Bait Act by engaging themselves to Americans to catch bait fishes or who sold to Americans. Twenty Colonial fishermen have been prosecuted this year for taking bait fishes for exportation without licence.

Am informed by Prime Minister that English counsel intimates that proceedings may be taken under Cap. 129, Consolidated Statutes, of 1892, or under the Marine and Fisheries Act, 1898.MACGREGOR.

Governor MacGregor to Lord Elgin.

[Telegram.]

(Received 9 a. m., November 4, 1906.) Minister of Justice has prepared instruction for Inspector, Bay of Islands:

Instruction begins: Government has decided on enforcement of provisions of Bait Act during the present herring fishing Bay of Islands. Government has been advised by me that Bait Act is not in any way superseded by terms of modus vivendi entered into between His Majesty's Government and the Government of the United States of America. I am desired to request that you will take action immediately against any one of our fishermen who has violated Bait Act. I have instructed Counsel proceed to Bay of Islands and he will advise you as to proper form of summons, &c. Until Counsel arrives you can consider most convenient way to effect service of process on the party whom you may elect as the defendant in the Instruction ends.

case.

I have requested that instruction may be withheld till 7th November.-MACGREGOR.

Lord Elgin to Governor MacGregor.

[Telegram.]

(Sent 7.5 p. m., November 9, 1906.) Your telegram, 3rd November." As your Ministers are well aware, the Modus Vivendi was arranged with a view to the prevention of action which would embitter the discussion proceeding between His Majesty's Government and the Government of the United States as to the proper meaning of the treaty of 1818-a discussion rendered inevitable by the policy of your Ministers.

With full knowledge of these facts your Ministers have deliberately decided to take action which may immeasurably increase the difficulty of the task which Newfoundland has imposed upon Great Britain. In these circumstances I have to inform your Ministers that, in endeavouring to frustrate the purely temporary measures which His Majesty's Government consider most likely to lead to a successful termination of the negotiations with the United States, they incur a grave responsibility which His Majesty's Government

a Received 4th November.

decline to share. His Majesty's Government will endeavour in the future, as in the past, to defend the claims of Newfoundland under the treaty of 1818 to the best of their ability, but if the difficulties in their way become increased your Ministers must bear the blame.ELGIN.

Mr. Reid to Sir Edward Grey.

AMERICAN EMBASSY, LONDON, November 15, 1906.

DEAR SIR EDWARD: Here is the little private and unofficial memorandum promised yesterday.

Believe me, &c.,

[Enclosure.]

WHITELAW REID.

Points of Fact communicated confidentially and unofficially, in interview of November 14th.

United States Fishery Agent in Newfoundland reported that on 12th November Colonial authorities summoned crew to appear at Court, Birchy Cove, for enlisting outside three-mile limit. Captain was inclined to ignore summons.

In answer to Agent's request for instructions, State Department said that penal proceedings under such circumstances against men shipped outside three-mile limit appeared plain violation of modus vivendi, but Department could not believe Newfoundland Government intended wholesale punishment of their own fishermen for seeking means of livelihood with clear permission from British Government. Department supposed whole purpose was to make a test case, and instructed Agent to ascertain. If so, to avoid conflict or disturbance, was willing, without waiving rights, to facilitate raising and disposition of the question in an orderly way, for which appearance of one or two men in Court would be sufficient. If, on contrary, wholesale arrests were intended, effect would be either to break up or seriously interfere with fishing under the modus vivendi, and the Department should be promptly informed.

Department explains desire to avoid any conflict that might excite Colonial feeling or cause embarrassment in dealing with Colony. But if Newfoundland Government really trying to break up fishing under modus vivendi, United States could not permit men to be taken from its ships. No doubt of Great Britain's full intention to enforce respect for its agreement, but prompt action seemed necessary.

Governor MacGregor to Lord Elgin.

[Telegram.]

