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Correspondence between England and America about British neutrality.

The Northern papers publish the diplomatic correspondence between Seward and Russell upon the subject of the cotton loan, Confederate cruisers, steam rams, &c. To show how completely England has been bullied by the Yankees in this matter we print a portion of the letters. With such timidity as is shown by the British Government, we may well be satisfied that nothing has been further from its intentions during this war than the "recognition" of the Confederate States.

The cotton loan.
Mr. Seward to Mr. Adams.

Department of State, Washington, April 10, 1863.
* * * * This Government has heard with surprise and regret that a loan has been made in London to the insurgents, with conditions of security and payment openly hostile to the United States, and it has good reasons for assuming that most or all of the moneys thus loaned are paid to British subjects residing in Great Britain for advances in money, labor, arms, military stores, and supplies used in filting out those hostile expeditions, in violation of the Queen's proclamation and of the enlistment acts of Great Britain, as well as of treaties and the law of nations. The President does not for a moment believe that her Majesty's Government have lent or will lend any sanction or approval to these proceedings of her Majesty's subjects; but he regrets that he is unable to perceive that any part of those transactions, so inimical to the United States, and apparently so universally known in Great Britain, have arrested the attention of her Majesty's Government, or encountered any opposition, or even any manifestation of its disapprobation or censure.

The loan made by European capitalists is a direct engagement with the armed insurgents who have assumed to control, supply, and deliver cotton for the reimbursement of the money advanced, with interest. You will give notice to Earl Russell that this transaction necessarily bringe to an end all concessions, of whatever form, that have been made by this Government for miligating or alleviating the rigor of the blockade in regard to the shipment of cotton and tobacco. Nor will any title of any person, whether citizen of the United States or subject of a foreign Power, to any cotton or merchandize, which title is derived from or through any pretended insurgent authority or other agent hostile to the United States be respected by this Government.

It would be to evince a want of frankness and good faith if we should fall to inform Great Britain that in this country the proceedings to which I have referred have come to be regarded, equally by the people and the Government, as tending to complicate the relations between the two countries in such a manner as to render it difficult, if not altogether impossible, to maintain and preserve friendship between them — a result which the President believes is as far from being desired by Great Britain as it is from being the policy or the wish of the United States. After the resort to the courts of the United Kingdom which the President has specially authorized as a sequel to the anticipations and remonstrance which you have made thus far without any effective result, this Government is not aware of any other measures remaining within its power to arrest the tendency I have described and to avert the calamities I have deprecated. If it be in the power of the British Government to suggest anything further that it may be thought possible and proper for the United States to do with that view, the suggestion will be received and considered with the utmost candor and respect.

You will, in such manner as shall seem most proper, bring these views to the knowledge of her Majesty's Government.

Earl Russell to Mr. Adams.

Foreign Office, April 2, 1863.

--Her Majesty's Government have not failed to consider, with the attention it deserved the letter which you addressed to me on the 14th ultimo, in reply to my letter of the 9th ultimo, on the subject of the intercepted correspondence which you had alleged went to show a deliberate attempt to establish within the limits of the United Kingdom a system of action in direct hostility to the Government of the United States.

I have now the honor to observe to you that, while you withhold your acquiescence in the opinion expressed by me of that correspondence, and state that you shall transmit a copy of my note, with profound regret, to your Government, you, nevertheless, do not controvert the principal positions assumed in that note.

You do not deny, first, that it is lawful for her Majesty's subjects to lend money on securities, or otherwise, to either helligerent, or secondly, that it is also lawful to sell, to either belligerent, munitions of war.

Upon this subject I beg to call to your notice that no longer ago than the 20th of last November, in answer to the remonstrance of Mexico against an alleged organized system in the United States of aiding France in the war in which she is engaged with that republic, but in which the United States are neutral, Mr. Seward replied by this, among other citations:

[After quoting from Mr. Webster's dispatch to Mr. Thompson, Earl Russell proceeds]:

It seems clear, on the principle enunclated in these authorities, that, except on the ground of any proved violation of the Foreign Enlistment act, her Majesty's Government cannot interfere with commercial dealings between British subjects and the so styled Confederate States, whether the subject of these dealings be money or contraband goods, or even ships for warlike purposes.

