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purpose, and on the 13th August their report was transmitted to Mr. Lawrence by Lord Malmesbury. The report was favorable, and a combination of British capitalists was made in contemplation of united action with American shareholders in the construction of the canal. For reasons which need not now be repeated, but principally because of the discussion which immediately began as to the clauses of the treaty relating to settlements in British Honduras, the project failed, and no canal was ever constructed under that grant.

A line of steamers was put on and run for many years, carrying passengers between New York and San Francisco. The expedition of Walker into Nicaragua terminated this line. The grant was revoked, the steamers were seized; the stockholders received no benefit from their property, and although the company nominally exists, it has been practically superseded by subsequent grants from Nicaragua to other companies.

It was also agreed in the treaty that the parties should invite other states to enter into similar stipulation, to the end that they might share in the "honor and advantage of having contributed to a work of such general interest and importance as the canal herein contemplated,” to wit, that by the Nicaragua route.

It is to be observed that if other nations were to become parties to the enterprise it was only on the joint invitation of both the United States and Great Britain; but the President regards the provision as lapsed by the failure to construct the canal to which it referred, and by the fact before stated that experience has shown that no joint protectorate for any canal across the isthmus is requisite. The canal, however, now in question is on the Panama and not on the Nicaragua route.

The remaining subject of the treaty is contained in the eighth article, which relates to a canal or railway across the isthmus other than by the Nicaragua route, as by way of Tehuantepec or Panama, and it is this provision of the treaty which has occasioned this correspondence. The article provides as follows:

The Governments of the United States and Great Britain having not only desired, in entering into this convention, to accomplish a particular object [to wit, the Nicaragua Canal, which, at the date of the treaty, it was thought was about to be constructed], but also to establish a general principle, they hereby agree to extend their protection, by treaty stipulations, to any other communications, whether by canal or railway, across the isthmus which connects North and South America, and especially to the interoceanic communications, should the same prove to be practicable, whether by canal or railway, which are now proposed to be established by the way of Tehuantepec or Panama.

It is to be here observed that the Government of the United States has a treaty with New Grenada, now a part of the United States of Colombia, entered into in 1846, by which free transit is guarantied to the citizens of the United States across the Isthmus of Panama upon any mode of communication that may be constructed, subject to no duties or burdens but such as may be imposed upon citizens of New Grenada; and by which, in order to secure the tranquil and constant enjoyment of these advantages, the United States guarantied, positively and efficaciously, the perfect neutrality of the isthmus, with the view that free transit from sea to sea might not be interrupted or embarrassed, and also guarantied the rights of sovereignty and property which New Grenada (now the United States of Colombia) had and possesses over said territory.

By this treaty with New Grenada the United States claim to occupy a peculiar relation to the means of transit by railroad or canal across the isthmus, within the territories of the United States of Colombia, a relation which cannot justly be superseded by the intervention of other States without the consent of the United States, duly and properly obtained. A protectorate of this kind is, like government, necessarily exclusive in its character, and implies a right and duty to make it effective. There may be a joint protectorate engaged in by mutual convention of different States, but the protectorate itself must be a unit. The treaty with New Grenada of 1846 still remains in full force. If Great Britain should desire to be united with the Government of the United States in that guaranty, of course it would require the consent of the United States of Colombia and of this government, and a convention to that end, the terms of which should be made agreeable to the parties.

Article VIII of the Clayton-Bulwer treaty relates only to those projects now [1850] proposed to be established; and expressly contemplates some further "treaty stipulation" on the part of Great Britain with the United States of America and New Grenada, now the United States of Colombia, before Great Britain can join the United States in the protectorate of the canal or railway by the Panama route. No such treaty stipulation has been made or has been proposed by Great Britain. Since the ratification of the Clayton-Bulwer treaty, for thirty years the United States, under the treaty of 1846 with New Grenada, has extended protection to the transit from sea to sea by the Panama Railway.

Should Her Majesty's Government, after obtaining the consent thereto

of the United States of Colombia, claim, under the Clayton-Bulwer treaty, the right to join the United States in the protection of the existing Panama Railway, or any future Panama canal, the United States would submit that experience has shown that no such joint protectorate is requisite; that the Clayton-Bulwer treaty is subject to the provisions of th treaty of 1846 with New Grenada, while it exists, which treaty obliges the United States to afford, and secures to it the sole protectorate of any transit by the Panama route; and if Great Britain still claimed the right to join in the protectorate the United States would then determine whether the "treaty stipulations" proposed by Great Britain regulating that joint protectorate were just; and, if so, whether the length of time during which Great Britain has concurred in the protection of the Panama route under the treaty with New Grenada has or has not relieved the United States from any obligation to accept a proposal from the government to join in the guaranty.

