During the last half of the nineteenth century, the United States and Britain both made increasing use of arbitration. The United States had arbitrations with Brazil, Chile, Colombia, Costa Rica, Ecuador, Haiti, Mexico, Paraguay, Peru, Denmark, France, Portugal, and Spain. Britain, too, entered into many arbitrations with Latin American and European states, but the two English-speaking countries continued to have more arbitrations with each other than with other powers. Several minor but difficult Anglo-American controversies were settled by arbitration during the 1850s and 1860s; after the Civil War, arbitration became a major feature of relations between Washington and London.
The nineteenth century's most important arbitral decisions concerned Anglo-American controversies arising from the Civil War. British shipbuilders had built warships for the Confederacy, a practice stopped by London only after vehement protests from Washington. But British authorities acted too late to prevent the sailing of several ships, among them the Alabama, the most notorious commerce raider of the war. When the Alabama and its sister ships began destroying Union merchant ships, many American shipowners transferred their ships to foreign registry, Britain receiving the largest number of registrations. The American merchant marine almost disappeared. As the war closed, influential Americans fulminated against British misdeeds. Senator Charles Sumner of Massachusetts charged that Britain was really responsible for prolonging the war for two years and demanded a large indemnity. Britain, too, had grievances, for British shipping had sustained considerable damages at the hands of the Union. As charges and countercharges were exchanged by intemperate speakers on both sides of the Atlantic, diplomats found negotiation of a settlement extremely difficult. Finally, in a treaty signed at Washington on 8 May 1871, the two governments agreed to arbitration of their Civil War claims and two other difficult matters, the boundary through the San Juan waterway between Vancouver Island and the United States and the compensation due Britain for recent concessions to the United States in the fisheries off Newfoundland and Canada.
The two governments used all the best-known forms of arbitration to resolve their four disputes. They made their most elaborate preparations for claims concerning the Alabama and the other commerce raiders, establishing a tribunal of five members in Geneva, Switzerland. Each of the two parties appointed an arbitrator, as did Brazil, Italy, and Switzerland. Presenting its case, the United States demanded payment of indirect claims, that is, damages sustained as a result of the prolonging of the war through actions of the raiders. The tribunal denied this demand, but in a decision announced 14 September 1872, it awarded the United States $15.5 million for actual destruction of ships and cargoes. Other American maritime claims against Britain and British claims against the United States were referred to a commission of three members, appointed by the United States, Britain, and Spain. Meeting in Washington, the commission soon decided against American claims but, in a decision announced 25 September 1873, awarded the British $1,929,819. Meanwhile, the United States and Britain had referred the San Juan waterway boundary dispute to German Emperor William I, who announced his decision on 21 October 1872, an award essentially in accord with American contentions. A commission of three members—an American, a Briton, and a Belgian—handled the fisheries case in sessions at Halifax. The commission announced on 23 November 1877 that the United States should pay Britain $5.5 million.
Of the four arbitrations, that of the Alabama claims was by far the most important. No other arbitration has so stimulated imaginations. While it is no doubt true, as Woodrow Wilson wrote, that the award "ended, not a controversy but a judicial process at the end of a controversy," many individuals convinced themselves that in this instance arbitration may have been a substitute for war. Long before the Civil War, arbitration had attracted the attention of people anxious to find ways of ridding mankind of the curse of war, and to such people the decisions of the Geneva tribunal seemed proof of what arbitration could accomplish. The spokesmen and journals of the American Peace Society, the Universal Peace Union, and many other peace organizations found in the Geneva arbitration topics for countless lectures and articles. Even before the Geneva tribunal announced its award, there were earnest recommendations that Britain and America negotiate treaties between themselves and with other nations in which they would recognize an obligation to resort to arbitration rather than war. Charles Sumner, on 31 May 1872, introduced a resolution in the Senate declaring that "in the determination of international differences Arbitration should become a substitute for war in reality as well as in name, and therefore coextensive with war in jurisdiction, so that any question or grievance which might be the occasion of war or of misunderstanding between nations should be considered by this tribunal."
A British peace leader, Henry Richard, on 8 July 1873 secured passage of a similar resolution in the House of Commons, and Sumner on 1 December of that year introduced another resolution urging arbitration in the Senate. While the two governments took no actions in response to these resolutions, the idea of treaties of obligatory arbitration continued to gain adherents. American and British peace advocates were probably unaware that Latin American governments almost as a matter of course included promises of arbitration in many of their treaties, and most Americans had probably forgotten that the Treaty of Guadalupe Hidalgo (1848), which ended the Mexican War, contained an article by which the United States and Mexico agreed to arbitration of differences in connection with the treaty. The peace movement in the United States and Britain gave little attention to developments in Latin America; it focused attention upon Anglo-American relations. If the United States and Britain were to conclude a permanent arbitration treaty, they would set an example for the rest of the world, peace leaders reasoned.