(Received 7.45 a. m., November 17, 1906.) Referring to your telegram of 9th November, Responsible Ministers send long reply, summary of which follows:

(1) They do not see that any reason existed to justify modus vivendi, which they think was unnecessary. They refer to your tele

gram of 8th August, which stated His Majesty's Government were informing United States Government that His Majesty's Government were prepared to negotiate for provisional arrangement, and would shortly submit proposals, from which Responsible Ministers infer that engagement to enter into modus vivendi was actually made without reference to opinion of this Government. Responsible Ministers saw they could not prevent the arrangement, but set forth their views and pointed out that modus vivendi not necessary, and guaranteed to maintain peace if His Majesty's Government did not interfere with enforcement of statute law against local fishermen. Under the circumstances Responsible Ministers find it impossible to admit any responsibility for modus vivendi.

(2) Policy of this Government same for twenty years; to enforce Bait Act against foreigners using bounties or prohibitive duties. In the years 1890 and 1892 American Government undertook to cancel duty on Newfoundland fish, and Newfoundland for fifteen years gratuitously allowed Americans privileges to be conveyed [? continued] under conventions mentioned. United States Government accepted concessions of Newfoundland in the 1890 and 1892 Conventions as quid pro quo for remission of duties, which shows United States Government did not think that they had right to purchase bait fishes or employ local fishermen under Treaty of 1818.

(3) Responsible Ministers hold opinion that it is their duty to this people to test validity of an arrangement apparently intended to render nugatory law of Colony, and set aside its constitutional rights. In reply to your telegram 8th August, Responsible Ministers 10th August, referred His Majesty's Government to despatch 26th March, 1857, which declares consent of Newfoundland essential preliminary to any modification of territorial rights or maritime rights, and five days later Responsible Ministers dealt fully with situation and suggested alternative to proposed modus vivendi.

(4) Object of Responsible Ministers in instituting legal proceedings under Bait Act as custodians of rights and privileges of public is to test validity of arrangement which, in their opinion, is infringement of constitutional rights of this Colony.

Responsible Ministers are very grateful for assurance that His Majesty's Government will defend claims of Newfoundland under Treaty of 1818, and they assure His Majesty's Government that no unlawful act on their part shall arise to increase difficulties of His Majesty's Government in carrying out this intention. (Summary Minute of Council ends.)

Full text of Minute of Council been posted to-day's post by "Glasgow."-MACGREGOR.

Sir Edward Grey to Mr. Reid.

FOREIGN OFFICE, June 20, 1907. SIR: On the 20th of July last, Your Excellency communicated to me a letter addressed to you by Mr. Root in which he gave reasons which prevented his agreement with the views of His Majesty's Government as to the rights of American fishing vessels in the waters of Newfoundland under the Convention of 1818.

No reply was returned at the time to the arguments contained in this letter, as the divergence of views between the two Governments made it hopeless to expect an immediate and definitive settlement of the various questions at issue and it was essential to arrive at some arrangement immediately which would secure the peaceable and orderly conduct of the impending fishery season.

Upon the conclusion of the Modus Vivendi, His Majesty's Government further deferred any additional observations on the questions at issue until the arrival in this country of the Premier of Newfoundland to attend the Imperial Conference.

They have now had the advantage of a full discussion with Sir R. Bond, and although His Majesty's Government are unable to modify the views to which they have on various occasions given expression, of the proper interpretation of the Convention of 1818 in its bearing on the rights of American fishermen, they are not without hope, having regard to the willingness of the United States Government from a practical point of view to discuss reasonable and suitable regulations for the due control of the fishermen of both countries, that an arrangement may be arrived at which will be satisfactory to both countries. I desire at the outset to place on record my appreciation of the moderation and fairness with which Mr. Root has stated the American side of the question and I shall in my turn endeavour to avoid anything of a nature to embitter this long-standing controversy.

It will be convenient to recapitulate the main grounds of divergence between the two Governments on the question of principle.

