HISTORICAL ACCOUNT ^'RUCTION OF* 4 A RAILWAY OF THE MISCHANCES IN REGARD TO TH ACROSS THE REPUBLIC OF HONDURAS; 'HE FAILURE OF THE LOANS SOLICITED FROM THE PUBLIC TO CARRY OUT THAT UNDERTAKING; THE PRINCIPAL Di (T IS S WHICH EAVE OCCURRED AT EACH FRESH COMBINATION ATTEMP'i FOR THE COMPLETION OF THE LINE. D. RAMON DE SILVA FERRO, SECRETARY OF THE ifSffDUBAS LEGATION, (TRANSLATED FROM THE SPANISH.} LONDON : PRINTED BY 0. F. HODGSON & SON, OOUGH SQUARE, FLEET STREET. 1875, CONTENTS. PAGE NOTE TO THE ENGLISH EDITION ., iii INTRODUCTION I. INTER-OCEANIC ROUTE ACROSS HONDURAS. HISTORICAL NOTES ... II. ARRANGEMENT OF THE FEDERAL DEBT. OTHER CLAIMS AGAINST HONDURAS 6 III. HONDURAS LOAN OF 1,000,000, LONDON, 1867 ... 15 IV. HONDURAS LOAN OF 207,509 BONDS, PARIS, 1869 ... 24 V. HONDURAS LOAN OF 2,500,OQP, LONDON, 1870 ... 32 VI. PROJECT FOR CONVERTING THE RAILWAY INTO AN INTER- OCEANIC RAILWAY TO TRANSPORT SHIPS ... ... 39 VII. MISSION OF A COMMISSIONER TO HONDURAS TO REPORT TO THE PROVISIONAL GOVERNMENT. ANOTHER LOAN PROJECTED AT PARIS ... ... ... ... ... 44 VIII. MEETING OF HONDURAS BONDHOLDERS, 10 JANUARY, 1873 51 IX. MM. HERRAN AND PELLETIER'S ANSWER TO CAPTAIN PIM'S ACCUSATIONS ... ... ... ... ... ... 75 X. MEETING OF BONDHOLDERS, 24 AUGUST, 1873. FORMA- TION OF TBE HONDURAS INTER - OCEANIC RAILWAY COMPANY ... ... ... ... ... ... 85 XI. CONCLUSION. 97 APPENDIX. No. I. OFFICIAL DOCUMENTS 109 II. CUTTING THE TIMBER AND WORKING THE MINES IN HONDURAS ... ... ... ... ... ... 115 ., III. APPENDIX TO THE REPORT OF THE COMMITTEE ... 117 ., IV. APPENDIX TO THE MEMORANDUM OF ASSOCIATION' OF THE HONDURAS INTER-OCEANIC RAILWAY COMPANY ... 132 V. SHIP RAILWAY ACROSS CENTRAL AMERICA 138 bra* NOTE TO THE ENGLISH EDITION. THIS HISTORICAL ACCOUNT has been written by order of the Honduras Government, communicated to the Minister Plenipotentiary in London, in a dispatch dated Comayagua, the 20th of August, 1874, and received at the Legation in London at the beginning of the following November. On the 4th of December last, the Minister Pleni- potentiary in London directed the Secretary of the Legation to draw r up the said HISTORICAL ACCOUNT in accordance with the records in the Archives of the Legation, in time to have it finished and printed, and sent to the Honduras Government by the mail of the 2nd January last, in conformity with the in- structions of the said Government, so that it might arrive at Comayagua at the same time as the special Commissioner of the Government, Dr. C. E. Bern- hard, who had the direction of all the financial affairs 11 of the Honduras Government in Europe, from the 27th of December, 1872, to the 15th of December, 1874. Dr. Bernhard left Southampton on the 17th of December last, to give a verbal account to the Supreme Government of the Republic of everything connected with the Railway and its loans. EAMON DE SILYA FEEEO, Secretary of the Honduras Legation . March, 1875. TO THE READER. So much has been written, said, and declaimed on the sub- ject of the construction of a Eailway across the Eepublic of Honduras ; so much has this interesting project been opposed, censured, and assailed ; so many have been the embarrass- ments and sudden changes which the various projects formed for this purpose have experienced and undergone ; so con- siderable the failures which have hitherto annihilated every effort to open that Eailway ; so unsatisfactory, not to say lamentable, the result of the loans contracted to meet the expenses of that costly work ; and so various, extraordinary, and frequently injudicious, the public comments upon every- thing connected with this unfortunate undertaking that any publication which tends to explain the real causes that have combined against the execution of the Railway across Hon- duras, meets a pressing necessity, and may serve as a starting- point for ascertaining whether there are still any means of imparting fresh impulse to the work by applying the lessons of the past and adopting a different course to conduct it in future. It appears that in Europe and in America there has been a fixed and very special design to shun the simple reality of the facts ; always setting aside the real cause of all the dis- asters, to enlarge upon the results only, and, turning round about in a vicious circle, to lay the blame of all that has happened, with as much injustice as temerity, on interme- diate entities, which had no more participation in these VI unfortunate episodes, than an electric wire has in the instruc- tions or transactions which it communicates from one com- mercial house to another on a different side of the ocean. The construction of the Honduras Eailway has hitherto broken down, because in truth all the combinations which have been attempted for that construction have broken down ; because the loans which have been proposed to the public in the European markets have broken down. And why have the loans broken down ? Do not those loans amount to more than 5,000,000 sterling ? Does not the Government of Honduras still owe that enormous sum ? - Might not the Eailway have been constructed for half that sum? Where have