Dudley to Charles Francis Adams, November 22, 1866

Mr. Dudley to Mr. Adams.

Sir: I enclose you a copy of a most extraordinary settlement, or agreement, made by Montgomery Gibbs, esq., and Freeman H. Morse, esq., our consul at London, with Fraser, Trenholm & Co., of this town, the financial agents of the late so-called confederate government during the war, extraordinary in its terms, for what it expresses upon its face, for what it concedes by implication, as well as for the time selected and the circumstances under which it was made. The time selected was while I was temporarily absent from Liverpool. The solicitor, though living in Liverpool, was not consulted, or the least information given us that any such thing was contemplated. The whole matter was kept as a profound secret. Though Mr. Morse and Mr. Gibbs were in Liverpool part of two days, neither of them ever called upon my solicitor or at the consulate. But aside from this slight and discourtesy to myself, which places me in a false position before the courts as well as the people, that I had instituted these suits either without any authority from my government, or else had forfeited its confidence, which is merely personal to myself, there are other and more important considerations involved in it of a public nature to which I deem it my duty to call your attention and to ask for your advice. The first knowledge I received of it was from my solicitor, who wrote me what Mr. Hull had communicated, and on the same day enclosed a letter from Mr. Hull requesting me to discontinue the suits. These letters were dated on the 7th and received by me on the 9th instant. On the 13th instant I received a letter from Mr. Gibbs, dated the 12th, informing me they had made the settlement. The next day, the 14th instant, I received a letter from Mr. Morse, dated the 13th instant. I enclose you a copy of Mr. Morse’s letter, and my answer, and his reply received yesterday. Mr. Morse, as you see, gives, or professes to give, the substance of the settlement. Finding that this differed very materially from what the other side was stating it to be, I got my solicitor to call on the solicitors of Fraser, Trenholm & Co., and procure from them a copy of the settlement. I send you, as mentioned before, what they, or Mr. Hull, furnished as the settlement which had been made. You will see how widely this settlement differs from that which Mr. Morse states in his letter. It is for him to reconcile and explain the discrepancy. I know nothing beyond what he saw fit to communicate, and which he calls the substance, and what Mr. Hull gives as the text of the agreement. This settlement, I think, is one-sided, unjust, and unfair to the United States; its interest is totally sacrificed, and everything given to Fraser, Trenholm &. Co., and nothing given in return. I assume that you are aware of the condition of things at the time this settlement was made. Two suits were pending in the court of chancery of this county against the firm of Fraser, Trenholm & Co.; one for the cotton brought here in the ship Aline, and valued at about £40,000 sterling, or $200,000, more or less, and which was instituted by me in behalf of the United States by your direction, and which was subsequently approved by the department; and the other, a bill for discovery and a general account of all their transactions and dealings, from the commencement of the rebellion down to the day of filing the bill, involving many millions of dollars and opening up their books, correspondence and dealings, and exposing and bringing to light the doings of themselves and their English friends, in fitting out piratical expeditions to destroy our commerce and make war upon our government, had been commenced by me under express instructions from the State Department. The management and conduct of both these suits had been intrusted entirely to myself in this country. As I construe this settlement, or agreement, it gives them without question or dispute all the moneys in their hands realized from cotton, ships, and other property sold before and since the termination of the rebellion, amounting in the aggregate to millions of dollars, including the proceeds from the cotton brought by the ship Aline, and supposed to amount to about £40,000 sterling, or $200,000, the four blockade steamers now under seizure at the suit of the United States in the court of admiralty of this country, to wit: the Ariel or Colonel Lamb, the Wasp, the Badger, and the Fox; and the £ 150,000 sterling, or upwards of $700,000, out of the property remaining in their hands, or under their control, unsold or undisposed of at the date of this agreement, provided it sells for enough to realize this sum. Of the five ships, to wit, the Ruby, Rosine, Penguin, Owl, and Lark, mentioned in the settlement as property, the highest valuation I had received for them is £40,000. I do not myself think they will bring this sum; but if, under favorable circumstances, they should, it would leave £110,000 to be made out of other property in their hands or Tinder their control. There is no other property mentioned in the settlement, and it will remain for Mr. Morse and Mr. Gibbs to show where the property is that Fraser, Trenholm, & Co., have under their control, out of which this sum is to be made, before anything can come to the United States under this agreement. I hope I may be disappointed, but my belief is that they have not now got sufficient property in their hands or under their control, undisposed of, belonging to the late so-called confederate government, to realize this sum, much less anything over and above it for the United States. I am quite prepared to hear that Fraser, Trenholm & Co. claim that all confederate property here in England, without, regard to its location or the person in whose possession it may be, is under their controlt and that they have the right to have it sold to pay them the £ 150,000 conceded by Mr. Morse and Mr. Gibbs to be due them. This seems to be foreshadowed in the remark made by Mr. Hull their solicitor, to Mr. Morse, as communicated in his letter to me, a copy of which is enclosed, that “we should get that property under the settlement they were making.” Now, this property is certain guns, made for the confederate government, and now in possession of Fawcett, Preston & Co., not in the possession or in point of fact under the control of Fraser, Trenholm & Co. If this proves to be the case then this firm will not only have all the property in their hands out of which to pay themselves this enormous sum, but all the confederate property in England. They may be able in this way to pay themselves in full the amount allowed them in the settlement, to say nothing about the suit pending in chancery for a discovery and general account, involving all Fraser, Trenholm & Co.’s dealings and transactions with the so-called confederate government from the commencement of the rebellion down to the time of filing the bill. In the other suit which we have for the cotton brought by the Aline, there is about £40,000 involved, the whole of which we claim; and there is no good reason for saying that we shall not have it all decreed to us upon a final hearing, when the case with all the evidence and facts are fully before the court, if not by the vice-chancellor at least by the chancellor or House of Lords, on our appeal which we have a right to make. The one-half part or about £20,000 sterling, or $100,000, is conceded to the United States, even by the vice-chancellor’s opinion, as one-sided and as unequitable as it is. This much is certain, and it is secured to us by three freeholders as security for its payment. This settlement discontinues or attempts to discontinue and wipe out both these suits, compels us to pay all our own costs in their prosecution, and hands over the whole of this money, as well the £20,000 conceded and secured to us as the other portion to Fraser, Trenholm & Co. So I read the agreement, or settlemen; and so I understand Fraser, Trenholm & Co. construe it.

