Source.—Life of the Right Hon. W.E. Forster, M.P., by T. Wemyss Reid, vol. ii., pp. 22, 23. (Chapman and Hall, 1888.)

But when everything seemed to be settled, and there was at last good hope of the final removal of the long-standing obstacle to the friendship of the two peoples, a new difficulty made its appearance in a very unexpected quarter. This was the claim for indirect damages, which were set forth in the “case” of America, as it was presented to the Court of Arbitration at Geneva. Great was the indignation in England when, at the close of January, 1872, it first became known that the American Government was prepared to prefer this demand. The Cabinet was at once summoned to consider the question, and some of the members were for forthwith withdrawing from the arbitration. Mr. Forster was in favour of a more moderate and prudent course, but at the same time he felt strongly as to the unfairness of the demand made by America. “Clearly,” he writes in his diary (January 30, 1872), “this claim is sharp practice by the Americans, as the protocols prove that they had waived the indirect claims. Our Press is very indignant and exigeant, the Daily News leading. A cool head and a cool temper wanted. I asked Tenterden to dinner to talk the matter over with him. He is strong against diplomatic negotiations, and recommends a protest and refusal to submit the indirect claims to the arbitration to be delivered through our agent to the tribunal to the United States agent, both being appointed by Article 2 of the Treaty. Thereby diplomatic wrangling would be avoided, and the Yankees would not be forced to immediate reply while the Presidential caucus is at its height. I never felt any matter so serious. (January 31.) Drew up a memorandum urging communication through the agents rather than by despatch, on the ‘Alabama’ hitch. Took it to Granville; then sent it to Gladstone, asking him whether he would object to its circulation. Found a note from G—— assenting to circulation, so sent F—— off with the box. (February 2.) My box returned. All the Ministers’ minutes against me, except Gladstone, Granville, Ripon, and Chancellor.”

The question was discussed in the Cabinet, but the opinion was not favourable to Mr. Forster’s proposal, who had to give way.

(P. 26.) In February General Schenck [the leader of the American House of Representatives, who was in England] unofficially proposed four possible plans by way of settling the difficulty: (1) A lump sum paid by England; (2) a maximum sum paid by England to cover all claims, direct or indirect, supposing the arbitrators found against us; (3) proceeding with our arbitration under our protest that we did not consider the indirect claims within the Treaty, and could not abide by any decision against us as respected them, or pay in respect of them any gross sum or portion thereof; (4) an exchange of Vancouver’s Island for the indirect claims, upon the principle that both treaties were open to two interpretations....

Eventually ministers agreed to fall in with the American suggestion of a supplemental treaty, or, rather, of a supplemental article to the existing treaty.

[Note.—On June 19 the arbitrators rejected altogether the indirect claims.]