consumption. Goods, the commerce of which is not free, are excepted from the privileges contained in this article, which goods, excepting powder, dynamite, and other explosives, remain subject to the requisites and duties prescribed by the laws. ARTICLE XXXI. The vessels employed by the company as tugboats or for the service of the canal shall be free from all duties and also the materials for their repair and the fuel they use. The vessels and appurtenances from whatever place they may be coming for the use of the company shall also be exempt from all duties. ARTICLE XXXII. The Government will establish such regulations as it may judge necessary to prevent smuggling and to maintain public order in the region of the canal. The company is bound to lend its assistance for the enforcement of such regulations. But in the free zone along the margin of the canal, as hereinafter provided, measures for the prevention of smuggling shall be limited to vigilance on the part of the employé or employés whom it may concern without any further measures being taken against passengers, vessels, or their cargoes, excepting when an attempt at smuggling is discovered; it being the intention of the State that there should be the most ample liberty of transit by the canal for persons and property, with the sole limitations established by this contract. Consequently the company shall have the right to discharge and reload ships in transit at such points as may be necessary in order to make repairs, lighten the vessel, shift cargo, or on account of any accident that renders it absolutely necessary, without being subject to search, exactions, or contributions of any kind, provided that in each case, and before beginning operations, the nearest custom-house authority shall be notified. ARTICLE XXXIII. The Government shall lend its protection, in conformity with the laws of the country, to the engineers, contractors, employés, and laborers engaged in the preliminary surveys or in the works of construction and operation of the canal. ARTICLE XXXIV. The company shall be exempt from all forced loans and military exactions in time of peace and of war. The foreign agents and employés shall likewise be exempt from direct contributions, forced loans, and military exactions during the time they are in the service of the canal, but they shall pay the taxes established by the laws if they acquire real property. ARTICLE XXXV. The company may freely introduce immigrants into the lands ceded to it, and the employés and workmen needed in its works and workshops. Asiatics, however, are excepted. Both the immigrants and the employés and workmen will be subject to the laws of the Republic and the regulations of the company. The Government assures them aid and protection and the enjoyment of their rights and guarantees in conformity with the constitution and the national laws during the time they remain on Nicaraguan territory. ARTICLE XXXVI. The Government of Nicaragua assures to the company and its agents under the laws of the country, as it does to the other inhabitants, the full enjoyment of the guarantees and rights which the constitution and the same laws grant to them. And reciprocally the company and its agents bind themselves strictly to respect the laws and regulations that are in force in Nicaragua, and especially to comply with the executory judgments of the tribunals without considering themselves vested with other rights than those which the laws concede in favor of the Nicaraguans. ARTICLE XXXVII. The Government shall establish all along the line of the canal included between the two terminal ports such police stations and revenue offices as in its judgment are necessary to preserve order in the region of the canal and for the observance of the fiscal laws of the Republic. All expenses incident to this service, including those of buildings, endowments, salaries and allowances of employés, and transportation of the forces, shall be paid to the Government by the company on such terms and conditions as may be established, taking into consideration the requirements and necessities of such service. The company, however, shall have the power to establish guards and watchmen for the service of the canal and the enforcement of its regulations. ARTICLE XXXVIII. Contracts for labor on the canal shall enjoy the privileges which the laws of the country accord to agricultural contracts, provided they be clothed with the formalities that the laws require in such contracts. And the contracts in regard to canal labor that the company execute in foreign countries shall be valid and lawful in Nicaragua during the term stipulated in them, provided they do not violate the laws of the Republic; provided also the documents containing them be presented to the proper authorities, with due authentication, that they may be registered. ARTICLE XXXIX. The company shall be exempt during the period of this concession, in peace and in war, from all manner of taxes upon the real property it may acquire by virtue of this contract, and from every kind of direct contributions, local taxes, or any other tax relating to the property and use of the canal, its buildings, and constructions appertaining thereto, in its entire length, including those that are situated in the ports and maritime establishments on the two oceans, as also the lands conceded to the company for the whole term of the privilege. This franchise is not assignable to those who buy the real estate which the company may dispose of by virtue of this concession. ARTICLE XL. The Republic of Nicaragua shall not establish any tonnage, anchor. age, pilot, light-house dues or charges of any kind whatsoever upon vessels of whatever class, or upon the merchandise, baggage, and pas sengers which may pass through the canal from one ocean to the other, all such dues being reserved for the benefit of the company, as hereinafter set forth in article 43. But all such merchandise as shall be loaded or discharged at any point of the canal intended for sale shall pay the import and export duties fixed by the revenue laws of the state. ARTICLE XLI. With the view of securing the most ample freedom in the transit of persons and property, and in order to remove as far as possible occasions for disagreeable questions, there shall be on each side of the canal a free zone, the extent of which shall be one hundred yards measured from the water's edge in the canal, it being understood that the borders of the lake shall not be considered as margin of the canal for the purposes of this stipulation. All traffic declared illegal by the laws of the Republic shall be prohibited within the said zone, and the revenue authorities charged with watching and preventing smuggling shall act in conformity with the stipulations in article 32. It is expressly agreed that every vessel that passes through the canal shall carry on board an officer named by the Government when the authorities think it necessary, and this employé shall act in conformity with the law in case he discovers its infringement. The two ports to be constructed for the entrance and exit of the canal on the two oceans shall be declared free ports, and they shall be recognized as such from the beginning of the work to the termination of this concession. The Government in agreement with the company shall establish, by special decree, the limits of the freedom of these ports, which limits shall not extend beyond the waters of the port, which are those