those millions of pounds sterling been buried ; where have they found their resting place ? It is by the answers to these questions that the mystery must be solved ; but the naked truth is very sad, it is very bitter ; and, the truth once known, the fault of the failure falls with equal force upon all who have interests, rights, claims, complaints, or any participation whatever in these matters. It is a kind of original sin, which reaches even the most innocent who have anything to do with this under- taking. The loans failed because they were based upon future guarantees ; because their conditions were burdensome and insupportable ; because they had not, generally speaking, genuine subscribers. The nominal sum which those loans represented was never realised, nor even half of it ; and that half could not be applied to the construction of the Line because the greater part of it was swallowed up by interest and redemption paid to the bond-holders. The Government of Honduras complains that it is still liable for considerable loans, the amounts of which it really never received, nor have they been applied to the construction of the Eail- way, and it may be added as gospel truth, that they never left the pockets of the speculators; but the Honduras Vll Government ought to take into account that its special cir- cumstances were dismal in regard to a favourable result of those loans. To those circumstances, which it would be superfluous to mention, must be added the unusual misfor- tune attendant upon the influence exercised by important political events in Europe and America at the most critical period of each of those operations. The bond-holders raise loud cries because they are not paid interest at ten per cent, on the nominal capital, and because those bonds which they took in good faith are not redeemed at par, Some of the bond-holders, indeed, but very few, sub- scribed and purchased bonds at the price of issue, in the hope of getting interest for their money at the rate of 13 or 14 per cent, per annum, and they did so in good faith ; but nine- tenths of the bond-holders of the Honduras Loans have bought them at 60, at 50, at 40, at 30, at 20, at 10, and at 8 per cent, of their value, in the hope of gaining 20, 30, 60, or 110 per cent, per annum, and with the chance of redemp- tion at par, by which they would gain 100, 200, and even 1150 per cent.; for those who bought bonds at 8 per cent, would gain no less than 1150 per cent., if the bonds were redeemed ; and there are many who have obtained them at that price, and even for less. Those bond-holders who expect such enormous profit, ought to understand that the advantages of speculations are in proportion to the risks which are run of their failure ; and, truly, those who speculate on 'Change, and invest their money in public shares which bear 10 per cent, interest, purchasing them for the fifth or the tenth part of their nominal value, ought to suppose that there is great probability of losing their money, and they cannot complain if that probability becomes a fact. Here, then, we have the two extremes, altogether anomalous, which are the real cause of the failures in regard to the Honduras Bail way; the Government, which expected to B 2 Vlll obtain loans for the construction of that work, on con- ditions very difficult to fulfil; and the bond-holders, who, relying on suicidal usury, have made that impossible which was only very difficult, by reducing the value of those bonds to a ruinous price, at which they received them from the trustees of the Government or from their agents. In short, the Government thought it could accomplish the construction of the Eailway by recourse to European loans which it expected to obtain easily, without any sacrifice, with- out any mischance, without any effort on its part, confiding in the utility of the enterprise and in its future proceeds ; and the European lenders have tried to obtain a colossal profit, by getting the bonds of the Honduras Government, representing amounts of which only a small part has been paid ; thus ruining the purpose of the Government in soliciting those loans, and paying dear themselves for their boundless ambition. These two extremes, equally vicious in principle, have been united by a chain of intermediaries and fellow- workers on both sides, who have stood the brunt of those opposing forces, frequently falling into a whirlwind of confusion, of difficulty, and deception, without knowing how to get out of it. Not all, perhaps, have conducted themselves with the uprightness, with the enthusiasm, disinterestedness, and self-denial, which are required to overcome great inconveniences. These qua- lifications are preeminent in the enlightened Hondurean D. Leon Alvarado, one of the principal promoters of this under- taking ; but the evils referred to were inevitable consequences of the very serious circumstances, and they would not have existed if the means by which it was intended to construct such an enormous work had been a little more solid and to the purpose. So many forces have conspired against the success of the Honduras Eailway that