corporation may provide. Five incorporators who shall be chosen by a majority of the number from those named in this act, shall have power to open books of subscription to the capital stock of said company in the city of New York, and at such other places in the United States, Nicaragua, or elsewhere, as they may designate, who shall receive all subscriptions for stock; and no stock shall be transferable except upon the books of the company provided for that purpose. The said incorporators shall give thirty days' notice of the time and place of the opening of said books, by publication in one daily newspaper in New York City, and one newspaper in Managua, Nicaragua, and one in San José, Costa Rica, if the said canal should be in part in the territory of that Republic. Sixty days' previous notice shall be given of the payment required of the time and place of payment by publication in one daily newspaper in the city of New York and in one newspaper in Managua, Nicaragua, and one in San José, Costa Rica, if the said canal should be in part in the territory of that Republic; and in case any stockholder shall neglect or refuse to pay, in pursuance of such notice, the stock held by him may be sold to the highest bidder for cash, according to the regulations to be made therefor in the by-laws of the said company. The directors hereinafter provided for may adopt regulations and by-laws not inconsistent with the provisions of this act. All shares, stocks, bonds, certificates, or other securities which the company may issue to raise the corporate capital shall be executed and issued at the principal office in the city of New York.

SEC. 3. That no certificates for stock, except as otherwise provided in this act, shall be issued till at least ten per cent. of the par value thereof shall be fully paid for in money, and such money deposited in the treasury of said company: and there shall be at least $1,000,000 in money paid on such subscriptions into the treasury of said company within one year from the passage of this act; and said company is hereby prohibited from returning or repaying any part of the money so paid. No part of the capital stock paid in shall be at any time withdrawn or returned to the stockholders, or in any manner diverted from the proper uses of the corporation. Any violation of the provisions of this section shall subject the charter to forfeiture.

SEC. 4. That the affairs of the said company shall be managed by a board of directors, fifteen in number, who shall hold their office for three years and until their successors are duly chosen and qualified, and a majority of whom shall be citizens and residents of the United States.

At the first election five shall be chosen by the stockholders for one year, five for two years, and five for three years, and at each annual election thereafter five shall be chosen by the stockholders for three years. The said board shall elect from its number a president, who shall be a citizen and resident of the United States, and one or more vice-presidents of the company, who shall also be citizens and residents of the United States, who shall hold office for such terms as the by-laws of said board may provide, and until their successors are duly elected and shall have qualified.

SEC. 5. That for the management and disposition of the stock, property, estate, and effects of the said company, the board of directors may make such by-laws, rules, and regulation as may conform to the authority granted in such canal concessions, and not be inconsistent with this act, of the laws of the United States, or the existing treaty stipulations of the United States with the Government of Nicaragua or of Costa Rica, if the said canal should be in part in the territory of that republic; and may fix the time for election of directors, and in case of vacancy in said board, caused by death, resignation, or otherwise, may fill the same. No person shall be a director who is not a stockholder, and any one ceasing to be a stockholder shall cease to be a director. All meetings of stockholders shall be held at the office of the company in the city of New York, and at least one such meeting shall be held in each year; but failure to elect directors on the day appointed by said by-laws shall not be deemed to dissolve said company, but such election may be holden on any day appointed thereafter by the directors, first giving thirty days' notice thereof in manner aforesaid. The directors, of whom eight, including the president, shall be a quorum, shall have full power touching the election or appointment of all officers of the company, and said officers shall hold office at the will and pleasure of said board.

SEC. 6. Said company shall make a report on the first Monday of December in each year, to the Secretary of the Interior, which shall be duly verified on oath by the president and secretary thereof, giving such detailed statement of its affairs and of its assets and liabilities as may be required by the Secretary of the Interior, and any wilfully false statement so made shall be deemed perjury, and punishable as such. And it shall be the duty of the Secretary of the Interior to require such annual statement, and to prescribe the form thereof and the particulars to be given thereby.

