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i

CRYPTOCURRENCIES IN PUBLIC
AND PRIVATE LAW
ii
iii

CRYPTOCURRENCIES
IN PUBLIC
AND PRIVATE LAW

Edited by
David Fox
Sarah Green

Contributors
Daniel Carr
Andrew Dickinson
Anne Fairpo
Benjamin Geva
Dorit Geva
Christopher Hare
Kelvin FK Low
Charles Proctor
Wu Ying-​C hieh
Corinne Zellweger-​G utknecht

1
iv

1
Great Clarendon Street, Oxford, OX2 6DP,
United Kingdom
Oxford University Press is a department of the University of Oxford.
It furthers the University’s objective of excellence in research, scholarship,
and education by publishing worldwide. Oxford is a registered trade mark of
Oxford University Press in the UK and in certain other countries
© The Contributors 2019
The moral rights of the authors have been asserted
First Edition published in 2019
Impression: 1
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a retrieval system, or transmitted, in any form or by any means, without the
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Links to third party websites are provided by Oxford in good faith and
for information only. Oxford disclaims any responsibility for the materials
contained in any third party website referenced in this work.
v

FOREWORD

Money has been with us for a long time.1 However it was only in 1938 that
the first full-​scale English law analysis of ‘money’ was published with FA Mann’s
magisterial work The Legal Aspects of Money.2 Cryptocurrencies burst onto the
public consciousness as late as 2009 when the programmer(s)3 Satoshi Nakamoto
launched the technology that enabled the public to trade in ‘Bitcoins’, which
remains the best known of the many thousands of alternative cryptocurrencies
that are traded today. Happily we have not had to wait nearly so long to have a
detailed guide to the legal aspects of cryptocurrencies with the publication of the
present volume.
What are cryptocurrencies? My working description is that they are digital or
virtual assets that use high-​level cryptography through a decentralized system for
trading purposes and to keep those assets secure. Cryptocurrencies are not organ-
ized by any nation State and they are largely outside state control for the present.
They represent a revolutionary new way to create and guard an ‘asset’ and to
make payments for other assets. The advocates of cryptocurrencies argue that they
have emerged as a result of a growing distrust or cynicism in so-​called ‘trusted
third party’ financial institutions, following the apparent inability of banks and
even States worldwide to master the financial crisis of 2008. Financial institu-
tions, thought to be sound and trustworthy, failed, or were only saved at a huge
cost to tax payers. Many individuals lost personal assets during or after the crisis.
Since then ‘centralized’ and so-​called ‘trusted’ third parties, whether banks, credit
agencies, or social media networks or companies, have had millions of peoples’
personal data stolen from them by internet hackers. The use of cryptocurrencies,
cutting out ‘the middleman’ and using high-​standard cryptography for security, is
a reaction to all these events. They enable people to transfer assets directly between
two people without any need for a ‘trusted’ third party like a bank. It is even ar-
gued that cryptocurrency technology enables those who have no access to banks
of similar institutions to have financial freedom, so that cryptocurrencies enable
everyone to ‘take back control’ of their money or assets.

1
‘A feast is made for laughter and wine maketh merry: but money answereth all things.’:
Ecclesiastes, 10:19.
2
7th edition published in 2012. It is now edited by Dr Charles Proctor, one of the contributors
to the present volume.
3
It is not known whether the ‘programmer’ was one person or a group of people.

v
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Foreword

It is estimated that the total value of all cryptocurrencies in the world today is in
the region of US$350 billion, although this figure fluctuates rapidly. The daily sale
and purchase of cryptocurrencies is about US$17 billion. They seem likely to be
an increasingly important part of the worldwide financial scene, despite attempts
by several States, including China, to ban or restrict their use.
The huge growth in the use of cryptocurrencies requires lawyers to tackle the issues
of how they fit into legal frameworks. Although there have been a large number of
articles and reports about different legal issues thrown up by cryptocurrencies, this
is the first volume that makes a national, international, and comparative law study
of the many difficult legal challenges that cyrptocurrencies present. The most basic
question for any system of law which encounters a cryptocurrency, whether it be
municipal or international, or private or public law, is how a cryptocurrency to be
characterized. Is it to be treated, for legal analysis, as being equivalent to ‘money’,
or is it an ‘asset’, or what English law calls a ‘chose (or thing) in action’ or some
other form of property? Depending on the answer to that question, issues about
the nature of ownership, possession, and other possible legal (or equitable) rights
in cryptocurrencies can then be analysed. Given that cryptocurrencies are virtual
and that anyone anywhere in the world who has access to the necessary crypto-
graphic keys and a computer can trade in them, it is obvious that cross-​border
legal issues such as how to decide which courts have jurisdiction in any dispute
and which is the applicable law will be of fundamental importance. Although the
originators of cryptocurrencies and many of its users would like to imagine that
they are outside national and international regulatory control and the criminal
law, that cannot be so. So the way the regulatory and criminal law deals with them
also needs attention. So do issues of whether or how cryptocurrencies and trading
in them or with them might be taxed. On a more philosophical and sociological
level it is also pertinent to enquire into whether, if cryptocurrencies are not state-​
backed currencies or assets, they fulfil some kind of ‘community currency’ role
and if so, what are the legal consequences of that?
The meteoric rise in the use of cryptocurrencies necessitates that all these difficult
legal and sociological questions be urgently examined. This book does so. It is not
confined to English law, nor even European legal systems, but considers the prob-
lems from the viewpoint of Asian law systems as well. The distinguished authors,
all specialists in the topics they address in each of the ten substantive chapters,
explain the problems and suggest solutions in a clear and concise way. For any
lawyer, like me, who is having to grapple with the legal aspects of cryptocurrencies
for the first time, this book is a godsend. And for those who are not tyros, the deep
and careful analyses that are given in each chapter will provide answers to prob-
lems or leads to further study.
This book is very timely and I warmly welcome it.
Richard Aikens

vi
vi

ACKNOWLEDGEMENTS

The editors would like to express their thanks to Travers Smith Braithwaite for
funding, and to St Hilda’s College, Oxford, for facilitating the workshop in July
2017, at which most of the papers published as chapters in this volume were
presented and discussed. Thanks are also due to the University of Oxford Law
Faculty and to Christopher Hare for their assistance with administering these
funds. In addition, Serena Crawshay-​Williams provided sterling help with editing
the manuscript before it was sent to the publisher. Finally, David and Sarah are
both immensely grateful to Sir Richard Aikens for taking the time to write the
foreword to this volume.

vii
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ix

CONTENTS

Table of Cases xvii

Table of Legislation xxv
Notes on Contributors xxxiii

1. Cryptocurrencies: The Underlying Technology

I. Introduction 1.01
II. Decentralization and Distributed Consensus 1.02
III. The Chapter Contributions to this Book 1.11

2. It’s Virtually Money

I. Introduction 2.01
A. What are virtual currencies and why do they present
such challenges to existing categories? 2.03
B. Universal medium of exchange 2.15
C. Unit of account 2.19
D. Store of value 2.20
E. A peculiarly private law concept of ‘money’ 2.22
F. Consequences of a failure to recognize virtual currency as money 2.26
1. Barter rather than sale 2.26
2. Applicability of the bona fide purchaser for value defence 2.44
II. Conclusion 2.48

3. Cryptocurrencies in International and Public Law

Conceptions of Money
I. Introduction 3.01
II. Theories of Money 3.05
III. Nature of Cryptocurrencies 3.09
IV. International Law 3.16
V. Public Law 3.24
VI. Criminal Law 3.27
A. Theft and fraud 3.28
B. Cryptocurrencies and money laundering 3.32
C. Financial markets legislation 3.34

