2d. But if the said company shall not accede to this treaty in all its parts, and if they shall not abandon or forfeit their said contract, but if they shall execute the same and comply with its terms, and build the said works all in the time required, then, in such case, this treaty in all its parts, wherein the State of Nicaragua grants to the United States, or to a company to be chartered by the President or Congress thereof, the exclusive privilege to be the constructors and owners of said works, shall be void, and of no force or effect.

3d. Nevertheless, in such case as is set forth in the second section next preceding, if said company shall accede to the fifth (5th), the sixth (6th), the eighth (8th), and the eleventh (11th) articles of this treaty, and shall consent and agree that the United States of America, and the citizens thereof, shall have and enjoy all the rights and privileges therein granted to them, and as defined also in the tenth (10th) section of the third (3d) article, then in such case the abovenamed fifth (5th), sixth (6th), eighth (8th), and eleventh (11th) articles of this treaty, as also the twelfth (12th) article thereof, shall be valid and obligatory between the contracting parties.

4th. But if in such case existing as is set forth in the second section above the said company shall refuse to accede or agree to the said fifth (5th), sixth (6th), eighth (8th), and eleventh (11th) articles hereof, as specified in the preceding third section, then this treaty shall be altogether void and of no force or effect whatever.

But the contracting parties, anticipating that said company, being satisfied that the great enterprise in view cannot succeed unless under the protection and patronage of the two govern ments, will concur and co-operate with them in the promotion thereof, they are assured that this treaty will meet their cordial approbation, and that it will be fully acceded to by them.

The present special convention between the United States of America and the State of Nicaragua shall be approved and ratified by the President of the United States of America, by and with the advice and consent of the Senate thereof, and by the Director of the State of Nicaragua, with the consent of the Legislative Chambers thereof, and the ratifications shall be exchanged in the city of Washington, Santiago de Managua or Leon, within the term of two years counting from this date.

In faith whereof, we, the plenipotentiaries of the United States of America and of the State of Nicaragua, have signed and scaled these presents in the city of Guatemala, on the twenty-first day of June, in the year of our Lord, one thousand eight hundred and forty-nine, in the seventythird year of the independence of the United States of America and in the twenty-eighth year of the independence of the State of Nicaragua.

(SEAL] [SEAL.]

ELIJAH HISE.
BUENAVA SELVA.

#9. Contract Between Nicaragua and the American Atlantic and Pacific Ship-Canal Company, signed at Leon, August 27, 1849.*

The supreme director of the State of Nicaragua and The American Atlantic and Pacific ShipCanal Company, composed of Cornelius Vanderbilt, Joseph L. White, Nathaniel H. Wolfe, and their associates, being always citizens of the United States, desiring to settle the terms of a contract for facilitating the transit across the Isthmus of Nicaragua from the Atlantic to the Pacific oceans, by means of a ship canal or railroad, have appointed as commissioners on the part of the supreme director of the State of Nicaragua, Messrs. Hermenegilda Zepeda and Gregorio Juares, and on the part of the said company Mr. David L. White, with full powers to arrange and conclude a contract for the above-named purposes, which commissioners, having exchanged their respective powers, have agreed upon and concluded the following articles:

ARTICLE I. The State of Nicaragua grants to the said company the exclusive right and privilege of constructing a ship canal across its territory, by a single route and at its own expense, from the port of St. Johns, of Nicaragua, or any other more feasible point on the Atlantic, to the port of Realejo, Gulf of Amapala, or Fonseca, Tamorinda, St. Johns of the South, or any other point on the Pacific Ocean which the engineers of the company may decide upon, by means of the St. Johns River, Lake Nicaragua, River Tipitapa, Lake of Leon, or any other rivers, lakes, waters, and lands situated within its territory, with the object of connecting the two oceans, and to make use of, for its construction and navigation, said rivers, lakes, waters, and lands, both public and private. And the State also grants to the company the exclusive right to the administration, management, and control of the said canal, according to the following articles:

II. The dimensions of the canal shall be such as may be necessary for the passage of vessels of all sizes, and the point at which it shall terminate on the Pacific, in the event that the engineers of the company shall decide upon two or more points as equally practicable, shall be that one most consistent with the mutual interests both of the State and the company.

III. The company binds itself to construct, at its own expense, in the harbors at the extremities of the route of said canal, custom-house buildings of the necessary capacity for the use of the State and company.

