During the discussions on the Venezuelan situation that took place in Parliament in December, 1902, the members of the government repeatedly repudiated the charge of the opposition that they were engaged in a debt-collecting expedition, and tried to make it appear that they were protecting the lives and liberties of British subjects. Lord Cranborne declared:
I can frankly tell the House that it is not the claims of the bondholders that bulk largest in the estimation of the government. I do not believe the government would ever have taken the strong measures to which they have been driven if it had not been for the attacks by Venezuela upon the lives, the liberty, and the property of British subjects.
During the same discussion, Mr. Norman said:
This idea of the British fleet being employed to collect the debts of foreign bondholders is assuredly a mistaken one. It was said by Wellington once that the British army did not exist for the purpose of collecting certain debts. It is still more true of the British fleet that it does not exist for the purpose of collecting debts of bondholders. People who lend money to South American republics know what the security is and what they are likely to get in return, and they ought not to have the British fleet at their backs.
To this Mr. Balfour, the prime minister, replied:
I do not deny—in fact, I freely admit—that bondholders may occupy an international position which may require international action; but I look upon such international action with the gravest doubt and suspicion, and I doubt whether we have in the past ever gone to war for the bondholders, for those of our countrymen who have lent money to a foreign government; and I confess that I should be very sorry to see that made a practice in this country.
Against President Roosevelt's contention that the coercion of an American state was not contrary to the Monroe Doctrine, provided that it did "not take the form of acquisition of territory by any non-American power," Signor Drago, Minister of Foreign Relations of the Argentine Republic, vigorously protested in a note dated December 29, 1902.[256] This note contained a restatement of the "Calvo doctrine," which takes its name from a celebrated Argentine publicist. In his well-known book on international law, Calvo contends that a state has no right to resort to armed intervention for the purpose of collecting the private claims of its citizens against another state. This doctrine, which has received the indorsement of most of the Latin-American states, was applied to public bonds in the note above referred to and is now usually known as the "Drago doctrine." Signor Drago held, first, "that the capitalist who lends his money to a foreign state always takes into account the resources of the country and the probability, greater or less, that the obligations contracted will be fulfilled without delay. All governments thus enjoy different credit according to their degree of civilization and culture, and their conduct in business transactions," and these conditions are measured before making loans. Second, a fundamental principle of international law is the entity and equality of all states. Both the acknowledgment of the debt and the payment must be left to the nation concerned "without diminution of its inherent rights as a sovereign entity."
He said further:
As these are the sentiments of justice, loyalty, and honor which animate the Argentine people and have always inspired its policy, your excellency will understand that it has felt alarm at the knowledge that the failure of Venezuela to meet the payment of its public debt is given as one of the determining causes of the capture of its fleet, the bombardment of one of its ports and the establishment of a rigorous blockade along its shores. If such proceedings were to be definitely adopted they would establish a precedent dangerous to the security and the peace of the nations of this part of America. The collection of loans by military means implies territorial occupation to make them effective, and territorial occupation signifies a suppression or subordination of the governments of the countries on which it is imposed.
The doctrine so ably expounded by Dr. Drago attracted much attention during the next few years and was given a place on the program of the Third Pan American Conference held at Rio de Janeiro in July, 1906. Dr. Drago had made his proposal as "a statement of policy" for the states of the American continents to adopt. After full discussion the Rio Conference decided to recommend to the governments represented "that they consider the point of inviting the Second Peace Conference at The Hague to consider the question of the compulsory collection of public debts; and, in general, means tending to diminish between nations conflicts having an exclusively pecuniary origin."[257]