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Contents

VII. The Central Bank 3.44

A. Financial stability 3.46
B. Monetary policy 3.55
VIII. Conclusions 3.58

4. Developing the Right Regulatory Regime for Cryptocurrencies

and other Value Data
I. Introduction 4.01
A. Scope 4.01
B. Thesis 4.04
C. Structure 4.05
II. Asset and Manifestation: Substance and Form of Monetary
Value over the Course of Time 4.06
A. Banknotes 4.06
1. Redeemable banknotes 4.06
2. Irredeemable banknotes 4.12
B. Central bank reserve balances 4.20
1. Initially: claims to payment of legal tender 4.22
2. Later: legal tender in the form of non-​convertible sight
deposits (fiat money) 4.27
C. Interim conclusion 4.35
III. Modes of Creation of Money and Their Effects on the
Substance of an Asset 4.47
A. Temporary money: created on a temporary basis 4.48
B. Outright money: created with no connected reversal event 4.51
C. Helicopter money 4.56
IV. Types of Manifestation and Their Effects on Legal Title,
Transfer, and Protection of Commercial Dealings 4.60
A. Manifestation by possession 4.63
B. Manifestation by oral or written but uncertificated consent 4.64
C. Manifestation by certificated security 4.65
D. Manifestation by money 4.66
E. Manifestation by intermediated security 4.71
F. Manifestation by entry in a register kept by a trusted party 4.76
V. Conclusion: Manifestation of Value Data by Entry in a
Register Kept by a Trusted Technology 4.80
A. Value data: the rivalrous and excludable 4.80
B. Book entries secured by elliptic cryptography 4.83
C. Legal consequences and recent legislative developments 4.87
1. Static dimension: legal title 4.87
2. Dynamic dimension: mode of transfer 4.94
D. Closing remark 4.100

x
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Contents

5. Cryptocurrencies and the Conflict of Laws

I. Introduction 5.01
A. Virtual currencies and cryptocurrencies in outline 5.01
B. The conflict of laws in outline 5.04
C. Regulatory challenges for the conflict of laws 5.07
II. The Law Applicable to the Relationships between Participants
within a Cryptocurrency System 5.15
A. Introduction 5.15
B. Key features of the Bitcoin and Ripple cryptocurrency systems 5.18
1. Bitcoin 5.18
2. Ripple 5.23
C. Conflict of laws characterization of the relationships between
participants in cryptocurrency systems 5.27
D. The law applicable to relationships between participants in
cryptocurrency systems 5.35
1. Choice of the applicable law (Article 3) 5.36
a) The Rome I Regulation: choice of national law 5.36
b) Possible future alternatives to choice of national law 5.39
2. Law applicable in the absence of choice (Article 4) 5.44
a) Temporal application of the Rome I Regulation 5.45
b) Particular categories of contract (Article 4(1)) and
characteristic performance (Article 4(2)) 5.49
c) The closest connection test (Article 4(4)) 5.62
d) Does a tenuous connection to the country of closest
connection suffice? 5.65
3. Other issues 5.68
E. Reflection 5.72
III. Cryptocurrencies as ‘Money’ in the Conflict of Laws 5.73
A. Cryptocurrencies and the ‘lex monetae’ 5.73
B. Illegality of transactions involving cryptocurrencies 5.81
C. Judgments in a cryptocurrency 5.89
IV. Cryptocurrencies as ‘Property’ in the Conflict of Laws 5.93
A. Introduction 5.93
B. The proprietary character of cryptocurrencies 5.96
C. The law applicable to assignments of claims under the
Rome I Regulation 5.103
D. Beyond legal rights: the law applicable outside the
Rome I Regulation 5.106
V. Conclusions 5.121

6. Cryptocurrencies in the Common Law of Property

I. Introduction 6.01
A. Approach and terminology 6.08

xi
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Contents

II. A Crypto-​Coin as an Object of Property 6.11

A. Data strings recording transactions 6.12
B. Fungibility, specificity, scarcity, and exclusion 6.20
1. Fungibility as an aim of cryptocurrency design 6.20
2. Fungibility and specificity in property law 6.21
3. Cryptocurrencies as either fungible or specific in law 6.25
4. Scarcity and exclusivity 6.26
C. Crypto-​coins in the law of personal property 6.28
1. Choses in possession and choses in action 6.28
2. Intangible personal property other than choses in action 6.32
3. The current authorities 6.38
III. Rules of Title and Transfer 6.45
A. General 6.45
B. Derivative transfers of title 6.48
1. General 6.48
2. Legal title and the blockchain record 6.49
3. The blockchain record as presumptive evidence of title 6.50
4. Derivative transfers of title and tracing 6.53
5. Purchase for value in good faith 6.57
IV. Mixture, Following, and Tracing 6.67
A. Mixtures of cryptocurrencies 6.67
1. Mixing in practice 6.69
B. Tracing and cryptocurrencies 6.74
1. Cryptocurrencies are traced not followed 6.75
2. The blockchain and traceability 6.76
3. Pseudonymity and tracing 6.78
C. Attribution in cryptocurrency transactions 6.79
1. Attribution by the blockchain record or by an
external transaction 6.79
D. Tracing through mixtures 6.81
1. Balances and transactional outputs 6.81
E. Cryptographic and legal rules for tracing through mixtures 6.83
1. The poison approach: a punitive causation rule 6.84
2. The haircut approach: proportionate division 6.86
3. The first-​in-​first-​out approach: Clayton’s Case 6.88
4. Variations from Clayton’s Case 6.93
F. Notice in cryptocurrency payments 6.97
V. Remedies 6.101
A. Common law remedies 6.102
B. Equitable remedies 6.105
VI. Conclusion 6.107

7. Cryptocurrencies as Property in Civilian and Mixed Legal Systems

I. Introduction 7.01

xii
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Contents

II. Cryptocurrencies as Res 7.05

A. What is a unit of cryptocurrency? 7.06
B. Fixed lists or numerus clausus 7.09
C. Possession? 7.15
D. Specificity 7.16
E. Publicity 7.18
F. Analogical addendum 7.21
III. Implications of Recognizing Cryptocurrencies as Res 7.23
A. ‘Ownership’? 7.24
B. Vindication and possessory actions 7.26
1. Vindication 7.26
2. Possessory actions 7.29
C. Acquisitive prescription and original acquisition 7.31
1. Mixtures, specification, and occupation 7.32
2. Acquisitive prescription 7.34
IV. Conclusion 7.36

8. The Characterization of Cryptocurrencies in East Asia

I. Introduction 8.01
II. Cryptocurrencies: Reinventing Money? 8.02
III. The Roman-​Germanic Terrain of East Asian Civil Law 8.06
IV. The Unbearable Strictness of Owning? 8.10
A. A fundamental distinction: ownership and its objects 8.10
B. The objects of ownership in East Asia 8.12
C. Cryptocurrencies as objects of ownership? 8.16
V. Real Rights without Tangible Objects: Quasi-​Real Rights? 8.22
A. Rei vindicatio 8.28
B. Damages under tort law 8.31
C. Electing between remedies 8.33
VI. Conclusion 8.34
VII. Postscript 8.35

9. Cryptocurrencies and Banking Law: Are there Lessons to Learn?

I. Introduction 9.01
II. The Cryptocurrency as a Store of Value 9.04
A. The duty to act within mandate 9.13
B. The duty of secrecy 9.16
C. The duty to act with reasonable skill and care 9.18
D. Fiduciary duties 9.20
III. The Cryptocurrency as Payment 9.21

xiii
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Contents

IV. The Cryptocurrency as a Basis for Lending 9.26

V. Conclusion 9.27

10. Taxation of Cryptocurrencies

I. Background 10.01
A. Direct taxes 10.13
B. Value-​added taxes 10.16
II. International Approaches 10.18
A. Cryptocurrencies as property 10.18
1. United States 10.18
2. Australia: income tax and capital gains tax 10.38
3. Other countries 10.49
a) Singapore 10.51
b) France 10.54
c) Israel 10.57
d) The UK 10.59
B. Cryptocurrencies as currency 10.62
1. Australia: goods and services tax—​supplies
of cryptocurrencies 10.63
2. European VAT 10.68
3. UK VAT 10.74
4. UK corporation tax 10.82
5. UK business tax 10.85
6. Switzerland 10.86
C. Other approaches 10.90
III. Consideration of the Tax Treatment of Cryptocurrencies 10.98
A. Equality 10.100
B. Efficiency, convenience, and certainty 10.112
IV. Conclusions 10.121