IV. The exclusive rights and privileges herein granted to the said company by the said State shall be enjoyed by the same for the fixed period of eighty-five years, counted from the day in which the canal shall be completed and put in use.

V. The company hereby agrees to pay to the said State for the said grant the following sums of money, namely:

First. Ten thousand dollars by draft on the said company in the city of New York as soon as this contract shall be ratified by the Legislature of the State.

Second. Ten thousand dollars at the expiration of one year from this same date, and $10,000 each year thereafter until the completion of the said canal, the above sums to be paid to the State in the city of Leon, or in the city of New York, as the State Lay elect. Also the said company makes a free donation to the said State of $200,000 of stock in the enterprise, which shall be delivered to the State as soon as the certificates of stock shall be distributed by the company.

VI. Said State shall receive for its proportion of the income of said canal, after the same shall be put in use, the following interests, namely: For the first twenty years, 20 per cent annually out of the net profits after deducting therefrom the interest of the capital employed in its construction at the rate of 7 per cent per annum, and 25 per cent each year thereafter out of said net profits, after deducting the said 7 per cent, until the expiration of the full period of the term hereinabove granted. And the State shall also receive 10 per cent out of the net profits, without any deduction of interest, of any route which the company may establish between the two oceans, whether it be by railroad or carriage road or by any other means of communication, during the twelve years herein granted for the construction of said canal.

VII. The said company shall be bound to make and present an annual report and account to the Government of Nicaragua, setting forth the receipts and expenditures, as well as a statement of the condition of the works of the canal, which report shall be certified by the proper officers of the company. The State, however, shall have the right, through any commissioners which it

• Report of the Isthmian Canal Commission, 1899-1901 (1904), Appendix MM, PI 509-513.

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may appoint for that purpose, to inspect and examine at any time the books of the company to satisfy itself of the correctness of the said receipts and expenditures.

VIII. It is hereby stipulated that the State of Nicaragua shall have the privilege of taking stock in the said canal, to the amount of $500,000, within one year from the date of the ratification of this contract, which it may distribute, as it may deem proper, among any of its native citizens or the citizens of the adjoining States, upon giving notice to the company of such intention through the United States consul in the city of Leon.

IX. It is further stipulated that a majority of the stock of said canal shall always be owned by citizens of the United States; in evidence of which the stock books of said company shall always be open to inspection at the principal office of the company, wherever the same may be

located.

X. The company binds itself to commence the preliminary surveys for said works within the period of twelve months from the date of the ratification of this contract, and also to complete the said canal within twelve years from the same date. But if any fortuitous or unforeseen events, beyond the control of the company-as, for example, earthquakes, epidemics, wars, or any other events of this nature should appear during the progress of the work to suspend its execution, the time thus lost shall not be reckoned as a part of the stipulated time above given for its completion. In case such event should occur, the company shall give immediate notice of the same to the Government, for the purpose of deciding, in connection with the company, upon the nature of such event.

XI. If none of the events which are expressed in the preceding article should occur, and the work shall not be completed within the said period of twelve years, then whatever may have been done by the company to that time, in the prosecution of the work, shall be forfeited to, and become the property of the State without any indemnity.

XII. The State gives to the said company the right to take, free of any charge or indemnity, any of the public lands or forests within the State, all the wood, stone, lime, timber, or any other materials which it may require for the construction and use of said canal and its dependencies. And the said State hereby further gives to the company the right to take and make use of such portions of the public lands as it may require for the establishment or erection of houses, stores, docks, wharves, stations, and all other useful objects connected with the works of said canal.

XIII. In case the company shall require any materials, such as wood, lime, stone, etc., which may be found in or upon the lands of particular individuals, it shall be obligated to pay for the same at such price as may be agreed upon between the company and such individuals; but all the lands which may be required for the passage of the canal in its entire route shall be at the expense of the State, and the company shall not be liable to pay any indemnity for the same. XIV. All the articles that the company may require, both for the surveys and explorations, and for the construction and use of the works of the canal, such as machines, instruments, tools, etc., and all other necessary materials, shall be admitted into the State free of duties of all kinds, and may be discharged in any of its harbors or at any other point within its territory that the company may select, in this last case, however, giving notice of such intention to the proper Government officer. But the company shall have no right to introduce within the territory of the State any goods, merchandise, or any other articles of commerce for sale or exchange without paying the duties established by law. And they are also prohibited from importing any articles or materials which may be monopolized or prohibited by the State for any purpose, except for the use of the works of the canal.