even a moiety of them would have sufficed to ruin any undertaking. It is not necessary to take into account the peculiar circumstances of the Eepublic, and. the incessant revolutions to which it has been subject ; it is enough to mention the external causes. IX Almost all those interested in other inter- oceanic lines across America have conspired against the success of the Bailway; the bond-holders themselves, and all the speculators at the Exchanges where the loans were announced, have con- spired against it ; misfortune, with wars and public cala- mities in her train, which prejudiced the operations, has conspired against it ; former creditors of Honduras for com- paratively insignificant sums, in order to avail themselves of the opportunity of getting payment by this means, have con- spired against it ; unworthy speculators without conscience, who derive profit by calculating upon the fall in matters which have not the proper solidity, have conspired against it ; many persons who ought not to have conspired, have conspired, for the pleasure of doing mischief, and not a few from ignorance ; and many others have conspired against it for the sole purpose of getting paid for the damage they could do. The historical account which follows hereafter fully explains the principal events connected with the Honduras Eailway and its loans. It is based upon authentic documents and drawn up with impartiality, not with the intention of attacking or defending any persons who have been mixed up in these affairs with more or less chances, with more or less misfortune, but for the purpose of affording a little more enlightenment to the present Government of Honduras, and also for the information of some private persons who are not sufficiently acquainted with these matters, and who lose themselves in a sea of conjectures, because they see nothing below the surface. London , January 1, 1875. HISTORICAL ACCOUNT, i. INTER-OCEANIC ROUTE ACROSS HONDURAS. HISTORICAL NOTES. THE magnificent maritime ports which Honduras possesses in the Atlantic and Pacific Oceans, namely, Port Caballos and the Bay of Fonseca, originated the idea of a grand route for communication between the two oceans, as early as the middle of the sixteenth century, scarcely half a century after the dis- covery of America. The first serious survey for a road across Honduras from Port Caballos to the Bay of Fonseca, was made in 1555 by Juan Garcia de Hermosilla, by order of the King of Spain. In the year 1586 the celebrated Italian engineer, Baptista Antonelli, who erected the castle of San Juan de Ulloa, and that of the Morro at Havannah, was commissioned to survey the route across Honduras ir^ conjunction with the Spaniard Juan de Tejada. They surveyed and sounded the ports at both extremities of the projected line, and they made a splendid report in favour of that inter-oceanic way. Many other sur- veys were made for the same purpose in the 17th century ; and if the opening of that road was not executed by the Spaniards, it was because rivalries had already grown up there, resulting from private interests, and because for the time the difficulty prevailed, arising from the fact that the ports of Caballos and Fonseca were too spacious to be put in a state of defence, so that ships which were anchored in them might be secure and safe from the attacks of the pirates who then infested those coasts. The discovery of the auriferous mines of California and the immense importance which the emigration from Europe and the United States to the Western shores of the Pacific, acquired from that time, again introduced the problem which for a very long time before had occupied the attention of the Spa- niards ; that is, the choice of the best route across Central America, or the Isthmus of Darieii, for the construction of a railway or the cutting of a canal which should fully meet the requirements of commerce and the transit of passengers. In the years 1850 to 1852 the representative of the United States in Central America, Mr. E. G. Squier, conceived the idea that it might be possible to make a railway across the Eepublic of Honduras from Port Caballos to the Bay of Fonseca. Adhering to this idea, he succeeded in getting a scientific body organised in the United States to ascertain the practicability of that line. That body left the United States in February, 1853, and returned in December of the same year. The report was very favourable; and, in consequence, Mr. Squier solicited from the Government of Honduras a concession for the construction of the road, in favour of Messrs. Eobert J. Walker, Amory Edwards, A. Miltenberger, James S. Thayer, Henry Stanton, Fletcher Westray, and E. Gr. Squier himself. General D. Jose Trinidad Cabanas was then President of the Eepublic, and D. Leon Alvarado and D. Justo F. Eodas were the Commissioners of the said Government. Having obtained from the Government of Honduras the concession to construct this Eailway, on the 28th of July, 1853, Mr. Squier formed a company in New York, which broke up shortly after on account of the opposition which it met with from those who were interested