11. Non-​State Community Virtual Currencies

I. Introduction: What Is Digital Community Currency? 11.01
II. Legal Tender and Money 11.08
III. Exchange, Community, and Money: Chicken and Egg? 11.17
IV. How Far Ought Acceptance Be Free? Lessons from History 11.26
V. Does Digitization Change the Meaning of a ‘Monetary’
Community? 11.33
VI. Privately Issued Money: Does Law Converge with Economic
Sociology? 11.41

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Contents

VII. Is the Banknote Unique? The Reach of Its Legal History 11.46
VIII. Do Cryptocurrencies Constitute ‘Money’? 11.54
IX. Does Community Money Bring Net Benefits?
A Brief Overview 11.61
X. Conclusion and Final Observations 11.66

Index 307

xv
xvi
xvi

TABLE OF CASES

UNITED KINGDOM
A/​S Awilco of Oslo v Fulvia SpA di Navigazione of Cagliari, The Chikuma [1981]
1 WLR 314 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.25
Able UK Ltd v HMRC [2007] EWCA Civ 1207 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.21
Actavis UK v Eli Lilly & Co [2015] EWCA Civ 555, [2016] 4 All ER 666 . . . . . . . . . . . . . . . 5.92
Akbar Khan v Attar Singh [1936] 2 All ER 545 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.09
Alldridge v Johnson (1857) 7 E & B 885, 119 ER 1476 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16
Amin Rasheed Shipping Corporation v Kuwait Insurance Co [1984] AC 50 . . . . . . . . . . . . . . 5.41
Armstrong DLW GmbH v Winnington Networks Ltd [2012] EWHC 10 (Ch),
[2013] Ch 156 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.29, 6.38, 6.39, 6.41, 6.103, 9.04, 9.09
Arnold v Britton [2015] UKSC 36, [2019] AC 1619 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.78
Ashton Investments Ltd v OJSC Russian Aluminium (Rusal) [2006]
EWHC 2545 (Comm) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.08
Attorney-​General v Observer Ltd [1990] 1 AC 109 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.16, 9.17
Attorney-​General for Hong Kong v Nai-​Keung [1987] 1 WLR 1339 . . . . . . 3.29, 3.30, 6.41, 9.09
Azam v Iqbal [2007] EWHC 2025 (Admin) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.09

BBMB Finance Ltd v Eda Holdings Ltd [1990] 1 WLR 409 . . . . . . . . . . . . . . . . . . . . . . . . . 6.104
BCCI (Overseas) Ltd v Akindele [2001] Ch 437 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.105
Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452 (HL) . . . . . . . . . . . . . . . . . . . . . . . 4.15
Banks v Whetson (1596) Cro Eliz 457 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.51
Barclays Bank v Quincecare [1992] 4 All ER 363 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.19
Barclays Bank v Taylor [1989] 1 WLR 1066 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.16, 9.17
Barclays Bank plc v O’Brien [1994] 1 AC 180 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.98
Barlow Clowes International Ltd (in liq) v Vaughan [1992] 4 All ER 22 . . . . . . . . 6.87, 6.89, 6.94
Black v Freeman & Co (1910) 12 CLR 105 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.49
Breyer Group Plc and Others v Department of Energy and Climate Change [2014]
EWHC 2257 (QB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.29
British Red Cross Balkan Fund, Re [1914] 2 Ch 419 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.94
Burnett’s Trs v Grainger 2004 SC (HL) 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.09

Campanari v Woodburn (1854) 15 CB 400 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.15

Campbell v Mirror Group Newspapers Ltd [2004] 2 AC 457 . . . . . . . . . . . . . . . . . . . . . . . . . 9.16
Celtic Extraction Ltd, Re [2001] Ch 475 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.41, 9.09
Charge Card Services Ltd, Re [1989] Ch 497 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.38, 9.25, 11.46
Clarke v Shee (1774) 1 Cowp 197 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.49, 6.59
Clayton’s Case, Devaynes v Noble (1816) 1 Mer 529 . . . . . . . . . . . . . . . . . . . . . . . 6.89, 6.91, 6.94
Coats Ltd v Inland Revenue Commissioners [1897] 1 QB 778, [1897] 2 QB 423 . . . . . . . . . . 2.35
Coco v AN Clark (Engineers) Ltd [1968] FSR 415 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.16
Coinstar Ltd v The Commissioners for Her Majesty’s Revenue and Customs [2016]
UKFTT 0610 (TC), aff’d [2017] UKUT 256 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.04
Colonial Bank v Whinney (1885) LR 30 Ch 261, adopted (1886)
LR 11 App Cas 426 (HL) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.28, 6.32, 6.33, 6.38
Commerzbank AG v IMB Morgan [2004] EWHC 2771 (Ch); [2005]
2 All ER (Comm) 564 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.89

xvii
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Table of Cases

Commissioners of Taxation v English, Scottish and Australian Bank [1920] AC 683 . . . . . . . . 9.08
Coutts & Co v Stock [2000] 1 WLR 906 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.11
Cowan de Groot Properties v Eagle Trust [1992] 4 All ER 700 . . . . . . . . . . . . . . . . . . . . . . . 6.100
Cox v Ergo Versicherung [2014] UKSC 22, [2014] AC 1379 . . . . . . . . . . . . . . . . . . . . . . . . . 5.92
Cretanor Maritime Co Ltd v Irish Marine Management Ltd [1978] 1 WLR 966 . . . . . . . . . . . 9.15
Customs & Excise Commissioners v Barclays Bank plc [2007] 1 AC 181 . . . . . . . . . . . . . . . . 9.15

Davies v Customs and Excise Commissioners [1975] 1 WLR 204 . . . . . . . . . . . . . . . . . . . . . . 2.37

Delbrueck & Co v Manufacturers Hanover Trust, 609 F 2d 1047 (2nd Cir, 1979) 1051 . . . . . 9.22
Despina R [1979] AC 685 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.90
Devaynes v Noble, Clayton’s Case (1816) 1 Mer 529 . . . . . . . . . . . . . . . . . . . . . . . 6.89, 6.91, 6.94
Diamantides v J P Morgan Chase Bank [2005] EWCA Civ 1612 . . . . . . . . . . . . . . . . . . . . . . 9.20
Diplock, Re [1948] Ch 465�����������������������������������������������������������������������������������������������������6.78
Douglas v Hello! Ltd (No 3) [2008] 1 AC 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.16
Drew v Nunn (1879) 4 QBD 661 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.15

Earl of Haig’s Trustees v IR 1939 SC 676 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.21

Egon Oldendorff v Libera Corp [1995] 2 Lloyd’s Rep 64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.71
El Ajou v Dollar Land Holdings plc [1993] 3 All ER 717 . . . . . . . . . . . . . . . . . . 6.49, 6.56, 6.106
Emperor of Austria v Day and Lossuth (1861) 3 De G F & J 217, 45 ER 861 . . . . . . . 3.18, 11.12
Environment Agency v Churngold Recycling [2014] EWCA Civ 909, [2015]
Env LR 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.29

Foley v Hill (1848) HLC 28 . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.15, 6.30, 7.13, 9.09, 9.10, 11.47
Footman Bower & Co Ltd, Re [1961] 1 Ch 443 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.90
Foskett v McKeown [2001] 1 AC 102 . . . . . . . . . . . . . . . 4.68, 6.75, 6.79, 6.85, 6.87, 6.105, 9.09
Foster v Driscoll [1920] 1 KB 470 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.82
Fourie v Le Roux [2007] 1 All ER 1087 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.15