included between the mouth of the canal and the entrance to the said ports. ARTICLE XLII. For the proper administration of the canal and its appurtenances, and in order to facilitate its construction and operation, the company shall establish the necessary regulations, which shall be binding on all persons found in its waters or its appurtenances, the sole reservation being that the rights and sovereignty of the State be respected. It being understood that the company in the exercise of the powers conferred by this article may not make other regulations than those necessary for the administration and particular management of the canal, and that before executing and enforcing these regulations they shall be submitted to the Government for approval. The state will lend the aid of its authority for the enforcement of these regulations. ARTICLE XLIII. By way of compensation for the expenses of surveys, construction, maintenance, and operation of the canal, which under the present concession shall be at the cost of the company during the period of said privilege, it shall have the right to establish and collect for the passage of all kinds of vessels, travelers, and merchandise through the canal, and in the waters and ports pertaining to it, taxes on navigation, tonnage, and pilotage, towage, storage, lay days, anchorage, light, road stead dues, wharfage, hospital dues, and any other similar charges in conformity with the tariff to be established by it in accordance with Article LII of this contract. These tariffs may be modified by the company at any time on condition that all modifications that may be introduced shall previously be communicated to the Government, which, in case of finding them within the limits established by the said Article LII, shall cause them to be complied with as if they were regulations enacted by itself. The payment of all the tariff dues shall be exacted without any exception or preference, and under identical conditions, from all vessels, whatever be the place they come from or their nationality, with the exception stipulated in the following article. ARTICLE XLIV. As compensation for the privileges and concessions that Nicaragua grants by this contract, it is hereby stipulated that the Republic shall enjoy the special privilege that Nicaraguan vessels sailing under the Nicaraguan flag may navigate the canal at a reduction of fifty (50 per cent) per centum from the general tariff while engaged in the coasting trade or in the reciprocal trade with the other republics of Central America. It is declared that the vessels referred to in the preceding paragraph must be exclusively of the register of the Republic, and they must not be owned, either in whole or in part, by citizens of other countries. A reduction of fifty (50 per cent) per cent from the general tariff is also granted to vessels that begin their voyage for a foreign country in any of the ports belonging to the Republic, with a cargo wholly composed of products of the country. All the privileges to which this article refers shall be extended to the other Republics of Central America whenever Nicaragua shall find itself free from international obligations which may prevent it, or whenever one or more of the said Republics shall form a single nation with Nicaragua. The company can not collect any navigation dues whatever upon vessels and craft navigating the lake of Nicaragua and its prolongatious without passing out of the locks. The Nicaraguan vessels of war, and in the case above provided those of the Republic of Central America, shall not pay any dues on passing through the canal. ARTICLE XLV. In case it may be possible to utilize the waters of the canal and its dependencies for the irrigation of plantations, gardens, and streets, or for the supply of towns that may be without it, or as motive power for private enterprises, the company shall have power to supply it, collecting dues in proportion to the amount furnished, according to the tariff that it may be establish in agreement with the Government. ARTICLE XLVI. In view of the existence of an exclusive privilege granted by the Republic in favor to Mr. F. Alf. Pellas, by a contract ratified on the 16th of March, 1877, for the navigation by steam on the lake and river for the purposes of the internal commerce of the Republic, the canal company shall have the right of expropriation against Mr. Pellas, as regards his rights and properties, on just assessments by experts, after making a corresponding compensation according to the laws of the Republic. It is also stipulated that the company binds itself to pay to the Government of the Republic all it may from now on expend in any way for the improvement of the navigation of the river and the port of San Juan del Norte. This payment shall be made within six months of the date of the beginning of the works of the canal, and according to the original accounts of the corresponding office. ARTICLE XLVII: The company shall undertake at its expense the final surveys of the ground and the location of the line of the canal by a commission of competent engineers, two of whom shall be appointed by the Government of the Republic, which shall protect as far as it may the said commission. There is granted to the concessionary company a term, not exceeding one year, in which to commence the final surveys for the canal, and one year and one-half additional for completing them; to organize the executing company, and commence the work of construction. Said terms shall begin to be counted from the date of the ratification of the present contract by the Nicaraguan Congress, published in the official paper, which shall be construed as notification. Furthermore, said terms are not to be extended, and it is understood that operations are not considered to have been begun if during the first year of the work two million dollars ($2,000,000) are not expended on it. ARTICLE XLVIII. A term of ten years is also granted to the company for the construction, completion, and opening of the canal for maritime navigation. However, should events of main force arise, duly justified and sufficient to impede the regular progress of the works during the period of the said ten years, an extension shall be granted equal in duration to the time that may have been lost by such delays. If, at the expiration of the ten years aforesaid, the works should not be completed so as to have the maritime communication between the two oceans opened, in consideration of the great capital the company may have invested in the enterprise, and of the good will and ability it may have shown, and the difficulties encountered, the Republic binds itself to concede a new extension. ARTICLE XLIX. As a guaranty of the fulfillment of the obligations which the company incurs in accordance with Article 47, it shall deposit to the order of the Government of Nicaragua in a bank or in a mercantile house in the city of New York, which the Government may designate and within sixty (60) days from the date of the ratification of this contract, the sum of one hundred thousand ($100,000) dollars, American gold, which the company shall forfeit to the Republic if it do not fulfill the said obligations; and which sum otherwise shall be considered an advance to the Government on account of the necessary expenses of payment of the police of the canal according to the stipulations set forth in Article 37. This deposit, as soon as made, shall be at the disposal of the Government, |