which shall exhibit such solidity and proportions as to distinguish it from the unsubstantial and illusory schemes which have, from time to time, proposed to solve the problem of interoceanic transit. The question involved presents itself distinctly to this government as a territorial one, in the administration of which, as such, it must exercise a potential control.

While this attitude of the United States to the political and commercial problem of an interoceanic canal, at whatever point, would seem to attach to their position on the continent, the particular rights and obligations in reference to any transit across the Isthmus of Panama, which grow out of the mutual engagements of the treaty with Colombia, fix more definitely the interest of this government in any material changes of that isthmus as the theater of these rights and obligations. It is manifest that so stupendous a change from the natural configuration of this hemisphere as transforms the Isthmus of Panama from being a barrier between the Atlantic and Pacific Oceans into a gateway and thoroughfare between them for the navies and merchant ships of the world bears directly upon the weight and burden of our guarantees under that treaty. It is equally manifest, and only less important, that the organization and nationality of an immense capital and the administration of a great and growing force of managers and laborers, and the throng of population likely to attend the prosperity of the enter prise, affect essentially the conditions under which the United States may be called upon to perform the engagements of that treaty. The guarantee of the neutrality of the transit and of the sovereignty and property of Colombia in the isthmus are one thing while the isthmus remains in its natural and unpeopled state, and quite another when it shall have been opened to the interests, the cupidities, and the ambitions of the great commercial nations, and occupied by populations of foreign allegiance and discordant habits.

So obvious are these propositions that it may well be assumed that no contract or negotiations could ever be entered into between private projectors and the Government of Colombia except in contemplation of this position of the United States under the treaty, and of the necessity that both the private interests and the public engagements involved, in reliance upon the power and faith of this government for their protection, must be conformed to its rightful participation and control in any arrangements that may seriously affect the discharge of its stipulated responsibilities.

[Inclosure in No. 67.-Translation from the Diario Oficial of Bogota, Wednesday, May 22, 1878.] Law 28th of 1878 (18th of May) "approving the contract for the construction of an interoceanic canal across Colombian territory."

The Congress of the United States of Colombia, after an examination of the contract, which is verbatim as follows:

CONTRACT FOR THE CONSTRUCTION OF AN INTEROCEANIC CANAL ACROSS COLOMBIAN TERRITORY.

Eustorgio Salgar, secretary of the interior and of foreign r lations of the United States of Colombia, duly authorized, of the one part, and of the other part Lucien N. B. Wyse, chief of the Isthmus Scientific Surveying Expedition in 1876, 1877, and 1878, member and delegate of the board of directors of the International Interoceanic Canal Association, presided by General Etienne Türr, in conformity with powers bestowed at Paris, from the 27th to the 29th of October, 1877, have celebrated the following

contract:

ARTICLE 1.* The Government of the United States of Colombia grants to Mr. Lucien *This article modified by Colombian Congress. See decree which follows.

N. B. Wyse, who accepts it in the name of the civil International Interoceanic Canal Association, represented by their board of directors, the exclusive privilege for the construction across its territory, and for the operating of a canal between the Atlantic and Pacific Oceans. Said canal may be constructed without restrictive stipulations of any kind.

This concession is made under the following conditions:

1st. The duration of the privilege shall be for ninety-nine years from the day on which the canal shall be wholly or partially opened to public service, or when the grantees or their representatives commence to collect the dues on transit and navigation.

2d. From the date of approbation by the Colombian Congress for the opening of the interoceanic canal, the government of the republic cannot construct, nor concede to any company or individual, under any consideration whatever, the right to construct another canal across Colombian territory which shall communicate the two oceans. Should the grantees wish to construct a railroad as an auxiliary to the canal, the government (with the exception of existing rights) cannot grant to any other company or individual, the right to build another interoceanic railroad, nor do so, itself, during the time allowed for the construction and use of the canal.

3d. The necessary studies of the ground, and the route for the line of the canal, shall be made, at the expense of the grantees, by an international commission of individuals and competent engineers, in which two Colombian engineers shall take part. The commission shall determine the general route of the canal and report to the Colombian Government directly, or to its diplomatic agents in the United States or Europe, upon the results obtained, at the latest in 1881, unless unavoidable circumstances, clearly proven, should prevent their so doing. The report shall comprise in duplicate the scientific labors performed, and an estimate of the projected work.

4th. The grantees shall then have a period of two years to organize a universal joint stock company, which shall take charge of the enterprise, and of the construction of the canal. This term shall commence from the date mentioned in the preceding paragraph.

5th. The canal shall be finished and placed at the public service within the subsequent twelve years after the formation of the company which will undertake its construction, but the executive power is authorized to grant a further maximum term of six years in the case of encountering superhuman obstacles beyond the power of the company, and if, after one-third of the canal is buil, the company should acknowledge the impossibility of concluding the work in the said twelve years.

