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

of wome creditors and some bondholders, who did not hesitate, for badly understood individual interests, to disturb a work that was carried on in the general interest. He had, moreover, to struggle during the same period for the reorganization of the work against grave judicial events that were determined or complicated by press polemies and parliamentary discussions on which we do not consider it necessary to dwell here.

The receiver, after these judicial debates, instituted the civil proceedings which were called for by the facts revealed by the two examinations. He had, in the course of the same year, 1893, settled by compromises the greater part of the suits in which the liquidation was interested. He found himself early in that year (January 26, 1893) in presence of a series of judgments proBounced by the civil court of the Seine, complying with the individual petitions of bondholders for the payment of the sums paid in by them, for that of all damages, of unpaid coupons, of legal interest, and, after these judgments, pronounced notwithstanding appeal, the interested parties bad made a series of seizures bearing upon the lottery bonds that had not been placed and upon other property belonging to the liquidation.

Early in 1892 Mr. Monchicourt had foreseen these difficulties which, in the name of private interests, seemed likely to baffle all his efforts and to imperil forever the reorganization of the work by rendering its vast assets and resources unavailable.

He had called the attention of the governmental authorities to the peril of the legal situation as regarded such suits, and had proposed, with a view to the transfer of the assets to a company organized for the completion of the canal, or at least with a view to an equitable division among all the bondholders, a special legislative modification of the case of the interoceanic canal.

He actively resumed his efforts after the judgment of January 26, 1893, and soon won his case.

The very important law of July 1, 1893 (article 2), provided that "actions of any kind which the bondholders of the Universal Interoceanic Canal Company had, whether against the legally appointed receiver or against the managers as being responsible, or for restitution for any other cause, should be brought by an attorney appointed at the request of the procurator of the Republic practicing before the civil court of the Seine by a judgment rendered in the council chambr." The court of the Seine thus appointed, July 4, 1893, Mr. Lemarquis attorney for the I anama bondholders.

According to this law (article 1) all similar proceedings then before the courts were suspended. By securing, April 4, 1893, at Bogota, the contract authorizing a second extension, and, July 1, 1893, by the agreement of the governmental authorities in France, the special law for the liquida tion of the Interoceanic Canal Company, Mr. Monchicourt had, notwithstanding the extreme difficulties of that time, prepared the way for the reorganization of the work. Illness did not long permit him to enjoy the success of his efforts.

On the 21st of July, 1893, the state of his health compelled him to secure from the court of the Seine the appointment of Mr. Gautron as coreceiver. Messrs. Monchicourt and Gautron worked together until March 14, 1894, on which day Mr. Monchicourt died.

There remained but a short time to effect, before October 31, 1894, the actual reorganization of the enterprise.

To this end, Mr. Gautron, the receiver, and Mr. Lemarquis, the attorney for the bondholders, secured, by a series of compromises, from the managers of the old company, from the credit companies, from the contractors, and from a certain number of persons to whom various securities had been assigned, their cooperation in the new work, in the form of a subscription to shares of the company for the completion of the canal; the amount necessary to complete the full sum was to be asked of the bondholders and shareholders of the old company.

The by-laws of the New Panama Canal Company were regularly filed on the 26th of June, 1894. The capital of the company was divided into 650,000 shares of 100 francs each, 600,000 of which were to be subscribed for; 50,000, wholly unincumbered, were to be sent to the Colombian Government in pursuance of the laws and contracts authorizing the extensions.

The assets of the old company were transferred by the receiver to the new company, with precise enumerations and on terms which were clearly defined by the by-laws. These arrangements relative to the transfer of the assets were confirmed by the civil court. The court set aside objections of third parties which had been presented, either with a view to protecting the general interest, by Mr. Lemarquis, or in behalf of private interests.

The new company was thus definitely established.

The course which he proposed to pursue was outlined at once. With a view to preventing any sudden interruption of the work, he ratified an agreement which had been concluded between the temporary managers and the contractors, whereby the latter engaged to continue the work, although reducing its amount as far as possible. In consequence of these agreements the work was continued on the Isthmus up to various dates, running from March 15 to May 15, 1889.

Mr. Brunet likewise thought that it was very highly important, whether he could resume the work directly or could succeed in organizing a company to complete the canal, to release the liquidation from the onerous contracts made by the old company. The cancellation of these various contracts took place in the course of the year 1889.

In order to procure the necessary capital to preserve the work done, to keep the plant in proper condition, and to provide for the expenses of a survey commission which he proposed to organize in order to examine the condition of the canal as regarded its completion, the receiver secured from the Chambers the passage of the law of July 15, 1889, which authorized him to negotiate, without restriction as to price and without interest, the lottery obligations not placed in the issue of 1889. These new bonds were termed lottery bonds. The law declared at the same time that sums accruing from the sale of these bonds were undistrainable to the amount of 34,000,000.

