Mr. Gray to Mr. Hay.
Our having submitted an ultimatum does not in my opinion preclude us from adopting a course that will prove more advantageous to our country. My reasons for accepting third proposition in the letter of the president of the Spanish Commission are, briefly, that in paying twenty millions we do not prevent the raising hereafter of the question of the liability of the sovereign of the relinquished and ceded territory for some part, of the so-called colonial debts. When raised we must either flatly refuse to consider it and take the consequences, or must arbitrate. We have nothing to fear from arbitration, but have much to gain in moral prestige and maintenance of our preeminence in recognizing the obligations of international law. By adopting this course we pay nothing to Spain, and settle instead of postpone the question of liability and carry the principle of arbitration with us into the new century.