6th. The canal shall have the length, depth, and all other conditions requisite in order that sailing vessels and steamships measuring up to 140 meters long, 16 meters in width, and 8 meters in draught shall, with lowered topmasts, be able to pass the canal.

7th. All public lands which may be required for the route of the canal, the ports, stations, wharves, moorings, warehouses, and in general for the construction and service of the canal as well as for the railway, should it be convenient to build it, shall be ceded gratis to the grantees.

th. These unoccupied public lands shall revert to the government of the republic, with the railroad and canal, at the termination of this privilege; there is also granted for the use of the canal a belt of land two hundred meters wide on each side of its banks throughout all the distance which it may run, but the owners of lands on its banks shall have free access to the canal and its ports as well as to the right of use of any roads which the grantees may open there; and this without paying any dues to the company.

9th. If the lands through which the canal shall pass, or upon which the railroad may be built, should, in whole or in part, be private property, the grantee shall have the right to demand their expropriation by the government according to all the legal formalities in such cases. The indemnity which shall be made to the land owners, and which shall be based on their actual value, shall be at the expense of the company. The grantees shall enjoy in this case, and in those of temporary occupation of private property, all the rights and privileges which the existing legislation confers. 10th. The grantees may establish and operate at their cost the telegraphic lines which they may consider useful as auxiliaries in the building and management of the canal. ART. 2,* Within the term of twelve months after the international commission shall have presented the result of their definitive surveys, the grantees will deposit in the bank or banks of London, which the national executive power may designate, the sum of seven hundred and fifty thousand francs as security for the accomplishment of the work. The receipt of said bank or banks shall be a voucher of the fulfillment of said engagement. The deposit shall be made in certificates of the foreign debt of Colombia, at the current market price on the day of delivery. It is understood that should the grantees forfeit this deposit by virtue of the provisions of clause 2, article 22, of

This article modified by Colombian Congress. See decree which follows.

this contract, the said sum with its interest shall become the sole property of the Colombian Government. On the conclusion of the canal the amount deposited as security shall remain to the credit of the treasury as indemnity to the national government for the expenses incurred in the erection of buildings for the use of public offices. ART. 3. Should the route of the canal from one ocean to the other pass to the west and to the north of the imaginary straight line which connects Cape Tiburon with Garachine Point, the grantees must make a friendly arrangement with the Panama Railroad Company, or pay an indemnity which shall be determined in accordance with the provisions of law 46, of August 16, 1867, "which approves the contract celebrated July 5, 1867, reformatory of that of April 15, 1850, for the construction of a railroad from ocean to ocean, across the Isthmus of Panama."

In case the international commission selects the Atrato, or some other stream now navigable, as one of the entrances of the canal, the canalized mouth shall be considered as one of the parts of the principal work, and maintained in equally good condition. River navigation in the upper part of the stream, so far as it has not for its object the use of the canal, shall be open to commerce, and free from all dues.

ART. 4.* In addition to the lands granted by paragraphs 7 and 8 of article 1, there are gratuitously given to the grautees, and at their choice five hundred thousand hectares of the unoccupied public lands, with the mines which they may contain. This allotment shall be made directly by the national executive power. The public lands situated on the sea-coast, or on the border of the canal, or at the rivers, shall be divided as closely as possible in alternate lots between the government and the company, forming, if the ground will permit, areas of one and two thousand hectares. The measurement for the allotment or location shall be made at the cost of the grantees, and with the intervention of commissioners of the government.

Unoccupied lands so granted, with the mines which they may hold, shall be awarded to the grantees as soon as they request them after the deposit of the security. In a belt of two myriameters on each side of the canal, and during five years after the conclusion of the work, the government cannot transfer other lands beyond the said lots until the company shall have obtained the whole of the lands which are granted to it gratuitously.

ART. 5.* The government of the republic declares neutral, for all time, the ports of each terminus of the canal and the waters of the latter from one sea to the other, and consequently in case of war between other nations or between one or more of these and Colombia, the transit of the canal shall not be interrupted on that account, and the merchant vessels and individuals of all nations of the world may enter said ports, and navigate the canal without let or hinderance. In general any ship whatever may navigate the canal freely without discrimination, exclusion, or preference of persons or nationalities, by paying the dues and abiding by the regulations laid down by the company for the use of said canal and its dependencies. Exception is made of foreign troops, which cannot pass without permission from Congress.

ART. 6. The entrance to the canal shall be rigorously prohibited to the war vessels of those nations which are at war with another or others, and whose destination manifests their intention to take part in hostilities.