in and partisans of the Panama Line, and on account of the contempt and indifference with which it was received by the speculating public of the United States. The promoters of this undertaking determined to have recourse to the European markets, in order to seek funds to carry it out. For this purpose they commissioned its originator Mr. Squier, to proceed to London or Paris, and bring it before the public in one of those capitals. After two years of contest and exertion, overcoming diffi- culties and opposition, he succeeded in forming a mixed Company, that is, English, French, and North American, with its seat in London, and under the direct sanction of the Eng- lish Government. Sir William Brown figured in that Company as President, and Eobert Wigram Crawford, Esq., as Vice- President, besides many other eminent men of high social position not surpassed by those of any other Company. Here is the complete list of the gentlemen who formed that Company ; and who, by their social position, influence, and wealth, constitute an association so respectable and powerful, that no better could be assembled at any place in the commercial world : i SIR WILLIAM BROWN, Bart. E. W. CRAWFORD, Esq., M.P., London. ABRAHAM DARBY, Esq., Stoke Court, Slough. JOHN PEMBERTON HEY WOOD, Esq. (Hey wood, Ken- nards, & Co.), Lombard Street. CHARLES HOLLAND, Esq., President of the Liverpool Chamber of Commerce. THOMAS SANDEN KIRKPATRICK, Esq., London. M. T. WEGUELIN, Esq., London. CHARLES F. MOULTON, Esq., Paris. JOHN LEWIS EICARDO, Esq., M.P., London. Major-General TREMENHERE, London. WILLIAM WHEELWRIGHT, Esq., London. JOSEPH EOBINSON, Esq., Ebbw Vale Company. It was Lord Clarendon himself, then Minister for Foreign Affairs of Great Britain, who induced Sir William Brown to undertake the Presidentship of the Company, and gave, on his part, all the facilities in his power in order that the con- struction might be carried on. On the 20th of August, 1856, a Treaty of Friendship, Commerce, and Navigation was concluded between Great Britain on the one part, represented by Lord Clarendon, and the Eepublic of Honduras on the other part, represented by the Minister of Honduras in London. That treaty estab- lished the neutrality of the Eailway across Honduras, under the protection of Great Britain, with other conditions favour- able to the development of commerce and free-trade by the said Line. The United States and France concluded similar treaties soon afterwards. By another treaty of 28th November, 1859, in consider- ation of the peculiar geographical position of Honduras, and to secure the neutrality of the adjacent islands with reference to any Eailway or inter-oceanic Line across Honduras, her Britannic Majesty's Government agreed to recognise the islands of Eoatan, Helena, Barbarota, Guanajo, Utila, and Morat, known as the Bay Islands, and situated in the Gulf of Honduras, as an integral part of the said Eepublic. By another article of the same Treaty, the English Govern- ment recognised the sovereignty of the Eepublic of Honduras over the territory inhabited by the Mosquito Indians, com- prised within the limits of the frontier of the said Eepublic, whatever they might be. In this manner the difficulties were amicably settled which existed between Great Britain, Central America, and the United States. This restitution of the Bay Islands and the Mosquito Territory to the Eepublic of Honduras, on the part of England, was the first advantage which Honduras obtained from the project of opening an Inter-oceanic Eailway across its territory. The Company having been formed in London, and at the personal expense of its directors, who laid out some 80,000 upon it, a complete survey of the Line was made in the years 1857 and 1858, under the direction of General William W. Wright, and the ports and rivers were carefully surveyed by Captain W. N. Jeffers, of the United States Navy. These labours were then verified by Lieutenant- Colonel Edward Stanton, Royal Engineer, who, with a body of engineers under his orders, was sent to Honduras in the service of Her Britannic Majesty's Government. The survey of the whole lino of the Eailway was minutely explained in the following collection of documents : I. General Map of the whole line of the proposed Eailway from Port Caballos (or Cortez) to the Bay of Fonseca, upon a scale of a mile to an inch. II. Detailed Topographical Maps of the field of labour (24 Maps) on a scale of 500 feet to an inch. III. Profile or vertical section of the whole line, on a scale of 400 feet to an inch horizontal, and 40 feet vertical. IV. Detailed Chart of the part of the Bay of Fonseca where the Railway is to terminate, drawn from triangulations by Lieutenant Jeffers, Hydrographical Engineer. V. Detailed Chart of Port Caballos and Alvarado Lagoon. VI. Extracts from the Memoir, by J. C. Trautwine, Esq., Chief Engineer. VII. Memoir by W. W. Wright, Esq., First Assistant Engineer, containing tables and details of the cuttings, embankments, tunnels, bridges, &c., with the estimates. VIII. Memoir by Lieutenant W. N. Jeffers, of the United States Navy, respecting the