ARTICLE XXV.

The association shall have the right of doing throughout the whole extent of the canal within the territory of Costa Rica, at the mouths of the canal on the two oceans, and in the whole extent of the lands which under the present contract have been granted to it according to articles 15, 16, and 20, all such works as may be necessary for locating, leveling, excavating, and dredging the canal, and all other works that may be required for the establishment, feeding, operation, preservation, and maintenance of the canal.

The association is especially authorized to make along the line of the canal and on the Costa Rican bank of the San Juan River and its Costa Rican affluents and confluents, as well as on the Costa Rican rivers tributary to the Lake of Nicaragua, the lakes or water courses which may be utilized in their flow to the Pacific or to the Atlantic; to construct dikes and dams, make rectifications, dredgings, embankments, and deviations; to locate buoys, and in general to do all the works that in the opinion of the engineers of the association may be deemed indispensable for the construction, feeding, navigation, and operation of the canal. The embankments, fillings, and dikes which may be made within the territory of Costa Rica, at the mouths of the canal on the ports on the two oceans, by using materials resulting from the excavation of the canal, shall belong in fee simple to the association; but the Government shall have the right to occupy them in whole or in part after compensation made. Should any port of the canal be within the territory of Costa Rica, the association shall not obstruct such port nor widen its beaches unless there is absolute necessity to do so, and in this case the embankments and fillings that it may be necessary to construct in front of said port shall belong to the Republic.

In general the association shall have the right to use all the lakes and rivers of Costa Rica the waters of which may be necessary in the judgment of the engineers of the association to construct and feed the canal and to maintain its operations, but this right shall have the following restrictions, to wit:

1st. The navigation of the Costa Rican rivers, which the association may dam or otherwise use for the benefit of the canal, shall remain at the termination of the respective works in as good condition as it was before they were made.

2d. In the places where the waters of said rivers may overflow in consequence of the erection of dams or other artificial obstructions made by the association, the said association shall be obliged to do whatever may be practicable to prevent the formation of swamps and marshes.

3d. Such damages as may be caused to private parties in consequence of the deviation or elevation of the streams shall be compensated for by the association according to appraisals made by experts in conformity with the laws of the Republic, but the association shall not be obliged to pay more than the State would under similar circumstances.

ARTICLE XXVI.

The association can not import merchandise into the territory of the Republic for the purposes of trafficking with it without paying the custom duties established by law, but it shall have the right to import free from custom duties and of any other imposts whatsoever the articles needed for the works of the enterprise, its surveys, explorations, exam

ination of localities, constructions, use, operation, maintenance, repairs, and improvements of the canal, and also for the telegraphic and railroad service of the same, and for the works and workshops of the company, and the said articles may consist of implements, machinery, apparatus, coal, limestone of all classes, lime, iron, and other metals, whether raw or manufactured, mining powder, dynamite, or any other analogous substance. These articles may be transported between whatever points they may be needed during the work of the construction of the canal, and shall be landed and stored free from all local taxes.

The association shall also have the right to import free from duties or imposts, during the work of constructing the canal, such provisions, clothing for the workmen, and medicines as may be absolutely necessary for its own consumption.

Those articles the commerce of which is not free are excepted from the privileges granted in this article, and shall remain subject, with the exception of gunpowder, dynamite, and other explosives, to such requisites and duties as are established by law.

ARTICLE XXVII.

The vessels that the association may employ as tug boats or for the service of the canal shall be free from all imposts or taxes of any kind whatever, and also the material to be used for their repair and the fuel that they may consume.

The vessels and their appurtenances, from whatever place they may come, for the service of the association shall be exempt from all duties and imposts.

ARTICLE XXVIII.

The Government shall enact such regulations as it may deem necessary to prevent smuggling and for the preservation of public order in the region of the canal lying within the territory of Costa Rica or bordering on it and in the waters where it may exert joint jurisdiction. The company shall be 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 employee or employees whom it may concern, without right to any further measures, either against passengers, vessels, or their cargoes, excepting when an attempt at smuggling may be discovered; it being the intention of the State that there shall be most ample freedom of transit through the canal for persons and property, with the sole limitations established by this contract. Consequently, the association shall have the right to unload and reload ships in transit at such point as may be necessary in order to make repairs or lighten the vessels or shift their cargoes, or on account of any accident that unavoidably may render it necessary, without being subject thereby to search, exactions, or contributions of any kind, provided in each case, and before beginning operations, notice is given to the nearest custom-house authority.

ARTICLE XXIX.

The Government shall afford its protection, in conformity with the laws of the Republic, to the engineers, contractors, employés, and laborers that may be engaged in the preliminary surveys or in the works of construction and operation of the canal.

ARTICLE XXX.

The association shall be exempt from all forced loans and military exactions whether in time of peace or of war. The foreign agents or employés shall also be exempt from direct taxes, forced loans, and military exactions during the time in which they are in the service of the canal, but they shall pay the direct taxes established by law in case they may become owners of real property or commercial or industrial establishments.

ARTICLE XXXI.

The association may freely introduce into the lands granted to it employés and laborers of every race who may be needed in its works and workshops; and it may also introduce immigrants of all nationalities, excepting Asiatics and negroes. Both the immigrants and the employés and laborers shall be subject to the laws of the Republic and to 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 that they may remain within Costa Rican territory.

ARTICLE XXXII.

The Government of Costa Rica shall assure the association and its agents, under the laws of the Republic, as it does to the other inhabitants, the full enjoyment of the guarantees and rights which the constitution and laws grant to them. Reciprocally, the association and its agents bind themselves strictly to respect the laws and regulations in force in Costa Rica, and especially to comply with the final decisions of the courts, without considering themselves vested with other rights than those granted by law to Costa Rican citizens.