Government of India v Taylor [1955] AC 491 (HL) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.18

Governor & Company of the Bank of Scotland v A Ltd [2001] 1 WLR 751 . . . . . . . . . 9.09, 9.20
Governor and Company of the Bank of Scotland v Alfred Truman [2005]
EWHC 583 (QB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.22

Hallett’s Estate, Re (1880) 13 ChD 696 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.78, 6.95, 6.105

Halpern v Halpern [2007] EWCA Civ 291, [2008] QB 195 . . . . . . . . . . . . . . . . . . . . . . . . . . 5.37
Hill & Al v Lewis (1693), 1 Salk 132, 91 ER 124 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.44
Hollicourt (Contracts) Ltd v Bank of Ireland [2001] 2 WLR 290 . . . . . . . . . . . . . . . . . 9.11, 9.15
Hopkins v Geary (1702), Hill Ann BR Guildhall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.44
Hunter v Moss [1993] 1 WLR 934, [1994] 1 WLR 452(CA) . . . . . . . . . . . . . . . . . . . . . . . . . 6.47

IBL Ltd v Coussens [1991] 2 All ER 133 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.104

IRC v Muller & Co’s Margarine Ltd [1901] AC 217 . . . . . . . . . . . . . . . . . . . . . . . . . 5.108, 5.110
Indian Oil Corporation Ltd v Greenstone Shipping SA (Panama) [1987] QB 345 . . . . . . . . . . 6.87
Industrial and Commercial Bank Ltd v Banco Ambrosiano Veneto SpA [2003]
1 SLR 221 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.24
Ireland v Livingstone (1872) LR 5 HL 395 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.13
Isaack v Clark (1615) Bulstrode 307; 1 Rolle 126 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.51

J & P Coats Ltd v Inland Revenue Commissioners [1897] 1 QB 778, [1897] 2 QB 423 . . . . . 2.35
J P Morgan Chase Bank v Springwell Navigation Corporation [2008] EWHC
1186 (Comm), aff’d [2010] EWCA Civ 1221 . . . . . . . . . . . . . . . . . . . . . . . . 9.11, 9.19, 9.20
Jervis v Harris [1996] Ch 195 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.43
Joachimson v Swiss Bank Corporation [1921] 3 KB 110 . . . . . . . . . . . 6.15, 6.87, 6.90, 9.10, 9.12
John Foster & Sons Ltd v Inland Revenue Commissioners [1894] 1 QB 516 . . . . . . . . . . . . . . 2.35

xviii
xi

Table of Cases

K v National Westminster Bank plc [2006] 2 All ER (Comm) 655 . . . . . . . . . . . . . . . . . . . . . 9.23

Karak Rubber Co Ltd v Burden [1972] 1 WLR 602 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.18
Kotonou v National Westminster Bank plc [2010] EWHC 1659 (Ch) . . . . . . . . . . . . . . . . . . 9.20
Kuwait Airways Corporation v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883 . . . . . . . . . . 6.29

Laconia [1977] AC 850 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.25

Ladbroke & Co v Todd (1914) 30 TLR 433 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10
Lancare Services Ltd v Barclays Bank plc [2009] EWCA Civ 752 . . . . . . . . . . . . . . . . . . . . . . . 9.22
Lawlor v Sandvik Mining and Construction Mobile Crushers and Screens Ltd [2013]
EWCA Civ 365, [2013] 1 Lloyd’s Rep 98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.63
Leask v Commonwealth [1996] HCA 29, (1996) 187 CLR 579 . . . . . . . . . . . . . . . . . . . . . . 10.41
Lehman Brothers International (Europe) [2012] UKSC 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.09
Leigh and Sillavan Ltd v Aliakmon Shipping Co Ltd [1986] AC 785 . . . . . . . . . . . . . . . . . . . . 9.08
Libyan Arab Foreign Bank v Bankers Trust Co [1989] QB 728 . . . . . . . . . . . . . . . . . . . . . . . . 5.83
Lipkin Gorman v Karpnale (a firm) [1991] 2 AC 548 . . . . . . . . . . . . 6.30, 6.59, 6.103, 9.16, 9.19
Littlewoods Mail Order Stores v Inland Revenue Commissioners [1963] AC 135 . . . . . . . . . . 2.35
Lloyds Bank Ltd v Bundy [1975] QB 326 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.20
London and Mediterranean Bank, Re (1870) LR 5 Ch App 567 . . . . . . . . . . . . . . . . . . . . . . . 9.15
London Joint Stock Bank v Macmillan [1918] AC 777 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.13
London Joint Stock Bank v Simmon [1892] AC 201 (HL) . . . . . . . . . . . . . . . . . . . . . . . . . . 11.16
Lupofresh Ltd v Sapporo Breweries Ltd [2013] EWCA Civ 948, [2013]
2 Lloyd’s Rep 444 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.71

Macmillan Inv v Bishopsgate Investment Trust plc (No 3) [1995] 1 WLR 978 . . . . . . . . . . . . 6.98
Mansouri v Singh [1986] 1 WLR 1391 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.88
Mardorf Peach & Co Ltd. v Attica Sea Carriers Corporation of Liberia,
The Laconia [1977] AC 850 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.25
Mercedes-​Benz v Leiduck [1996] AC 284 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.15
Midland Bank v Seymour [1955] 2 Lloyd’s Rep 147 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.13
Miliangos v George Frank (Textiles) Ltd [1976] AC 443 . . . . . . . . . . . . . . . . . . . 5.90, 5.92, 11.10
Miller v Race (1758) 1 Burr. 452; 97 ER 398 (KB) . . . . . . . . . . . . . . 4.37, 6.51, 6.59, 6.61, 6.62,
7.33, 11.08, 11.12
Montagu’s ST, Re [1987] Ch 264 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.105
Moss v Hancock [1899] 2 QB 111 . . . . . . . . . 2.13, 6.64–​6.65, 11.13, 11.23, 11.41, 11.51, 11.53
Murphy v HSBC Bank plc [2004] EWHC 467 (Ch) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.20

N Joachimson v Swiss Bank Corporation [1921] 3 KB 110 . . . . . . . . . 6.15, 6.87, 6.90, 9.10, 9.12
NSB Ltd v Worldplay Ltd [2012] EWHC 927 (Comm) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.22
National Commercial Bank (Jamaica) Ltd v Hew [2003] UKPC 51 . . . . . . . . . . . . . . . . . . . . 9.19
National Provincial Bank Ltd v Hastings Car Mart Ltd [1965] AC 1175 . . . . . . . . . . . . . . . . . 9.09
National Westminster Bank Ltd v Halesowen Presswork Assemblies Ltd [1972] AC 785 . . . . . 9.15
Navee Ltd v The Commissioners for Her Majesty’s Revenue and Customs
[2017] UKFTT 0602 (TC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.04

OBG Ltd v Allan [2007] UKHL 21, [2008] 1 AC 1 . . . . 2.04, 6.29, 6.42, 6.46, 6.102, 7.30, 9.08
Office of Fair Trading v Lloyds TSB Bank plc [2008] 1 Lloyd’s Rep 30 . . . . . . . . . . . . . . . . . . 9.22
One Step (Support) Ltd v Morris-​Garner [2018] 2 WLR 1353 . . . . . . . . . . . . . . . . . . . . . . . . 7.21
Owners of MV Despina R, The Despina R [1979] AC 685 . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.90

PJS v News Group Newspapers [2016] UKSC 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.16

PML v Person(s) Unknown (responsible for demanding money on 27 February
2018) [2018] EWHC 838 (QB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.01
Papadimitriou v Crédit Agricole Corpn and Investment Bank [2015] UKPC 13,
[2015] 1 WLR 4265 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.98

xix
Another random document with
no related content on Scribd:
 General Miles,
Report
(Annual Reports of the War Department, 1898,
volume 1, part 2, page 36).

{618}

UNITED STATES OF AMERICA: A. D. 1898 (July-September).

