Hearings, Reports and Prints of the Senate Committee on Foreign Relations

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 operatien 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, roadstead dues, wharfage, hospital dues, and any other similar charges in conformity with the tariff to be established by it in accordance with Article 52 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 52, 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 Nicaraugua grants by this contract it is hereby stipulated that the Republic shall enjoy the special privilege that Nicaraguan vessels ailing under the Nicaraguan flag may navigate the canal at a reduction of fifty (50) 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 paragraphs 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. 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 Nicaraugua. The company can not collect any navigation dues whatever upon vessels and craft navigating the lake of Nicaragua and its prolongations without passing out of the locks. The Nicarauguan 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 dus in proportion to the amount furnished, according to the tariff that it may establish in agrement with the Government.

ARTICLE XLVI.

In view of the existence of an exclusive privilege granted by the Republic in favor of 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 assessment 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 correponding 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 term 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 no 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 beer 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.

ARTICLE L.

In consideration of the valuable privileges, franchises, and concessions granted to the company by this contract, the Republic shall receive in shares, bonds, certificates or other securities which the company may issue to raise the corporate capital, six per centum of the total amount of the issue.

Such shares, bonds, certificates or other securities shall be free of all payment on the part of the Republic, being considered as paid in full. The six per centum shall in no event be less than four million dollars ($4,000,000), that is to say, forty thousand shares or obligations of whatsoever kind of one hundred ($100) dollars each.

Of said shares, bonds, certificates, or securities of whatsoever class, two-thirds shall not be transferable; but all shall participate in the benefits, interests, partitions, dividends, sinking funds, rights, privileges, and in all the advantages given to paid up shares without any distinction. The Government, in its capacity of shareholder shall, besides, have the right to appoint one director who shall represent its interest in the board of directors of the canal company from the time of its definite establishment. The shares referred to in this article shall be delivered to the agent the Government may appoint to receive them as soon as the company shall be ready to issue the certificates for its capital.

ARTICLE LI.

In order that the canal association may indemnify itself for the expenses it may have had to incur for the verifications, preparations, explorations, and surveys hereinbefore mentioned, and for all other expenditures that it will have to make until the definite organization of the company, it shall have the right, from the time of the organization of said company, to six per cent in shares, bonds, certificates, or other securities which the company may issue for the purpose of raising the corporate capital, and which are to be issued in excess of the capital to be subscribed.

These bonds, shares, or securities shall be identically like the subscription shares, and issued from the same register or stock book. As a consequence they shall participate in all benefits, interests, partitions, dividends, sinking fund, rights, privileges, and of all the advantages given to the paid up shares, bonds, or securities without any distinction whatever.

ARTICLE LII.

From the receipts of the enterprise the company shall take in the first place the necessary amount to cover all the expenses for maintenance, operation, and administration; all the sums Lecessary to secure the interest which shall not exceed six per centum, and the amortization of the obligations and of the shares, and what remains shall form the net profits, of which at least eighty per centum (80 per cent.) shall be divided among the shareholders, it being agreed that after the lapse of ten years after the completion of the canal, the company shall not divide among the shareholders, in payment of dividends, directly or indirectly, by issue of shares or otherwise, more than fifteen per centum (15 per cent.) annually or in this proportion from dues collected from the aforesaid canal, and where it shall appear that these dues yield a greater profit, they shail be reduced to the fixed limit of fifteen per cent per annum.

ARTICLE LIII.

The present concession shall be forfeited:

1st. Through the failure on the part of the company to comply with any of the conditions contained in Articles 8, 46, 47, 48, and 49.

2d. If the service of the canal, after its completion, be interrupted for six months, except in cases of main force.

When the concession shall have been declared forfeited, from whichever of these causes, the public lands granted by this convention will revert to the Republic, in whatsoever state they may be, and without compensation even in the case that buildings may have been erected thereon.

Such lands shall be excepted as may have been alienated to private parties by the company, with the formalities prescribed by law, provided that such alienations shall not have taken place within the six months preceding the date on which the company may have become legally fiable to the penalty herein established.

ARTICLE LIV.

