Document
jNo. 78.
\IS.VSliß ' ••
ÍÍICAEAGÜA CAÎ7AL.
January 22, 1897.—Ordered to be priuted.
Mr. Sherman presented the following
LETTER 'FROM THE SECRETARY OF STATE, TRANSMITTING A
COMMUNICATION FROM THE MINISTER OF THE GREATER
REPUBLIC OF CENTRAL AMERICA AT THE CITY OF WASHING¬
TON, RELATIVE TO THE VARIOUS BILLS NOW PENDING IN CON¬
GRESS LOOKING TO THE CONSTRUCTION OP AN INTEROCEANIC
CANAL THROUGH NICARAGUA.
-V
-^4th Congress, ^ SENATE.
Se,sKÍon. )
Department of State,
Washington, January 22, 1897.
Sir: In the matter of the various bills now pending in Congress
looking to the construction of an interoceanic caiud through Nicaragua,
I have the honor to inclose herewith for the information of your coni-
¿nittee a comuiunication just received by me from the minister of the
Greater liepublic of Central America at this capital.
Kespectfully, yours,
Eiciiard Olney.
Hon. John Sherman,
Chairman Committee on Foreign Relations, United States Senate.
Legation of the Greater Eepubhp
of Central America,
Washington, January 15, 1897.
The undersigned, envoy extraordinary and minister plenipotentiary
of the Greater Eepublic of Central America, has the honor to address
His Excellency the Secretary of State, informing him that, as several
bills relative to the construction of an interoceanic canal through
Nicaragua have been for some time pending before both Houses of the
American Congress, his Government recently instructed him to exam¬
ine them and to make, under certain conditions, suitable reiiresenta-
tions to His Excellency the Secretary of State.
The undersigned has consequently examined said bills, which are five
in number, to wit:
Three introduced in the House of Eejiresentatives, one by Mr. Mahon,
December J, 1895, another by Mr. Doolittle, and the third by Mr. Bar-
ham, both the latter having been introduced December 6, 1895.
Two introduced in the Senate, one by Mr. Perkins, December .30,1895,
and the other by Mr. Morgan, June 1, 1890.
anu rue oiner oy í
TCngf
\^'Ul a.
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NICARAGUA CANAL.
All tliese bills take it for grauted, witb minor differences of detail,
tbat the American Government is to take an important part in the
enterpiise, and that it is to furnish the money necessary lor the con¬
struction of the canal by the IMaritiine Canal Company of Nicaragua,
whose constitution and organization they essentially modify.
Unfortunately, the undersigned observes thai the provisions of these
bills are at variance, both generally and in matters of detail, with the
stipulations of the contract of April 1*4, 1887, between Nicaragua and
the company aforesaid, from which contract the company derives its
existence, and wliich is the basis of its enterprise.
Tiiat contract stipulates in its eighth article that the concession
therein provided for shall in no case be transferable to Governments
or to foreign public ])owers, and article 58 provides that any contra¬
vention of this stipulation shall entail a forfeiture of the ('ontract. As
it can not be denied that the bills to which the undersigned has refer¬
ence—although thej' do not expressly say so—effect that transfer most
fully, making the Government of the United States of America the
absolute owner of the enterprise and of the canal and its rights, the
result to which they inevitably conduce is the forfeiture of the contract.
Article 47 of 1 hat instrument provides that the company shall under¬
take. at its own expense, the ttnal surveys of the ground and the loca¬
tion of tlie line of the canal by a commission of competent engineers,
two of whom are to be appointed by the Government of Nicaragua, and
the aforesaid article 53 provides that a failure to comply with this stip¬
ulation shall entail the forfeiture of the concession. The bills, however,
provide that the canal shall be constructed under the surveillance of
the Department of Engineers of the Army of the United States of
America, and according to its plans, and that three engineers shall be
designated by the President forthat purpose, who shall make the explo¬
rations and estimates. This provision likewise conducesto the forfeiture
of the contract.
The iieople of all nations shall be inTited to coutribute the necessary capital to
the enterjniso.
Of the ua])ital Avith wliiuh the company shall organize, and Avhich it proposes to
distribute amono- tlie dilferent conntries interested in the enterprise, there shall be
reserved at least ñ ]>er cent for the Central American Government and citizens that
may desire to subscribe.
These provisions of article 7 of the t'ontract are antagonized by the
bills wliich distribute tbe capital of the enterprise among the United
States of America, Nicaragua, Costa Rica, and the company.
Tlio capitnl stork of tlie final coininu)}- shall he coiiiposod of .shares, bonds, or
ohlii;ation.s of any olhor kind, in such proportion as it may drein convenient.
This is another provision of the ninth article. The bills, however, fix
the amount of the caiiital sfoclt in shares, of which they (lisjiose in such
a way that they arc of no use for the work of tlie enterprise, as they
ought to be, according to tlie intent of tlie eontract. Eor the work of
tlie enterprise the bills create bonds, wliicli must thus be eonverted
inio capital stock or be lel't out of tlie contract. The undersigned need
not here iioint out the infractions which the bills involve.