His Majesty's Government, on the one hand, claim that the Treaty gave no fishing rights to American vessels as such, but only to inhabitants of the United States and that the latter are bound to conform to such Newfoundland laws and regulations as are reasonable and not inconsistent with the exercise of their Treaty rights. The United States Government, on the other hand, assert that American rights may be exercised irrespectively of any laws or regulations which the Newfoundland Government may impose, and agree that as ships strictly speaking can have no rights or duties, whenever the term is used, it is but a convenient or customary form of describing the owners' or masters' rights. As the Newfoundland fishery, however, is essentially a ship fishery, they consider that it is probably quite unimportant which form of expression is used.

By way of qualification Mr. Root goes on to say that if it is intended to assert that the British Government is entitled to claim that, when an American goes with his vessel upon the Treaty Coast for the purpose of fishing, or with his vessel enters the bays or harbours of the coast for the purpose of obtaining shelter, and of repairing damages therein, or of purchasing wood, or of obtaining water, he is bound to furnish evidence that all the members of the crew are inhabitants of the United States, he is obliged entirely to dissent from any such proposition.

The views of His Majesty's Government are quite clear upon this point. The Convention of 1818 laid down that the inhabitants of the United States should have for ever in common with the subjects of His Britannic Majesty the liberty to take fish of every kind on the coasts of Newfoundland within the limits which it proceeds to define. This right is not given to American vessels, and the distinction is an important one from the point of view of His Majesty's Government,

as it is upon the actual words of the Convention that they base their claim to deny any right under the Treaty to American masters to employ other than American fishermen for the taking of fish in Newfoundland Treaty waters.

Mr. Root's language, however, appears to imply that the condition which His Majesty's Government seek to impose on the right of fishing is a condition upon the entry of an American vessel into the Treaty waters for the purpose of fishing. This is not the case. His Majesty's Government do not contend that every person on board an American vessel fishing in the Treaty waters must be an inhabitant of the United States, but merely that no such person is entitled to take fish unless he is an inhabitant of the United States. This appears to meet Mr. Root's argument that the contention of His Majesty's Government involves as a corollary that no American vessel would be entitled to enter the waters of British North America (in which inhabitants of the United States are debarred from fishing by the Convention of 1818) for any of the four specified purposes, unless all the members of the crew are inhabitants of the United States.

Whatever may be the correct interpretation of the Treaty as to the employment of foreigners generally on board American vessels, His Majesty's Government do not suppose that the United States Government lay claim to withdraw Newfoundlanders from the jurisdiction of their own Government so as to entitle them to fish in the employment of Americans in violation of Newfoundland laws. The United States Government do not, His Majesty's Government understand, put their claim higher than that of a "common" fishery, and such an arrangement cannot override the power of the Colonial Legislature to enact laws binding on the inhabitants of the Colony. It can hardly be contended that His Majesty's Government have lost their jurisdiction not only over American fishermen fishing in territorial waters of Newfoundland, but also over the British subjects working with them.

It may be as well to mention incidentally in regard to Mr. Root's contention that no claim to place any such restriction on the French right of fishery was ever put forward by Great Britain; that there was never any occasion to advance it, for the reason that foreigners other than Frenchmen were never employed by French fishing vessels.

The main question at issue is, however, that of the application of the Newfoundland regulations to American fishermen. In this connection the United States Government admit the justice of the view that all regulations and limitations upon the exercise of the right of fishing upon the Newfoundland Coast, which were in existence at the time of the Convention of 1818, would now be binding upon American fishermen. Although Mr. Root considers that to be the extreme view which His Majesty's Government could logically assert, and states that it is the utmost to which the United States Government could agree, His Majesty's Government feel that they cannot admit any such contention, as it would involve a complete departure from the position which they have always been advised to adopt as to the real intention and scope of the treaties upon which the American fishing rights depend. On this vital point of principle there does not seem to be any immediate prospect of agreement with United States views, and it would, therefore, seem better to endeavour