SEC. 7. Nothing in this act contained shall be deemed or construed

to in any wise restrict or impair any right of the United States under any treaty in force with the Republic of Nicaragua.

SEC. 8. That Congress shall at all times have the power to alter, amend, or repeal this act, when it its judgment the public good may so require. This act shall expire and be of no force or effect at the end of three years unless the construction of said canal shall be commenced and prosecuted in good faith within that time.

Approved February 20th, 1889.

APPENDIX VII.

NICARAGUA CANAL CONSTRUCTION COMPANY. REPORT OF THE BOARD OF CONSULTING

ENGINEERS, MAY 9TH, 1889.

To the Nicaragua Canal Construction Company.

GENTLEMEN: The undersigned were requested by your letter of January 10th, 1889, to examine the plans and estimates prepared by your chief engineer, Mr. A. G. Menocal, for a ship canal between the two oceans at Nicaragua, and to indicate the cost, in their judgment, of constructing a canal along the line proposed and following, in general, the plans of your chief engineer. You also requested an opinion upon the practicability of the canal as now proposed, with due reference to the end in view, namely, the safe and convenient passage of sea-going ships from ocean to ocean. We beg to present the following report :

We have carefully examined the unusually full maps, profiles, borings, samples of materials, etc., which have been prepared and collected under the directions of your chief engineer, and the completeness and excellent form of which reflect credit upon your engineering staff.

We find certain elements of the designs submitted which may probably be advantageously modified. This would in some cases reduce and in others increase the quantities. It is also altogether likely that some parts of the work may be let at lower and other parts at higher prices than are estimated. We, however, are disposed to base our conclusions on quantities and prices which should prove sufficient to accomplish it upon the assumption of good and honest management, backed by an ample treasury. We have necessarily borne in mind the fact that the cost of the notable precursors of this canal project, both at Suez and Panama, has greatly exceeded the amount of the original

estimates, and that this has been true of many other important works. While this might be, perhaps, in a large measure traced to unfortunate management, as well as the lack of such careful preliminary studies as have been laid before us in this case, we have nevertheless endeavoured to guard against a similar result by a liberal allowance for every apparent contingency.

Acting on this principle, we have not yet deemed it wise to reduce the quantities or prices of your chief engineer's estimates in any instance, even when it appeared possible that this might prudently be done. His figures are, of course, founded upon a better knowledge of the local conditions than we can now possess. But to the extent to which it has appeared at all doubtful we have liberally increased one or both. Our conclusions are as follows:

The project, as a whole, appears to have comparatively few elements of doubt about it, as contrasted with other works of at all similar magnitude, and we consider it to be unquestionably feasible. The great area of Lake Nicaragua offers immunity from serious floods by regulating flow. Much of the earth excavation and dredging, the rock drilling, and the concrete mixing can be done by mechanical means, to that extent reducing the need for manual labour. The dams and embankments are proposed to be made largely from the immense mass of otherwise useless rock spoil. Under the climatic conditions, as we understand them, an adequate supply of labour should be obtainable. The project in detail consists of the following elements:

First. Of 10 miles on the east end and 0.57 miles on the west end of sea-level canal dredged in from coast. The borings submitted seem to warrant the opinion that this will be entirely through alluvial deposits, as is also the case in certain parallel river diversions. The samples of material taken from these borings all appear favourable for dredging, and the cost of such dredging can be foreseen with the greater precision, because less influenced by climate, weather, and rates of wages than most other engineering work.

Second. Of a flight of three locks on each end, all within a distance of about one and one-half miles at one end and two miles at the other, by which the ascent is made from the sea-level to the summit-level of 110 feet (this elevation being some four feet less on the eastern end to allow for a necessary fall of three-fourths of an inch per mile in the San Juan River). These locks are shown by the borings submitted to be all founded on rock. The proposed size for locks, 650 feet by 70 feet by 30 feet deep, seems sufficient for all demands.