Venezuela, and in part to the delayed "payments on the external debt "

of Venezuela, he proposed to seize the occasion, "suggested by the events that have taken place," to set forth "some considerations with reference to the forcible collection of public debts." He did so; and what he advocated, or is supposed to have advocated, gave rise to the so-called "Drago Doctrine."

In his instruction, Dr. Drago omitted to mention that Germany in July, 1901, had invited Venezuela to arbitrate the claims of her subjects in dispute, and that Venezuela had replied: "You insist that Germany shall participate in the examination of the claims, and Venezuela, on behalf of her sovereignty and by virtue of her domestic legislation, maintains that such participation is wholly inadmissible." Dr. Drago also omitted to mention that on December 7, 1902, the British Government called the attention of Venezuela to the claims of British subjects, including therein " an arrangement of the foreign debt," and requested that the justice of all these claims be at once admitted in principle, that some of them should be immediately paid, and that for the others Venezuela should "consent to accept the decisions of a mixed commission with respect to the amount and the guaranty for payment." Dr. Drago failed to note, also, in his instruction, that Venezuela, in replying to the British ultimatum, had made no reference to the employment of a mixed commission to determine the claims in dispute, but had contented herself by insisting on the adequacy and finality of her national laws and by stating that "the so-called foreign debt ought not to be and never had been a matter of discussion beyond the legal guaranties found in the law of Venezuela on the public debt." Likewise, Dr. Drago failed to mention that Italy, the third blockading Power, had on December 11, 1902, requested Venezuela to "be good enough to declare itself disposed to give to the claims of her subjects the attention which may put an end to further discussion, accepting the opinion of a mixed commission," and finally that Venezuela had answered this note in the same fashion she had those of Germany and Great Britain by ignoring the proffer of arbitration and insisting that her national laws were conclusive of the merits of the claims in controversy.

What Dr. Drago did in his famous instruction was to point out

certain special considerations in respect to "the external debt” of states (the public bonds "floated" abroad) which ought to induce the adoption by the states of the American continents of a policy to this effect: "The public debt of an American state can not occasion armed intervention, nor in any wise the actual occupation of the territory of the American nations, by a European power." He contended that "the collection of loans by force implies territorial occupation to make it effective; that territorial occupation means the suppression of the governments of the countries on which it is imposed;" that there was considerable European expression in favor of establishing colonies in South America; and that, he feared, under the guise of "financial interventions," the yearnings, evidenced by that expression, might be suddenly stimulated and gratified. His point, as he himself has since stated, was "before and above all a statement of policy" which he wished to see adopted by the states of North and South America; it was something that should be supplementary to, if not a further definition of, the Monroe Doctrine.

How far the particular claims based on "the external debt" of Venezuela played a part in prompting the three blockading Powers to resort to armed force is difficult to determine. It is likely that their importance as an active cause for the armed intervention has been vastly over-emphasized. However, each of the treaties, which the blockading Powers made with Venezuela, as a condition to raising the blockade, contained a stipulation that the Venezuelan Government "undertakes to enter into a fresh arrangement respecting the external debt of Venezuela with a view to the satisfaction of the claims of the bond-holders. This arrangement shall include a definition of the sources from which the necessary payments are to be provided." As a consequence of these special stipulations respecting the public bonds of Venezuela, only four claims arising from bonds were presented to the ten international arbitration tribunals which sat at Caracas in the summer of 1903 to decide the private claims of ten Powers against Venezuela. Of these only two were allowed.

Belgium presented one such claim in the case of the Compagnie Générale des Eaux de Caracas v. Venezuela. The umpire took juris