ART. 7. The grantees will enjoy the right during the whole time of the privilege to use the ports at the termini of the canal, as well as intermediate points, for the anchorage and repair of ships, and the loading, depositing, transshipping, or landing of merchandise. The ports of the canal shall be open and free to the commerce of all nations, and no import duties shall be exacted except on merchandise destined to be introduced for the consumption of the rest of the republic. The said ports shall, therefore, be open to importations from the commencement of the work, and the customhouses, and the revenue service which the government may deem convenient for the collection of duties on merchandise destined for other portions of the republic, shall be established, in order to prevent introduction of smuggled goods.

ART. 8.* The executive power shall issue the necessary regulations for the protection of its revenues by preventing smuggling, and shall appoint the number of men necessary for this service at its own expense. Of the employés indispensable for this, ten shall be paid by the company, and their salaries shall not exceed those paid to officials of the same grade in the custom-house at Barranquilla. When necessary, the company shall transport, free of charge, by the canal or by the auxiliary railroad, the men at the service of the union or destined for police duty, with the object of guarding public service without, or preserving public order within. If the company should not own ships or tugs, they shall pay the passage of these men across the isthmus. The sustenance of the public force necessary for the security of the interoceanic transit shall also be at the expense of the company.

ART. 9. The grantees shall have the right to introduce, free of import or other duties of whatever class, all the instruments, machinery, tools, fixtures, provisions, clothing for laborers, which they may need during all the time allowed to them for the con

This article modified by Colombian Congress. See decree which follows.

struction and use of the canal. The ships carrying cargoes for the use of the enterprise shall enjoy free entry to whatever points shall affords them easy access to the line of the canal.

ART. 10. No taxes, either national, municipal, of the State, or of any other class, shall be levied upon the canal, the ships that navigate it, the tugs and vessels at the service of the grantees, their warehouses, work-shops, and offices, factories of whatever class, storehouses, wharves, machinery, or other works or property of whatever character belonging to them, and which they may need for the service of the canal and its dependencies, during the time conceded for its construction and operation. The grantees shall also have the right to take from unoccupied lands the materials of any kind which they may require without paying any compensation for the same.

ART. 11. The passengers, money, precious metals, merchandise, and articles and effects of all kinds which may be transported over the canal, shall also be exempt from all duties, national, municipal, transit and others. The same exemption is extended to all articles and merchandise for interior or exterior commerce which may remain in deposit, according to the conditions which may be stipulated, with the company in the storehouses and stations belonging to them.

ART. 12. Ships desiring to cross the canal shall present at the port of the terminus of the canal at which they may arrive, their respective registers and other sailing p ipers, prescribed by the laws and public treaties, so that the vessels may navigate without interruption. Vessels not having said papers, or which should refuse to present them, may be detained and proceeded against according to law.

*

ART. 13. The government allows the immigration and free access to the lands and work-shops of the grantees of all employés and laborers, of whatever nationality, contracted for the enterprise, or who may come to engage themselves in the service of the canal, on condition that such employés or laborers submit to existing laws, and to the regulations established by the company. The government assures them aid and protection and the enjoyment of their rights and privileges, according to the constitution and laws of the nation, during the time they live in Colombian territory.

ART. 14.* As a compensation to the grantees for the expenses of the building, preservation and operation of the canal, which are for their account, they shall have the right during all the period of this privilege to charge and collect for passage over the canal, and the ports dependent upon it, dues for light-house, anchorage, transit, navigation, repairs, pilotage, towing, hauling, storage, and station, as per the tariff they may establish, and which may be modified at any time under the following express conditions:

1st. These dues shall be imposed without exception or favor upon all ships in identical conditions.

2d. The tariff shall be published four months before going into operation in the Diario Oficial of the government, as well as in the capitals and principal commercial ports of the countries affected thereby.

3d. The principal dues to be collected on vessels shall not exceed the rate of ten francs for each cubic meter, resulting from the multiplication of the principal dimensions of the submerged portion of the ship in transit (length, breadth, and draught). 4th. The principal dimensions of the ship in transit, that is to say, the greatest exterior length and beam of vessel, as well as the greatest draught of water, shall be nautical dimensions, inserted in the official clearance papers, with the exception of such modifications as may result in the course of the voyage. The captains of ships and agents of the company may require a new measurement to be taken, which operation shall be effected at the expense of the solicitor.

5th. The same measurement, that is to say, the parallelopiped described by the submerged part of the ship, shall serve as the basis for the determination of the other accessory charges.

6th. Special dues for navigation shall be reduced in proportion to the excess when the net profits derived therefrom shall exceed 12 per cent. of the capital employed in the enterprise.