ARTICLE XXXIII.

The Government shall establish all along the line of the canal which may be within the territory of Costa Rica or along its frontier or in the waters appertaining to it in ownership or joint jurisdiction, such police stations and revenue offices as in its judgment may be necessary for the preservation of order in the region of the canal and for the observance of the fiscal laws of the Republic.

The expenses incident to said services, including those of buildings, salaries, wages, and allowances of the employés and transportation of the forces, and which may be in excess of such as are now borne by the Government for the custom-house actually established at the mouth of the San Carlos, or on any other point that may be crossed by the canal, shall be paid to the public treasury by the company on such terms and conditions as may be established hereafter, taking into consideration the requirements and necessities of such services.

The association shall also have the right to establish guards and watchmen for the service of the canal and the enforcement of its regulations.

ARTICLE XXXIV.

All contracts in regard to the works of the canal that the association may enter into in foreign countries shall be valid and effective, and shall have full force and effect in Costa Rica, provided they do not violate the laws of the Republic.

ARTICLE XXXV.

The association shall be exempt during the period of this concession both in time of peace and in time of war from all kinds of taxes upon the real estate that it may acquire by virtue of this contract and from all kinds of direct taxes, local charges, or any other imposts relating to the property and use of the canal, or of its buildings and the construction and dependencies thereof, all along its extent, including those situated in the ports and maritime establishments on the two oceans. This franchise is not transferable to the purchasers of the real estate which the association may alienate under this grant.

ARTICLE XXXVI.

The Republic of Costa Rica shall not establish any tonnage, anchorage, pilot, or light-house dues or any other charges of any kind whatsoever, upon vessels of any class whatever or upon the merchandise, baggage, and passengers which may pass through the canal from one ocean to the other; all such dues are reserved for the benefit of the association as provided for in article 39.

ARTICLE XXXVII.

For the purpose of securing the most ample liberty of transit of persons and property a free zone shall be established on each side of the canal, and the width thereof shall be 90 meters and 288 millimeters, measured from the water's edge in the canal.

All traffic declared illegal by the laws of the Republic shall, however, be prohibited within the said zone and the revenue authorities whose duty it is to watch for and prevent smuggling shall act in conformity with the stipulations of Article XXVIII.

It is expressly agreed that every vessel that may pass through the part of the canal which may be within the territory of Costa Rica or along its borders or in waters over which it exerts co-jurisdiction shall carry on board an officer appointed by the Government whenever the authorities may deem it convenient, and that officer shall act in conformity with the law should he discover that it is being violated.

The two ports to be constructed for the entrance and exit of the canal on both oceans, which may be wholly or in part within the territory or in waters of Costa Rica, shall be declared free ports and shall be recognized as such from the opening of the canal to the end of this concession.

The Government, in agreement with the company, shall establish, by means of a special decree, the limits of this franchise, which shall never extend beyond the waters of the ports comprised between the mouth of the canal and the entrance of said ports.

All merchandise that shall be loaded or discharged at any point of the canal within the territory of Costa Rica, and intended for internal commerce, shall pay the import and export duties fixed by the revenue laws of the State.

ARTICLE XXXVIII.

For the proper administration of the canal and its dependencies, and in order to facilitate its construction and operation, the association shall establish the proper regulations, which shall be binding upon

every person who may be found in its waters or in its dependencies; the sole reservation being that the rights and sovereignty of the State be respected.

It is understood that the association, in the exercise of the powers conferred by this article, shall not make other regulations than those necessary for the administration and particular management of the canal; and that, before carrying them into effect, they shall be submitted for the approval of the Government. The State shall lend the aid of its authority to enforce these regulations.

ARTICLE XXXIX.

By way of compensation for the expenses incurred in the surveys, construction, maintenance, and operation of the canal, or any part thereof, during the period of said privilege, the said association shall have the right to establish and collect for the passage of all kinds of ships, vessels, travelers, and merchandise through the canal and in the waters and ports pertaining to it, such dues of navigation, tonnage, pilotage, towage, storage, lay days, anchorage, light, roadsteads, wharf age, hospital dues, and any other similar charges in conformity with the tariffs to be established by it in accordance with article 45 of this contract.

These tariffs may be modified by the association at any time, on condition that all modifications that may be introduced in it shall be previously communicated to the Government, which, in case of finding them within the limits established by said article 45, shad 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 XL.

In compensation for the privileges and concessions the Costa Rica grants by this contract, it is hereby stipulated that the Republic shall enjoy the special privilege that Costa Rican vessels, navigating under the flag of Costa Rica, shall be entitled to navigate the canal at a reduction of fifty per centum of the general tariff while engaged in the coasting trade or in the reciprocal trade with the other republics of Central America.

To enjoy this privilege, the said vessels shall be necessarily of the register of the Republic, and belong to citizens of the same.

A reduction of fifty per centum of the general tariff is also granted to all vessels that begin their voyage for a foreign country at any of the ports belonging to the Republic with a cargo wholly consisting of products of the country.

Costa Rican vessels of war and revenue cutters shall pay no dues in passing through the canal. No dues shall be paid by the vessels of the National Register navigating either Costa Rican waters connected with the canal or the canal itself, without passing out of the locks, but said vessels are not in any way to obstruct the free navigation of the canal. Costa Rica, on its part, shall not object to the enjoyment by Nicaraguan ships of the advantage granted in this article to those of Costa Rica, provided that Nicaragua, on its part, consents that the ships of Costa Rica shall enjoy in Nicaraguan waters the said privilege,