During the same period final judgments had recognized the civil character of the old company and consolidated the powers of the receiver. They had, moreover, recognized that the holders of encumbered lottery bonds had a right to stop payments due to the old company, which would have been a serious matter for the liquidation and would have deprived it of all its resources, if it had not secured from the legislative branch of the Government the passage of the law of July 15, 1889.

Mr. Brunet organized without delay, under the presidency of Mr. Guillemain, inspectorgeneral, director of the National School of Bridges and Roads, the survey commission, composed of French and foreign engineers, whose duty was to proceed to a careful examination of the exact condition of the work. To this end a delegation of five members, presided over by Mr. Germain, hydrographic engineer of the navy, sailed for the Isthmus December 10, 1889.

A few days afterwards Mr. Brunet contracted the germs of the disease which was soon to carry him off.

On the 13th day of February, 1890, he secured the appointment of Mr. Achille Monchicourt by the civil court as coreceiver. As he constantly grew worse, Mr. Brunet was obliged to hand in his resignation, and on the 8th of March, 1890, Mr. Monchicourt was appointed sole receiver, with the powers previously conferred upon Mr. Brunet.

Mr. Monchicourt received on the 5th of May, 1890, the full report of the survey commission, completed by seven appendices.

That report declared, with the necessary reservations, that in the opinion of the commission1. It was possible to complete the canal in eight years, with a system of locks having a lift of from 8 to 11 meters united in groups on each slope.

2. That the plant on the Isthmus was in a satisfactory condition, and might suffice for the completion of the canal.

3. That, as the work to be done might be estimated at 580,000,000 francs, the amount to be asked of the public was to be placed at 900,000,000. The cost of the work already done and the value of the plant on the Isthmus were estimated by the commission at 450,000,000 francs.

Struck by this report, and resting upon its conclusions, the receiver designated, without delay, Mr. Lucien Napoleon Bonaparte Wyse to go to Bogotá and negotiate with the Colombian Government an extension of the time granted for the completion of the maritime canal by the law govering its concession.

After conferences which lasted from July 25 to December 10, 1890, Mr. L. N. B. Wyse signed a treaty providing for an extension of ten years.

Thus reassured on the essential point, viz, the extension of the time necessary for the resumption and completion of the interrupted work, the receiver devoted himself to the organization of a new company. He had, in fact, realized, like Mr. Brunet, the disastrous character of an actual liquidation, the difficulty and the dangers of realizing the assets, the difficulty and even the impossibility of distributing them when realized, the legal formalities being duly observed. He had understood that all the interests involved, both material and moral, called for a reorganization of the enterprise.

The Colombian Government, by a contract signed April 14, 1893, granted a new extension until October 31, 1894, to organize a new company which should have, from the date of its organization, ten years in which to complete the ship canal.

During these years, viz, 1891, 1892, and early in 1893, the receiver had, by a series of compromises confirmed by the civil court, settled most of the lawsuits then existing with the enterprises of the old company. He had resisted, amid the most serious legal difficulties, the attempts

of some creditors and some bondholders, who did not hesitate, for badly understood individual interests, to disturb a work that was carried on in the general interest. He had, moreover, to struggle during the same period for the reorganization of the work against grave judicial events that were determined or complicated by press polemies and parliamentary discussions on which we do not consider it necessary to dwell here.

The receiver, after these judicial debates, instituted the civil proceedings which were called for by the facts revealed by the two examinations. He had, in the course of the same year, 1893, settled by compromises the greater part of the suits in which the liquidation was interested. He found himself early in that year (January 26, 1893) in presence of a series of judgments pronounced by the civil court of the Seine, complying with the individual petitions of bondholders for the payment of the sums paid in by them, for that of all damages, of unpaid coupons, of legal interest, and, after these judgments, pronounced notwithstanding appeal, the interested parties had made a series of seizures bearing upon the lottery bonds that had not been placed and upon other property belonging to the liquidation.

He actively resumed his efforts after the judgment of January 26, 1893, and soon won his case.

The very important law of July 1, 1893 (article 2), provided that "actions of any kind which the bondbolders of the Universal Interoceanic Canal Company had, whether against the legally appointed receiver or against the managers as being responsible, or for restitution for any other cause, should be brought by an attorney appointed at the request of the procurator of the Republic practicing before the civil court of the Seine by a judgment rendered in the council chamber." The court of the Seine thus appointed, July 4, 1893, Mr. Lemarquis attorney for the I anama bondholders.

According to this law (article 1) all similar proceedings then before the courts were suspended. By securing, April 4, 1893, at Bogota, the contract authorizing a second extension, and, July 1, 1893, by the agreement of the governmental authorities in France, the special law for the liquidation of the Interoceanic Canal Company, Mr. Monchicourt had, notwithstanding the extreme difficulties of that time, prepared the way for the reorganization of the work. Illness did not long permit him to enjoy the success of his efforts.

There remained but a short time to effect, before October 31, 1894, the actual reorganization of the enterprise.

The new company was thus definitely established.

