The language of Prince Bismarck, on receipt of the remon-
strance from Spain about the Carolines, was studiously con- ciliatory. In a despatch, dated August 31st, after a rather futile remark that German merchants would not have settled in the Carolines if the islands had been Spanish, or if they had expected "to be subjected to the Spanish system of Colonial administration"—as if there were no Germans in Manilla or Havannah—the Prince quotes the English and German refusal in 1875 to acknowledge the sovereignty of Spain, and asks why the Spanish Government did not reply to the despatch contain- ing that refusal? Ho also remarks on the failure of Spain to occupy the islands, and offers a frank examination of Spanish claims. He concludes, however, thus :—" But should an understanding not be arrived at by this amicable method, the Imperial Government would be ready to submit the de- cision of the legal question at issue between the two Govern- ments to the arbitration of a Power friendly to both. The question as to which of the two Powers may be entitled to exercise sovereign rights on the Caroline Islands is not suffi- ciently important to tempt the Imperial Government to seek a solution of it by departing from the conciliatory traditions of its policy, which have always been especially friendly to Spain." It is understood that Spain declined arbitration, and that the Imperial Government, recognising that the arrival of Spanish war-ships three days before the German flag had been hoisted amounted to occupation, agrees to admit that the Carolines have become Spanish.
