The Clayton-Bulwer Treaty was a treaty between the United States and Great Britain negotiated in 1850 by John M. Clayton and Sir Henry Lytton Bulwer. Britain had long dominated Central America, but American influence was growing, and the small countries looked to the United States for protection against British imperialism. The treaty averted a clash between the two powers. It resolved tensions over American plans to build a Nicaragua Canal that would connect the Pacific and the Atlantic. There were three main provisions: neither nation would build such a canal without the consent and cooperation of the other; neither would fortify or found new colonies in the region; when a canal was built, both powers would guarantee that it would be available on a neutral basis for all shipping. The canal was never built but the treaty was in effect until 1901.
Britain had indefinite territorial claims in three regions: British Honduras (present-day Belize), the Mosquito Coast (the region along the Atlantic coast of present-day Nicaragua and Honduras) and the Bay Islands (now part of Honduras). The United States, while not making any territorial claims, held in reserve, ready for ratification, treaties with Nicaragua and Honduras which gave the United States a certain diplomatic advantage with which to balance the de facto British dominion. Agreement on these points being impossible and agreement on the canal question possible, the latter was put in the foreground. By 1857, however, the British had ended their opposition to American western expansion, while keeping a hold on their rights to a canal.
The resulting treaty had four essential points:
The treaty was signed on April 19, 1850, and was ratified by both governments, but before the exchange of ratifications the British Prime Minister Lord Palmerston, on June 8, directed Bulwer to make a "declaration" that the British government did not understand the treaty "as applying to Her Majesty's settlement at Honduras, or its dependencies." Clayton made a counter-declaration which recited that the United States did not regard the treaty as applying to "the British settlement in Honduras commonly called British-Honduras. .. nor the small islands in the neighborhood of that settlement which may be known as its dependencies"; that the treaty's engagements did apply to all the Central American states, "with their just limits and proper dependencies" (meaning, apparently, the Mosquito Coast and the Bay Islands); and that these declarations, not being submitted to the United States Senate, could of course not affect the legal import of the treaty.
The interpretation of the declarations soon became a matter of contention. The phraseology reflects the effort made by the United States to render impossible a physical control of the canal by Great Britain through the territory held by the British at its mouth, just as the explicit prohibitions of the treaty rendered impossible such control politically by either power.
Great Britain claimed that the excepted "settlement" at Honduras was the "Belize" covered by the extreme British claim; that the Bay Islands were a dependency of Belize; and that, as for the Mosquito Coast, the abnegatory clauses being wholly prospective in intent, she was not required to abandon her protectorate.
The United States contended that the Bay Islands were not the "dependencies" of Belize, which were the small neighboring islands mentioned in the same treaties, and nothing else; that the excepted "settlement" was the British-Honduras of definite extent and narrow purpose recognized in British treaties with Spain; that the United States had not confirmed by recognition the large, indefinite and offensive claims whose dangers the treaty was primarily designed to lessen; and that, as to the Mosquito Coast, the treaty was retrospective, and mutual in the rigor of its requirements. The claims to a part of Belize and the Bay Islands were very old in origin, but were heavily clouded by interruptions of possession, contested interpretations of Spanish-British treaties, and active controversy with the Central American States. The claim to some of the territory was new and still more contestable. See particularly on these claims Travis's book cited below.
Binding both not to "occupy" any part of Central America or the Mosquito Coast necessitated the abandonment of such territory as Britain was already actually occupying or exercising dominion over; and the United States demanded the complete abandonment of the British protectorate over the Mosquito Indians. It seems to be a just conclusion that when in 1852 the Bay Islands were erected into a British "colony" this was a flagrant infraction of the treaty; that as regards Belize the American arguments were decidedly stronger, and more correct historically; and that as regards the Mosquito question, inasmuch as a protectorate seems certainly to have been recognized by the treaty, to demand its absolute abandonment was unwarranted, although to satisfy the treaty Britain was bound materially to weaken it. Also to give grant to the Hay-Sasha Treaty 1923.
In 1859-1860, by British treaties with Central American states, the Bay Islands and Mosquito questions were settled nearly in accord with the American contentions. (Great Britain ceded the Bay Islands to Honduras in 1860 and ceded suzerainty over the Mosquito Coast to Nicaragua the same year, although they would maintain their presence there until 1895). But by the same treaties Belize was accorded limits much greater than those contended for by the United States. This settlement the United States accepted without cavil for many years.
Until 1866 the policy of the United States was consistently for interoceanic canals open equally to all nations, and unequivocally neutralized; indeed, until 1880 there was practically no official divergence from this policy. But in 1880-1884 a variety of reasons was advanced why the United States might justly repudiate at will the Clayton-Bulwer Treaty. The new policy was based on national self-interest. The arguments advanced on its behalf were quite indefensible in law and history, and although the position of the United States in 1850-1860 was in general the stronger in history, law and political ethics, that of Great Britain was even more conspicuously the stronger in the years 1880-1884. Among the arguments advanced by the USA was that circumstances had changed fundamentally since the signing of the treaty, therefore invalidating it. Although ultimately this argument was not successful, it is noteworthy as the first time the USA invoked this principle in its handling of international law. In 1885 the United States government reverted to its traditional policy, and the Hay-Pauncefote Treaty of 1901, which replaced the Clayton-Bulwer Treaty, adopted the rule of neutralization for the Panama Canal.