XV. The State binds itself to facilitate and aid in every possible way the engineers, contractors, employes, and laborers who may be employed in the explorations and surveys of the route, and in the construction of the works of the canal, and to this end stipulates that all citizens of the country who may be so employed by the company shall be free and exempt from all civil or military service of the State whatsoever; but to entitle them, however, to the right of exemption from such military service they shall have been previously in the employ of the company for at least the period of one month. The State also guarantees to all foreigners who may be employed on the works of the canal the same rights, liberties, and privileges as are enjoyed by inhabitants of the country, and also that they shall not be molested or disturbed in their labors while thus employed by any internal commotions or disorders of the country, and at the same time tint they shall be free and exempt from all taxes, duties, or direct contributions whatsoever during the time they may be in the company's employ.

XVI. The said company agrees to receive from the State as laborers upon the works of the canal any convicts who may be capable of labor upon such terms as may be agreed upon between the company and the State.

XVII. The said company agrees to transport across the said canal all passengers, goods, merchandise, and materials of every description which may be intrusted to it; and also stipulates that the canal shall be open to the transit of vessels of all nations, subject to fixed and uniform rates of tolls that may be established by the company.

XVIII. The company shall establish a tariff of fees or tolls for the transportation of all passengers, goods, wares, merchandise, and property of every description, and for vessels of all kinds passing through or along the said canal, which shall have the force of law from the moment in which it shall be communicated to the Government of Nicaragua, which shall be obliged to sanction the same within eight days after its reception; and at the same time, with a view to induce the largest and most extended business by this route, the said company agree to fix the said tariff of fees or tolls for the same at the lowest possible rate consistent with the mutual interests, both of the State and the company; and in case that the company should determine at any time to alter such tariff, it shall be incumbent upon it to give six months' previous notice of such determination in the State paper of Nicaragua and in the principal seaport towns of the United States.

XIX. The rate of tolls and charges for the transit of the products and manufactures of the State of Nicaragua and the adjoining States shall be regulated by a particular and more favorable tariff, which shall be agreed upon between the State and the company.

XX. The State grants to all steamers and vessels of the company during the continuance of this contract the right of ingress and egress to, from, and through all its barbors, rivers, and waters, both on the Pacific and Atlantic oceans and the interior, and the use of the same free of all duties or charges of any kind whatsoever, as, for example, anchorage, tonnage, etc.

XXI. The State hereby stipulates that all vessels and steamers of the company, and also all goods, merchandise, manufactured articles, or any other property which may be conveyed therein passing through the said canal from one sea to the other in either direction to any foreign country, shall be free and exempt from all kinds of Government duties or taxes whatsoever, and shall also be secure and protected from all interruption or detention in their course on the part of the State.

XXII. The company shall furnish to the State annually a list of all its vessels employed in the navigation of the route, containing the names and descriptions of each of such vessels, which shall be registered in the archives of the State, and thereupon the State shall give to the company a separate certificate of the register of each one of the said vessels, signed by the proper officer of the Government, which certificate shall serve always as a passport for said vessels through all the harbors of the State upon presenting the same to the custom-house or harbor officer.

XXIII. The exclusive right which the company has acquired by this contract of navigating the said lakes, rivers, and waters of the said State by means of steam vessels, from one sea to the other, is understood as not to exclude the natives of the country from free interior navigation by means of sailing or any other vessels, excepting steam vessels.

XXIV. The company binds itself to transport by the said canal, on board of any of its vessels, all the principal officers of the Government and its subalterns, in case of Government necessity, from one point of said route to any other one at which said vessels may stop, without any charge to the State therefor.

XXV. The company is to convey by any of its steamers or vessels, free of cost or charge, over the route of the said canal all the official correspondence of the State, in consideration of which the State agrees not to collect or recover any postage or duties of any kind upon any of the correspondence of the said company.

XXVI. The company binds itself to construct, at its own expense, bridges upon that part of the canal that may be made between the lakes and the Pacific, upon such principal highways as may be agreed upon between the State and the company. The said State, with the consent of the company, shall establish rates of toll or charges upon such persons or things as may pass over said bridges, the profits from which shall be appropriated to redeem the capital invested in their construction, and the interest thereon at the rate of 7 per cent per annum; and when such capital and interest shall have been reimbursed to the company then the profits shall be divided equally between the State and the company for the remaining period of this contract, but such bridges shall continue under the control and management of said com company.

