304 Doc. No 75. 



by self-reliance and the development of your own resources^ attain to an 

 enviable position among e nations of the earth. 



I have the honor to be^ sir^ sincerely yours, 



GEORGE BANCROFT. 



Don Francisco CastelloN; 



Miiiistei^ of Nicaragua j (J'c, ^^c. 



No. 16. 



Foreign Office^ July 16^ 1849. 



Sir: I have the honor to acknowledge the receipt of the letter which 

 you addressed to me on the 23d ultimo, in reply to my letter of the 27th 

 of April relative to the debt due by the State of Nicaragua to certain 

 British subjects holders of bonds of that State. 



As the question whether the State of Nicaragua has a right to include 

 amongst those branches of net revenue which are pledged for the pay- 

 ment of that debt custom duties to be levied at the port of Grey town, or, 

 in other words, the question as to the validity of the alleged right of 

 Nicaragua to the port of Grey town, forms the essential point in your letter 

 now under consideration, as well as in your preceding letters of the 20th 

 of January and of the 5th and 19th of March last, I will address myself 

 at once to that question. 



In your letter of the 23d ultimo you say that, by the arguments therein 

 employed, you have shown — 1st. That tiie port of Greytown is now de 

 jure the property of the State of Nicaragua, and has been so ever since 

 Central America declared itself independent of Spain; 2dly, that there- 

 fore the revenue of customs levied at that port is justly to be in- 

 cluded in the revenues of the State of Nicaragua, which are pledged for 

 the redemption of the loan which was contracted for in 1826 by the re- 

 public of Central America with the house of Barclay & Co.; and 3dly, 

 that the British creditors are bound to assist the government of Nicaragua 

 in establishing its claim to Greytown; and that if they do not do so, they 

 must submit to the loss which may result from their own laches^ until the 

 port wiiich you say is unjustly withheld by Great Britain shall have been 

 restored to Nicaragua. 



Upon these propositions I am prepared to join issue with you, and will 

 proceed to show that the port of Greytown does not belong, and never 

 has rightfully belonged, to the State of Nicaragua. This point once 

 demonstrated, the second and third propositions which you deduce from 

 the alleged rights of Nicaa^agua to Greytown must, of course and neces- 

 sarily, fall to the ground. 



Now, in the first place, I have to remark, that since the people of J 

 Nicaragua have never occupied any part of the territory of Mosquito, ex- 

 cept Greytown, which they forcibly took possession of early in 1836, the 

 sole pretence upon which the State of Nicaragua can claim a right to 

 Greytown, or to any other part of the Mosquito territory, is the allegation 

 that the Mosquito territory belonged to them, and that Nicaragua has in- 

 herited the rights of Spain over that territory. But assuming, for the 

 present, for the sake of argument, that Spain has rights over tiie Mos- 

 quito territory; how can it be shown that those rights have devolved to 