On the expiration of the ninety-nine years stipulated in this concession, or in the event of the forfeiture contained in the preceding article, the Republic shall enter upon possession in perpetuity, of the canal, of works of art, lighthouses, storehouses, stations, deposits, stores, and all the establishments used in the administration of the canal, without being obliged to pay any indemnity to the company.

There shall be excepted from this condition, the vessels belonging to the company, its stores of coal and other materials, its mechanical work shops, its floating capital and reserve fund, as also the lands ceded to it by the State, excepting those in which are established the works indicated in the first part of this article, and which will revert to the State together with their immediate appurtenances, as necessary for the service of the canal, and as an integral part of the

But the company shall have the right, at the expiration of the aforesaid term of ninety-nine rers, to the full enjoyment of the free use and control of the canal in the capacity of lessee, with all the privileges and advantages granted by the said concession, and for another term of ninetynine years, on the condition of paying twenty-five per cent of the annual net profits of the enterprise to the Government of the Republic, besides the dividends due to it for its shares in the capital stock.

The company furthermore shall have the right to fix, at its discretion, the dues referred to in article 43 of this concession, so that the shareholders still receive dividends not to exceed ten per entum per annum on the whole capital, after deducting the payment of twenty-five per cent of the net guins to the Government.

At the expiration of this second term of ninety-nine years the Government shall enter into perpetual possession of the canal and other properties referred to in the first part of this article, including also in this possession all that which is excluded in the said first part with the exception of the reserve and aniortization funds. The failure to comply with any of the terms of the lease Sall terminate it, and the State shall enter into possession of the canal and other works belonging to it in accordance with the provisions of the preceding paragraph.

ARTICLE XLVII.

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 term shall begin to be counted from the date of the ratification of the present contract by th 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 no 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.

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 grea 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.

ARTICLE L.

director who shall represent its interest in the board of directors of the canal company from the time of its definite establishment. The shares referred to in this article shall be delivered to the agent the Government may appoint to receive them as soon as the company shall be ready to issue the certificates for its capital.

ARTICLE LI.

ARTICLE LII.

From the receipts of the enterprise the company shall take in the first place the necessary ount to cover all the expenses for maintenance, operation, and administration; all the sums sary to secure the interest which shall not exceed six per centum, and the amortization of the obligations and of the shares, and what remains shall form the net profits, of which at least eighty per centum (80 per cent.) shall be divided among the shareholders, it being agreed that after the lapse of ten years after the completion of the canal, the company shall not divide among the shareholders, in payment of dividends, directly or indirectly, by issue of shares or otherwise, more than fifteen per centum (15 per cent.) annually or in this proportion from dues collected from the aforesaid canal, and where it shall appear that these dues yield a greater profit, they shall be reduced to the fixed limit of fifteen per cent per annum.

ARTICLE LIII.

The present concession shall be forfeited:

1st. Through the failure on the part of the company to comply with any of the conditions

contained in Articles 8, 46, 47, 48, and 49.

2. If the service of the canal, after its completion, be interrupted for six months, except in

cases of main force.

to the penalty herein established.

ARTICLE LIV.

indeninity to the company.

But the company shall have the right, at the expiration of the aforesaid term of ninety-nine years, to the full enjoyment of the free use and control of the canal in the capacity of lessee, with all the privileges and advantages granted by the said concession, and for another term of ninetyFine Tears, on the condition of paying twenty-five per cent of the annual net profits of the enterprise to the Government of the Republic, besides the dividends due to it for its shares in the The company furthermore shall have the right to fix, at its discretion, the dues referred to in

capital stock.

article 43 of this concession, so that the shareholders still receive dividends not to exceed ten per cheer annum on the whole capital, after deducting the payment of twenty-five per cent of the net gains to the Government.

perpetual posesion of the canal and other properties referred to in the first part of this article, At the expiration of this second term of ninety-nine years the Government shall enter into including also in this possession all that which is excluded in the said first part with the exception Sali terminate it, and the State shall enter into possession of the canal and other works belonging to it in accordance with the provisions of the preceding paragraph.

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