XXVII. The State of Nicaragua, with the object of facilitating colonization of the lands contiguous to the river St. John and the adjacent rivers, and of the canal which in or along it may be constructed, makes a free donation to the company of eight stations or sections of land to be located at such points upon either one or both of the banks of the said river or canal as the company may elect, each one of which stations shall be of 6 English miles in length, fronting upon the river or canal, and 6 miles in width, measured from the bank of the canal or river toward the interior. And the State further grants to the company the right of alienating the lands which compose said sections to settlers, or any other person or persons who may wish to locate themselves upon the same. Said sections of land are granted upon the following conditions: (1) They shall be located by the company in such a manner that they shall be at least 3 English miles distant from each other.

That no one of them shall be located within the distance of 44 English miles from the mouth of the St. Johns River.

(3) The State reserves to itself the right to such points as shall be necessary for its military

fortifestions and public buildings.

(4)That the lands granted shall not be alienated to settlers until six months after the commencement of the survey of the route of the said canal.

(5) The State reserves to itself the supreme dominion and sovereignty over said lands and

their inhabitants.

(6) That said lands shall not be alienated by the company to any government whatsoever. XXVIII. The colonies which the company may establish upon said lands shall be colonies of Nicaragua, and thereupon the settlers shall be subject to the laws of the State the same as the natives of the country, being, however, exempt for the term of ten years from all taxes and direct contributions, and from all public service, as soon as each colony shall contain at least fifty settlers.

XXIX. The State further agrees that in case any event may hereafter occur, as named in the preceding Article X, to suspend or prevent the construction of the canal, or if the said contract shall become forfeited or annulled by either or both of the parties, and also in case the said contract shall continue in force for the full period of eighty-five years, mentioned in the preceding Article IV, the said State shall always acknowledge as private property the lands which may have been alienated or ceded by the company to settlers or other persons in virtue of the legal title which the company has acquired by this contract to the said lands.

XXX. The company shall have the exclusive right to construct rail or carriage roads and bridges, and to establish steamboats and steam vessels on the said rivers and lakes as necessary accessories to and in furtherance of the execution of the canal; but the company hereby stipu lates and agrees that, in case the construction and completion of the said canal, or any part of it, becomes impossible by any unforeseen event or insurmountable obstacle of nature, to construct a railroad or rail and carriage road and water communication between the two oceans, provided the same may be practicable, within the same period as is stipulated for the building of the said Canal, and subject to the same terms, conditions, regulations, and restrictions as far as they can be made applicable to the same.

XXXI. The State hereby binds itself not to sell or dispose of any of its public lands located upon or near the river St. Johns, or upon or near any of the routes or points designated in Article I of this contract, until after the surveys shall have been made and the route determined

of the said canal.

XXXII. The State also binds itself to protect and defend the company in the full enjoyment of the rights and privileges granted in this contract, and also binds itself not to contract with or cede to any government, individual, or companies whatsoever the right of constructing a ship canal, railroad, or any other communication across its territory between the two oceans, or the right of navigating by means of steam vessels any of its rivers or lakes which may be occupied by this company while this contract continues in force. But should this contract become forfeited or annulled, then the State shall be privileged and free to contract with any other individuals or companies as it may deem proper.

XXXIII. In case any dispute or controversy shall arise during the existence of this contract between the State and the company, the same shall be determined by a reference to five commissioners, to be chosen in the following manner, viz, two to be named on the part of the State, two named by the company, and the fifth to be selected by the four thus appointed, who shall hear and determine the matters in controversy, and decide upon the same; which decision of the said commissioners shall be final and without appeal, and binding upon both the State and the company. XXXIV. It is further provided that in the event of the four commissioners thus chosen not being able to agree upon the selection of the fifth, the State and the company shall then choose three individuals, out of which number they shall select one to act as such fifth commissioner; but should they disagree in such selection, then the choice shall be made out of said number by lot. XXXV. After the period of the eighty-five years herein granted to the company shall have expired, the company shall surrender to the State the canal or roads, and its dependencies, reveDues, and privileges, free from all indemnity, for the capital which may have been invested in the said

annually out of the net

profits of canal for of such surrender, promors, the cost of the same shall be less than $20,000,000, but should the cost be $20,000,000 or more, then the company shall receive the said 15 per cent for the period of twenty years after XXXVI. It is expressly stipulated on the part of the State of Nicaragua that the vessels,

such surrender.

products, manufactu

rés,

canal through the territory of the State, subject to no other or higher duties, charges, or taxes

and citizens of all nations shall be permitted to pass upon the proposed