Mr. Adams to Earl Russell.

Legation of the United States, London, April 6, 1863.
* * * I have given to all the passages presented by your lordship the same profound attention which I habitually pay to everything from the same source. I cannot, however, perceive that they have any effect in disturbing the positions which have been heretofore assumed by myself. The sale and transfer, by a neutral, of arms, of munitions of war, and even of vessels-of-war, to a belligerent country, not subject to blockade at the time, as a purely commercial transaction is decided by these authorities not to be unlawful. They go not a step further, and precisely to that extent I have myself taken no exception to the doctrinc.

But the case is changed when a belligerent is shown to be taking measures to establish a system of operations in a neutral country, with the intent to carry on a war from its ports, much in the same way that it would do, if it could, from its own territory, when it appoints agents residing in that country for the purpose of borrowing money to be applied to the fitting out of hostile armaments in those very ports, and when it appoints and sends out agents to superintend in those port the constructing, equipping and arming of ships of war, as well as the enlisting of the subjects of the neutral country, to issue forth for the purpose of carrying on hostilities on the ocean.

These are the points to which I desire to call your lordship's attention in the intercepted dispatches. I affirmed that they went to show a system of operations to the extent thus designated I did not affirm that they absolutely proved the fact. But I did mean to be understood as affirming them to furnish strong corroborative evidence to sustain all other proofs which I have been in the practice of laying before your lordship for a long time past of the abuses made of her Majesty's neutral territory for the conduct of the war directly from her ports, without the intervention of time even for the vessels to gain the semblance of a national character.

* * * * * *

Laird's rams
Mr. Adams to Earl Russell.

Legation of the United States, London, Sept. 3, 1863.

My Lord:
I have the honor to transmit copies of further depositions relating to the launching and other preparation of the second of the two vessels-of-war from the yard of Messrs. Laird, at Birkenhead, concerning which it has already been my disagreeable duty to make most serious representations to her Majesty's Government.

I believe there is not any reasonable ground for doubt that these vessels, if permitted to leave the port of Liverpool, will be at once devoted to the object of carrying on war against the United States of America. I have taken the necessary measures in the proper quarters to ascertain the truth of the respective statements current here, that they are intended for the use of the Government of France or for the Pacha of Egypt, and have found both without foundation. At this moment neither of those Powers appears to have occasion to use conceatment or equivocation in regard to its intentions, had it any in obtaining such ships. In the notes which I have the honor to address to your lordship on the 11th of July and 14th of August, I believe I stated the importance attached by my Government to the decision involved in this case with sufficient distinctness. Since that date I have had the opportunity to receive from the United States a full approbation of its contents. At the same time I feel it my painful duty to make known to your lordship that, in some respects, it has fallen short in expressing the earnestness with which I have been in the interval, directed to describe the grave nature of the situation in which both countries must be placed in the event of an act of aggression committed against the Government and people of the United States by either of these formidable vessels.

I pray your lordship to accept the assurances of the highest consideration with which I have the honor to be, my lord, your most obedient servant,

Earl Russell to Mr. Adams.

Foreign Office, Sept. 8, 1863.
Lord Russell presents his compliments to Mr. Adams, and has the honor to inform him that instructions have been issued which will prevent the departure of the two iron-clad vessels from Liverpool.

The fitting out of the Alexandra.
Mr. Seward to Mr. Adams.

Department of State, Washington, July 11th, 1863.

--Your dispatch of the 26th of June (No. 438) has been received, together with three paper books containing a report of the trial of the Alexandra.

* * * * * *

If the law of Great Britain must be left without amendment, and be construed by the Government in conformity with the of the Chief Baron