I have received a letter from Mr. Morse in reply to the one I wrote to him on the 15th instant, and partly in reply to one I wrote to him on the 17th instant, about another case which he has assumed to control. I do not find that he explains in the least this most unjust and extraordinary settlement, or gives any satisfactory reason for making it, but seems fully in accord with Fraser, Trenholm & Co. in enforcing and carrying it out, and having the suits dismissed before I can be advised from the department. My solicitors also received on Monday the following notice from the solicitors of Fraser, Trenholm & Co.:

“The United States and Fraser, Trenholm & Co.

“Acting under the advice of counsel, we are instructed to give you notice that unless you agree to the dismissal of these suits we shall on Thursday give a notice of motion for Monday, the 26th instant, to stay all further proceedings, and to discharge the receiver and the recognizances. You will oblige us personally if you can give us as early an intimation as you are able of the course you intend to take, so as to save us the trouble and expense, if possible, of the preparation of the necessary documents.”

I have written fully to the department, and asked instructions as to my future conduct in these cases, and had hoped the parties would have assented to await the answer; but, as you will see, Fraser, Trenholm & Co. are determined to follow up the advantage they have gained by this unjust settlement, and Mr. Morse is disposed to assist them in it. My own judgment is, that it is my duty to resist the dismissal of these suits until I hear from Washington, and my solicitors think this is the proper course, under the circumstances, and I have no doubt but what our counsel will concur; but I defer the matter to you, and shall be obliged for any instructions you may feel authorized to give.

I am, sir, very respectfully, your obedient servant,

[Untitled]

Memorandum of agreement made the sixth day of November, one thousand eight hundred and sixty-six, between Montgomery Gibbs, esquire, agent in Europe for the Treasury Department of the United States of America, and Freeman Harlow Morse, esquire, consul at London for the said United States, of the one part, and Messrs. Fraser, Trenholm & Co., of Liverpool, merchants, of the other part. It is hereby mutually agreed as follows:

1. The claim of Messrs. Fraser, Trenholm & Co. against certain property of the late Confederate States under their control is agreed at £150,000.

2. Messrs. Fraser, Trenholm & Co. are to declare what property they have under their control and where it is; it being understood that amongst this property are the five following ships: the Ruby, the Rosine, the Penguin, the Owl, and the Lark.

3. This property to be sold at the best prices obtainable by Messrs. Fraser, Trenholm & Co., and the proceeds to be applied to the payment of the £150,000, and any surplus to be accounted for and paid over to the United States government.

4. The United States consul, Mr. Morse, and the United States government to give every assistance in disposing of the property, and if proper and expedient, to grant an American register to all or any of the said ships.

5. All suits now pending, either in Great Britain or in the United States, between Messrs. Fraser, Trenholm & Co., or any of them, and the United States, to be abandoned, each party paying their own costs.

6. Messrs. Fraser, Trenholm & Co. to furnish Mr. Morse and Mr. Gibbs with an account showing how the indebtedness to them is made out, and to allow them and an accountant acceptable to Messrs. Fraser, Trenholm & Co. to inspect their books, it being understood that any information thus derived shall not be used against any one in any action or proceeding except for the recovery of property.

In witness, &c.