CO885-(15-16) — Page 314

PUBLIC RECORD OFFICE

Reference :-

C.O. 885

15 PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

2

Majesty's Government took over all the rights and liabilities of its former Govern- ment. That in that connection Mr. Bertram Cox was to refer us to our reports of the 30th of November and the 21st of December, 1900.* That it appeared to you that however much a Company might be bound to yield up its line to the Govern- ment of the country in which it laid during war, it was not bound to depart from the functions which properly appertained to a Railway Company or to take part in warlike actions either within or outside its own territories, as did the Nether- lands Railway when its servants, acting under the instructions of the Company, given by its General Manager, with the full cognizance and approval of the Board of Directors, destroyed bridges in Natal, and that as regarded the shareholders of a Company they were always liable to suffer for the acts of their Directors and there was no reason why they should be placed in a better position if the Directors used the resources of the Company for purposes of hostility than they would be if they ruined the Company by unprofitable speculations.

Further, that it was submitted that non-combatants in an enemy's country were only entitled to immunity from interference if they remained peaceful and kept apart from warlike operations, and that if they departed from this attitude they were liable to be fined and to have their private property seized. That it would be remembered that in the Franco-German war fines were imposed by the Germans upon whole communes in consequence of hostile action taken by non-combatants in the neighbourhood of the German forces. That it would seem that the provisions of the Hague Convention with regard to the respect due to private property must be read as subject to the condition that owners who were non-combatants should re- frain from acts of hostility. That in that connection it might be observed that the Company's officials were conscious of the difficulty in which their hostile action might place them, as they took every means to give the appearance of compulsion by the Government to the proceedings upon which they embarked.

That with regard to the shares, Mr. Bertram Cox was to refer us to our report to the Foreign Office of the 8th of August, 1901,† and that he was to add that the shares now held by French shareholders were believed to have been transferred by Dr. Leyds in November, 1900, i.., after the Transvaal had been annexed and the late Government of the South African Republic had ceased in the eye of British law to be able to give any title to them, and that the shares were probably pur- chased after the establishment of the protection Committees in Amsterdam and Berlin, and that the proceedings taken by those Committees had made it a matter of public notoriety that certain shares had acquired such a character as to affect the position of their holders for value.

That Mr. Bertram Cox was to request us to take the above matters into our consideration and to advise you :-

1. What answer should be returned to the arguments contained in M. Cambon's communication of the 22nd of January, 1904?

2. Generally.

We have taken the papers into our consideration and, in obedience to your commands, have the honour to

Report-

1. That we suggest that an answer should be sent somewhat to the following effect, with such additions as may seem expedient

His Majesty's Government do not dispute the general propositions

(i) that private property should not ordinarily be confiscated in war; (ii) that the South African Republic were justified in taking possession of and using the Netherlands Railway on the outbreak of hostilities. If this was simply the case of a belligerent having taken possession of the line which was the property of a neutral, His Majesty's Government would not dispute that, at the end of the war, it ought to be restored to the Company. But the point which M. Cambon seems to ignore is that the neutral Company in this case became, in breach of its duty as a neutral, an active belligerent, and, in the course of the war, used its organization to inflict serious damage upon His Majesty's Forces and upon property.

Can it be said that such conduct does not render the neutral Company liable for the losses it has inflicted, and for the part it took in prolonging the war? Such

† No. 98.

• Nos. 60 and 63.

3

conduct on the part of a neutral is different from that of an enemy subject, the latter is only doing his duty to his country by taking part in the war; the neutral acts voluntarily, and his property may properly be made liable for the damage which his intervention has caused.

In putting forward a claim on behalf of French subjects M. Cambon would appear to be supporting the claim of a neutral who had committed breaches of neutrality. M. Cambon appears also to raise the further question, viz. :-Can the shareholders dissociate themselves from the acts of the Company in South Africa! The argument seems to be that the Directors and Managers-in so far as they acted as active belligerents-did so in their private capacities, and that their action was not that of the Company. This is not sustainable as the whole organization of the Company was used under the influence and at the suggestion of the governing body to aid the enemy.

But His Majesty's Government recognizing the hardship that would be inflicted upon creditors and shareholders have determined, as an act of grace, to pay debenture-holders who are creditors in full and, upon the principle of making certain deductions for the damage caused, to compensate the shareholders in such cases as are mentioned in Lord Lansdowne's previous note.

The contention that if the Government of the South African Republic had survived they would have been liable to the Company for the full value of the line, and that, therefore, His Majesty's Government, as successor is liable, is not sus- tainable. His Majesty's Government have never admitted their liability for wrongs committed by the South African Republic, nor for debts contracted during the war for the purpose of providing funds to be used against our forces, nor is there any authority in international law to show that such a liability has ever been admitted. It is for this reason that His Majesty's Government decline to recognise sales by the Government of the South African Republic of shares in the Netherlands Rail- way Company made after the Proclamation, and every purchaser after that date must be taken to have had notice of the intentions of His Majesty's Government, and they see no reason for departing from the determination arrived at.

2. Care should be taken that the reply sent to M. Cambon follows the lines of the note already sent to the German Government.

We may add that the above are merely suggestions for your consideration, and that we do not desire in any way to modify the memorandum previously furnished by us on the 8th of August, 1901.

The Right Honourable

Alfred Lyttelton, M.P., &c.,

&c.,

&c.

We have, &c.,

R. B. FINLAY. EDWARD CARSON.