The War with Spain.
Capture of Manila.
Relations with the Filipino insurgents.
General Merritt's report.
Aguinaldo declared President of the Philippine Republic.

"Immediately after my arrival [July 25] I visited General

Greene's camp and made a reconnaissance of the position held
by the Spanish, and also the opposing lines of the insurgent
forces, hereafter to be described. I found General Greene's
command encamped on a strip of sandy land running parallel to
the shore of the bay and not far distant from the beach, but
owing to the great difficulties of landing supplies, the
greater portion of the force had shelter tents only, and were
suffering many discomforts, the camp being situated in a low,
flat place, without shelter from the heat of the tropical sun
or adequate protection during the terrific downpours of rain
so frequent at this season. I was at once struck by the
exemplary spirit of patient, even cheerful, endurance shown by
the officers and men under such circumstances, and this
feeling of admiration for the manner in which the American
soldier, volunteer and regular alike, accept the necessary
hardships of the work they have undertaken to do, has grown
and increased with every phase of the difficult and trying
campaign which the troops of the Philippine expedition have
brought to such a brilliant and successful conclusion.

"I discovered during my visit to General Greene that the left

or north flank of his brigade camp extended to a point on the
'Calle Real' about 3,200 yards from the outer line of Spanish
defenses of the city of Manila. This Spanish line began at the
powder magazine, or old Fort San Antonio, within a hundred
yards of the beach and just south of the Malate suburb of
Manila, and stretched away to the Spanish left in more or less
detached works, eastward, through swamps and rice fields,
covering all the avenues of approach to the town and
encircling the city completely. The Filipinos, or insurgent
forces at war with Spain, had, prior to the arrival of the
American land forces, been waging a desultory warfare with the
Spaniards for several months, and were at the time of my
arrival in considerable force, variously estimated and never
accurately ascertained, but probably not far from 12,000 men.
These troops, well supplied with small arms, with plenty of
ammunition and several field guns, had obtained positions of
investment opposite to the Spanish line of detached works
throughout their entire extent; and on the particular road
called the 'Calle Real,' passing along the front of General
Greene's brigade camp and running through Malate to Manila,
the insurgents had established an earthwork or trench within
800 yards of the powder-magazine fort. They also occupied as
well the road to the right, leading from the village of Pasay,
and the approach by the beach was also in their possession.
This anomalous state of affairs, namely, having a line of
quasi-hostile native troops between our forces and the Spanish
position, was, of course, very objectionable, but it was
difficult to deal with, owing to the peculiar condition of our
relations with the insurgents, which may be briefly stated as
follows:

"Shortly after the naval battle of Manila Bay, the principal

leader of the insurgents, General Emilio Aguinaldo, came to
Cavite from Hongkong, and, with the consent of our naval
authorities, began active work in raising troops and pushing
the Spaniards in the direction of the city of Manila. Having
met with some success, and the natives flocking to his
assistance, he proclaimed an independent government of
republican form, with himself as president, and at the time of
my arrival in the islands the entire edifice of executive and
legislative departments and subdivision of territory for
administrative purposes had been accomplished, at least on
paper, and the Filipinos held military possession of many
points in the islands other than those in the vicinity of
Manila. As General Aguinaldo did not visit me on my arrival
nor offer his services as a subordinate military leader, and
as my instructions from the President fully contemplated the
occupation of the islands by the American land forces, and
stated that 'the powers of the military occupant are absolute
and supreme and immediately operate upon the political
condition of the inhabitants,' I did not consider it wise to
hold any direct communication with the insurgent leader until
I should be in possession of the city of Manila, especially as
I would not until then be in a position to issue a
proclamation and enforce my authority, in the event that his
pretensions should clash with my designs.

"For these reasons the preparations for the attack on the city
were pressed and military operations conducted without
reference to the situation of the insurgent forces. The wisdom
of this course was subsequently fully established by the fact
that when the troops of my command carried the Spanish
intrenchments, extending from the sea to the Pasay road on the
extreme Spanish right, we were under no obligations, by
pre-arranged plans of mutual attack, to turn to the right and
clear the front still held against the insurgents, but were
able to move forward at once and occupy the city and suburbs.

"To return to the situation of General Greene's brigade as I

found it on my arrival, it will be seen that the difficulty in
gaining an avenue of approach to the Spanish line lay in the
fact of my disinclination to ask General Aguinaldo to withdraw
from the beach and the 'Calle Real,' so that Greene could move
forward. This was overcome by instructions to General Greene
to arrange, if possible, with the insurgent brigade commander
 in his immediate vicinity to move to the right and allow the
American forces unobstructed control of the roads in their
immediate front. No objection was made, and accordingly
General Greene's brigade threw forward a heavy outpost line on
the 'Calle Real' and the beach and constructed a trench, in
which a portion of the guns of the Utah batteries was placed.
The Spanish, observing this activity on our part, made a very
sharp attack with infantry and artillery on the night of July
31. The behavior of our troops during this night attack was
all that could be desired, and I have, in cablegrams to the
War Department, taken occasion to commend by name those who
deserve special mention for good conduct in the affair. Our
position was extended and strengthened after this and resisted
successfully repeated night attacks, our forces suffering,
however, considerable loss in wounded and killed, while the
losses of the enemy, owing to the darkness, could not be
ascertained.

"The strain of the night fighting and the heavy details for
outpost duty made it imperative to re-enforce General Greene's
troops with General MacArthur's brigade, which had arrived in
transports on the 31st of July. The difficulties of this
operation can hardly be overestimated. The transports were at
anchor off Cavite, 5 miles from a point on the beach where it
was desired to disembark the men.
{619}
Several squalls, accompanied by floods of rain, raged day
after day, and the only way to get the troops and supplies
ashore was to load them from the ship's side into native
lighters (called 'cascos') or small steamboats, move them to a
point opposite the camp, and then disembark them through the
surf in small boats, or by running the lighters head on to the
beach. The landing was finally accomplished, after days of
hard work and hardship; and I desire here to express again my
admiration for the fortitude and cheerful willingness of the
men of all commands engaged in this operation. Upon the
assembly of MacArthur's brigade in support of Greene's, I had
about 8,500 men in position to attack, and I deemed the time
had come for final action. During the time of the night
attacks I had communicated my desire to Admiral Dewey that he
would allow his ships to open fire on the right of the Spanish
line of intrenchments, believing that such action would stop
the night firing and loss of life, but the admiral had
declined to order it unless we were in danger of losing our
position by the assaults of the Spanish, for the reason that,
in his opinion, it would precipitate a general engagement, for
which he was not ready. Now, however, the brigade of General
MacArthur was in position and the 'Monterey' had arrived, and
under date of August 6 Admiral Dewey agreed to my suggestion
that we should send a joint letter to the captain-general
notifying him that he should remove from the city all
non-combatants within forty-eight hours, and that operations
against the defenses of Manila might begin at any time after
the expiration of that period.

"This letter was sent August 7, and a reply was received the
same date, to the effect that the Spanish were without places
of refuge for the increased numbers of wounded, sick women,
and children now lodged within the walls. On the 9th a formal
joint demand for the surrender of the city was sent in. This
demand was based upon the hopelessness of the struggle on the
part of the Spaniards, and that every consideration of
humanity demanded that the city should not be subjected to
bombardment under such circumstances. The captain-general's
reply, of same date, stated that the council of defense had
declared that the demand could not be granted; but the
captain-general offered to consult his Government if we would
allow him the time strictly necessary for the communications
by way of Hongkong. This was declined on our part for the
reason that it could, in the opinion of the admiral and
myself, lead only to a continuance of the situation, with no
immediate result favorable to us, and the necessity was
apparent and very urgent that decisive action should be taken
at once to compel the enemy to give up the town, in order to
relieve our troops from the trenches and from the great
exposure to unhealthy conditions which were unavoidable in a
bivouac during the rainy season.