ART. 15*. By way of compensation for the right and exemptions which are conferred upon the grantees by this contract, the government of the republic shall enjoy a participation equal to 5 per cent. of the gross earning which shall accrue to the enterprise, as per the tariff to be fixed by the company.

ART. 16. The grantees are authorized to require payment in advance of any charges which they may establish; nine-tenths of these charges shall be made payable in gold, and only the remaining one-tenth part shall be payable in silver of twenty-five grammes, of a fineness of 900.

ART. 17. The ships which shall infringe upon the rules established by the company shall be subject to the payment of a fine, which said company shall fix in its regulations, of which due notice shall be given to the public at the time of the issue of the tariff. Should they refuse to pay said fine, nor furnish sufficient security, they may

* This article modified by Colombian Congress. See decree which follows.

be detained and prosecuted according to the laws. The same proceedings may be observed for the damages they may have caused.

ART. 18. If the opening of the canal shall be deemed financially possible, the grantees are authorized to form, under the immediate protection of the Colombian Government, a universal joint-stock company, which shall undertake the execution of the work, taking charge of all financial transactions which may be needed. As this enterprise is essentially international, and for public utility, it is understood that it shall always be kept free from political influences.

The company shall take the name of "The Universal Interoceanic Canal Association"; its residence shall be fixed in Bogota, New York, London, or Paris, as the grantees may choose; branch offices may be established wherever necessary. Its contracts, shares, bonds, and titles of its property shall never be subjected by the Government of Colombia to any charges for registry, emission, stamps, or any similar imposts upon the sale or transfer of these shares or bonds, as well as on the profits produced by these values.

ART. 19. The company is authorized to reserve as much as 10 per cent. of the shares emitted, to form a fund of shares, to the benefit of the founders and promoters of the enterprise. Of the products of the concern, the company take, in the first place, what is necessary to cover all expenses of repairs, operations, and administration, and the share which belongs to the government, as well as the sums necessary for the payment of the interest and the amortization of the bonds, and, if possible the fixed interest or dividend of the shares; that which remains will be considered as net profit, out of which 80 per cent. at least will be divided among the shareholders.

ART. 20. The Colombian Government, should it consider it important, may name a special commissioner in the board of directors of the company. This delegate shall enjoy all the advantages conceded to the other directors by the statutes of the company. The grantees are obliged to appoint in Bogota, near the national government, an agent duly authorized to resolve all doubts and to present all demands to which this contract may give rise. Reciprocally, and with the same intention, the government shall name a resident agent in the principal establishment of the company on the canal. In every case the difficulties which may arise between the contracting parties shall be submitted to a committee of arbitrators, composed of four individuals, two of whom shall be selected by the executive power from among the members of the federal supreme court, and the other two named by the company. In case of a tie in the votes of this committee, the said arbitrators shall name a fifth party. The decision pronounced by this tribunal shall be final.

ART. 21. The grantees, or those who in future may succeed them in their rights, may transfer those rights to other capitalists or financial companies, but it is absolutely prohibited to cede or mortgage them under any considerations whatever to any nation or foreign government.

ART. 22. The grantees or their representatives shall forfeit their acquired rights in the following cases:

1st. If they do not deposit within the term stipulated the amount required as security for the execution of the work.

2d. If in the first of the twelve years allowed for the construction of the canal the work is not already begun. In this case the company shall forfeit the sum deposited as a guarantee, and which shall go to the benefit of the republic.

3d. If at the termination of the period fixed by paragraph fifth of article one, the canal is not navigable.

4th. If they do not comply with the provisions of article 21.

5th. If the service of the canal should be interrupted without some superhuman obstacle.

In cases 2, 3, 4, and 5, the federal supreme court shall decide whether the privilege has become null or not.

ART. 23.* In all cases of declaration of nullity, the public lands mentioned in paragraphs 7 and 8 of article 1, and those not alienated among those conceded in article 4, will return to the possession of the republic in the state in which they are found, and without any indemnity whatever, and also the buildings, materials, works, and improvements of which the grantees hold possession in the canal. These shall reserve only their capital, vessels, provisions, and, in general, their movable property.

ART. 24. Five years previous to the expiration of the ninety-nine years of the privilege, the executive power shall appoint a commissioner to examine the condition of the canal and annexes, and, with the knowledge of the company or its agents on the isthmus, to make an official report, describing in every detail the condition of the same and pointing out what repairs may be necessrry. This report will serve to establish in what condition the canal and its dependencies shall be delivered to the national government on the day of expiration of the privilege now granted.

ART. 25. The enterprise of the canal is reputed to be of public utility.

ART. 26. This contract, which will serve as a substitute for the provisions of law 33,

*This article modified by Colombian Government. See decree which follows.