#20. The Collapse of the Maritime Canal Company of Nicaragu: 1893*

The Maritime Canal company was required to make an annual repor on the first Monday of December to the Secretary of the Interior, giv ing under oath a detailed statement of its affairs, its assets and liabil ties. This requirement has been complied with, and the report has bee printed as a Senate executive document each year since 1889.

From these reports it appears that the surveys and plans for th canal were completed within the time required by the concession and duly approved by the Nicaraguan Government, and that the work o actual construction had been begun within this limit and officially rec ognized on the 8th day of October, 1889. The work proceeded under: contract with the Nicaragua Canal Construction Company, and som progress was made, but the construction company met with financia embarrassment, the work was stopped, and the company was obliged to suspend payment. This resulted in the appointment of a reciever for the company on the 30th day of August, 1893, by the circuit court of the United States for the southern district of New York, and the worl of construction has not been since resumed.

The President of Nicaragua, in a message to the Congress of the Republic dated on the 27th day of October, 1898, announced that the contract had become null and void, owing to the lack of fulfillment of its most essential clauses and the abandonment of the work; but an official declaration of forfeiture was delayed until after the time fixed for the completion of the work, the 8th day of October, 1899.

•Report of the Isthmian Canal Commission (1904), p. 121.

#21. Extensions by Colombia of the Wyse Concession to the French Company, 1890, 1893, 1900*

ADDITIONAL CONTRACT MODIFYING THAT OF MARCH 23, 1878, APPROVED BY LAW 28 OF THE SAME YEAR-LAW 107 OF 1890. (DECEMBER 26.)

EXTENSION OF TEN YEARS FOR THE OPENING OF THE INTEROCEANIC CANAL ACROSS COLOMBIAN TERRITORY.

The Congress of Colombia decrees:

ONLY ARTICLE. The contract modifying that of March 23, 1878, for the opening of an interoceanic canal across Colombian territory, concluded between his excellency the minister of foreign affairs and Mr. Lucien N. B. Wyse, special representative of the receiver of the Compagnie Universelle du Canal de Panama, is approved in all its parts, which contract is literally as follows: Antonio Roldan, minister of foreign affairs, duly authorized by His Excellency the President of the Republic, bereinafter called the "Government," of the one part, and Lucien N. B. Wyse, naval commander, engineer, original concessionary of the interoceanic canal, and special delegate of the receiver of the Compagnie Universelle du Canal de Panama, under powers of attorney executed at Paris May 16, 1890, hereinafter called the "concessionary," of the other part, have agreed to modify the contract of March 23, 1878, for the opening of an interoceanic canal across Colombian territory, approved by law 28 of the same year, in accordance with the following stipulations:

ARTICLE L. The Government grants to the receiver of the Compagnie Universelle du Canal de Panama an extension of ten years, within which the canal is to be finished and put in public operation. The said extension is consented to subject to the following conditions:

First. The concessionary agrees to transfer all the plant of the company in liquidation to a new company, which shall undertake the completion of the work of the interoceanic canal.

Second. The new company shall be formally organized with a capital sufficient for this purpose, and shall resume the work of excavation in a serious and permanent manner not later than February 28, 1893.

Third. The concessionary, or his successors, shall furnish monthly to the National Government at Panania the sum of 10,000 piasters, in Colombian coin of 0.835, for the maintenance of 230 men of the military garrison of the department of Panama, whom the Government undertakes to assign for the preservation of order and for the security of the line of the canal during the work of excavation, and upon its termination for the protection of interoceanic transit.

In case the company should have need of a greater number of men of the public forces, the Government will assign them to said service, taking them from the military garrison of the department, but the additional expense occasioned by this increase, reckoned upon the basis already established, shall also be borne by the company.

The company binds itself to furnish places set apart for the occupancy of the troops upon points on the line at which the Government has none of its own. The last part of Article VIII of the original contract for the privilege is modified in these respects.

Fourth. The navigation of the lakes which may form part of the canal shall be free to small vessels, in accordance with the regulations which the company may prescribe for this purpose. The latter shall not be responsible for the inherent risks of this navigation. The internal regulation of the lakes shall be settled by the Government at the proper time, taking into account the general interests of the enterprise.

Fifth. The company binds itself to reestablish public transit at the mouth of the Rio Grande by means of bridges or boats, as it shall consider most practicable; and if, in consequence of the number of vessels, passige should become hereafter too diflicult, the company shall reestablish it between Emperador and Arraijan to the satisfaction of the Government.

ARTICLE H. Besides the public lands granted gratis by the contract of 1878, the expropriation of lands, buildings, and plantations which shall prove necessary to the canal and its dependencies shall be made by the Government, on account of the company, in conformity with the ninth condition of Article I of the aforesaid contract, approved by law 28 of 1878.

Such expropriation shall be made with all speed which the legislation of the country upon the subject permits. The expropriated real estate shall be immediately delivered over to the concessionary, or his successors.

ARTICLE III. The Government also undertakes to take the necessary steps for restoring to the new company the complete enjoyment of the lands belonging to the company in liquidation

•Report of the Isthmian Canal Commission (1904), Appendices HH, II, JJ, pp. 479–484.

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