"The seacoast batteries in defense of Manila are so situated

that it is impossible for ships to engage them without firing
into the town, and as the bombardment of a city filled with
women and children, sick and wounded, and containing a large
amount of neutral property, could only be justified as a last
resort, it was agreed between Admiral Dewey and myself that an
attempt should be made to carry the extreme right of the
Spanish line of intrenchments in front of the positions at
that time occupied by our troops, which, with its flank on the
seashore, was entirely open to the fire of the navy. It was
not my intention to press the assault at this point, in case
the enemy should hold it in strong force, until after the navy
had made practicable breaches in the works and shaken the troops
holding them, which could not be done by the army alone, owing
to the absence of siege guns. … It was believed, however, as
most desirable, and in accordance with the principles of
civilized warfare, that the attempt should be made to drive
the enemy out of his intrenchments before resorting to the
bombardment of the city. …

"All the troops were in position on the 13th at an early hour

in the morning. About 9 a. m. on that day our fleet steamed
forward from Cavite and before 10 a. m. opened a hot and
accurate fire of heavy shells and rapid-fire projectiles on
the sea flank of the Spanish intrenchments at the powder
magazine fort, and at the same time the Utah batteries, in
position in our trenches near the 'Calle Real,' began firing
with great accuracy. At 10.25, on a prearranged signal from
our trenches that it was believed our troops could advance,
the navy ceased firing, and immediately a light line of
skirmishers from the Colorado regiment of Greene's brigade
passed over our trenches and deployed rapidly forward, another
line from the same regiment from the left flank of our
earthworks advancing swifty up the beach in open order. Both
these lines found the powder-magazine fort and the trenches
flanking it deserted, but as they passed over the Spanish
works they were met by a sharp fire from a second line
situated in the streets of Malate, by which a number of men
were killed and wounded, among others the soldier who pulled
down the Spanish colors still flying on the fort and raised
our own.

"The works of the second line soon gave way to the determined
advance of Greene's troops, and that officer pushed his
brigade rapidly through Malate and over the bridges to occupy
Binondo and San Miguel, as contemplated in his instructions.
In the meantime the brigade of General MacArthur, advancing
simultaneously on the Pasay road, encountered a very sharp
fire, coming from the blockhouses, trenches, and woods in his
front, positions which it was very difficult to carry, owing
to the swampy condition of the ground on both sides of the
roads and the heavy undergrowth concealing the enemy. With
much gallantry and excellent judgment on the part of the
brigade commander and the troops engaged these difficulties
were overcome with a minimum loss, and MacArthur advanced and
held the bridges and the town of Malate, as was contemplated
in his instructions.

"The city of Manila was now in our possession, excepting the

walled town, but shortly after the entry of our troops into
Malate a white flag was displayed on the walls, whereupon
Lieutenant Colonel C. A. Whittier, United States Volunteers,
of my staff, and Lieutenant Brumby, United States Navy,
representing Admiral Dewey, were sent ashore to communicate
with the Captain-General. I soon personally followed these
officers into the town, going at once to the palace of the
Governor-General, and there, after a conversation with the
Spanish authorities, a preliminary agreement of the terms of
capitulation was signed by the Captain-General and myself.
This agreement was subsequently incorporated into the formal
 terms of capitulation, as arranged by the officers
representing the two forces, a copy of which is hereto
appended and marked.
{620}
Immediately after the surrender the Spanish colors on the sea
front were hauled down and the American flag displayed and
saluted by the guns of the navy. The Second Oregon Regiment,
which had proceeded by sea from Cavite, was disembarked and
entered the walled town as a provost guard, and the colonel
was directed to receive the Spanish arms and deposit them in
places of security. The town was filled with the troops of the
enemy driven in from the intrenchments, regiments formed and
standing in line in the streets, but the work of disarming
proceeded quietly and nothing unpleasant occurred.

"In leaving the subject of the operations of the 13th, I

desire here to record my appreciation of the admirable manner
in which the orders for attack and the plan for occupation of
the city were carried out by the troops exactly as
contemplated. I submit that for troops to enter under fire a
town covering a wide area, to rapidly deploy and guard all
principal points in the extensive suburbs, to keep out the
insurgent forces pressing for admission, to quietly disarm an
army of Spaniards more than equal in numbers to the American
troops, and finally by all this to prevent entirely all
rapine, pillage, and disorder, and gain entire and complete
possession of a city of 300,000 people, filled with natives
hostile to the European interests, and stirred up by the
knowledge that their own people were fighting in the outside
trenches, was an act which only the law-abiding, temperate,
resolute American soldier, well and skillfully handled by his
regimental and brigade commanders, could accomplish. …

"The amount of public funds and the numbers of the prisoners

of war and small arms taken have been reported in detail by
cable. It will be observed that the trophies of Manila were
nearly $900,000, 13,000 prisoners, and 22,000 arms.
Immediately after the surrender my headquarters were
established in the ayuntamiento, or city office of the
Governor-General, where steps were at once inaugurated to set
up the government of military occupancy. … On the 16th a
cablegram containing the text of the President's proclamation
directing a cessation of hostilities was received by me, and
at the same time an order to make the fact known to the
Spanish authorities, which was done at once. This resulted in
a formal protest from the Governor-General in regard to the
transfer of public funds then taking place, on the ground that
the proclamation was dated prior to the surrender. To this I
replied that the status quo in which we were left with the
cessation of hostilities was that existing at the time of the
receipt by me of the official notice, and that I must insist
upon the delivery of the funds. The delivery was made under
protest.

"After the issue of my proclamation and the establishment of

my office as military governor, I had direct written
communication with General Aguinaldo on several occasions. He
recognized my authority as military governor of the town of
Manila and suburbs, and made professions of his willingness to
withdraw his troops to a line which I might indicate, but at
the same time asking certain favors for himself. The matters
in this connection had not been settled at the date of my
departure. Doubtless much dissatisfaction is felt by the rank
and file of the insurgents that they have not been permitted
to enjoy the occupancy of Manila, and there is some ground for
trouble with them owing to that fact, but, notwithstanding
many rumors to the contrary, I am of the opinion that the
leaders will be able to prevent serious disturbances, as they
are sufficiently intelligent and educated to know that to
antagonize the United States would be to destroy their only
chance of future political improvement.

"On the 28th instant I received a cablegram directing me to

transfer my command to Major-General Otis, United States
 Volunteers, and to proceed to Paris, France, for conference
with the peace commissioners. I embarked on the steamer
'China' on the 30th in obedience to these instructions."

Report of General Wesley Merritt

(Annual Reports of the War Department, 1898,
volume 1, pages 39-45).

"Aguinaldo … retired to Malalos, about 25 miles to the

northward, leaving his troops entrenched round Manila, and
there with considerable pomp and ceremony on September 29th,
1898, he was declared First President of the Philippine
Republic, and the National Congress was opened with Pedro
Paterno as President of that assembly."

G. J. Younghusband,
The Philippines and Round About,
page 27.

UNITED STATES OF AMERICA: A. D. 1898 (July-December).

War with Spain.
Suspension of hostilities.
Negotiation of Treaty of Peace.
Instructions to American Commissioners.
Relinquishment of Spanish sovereignty over Cuba and cession
of Porto Rico, the island of Guam and the Philippine Islands
to the United States.