of the Exchequer, then there will be left for the United States no alternative but to protect themselves and their commerce against armed cruisers proceeding from British ports as against the naval forces of a public enemy; and also to claim and insist upon indemnities for the injuries which all each expeditions have hitherto committed or shall hereafter commit against this Government and the citizens of the United States. To this end this Government is now preparing a naval force with the utmost vigor; and if the national navy, which it is rapidly creating, shall not be sufficient for the emergency, then the United States must bring into employment such private armed naval forces as the mercantile marine shall afford. British ports, domestic as well as colonial, are now open, under certain restrictions, to the visits of piratical vessels, and not only furnish them with coals, provisions, and repairs, but even receive their prisoners when the enemies of the United States come in to obtain such relief from voyages in which they have either burned ships which they have captured, or have even manned and armed them as pirates and sent them abroad as auxiliaries in the work of destruction. Can it be an occasion for either surprise or complaint that if this condition of things is to remain and receive the deliberate sanction of the British Government, the navy of the United States will receive instructions to pursue these enemies into the port which thus, in violation of the law of nations and the obligations of neutrality, become harbors for the pirates? The President very distinctly perceives the risks and hazards which a naval conflict thas maintained will bring to the commerce, and even to the peace, of the two counties. But he is obliged to consider that in the the destruction of our commerce will probably amount to a naval war waged by a portion, at least, of the British nation upon the Government and people of the United States--a war tolerated, although not declared or avowed, by the British Government. If, through the necessary employment of all our means of national defence, such a partial was shall become a general one between the two nations, the President thinks that the responsibility for that painful result will not fall upon the United States.

England responsibility
Earl Russell to Mr. Adams

Foreign Officer, Sept. 11, 1863.

--I have received your letter of the 5th inst., and have read it with great regret.

It has been the aim of the Government of Great Britain to maintain a strict neutrality between the parties who for two years have carried on a civil war of unusual extent and loss of life on the continent of North America.

Her Majesty's Government have, for the most part, succeeded in this impartial course. If they have been unable to prevent some violations of neutrality on the part of the Queen's subjects, the cause has been that Great Britain is a country which is governed by definite laws, and is not subject to arbitrary will. But law, as you are well aware, is enforced here, as in the United States, by independent courts of justice, which will not admit assertion for proof, nor conjecture for certainty.

* * * * * *

In the case still pending of the iron clad steam rams at Birkenhead, Mr. Seward, with his knowledge and perspicuity of judgment, cannot fall to acknowledge that it was necessary to show not only that these vessels were built and equipped for purposes of war, but also that they were intended for the so called Confederate States.

With a view to complete the evidence on this head it was material to prove that the iron clads were not intended for the French Government, or for the Pacha of Egypt. With respect to the French Government her Majesty's Government have received, upon inquiry, assurances, through Earl Cowley and the Marquis of Cadors, that the French Government have nothing to do with the Birkenhead iron clads.

In respect to the Egyptian Government, it was only on the 5th instant that her Majesty's Government received a dispatch from Mr. Colquhon, her Majesty's Consul General in Egypt, which is conclusive on this subject.

Ismail Pacha refused to purchase these vessels.

From this example, and that of the vessels built for the Emperor of China, whose name was alleged all over the United States to be a mere sham to cover, the real destination of the vessels, the President will gather how necessary it is to be dispassionate and careful in inquiries and statements upon subjects involving such great interests, and affecting the good faith and character of a Power so honorable as Great Britain.

These matters will no doubt, be duty and dispassionately considered by the Government at Washington, however they may have been understood in London.

I deem it right, however, to observe that the question at issue between yourself an her Majesty's Government relates to two separate and distinct matters — the general international duties of neutrality, and the municipal law of the United Kingdom. With regard to the general duties of a neutral, according to international law, the true doctrine has been laid down repeatedly by Presidents and Judges of eminence of the United States, and that doctrine is, that a neutral may sell to either or both of two belligerent parties any implements or munitions of war which such belligerents may wish to purchase from the subjects of the neutral, and it is difficult to find a reason why a ship that is to be used for warlike purposes is more an instrument or implement of war than cannon, muskets, swords, bayonets gunpowder, and projecties to be fired from cannon and muskets.

A ship or musket may be sold to one belligerent or the other, and only ceases to be neutral when the ship is owned, manned, and employed in war, and the musket is held by a soldier, and used for the purpose of killing his enemy. In fact, the ship can never be expected to decide a war or a campaign, whereas the other things above mentioned may, by equipping a larger army, enable the belligerent which requires them to obtain decisive advantages in the war.

Then, again, as regards the employment of the subjects of a neutral by either belligerent: it is envious that even if the whole crew of a ship-of-war were composed of the subjects of a neutral, that crew should have less influence on the results of the war than whole regiments and brigades employed or land, and composed of the subjects of a neutral State. * * * * * * *

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