I may then state the President's views on the whole subject, which I do with an assurance that they will meet with a candid consideration from Lord Granville, and with the hope that they may be substantially concurred in by Her Majesty's Government.

The Clayton-Bulwer treaty was concluded to secure a thing which did not exist, and which now never can exist. It was to secure the construction of a canal under the grant of 1849 from Nicaragua that the United States consented to waive the exclusive and valuable rights which had been given to them; that they consented to agree with Great Britain that they would not occupy, fortify, colonize, or assume dominion over any part of Central America; and that they consented to admit Her Majesty's Government at some future day to a share in the protection which they have exercised over the Isthmus of Panama.

The Government and people of the United States, though rich in land and industry, were poor in money and floating capital in 1850. The scheme for a canal, even without the complications of the Mosquito protectorate, was too vast for the means of the Americans of that day, who numbered then considerably less than one-half of their numbers to-day. They went to England, which had what they had not, surrendered their exclusive privileges, offered an equal share of all they had in those regions in order, as expressed in the seventh article of the treaty, "that no time should be unnecessarily lost in commencing and constructing the said canal." Through no fault of theirs time was unnecessarily lost, the work was never begun, and the concession failed.

The President does not think that the United States are called upon by any principle of equity to revive those provisions of the Clayton-Bulwer treaty which were specially applicable to the concession of August, 1849, and apply them to any other concession which has been since or may hereafter be made. The conditions of 1882 are not those of 1852. The people of the United States have now abundance of surplus capital for such enterprises, and have no need to call upon foreign capitalists. The legislative branch of the Government of the United States may also desire to be free to place the credit of the United States at the service of one or more of these enterprises. The President does not feel himself warranted in making any engagement or any admission respecting the extinct provisions of the Clayton-Bulwer treaty which would prevent or interfere with such a purpose. On the contrary, frankness requires him to say that as the persons who held the grant which the United States understood to be accepted by the two governments under the provisions of the treaty have not "carried out the proposed enterprise," the United States esteem themselves competent to refuse to afford their protection jointly with Great Britain to any other persons or company, and hold themselves free hereafter to protect any interoceanic communication in which they or their citizens may become interested in such way as treaties with the local sovereign powers may warrant and their interests may require.

There are some provisions of the treaty which the President thought might be advantageously retained. With this purpose the present correspondence was opened by the note to you of the 19th November last, in which these points were indicated. The President is still ready on the part of the United States to agree that the reciprocal engagements respecting the acquisition of territory in Central America, and respecting the establishment of a free port at each end of whatever canal may be constructed, shall continue in force, and to define by agreement the distance from either end of the canal where captures may be made by a belligerent in time of war, and with this definition thus made to keep alive the second article of the treaty. He hopes that Lord Granville on further consideration may not be averse to revising his opinion that such agreements would not be beneficial.

To the suggestion made by Lord Granville, at the close of this note of January 7, that the United States should take the initiative in an invitation to other powers to participate in an agreement based upon the convention of 1850, the President is constrained, by the considera

tions already presented, to say that the United States cannot take part in extending such an invitation, and to state with entire frankness, that the United States would look with disfavor upon an attempt at a concert of political action by other powers in that direction.

It is not necessary to observe that there is no provision of the Clayton-Bulwer treaty which authorizes Great Britain to invite, or obliges the United States to accept, the aid of other nations to protect or to guarantee the neutrality of the Panama route.

Fortunately the want of harmony in the views of the two governments can have at present no injurious influence. No canal yet exists across the isthmus, and in the natural course of events some time must elapse before one can be constructed; meanwhile the points of divergence between Her Majesty's Government and that of the United States may disappear. The President hopes that long before the subject becomes one of practical importance Her Majesty's Government may be brought to see that the interests of Great Britain and of the United States in this matter are identical, and are best promoted by the peaceful policy which he has marked out for this country.

In the mean time the diversity of opinion which now exists will not in any wise impair the good understanding happily existing between the people and Governments of the United States and Great Britain.

You will read this dispatch to Lord Granville, and if he desires to have a copy of it you may leave one with him.

I am, sir, your obedient servant,


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