In his message to Congress, December 5, 1898, President

McKinley gave the following account of his reception of
overtures from Spain, for the termination of the war, and of
the negotiations which resulted in a treaty of peace:

"The annihilation of Admiral Cervera's fleet, followed by the

capitulation of Santiago, having brought to the Spanish
Government a realizing sense of the hopelessness of continuing
a struggle now become wholly unequal, it made overtures of
 peace through the French Ambassador, who, with the assent of
his Government, had acted as the friendly representative of
Spanish interests during the war. On the 26th of July M.
Cambon presented a communication signed by the Duke of
Almodovar, the Spanish Minister of State, inviting the United
States to state the terms upon which it would be willing to
make peace. On the 30th of July, by a communication addressed
to the Duke of Almodovar and handed to M. Cambon, the terms of
this Government were announced, substantially as in the
protocol afterwards signed. On the 10th of August the Spanish
reply, dated August 7th, was handed by M. Cambon to the
Secretary of State. It accepted unconditionally the terms
imposed as to Cuba, Porto Rico and an island of the Ladrone
group, but appeared to seek to introduce inadmissible
reservations in regard to our demand as to the Philippine
Islands. Conceiving that discussion on this point could
neither be practical nor profitable, I directed that, in order
to avoid misunderstanding, the matter should be forthwith
closed by proposing the embodiment in a formal protocol of the
terms upon which the negotiations for peace were to be
undertaken.
{621}
The vague and inexplicit suggestion of the Spanish note could
not be accepted, the only reply being to present as a virtual
ultimatum a draft of protocol embodying the precise terms
tendered to Spain in our note of July 30th, with added
stipulations of detail as to the appointment of commissioners
to arrange for the evacuation of the Spanish Antilles. On
August 12th M. Cambon announced his receipt of full powers to
sign the protocol submitted. Accordingly, on the afternoon of
August 12th M. Cambon, as the plenipotentiary of Spain, and
the Secretary of State, as the plenipotentiary of the United
States, signed a protocol providing:

Article I—
Spain will relinquish all claim of sovereignty over and title
to Cuba.
Article II-
Spain will cede to the United States the island of Porto Rico
and other islands now under Spanish sovereignty in the West
Indies and also an island in the Ladrones to be selected by
the United States.

Article III-
The United States will occupy and hold the city, bay and
harbor of Manila pending the conclusion of a treaty of peace,
which shall determine the control, disposition and government
of the Philippines.

The fourth article provided for the appointment of joint

commissions on the part of the United States and Spain, to
meet in Havana and San Juan, respectively, for the purpose of
arranging and carrying out the details of the stipulated
evacuation of Cuba, Porto Rico and other Spanish islands in
the West Indies.

The fifth article provided for the appointment of not more

than five commissioners on each side, to meet at Paris not
later than October 1st, and proceed to the negotiation and
conclusion of a treaty of peace, subject to ratification
according to the respective constitutional forms of the two
countries.

The sixth and last article provided that upon the signature of
the protocol hostilities between the two countries should be
suspended and that notice to that effect should be given as
soon as possible by each government to the commanders of its
military and naval forces. Immediately upon the conclusion of
the protocol I issued a proclamation of August 12th,
suspending hostilities on the part of the United States. The
necessary orders to that end were at once given by telegraph.
The blockade of the ports of Cuba and San Juan de Porto Rico
was in like manner raised. On the 18th of August the
muster-out of 100,000 Volunteers, or as near that number as
was found to be practicable, was ordered. On the 1st of
December 101,165 officers and men had been mustered out and
discharged from the service and 9,002 more will be mustered
out by the 10th of this month. Also a corresponding number of
general staff officers have been honorably discharged from the
service. The military commissions to superintend the
evacuation of Cuba, Porto Rico and the adjacent islands were
forthwith appointed: For Cuba, Major-General James F. Wade,
Rear-Admiral William T. Sampson, Major-General Matthew C.
Butler. For Porto Rico, Major-General John R. Brooke,
Rear-Admiral Winfield S. Schley and Brigadier-General William
W. Gordon, who soon afterwards met the Spanish commissioners
at Havana and San Juan respectively. … Pursuant to the fifth
article of the protocol, I appointed William H. Day, late
Secretary of State; Cushman K. Davis, William P. Frye and
George Gray, Senators of the United States, and Whitelaw Reid,
to be the peace commissioners on the part of the United
States. Proceeding in due season to Paris they there met on
the first of October five commissioners, similarly appointed
on the part of Spain."

Message of the President to Congress,

December 5, 1898.

The instructions given (September 16) by President McKinley to

the commissioners appointed to treat for peace with Spain, and
the correspondence between the commissioners at Paris and the
President and the Secretary of State at Washington during the
progress of the negotiations, were communicated confidentially
to the United States Senate on the 30th of January, 1899, but
not published until February, 1901, when the injunction of
secrecy was removed and the printing of the papers ordered by
vote of the Senate. The chief interest of these papers lies in
their disclosure of what passed between the American executive
and the peace commissioners on the subject of the Philippine
Islands which led to the demand for their entire surrender by
Spain.

In his instructions of September 16th to the commissioners, on

their departure for the meeting with Spanish commissioners at
Paris, the President wrote on this subject: "By article 6 of
the protocol it was agreed that hostilities between the two
countries should be suspended, and that notice to that effect
should be given as soon as possible by each Government to the
Commanders of its military and naval forces. Such notice was
given by the Government of the United States immediately after
the signature of the protocol, the forms of the necessary
orders having previously been prepared. But before notice
could reach the commanders of the military and naval forces of
the United States in the Philippines they captured and took
possession by conquest of the city of Manila and its suburbs,
which are therefore held by the United States by conquest as
well as by virtue of the protocol. In view of what has taken
place it is necessary now to determine what shall be our
future relations to the Philippines. …

"Our aim in the adjustment of peace should be directed to

lasting results and to the achievement of the common good
under the demands of civilization rather than to ambitious
designs. The terms of the protocol were framed upon this
consideration. The abandonment of the Western Hemisphere by
Spain was an imperative necessity. In presenting that
requirement we only fulfilled a duty universally acknowledged.
It involves no ungenerous reference to our recent foe, but
simply a recognition of the plain teachings of history, to say
that it was not compatible with the assurance of permanent
peace on and near our own territory that the Spanish flag
should remain on this side of the sea. This lesson of events
and of reason left no alternative as to Cuba, Porto Rico, and
the other islands belonging to Spain in this hemisphere. The
Philippines stand upon a different basis. It is none the less
true, however, that, without any original thought of complete
or even partial acquisition, the presence and success of our
 arms at Manila imposes upon us obligations which we can not
disregard. The march of events rules and overrules human
action. A vowing unreservedly the purpose which has animated
all our effort, and still solicitous to adhere to it, we can
not be unmindful that without any desire or design on our part
the war has brought us new duties and responsibilities which
we must meet and discharge as becomes a great nation on whose
growth and career from the beginning the Ruler of Nations has
plainly written the high command and pledge of civilization.

{622}

"Incidental to our tenure in the Philippines is the commercial

opportunity to which American statesmanship can not be
indifferent. It is just to use every legitimate means for the
enlargement of American trade; but we seek no advantages in
the Orient which are not common to all. Asking only the open
door for ourselves, we are ready to accord the open door to
others. The commercial opportunity which is naturally and
inevitably associated with this new opening depends less on
large territorial possessions than upon an adequate commercial
basis and upon broad and equal privileges. It is believed that
in the practical application of these guiding principles the
present interests of our country and the proper measure of its
duty, its welfare in the future, and the consideration of its
exemption from unknown perils will be found in full accord
with the just, moral, and humane purpose which was invoked as
our justification in accepting the war.

"In view of what has been stated, the United States can not
accept less than the cession in full right and sovereignty of
the island of Luzon. It is desirable, however, that the United
States shall acquire the right of entry for vessels and
merchandise belonging to citizens of the United States into
such ports of the Philippines as are not ceded to the United
States upon terms of equal favor with Spanish ships and
merchandise, both in relation to port and customs charges and
rates of trade and commerce, together with other rights of
protection and trade accorded to citizens of one country
within the territory of another. You are therefore instructed
to demand such concession, agreeing on your part that Spain
shall have similar rights as to her subjects and vessels in
the ports of any territory in the Philippines ceded to the
United States."