According to article 1(1 of the contract, the board of directors is to
be composed of ])ersons at least one liait of Avlioin shall be cliosen—by
tlie eomiiaiiy, of coiirse—from the proiiioters who may yet jireserve their
quality as siicli. The bills orgaiiizi» the board of directors with eleven
members, clglit of wliom are to be aiqiointed by tlie President of the
United States, in différent capacities, one by Nicaragua, one by Costa
NICARAGUA CANAL.
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Eica and one by the canal company. The difference between this pro¬
vision and the stipulation referred to could not be more marked than
it is.
Among the beneftts which Nicaragua reserves to herself, in consid¬
eration of the valuable privileges and rights which she surrenders, is 6
per cent of the shares, bonds, certiâcates, or such other obligations as
the company may issue with a view to raising the capital. Now, not¬
withstanding the fact that the < ompany has made several issues, it has
not fulfilled this obligation : and as the bills say nothing on this particu¬
lar point of shares, bonds, certificates, or other obligations which were
to be issued and have not been issued in favor of Nicaragua, these
securities would probably either be lost in the new form of the enter¬
prise or would be liable to troublesome and tedious litigation.
Two of the bills in question have already been reported by a com¬
mittee, so that they may finally exclude the others; nothing, however,
is established in them with regard to the shares that would belong to
Nicaragua; and it might happen, owing to this, that Nicaragua would
get none at all.
If the company were to issue a hundred or a hundred and fifty mil¬
lion dollars' worth of bonds iu order to meet the cost of the work,
which bonds, as I have already remarked, would have to be considered
as capital or be left out of the contract, Nicaragua would be entitled
to her 6 per cent in virtue of tiie stipulation above referred to; but the
bills leave no door o])eu to such a ])ossibility, nor do tliey allow her
any participation in the issue which is to be made in order to pay for
the work already done.
The company, by article 1-i of the aforesaid contract, has contracted
the solemn obligation to construct at its own expense within the term of
three years, reckoned from the commencemejit of the work upon the
interoceanic canal, a navigable canal between Lake Managua and the
navigable part of the Tipitapa River, near Pasquier, of sufiicieut dimen¬
sions to admit of the free passage of vessels drawing 6 feet, and of 150
feet in length. That term ex^ûred a long time ago, but the companjq
notwithstanding the most earnest solicitation, has made no pretense of
meeting that obligation, or of definitively adjusting the compensation
which it ought to pay in order to be discharged therefi-om. The bills
establish nothing on this other jioint, and Nicaragua's rights in this
matter might thus be annulled in consequence of their silence.
By the jilan involved in the new form which the bills devise for the
enterprise, the present company is extinguished and nothing remains
of it in its relations with the enteiqirise save the shadow of a person¬
ality represented by a vote in a board of directors of 11 members;
while in its relations with Nicaragua it may always claim full per.son-
ality as the holder of the concession, although having none of the
means necessary to enable it to meet its obligations.
Finally, it is to be ob.served tjiat, while the bills contravene and set
at nanglit stijmlations of the contract, they do not state whether the
remaining ones still remain in force or not, although among these latter
there are very many which are of no great importance to Nicaragua in
particular and to Central America in general.
The undersigned is convinced of the good faith of the gentlemen who
have introduced these bills in both Houses, and of those who advocate
their jiassage. He takes, moreover, pleasure in stating that he recog¬
nizes these efforts as the result of the legitimate interest which they
feel in behalf of the construction of an interoceanic canal, in which the
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NICARAGUA CANAL.
confederation that he represents is quite as deeply interested. And in
calling attention to the serious objections enumerated, which would
render these efforts nugatory, the only object that he has in view is to
protect just rights, which he thinks are menaced by the bills aforesaid.
It seems evident that the company is unable to raise money to ful¬
fill its contract unless the United States of America furnish it there¬
with, and since that contract excludes the possibility of attaining that
result, the undersigned, having been duly authorized to do so, proposes
to his excellency, the Secretary of State, that the two Governments—
relying upon the favorable disposition of the Government of the United
States of America—shall come to a direct understanding on the subject,
on the basis of the Zavala-Frelinghuysen treaty, with such modifica¬
tions as may be agreed upon, and endeavoring to reach a just arrange¬
ment with the Maritime Canal Company of Nicaragua, so that it may
renounce a concession whose conditions it is unable to fulfill.
The undersigned, in thus obeying the instructions of his Govern¬
ment, avails himself of this occasion to reiterate to his excellency Sec¬
retary Olney the assurances of his most distinguished consideration.
J. D. Kodbiguez.
His Excellency Eiohabd Olney,
Secretary of State of the United States, Washif^gton, D. G.