On the 7th of October, Mr. Day, on behalf of the American

commissioners, cabled a long communication from Paris to Mr.
Hay, his successor in the United States Department of State,
summarizing testimony given before the Commission by General
Merritt, lately commanding in the Philippines, and statements
brought by General Merritt from Admiral Dewey, General Greene,
and others. In part, the telegram was as follows:

"General Anderson, in correspondence with Aguinaldo in June

and July, seemed to treat him and his forces as allies and
native authorities, but subsequently changed his tone. General
Merritt reports that Admiral Dewey did not approve this
correspondence and advised against it. Merritt and Dewey both
kept clear of any compromising communications. Merritt
expresses opinion we are in no way committed to any insurgent
programme. Answering questions of Judge Day, General Merritt
said insurrection practically confined to Luzon. Tribal and
religious differences between the inhabitants of various
islands. United States has helped rather than injured
insurrection. Under no obligation other than moral to help
natives. Natives of Luzon would not accept Spanish rule, even
with amnesty. Insurgents would be victorious unless Spaniards
did better in future than in past. Insurgents would fight
among themselves if they had no common enemy. Think it
feasible for United States to take Luzon and perhaps some
adjacent islands and hold them as England does her colonies.
Natives could not resist 5,000 troops. … General Merritt
thinks that if United States attempted to take possession of
Luzon, or all the group as a colony, Aguinaldo and his
immediate followers would resist it, but his forces are
divided and his opposition would not amount to anything. If
the islands were divided, filibustering expeditions might go
from one island to another, thus exposing us to constant
danger of conflict with Spain. In answer to questions of
Senator Frye, Merritt said insurgents would murder Spaniards
and priests in Luzon and destroy their property if the United
States withdrew. United States under moral obligation to stay
there. He did not know whether the effect of setting up a
government by the United States in Luzon would be to produce
revolutions in other islands. It might cause reforms in their
government. … Answering questions of Mr. Gray, Merritt said
consequences in case of either insurgent or Spanish triumph
made it doubtful whether United States would be morally
justified in withdrawing. Our acts were ordinary acts of war,
as if we had attacked Barcelona, but present conditions in
Philippine Islands were partly brought about by us. Insurgents
not in worse condition by our coming. Spaniards hardly able to
defend themselves. If we restored them to their position and
trenches, they might maintain themselves with the help of a
navy when we withdrew. Did not know that he could make out a
responsibility by argument, but he felt it. It might be
sentimental. He thought it would be an advantage if the United
States would change its policy and keep the islands. (He)
thought our interests in the East would be helped by the cheap
labor in the Philippines, costing only from 20 to 80 cents a
day, according to skill. … Answering questions of Mr. Reid,
Merritt said he considered capture of Manila practically
capture of group. Nothing left of Spanish sovereignty that was
not at mercy of the United States. Did not think our humanity
bounded by geographical lines. After Dewey's victory we armed
insurgents to some extent, but Dewey says it was
over-estimated. Insurgents bought arms from Hongkong merchants
with Dewey's cognizance, but Dewey was not in favor of allowing
this to continue. Spaniards would destroy Aguinaldo and his
principal followers, if allowed to do so."
 October 25, Judge Day cabled a message to Washington, saying:
"Differences of opinion among commissioners concerning
Philippine Islands are set forth in statements transmitted
herewith. On these we request early consideration and explicit
instructions. Liable now to be confronted with this question
in joint commission almost immediately." The differing
statements then transmitted were three in number, the first of
them signed by Messrs. Davis, Frye, and Reid, who said:
"Information gained by commission in Paris leads to conviction
that it would be naval, political, and commercial mistake to
divide the archipelago. Nearly all expert testimony taken
tends to this effect. As instructions provide for retention at
least of Luzon, we do not consider question of remaining in
Philippine Islands at all as now properly before us. We
therefore ask for extension of instructions. Spain governed
and defended these islands from Manila, and with destruction
of her fleet and the surrender of her army we became as
complete masters of the whole group as she had been, with
nothing needed to complete the conquest save to proceed with
the ample forces we had at hand to take unopposed possession.
{623}
The Ladrones and Carolines were also governed from the same
capital by the same governor-general. National boundaries
ought to follow natural divisions, but there is no natural
place for dividing Philippine Islands. … If we do not want the
islands ourselves, better to control their disposition; that
is, to hold the option on them rather than to abandon it.
Could then at least try to protect ourselves by ample treaty
stipulations with the acquiring powers. Commercially, division
of archipelago would not only needlessly establish dangerous
rivals at our door, but would impair value of part we kept."

Disagreeing with this view, Judge Day said:

"I am unable to agree that we should peremptorily demand the

entire Philippine island group. In the spirit of our
instructions, and bearing in mind the often declared
disinterestedness of purpose and freedom from designs of
conquest with which the war was undertaken, we should be
consistent in our demands in making peace. Territory
permanently held must be taken as war indemnity and with due
regard to our responsibility because of the conduct of our
military and naval authorities in dealing with the insurgents.
Whether this conduct was wise or unwise is not now important. We
cannot leave the insurgents to mere treaty stipulations or to
their unaided resources, either to form a government or to
battle against a foe which (although) unequal to us, might
readily overcome them. On all hands it is agreed that the
inhabitants of the islands are unfit for self-government. This
is particularly true of Mindanao and the Sulu group. Only
experience can determine the success of colonial expansion
upon which the United States is entering. It may prove
expensive in proportion to the scale upon which it is tried
with ignorant and semibarbarous people at the other side of
the world. It should therefore be kept within bounds." Judge
Day, accordingly, suggested a division of the archipelago that
would give to the United States Luzon, Mindoro, and Palawan,
and control the entrance to the China Sea. Senator Gray, in a
third statement, dissented from both these views, saying: "The
undersigned can not agree that it is wise to take Philippine
Islands in whole or in part. To do so would be to reverse
accepted continental policy of the country, declared and acted
upon throughout our history. Propinquity governs the case of
Cuba and Porto Rico. Policy proposed introduces us into
European politics and the entangling alliances against which
Washington and all American statesmen have protested. It will
make necessary a navy equal to largest of powers; a greatly
increased military establishment; immense sums for
fortifications and harbors; multiply occasions for dangerous
complications with foreign nations, and increase burdens of
taxation. Will receive in compensation no outlet for American
labor in labor market already overcrowded and cheap; no area
for homes for American citizens; climate and social conditions
demoralizing to character of American youth; new and disturbing
questions introduced into our politics; church question
menacing. On whole, instead of indemnity—injury. The
undersigned can not agree that any obligation incurred to
insurgents is paramount to our own manifest interests. … No
place for colonial administration or government of subject
people in American system. So much from standpoint of
interest; but even conceding all benefits claimed for
annexation, we thereby abandon the infinitely greater benefit
to accrue from acting the part of a great, powerful, and
Christian nation; we exchange the moral grandeur and strength
to be gained by keeping our word to nations of the world and
by exhibiting a magnanimity and moderation in the hour of
victory that becomes the advanced civilization we claim, for
doubtful material advantages and shameful stepping down from
high moral position boastfully assumed. We should set example
in these respects, not follow in the selfish and vulgar greed
for territory which Europe has inherited from medieval times.
Our declaration of war upon Spain was accompanied by a solemn
and deliberate definition of our purpose. Now that we have
achieved all and more than our object, let us simply keep our
word. … At the very least let us adhere to the President's
instructions and if conditions require the keeping of Luzon
forego the material advantages claimed in annexing other
islands. Above all let us not make a mockery of the injunction
contained in those instructions, where, after stating that we
took up arms only in obedience to the dictates of humanity and
in the fulfillment of high public and moral obligations, and
that we had no design of aggrandizement and no ambition of
conquest, the President among other things eloquently says:
'It is my earnest wish that the United States in making peace
should follow the same high rule of conduct which guided it in
facing war. It should be as scrupulous and magnanimous in the
concluding settlement as it was just and humane in its
original action.' This and more, of which I earnestly ask a
re-perusal, binds my conscience and governs my actions."

But the President had now arrived at a different state of