Bay of Fonseca. IX. Memoranda and observations presented by Lieutenant W. N. Jeffers, acting as deputed agent. X. Extract from the Memoir by Lieutenant Colonel Edward Stanton to General Sir J. F. Burgoyne, K.C.B., respecting the Bay of Fonseca. "XL Memoir by Dr. J. L. Le Conte, respecting the agricultural and mineral resources of the country in the vicinity of the line of railway. XII. Memoir by Gustavus Holland, M.D., Surgeon to the expe- dition. XIII. Extract from a Memoir addressed to the French Govern- ment, respecting the Bay of Fonseca, by Captain M. T. de Lapelin, of the Frigate " La BrilJaute." But before the fruits of these preparatory labours could be gathered, the Italian War broke out, and all the operations for carrying on the undertaking were suspended. Then also began the war in the United States, and very soon after the invasion of Mexico by the French ; and under these circumstances the directors of the Company in London, who had, moreover, re- ceived from one of their engineers an unfavourable report in regard to the practicability of the Line, lost heart, and suspendi all action calculated for the furtherance of the undertaking. In the midst of so many unfavourable circumstances, tin concession for the said Eailway became void, by virtue of on of the articles contained therein, and the projected Hondun Eailway disappeared for the time from the public stage. II. ARRANGEMENT OF THE FEDERAL DEBT. OTHER CLAIMS AGAINST HONDURAS. AFTER the lapse of some time, D. Leon Alvarado, a worthy son of Honduras, who had signed the original concession in the name of the Government of the Eepublic, came to Europe as Special Commissioner of that Government, and tried in vain to re-organize the Company on the same basis as before. But his efforts produced not the slightest result; and it was then decided to have direct recourse to the English public, and solicit a loan in the name of the Government of Honduras, for the purpose of applying it to the construction of the Eailway; offering as security for the said loan, not only the Line itself which it was intended to construct, but also the uncultivated lands and the magnificent forests of the Eepublic. The first difficulty which stood in the way of this project was that, according to the regulations of the London Exchange, no foreign nation which has not fulfilled its previous financial engagements, or has not arranged them satisfactorily with its creditors, can enter into fresh negociations in the monetary market, or quote funds of new loans or undertakings on the said Exchange. The Government of Honduras was endeavouring to arrange the part which had been assigned to it in the partition of the Federal debt of Central America, amongst the five independent Republics which were formed after the dissolution of the Federation, which Federal debt originated as follows : In August 1825, the then Federal States of Central America, namely, Guatemala, Honduras, Salvador, Nicaragua, and Costa Rica, proposed to negotiate a loan in London of 1,428,571 nominal value ; but only J 63,300 were issued, at six per cent- annual interest. When the federation was dissolved, the five States which had composed it divided this debt amongst them, according to Mr. Chatfield's arrangement, the share of each of them being as follows : Honduras, two-twelfths . . . 27,200 Guatemala, five-twelfths . . . 67,900 Salvador, two-twelfths . . 27,200 Nicaragua, two-twelfths . . . 27,200 Costa Eica, one-twelfth . . . 13,500 Which items amount to . . 163,000 From February 1827 to April 1844, none of the five States of Central America paid the interest on the part of the debt which had been assigned to it. In April 1844, Costa Eica made an arrangement of its part with the English creditors, paying them 85 per cent, of the capital ; thus the creditors lost the remaining 15 per cent, and seventeen years' interest. In 1856, that is, twelve years after Costa Bica, Guatemala made an arrangement of its debt, paying the English creditors 01 per cent, of the capital and the interest for twenty-seven years overdue not in coin, however, but in bonds issued for the purpose, which bore an annual interest of five per cent, instead of the six per cent, on the previous bonds. Four years after Guatemala, that is in 1860, Salvador was the third State which arranged with its creditors. During the years 1860, 1861, and 1862, it paid them in coin up to 90 per cent, of the capital of the debt, and the creditors lost 10 per cent, of the capital, and the interest for thirty-four years. Nicaragua has not paid the interest on its part of the Federal debt since 1827, and only lately, in 1873 and 1874, has it taken steps to make an arrangement. The Federal debt belonging to Honduras, with the interest overdue, amounted in July, 1867, to 231 per cent, of the original capital, that is, to 62,862 for interest, which with the capital made a total of 90,075. D. Leon Alvarado then saw himself under the imperative necessity of arranging this debt, because without such pre- vious arrangement nothing absolutely nothing could be attempted in regard to the projected loans for the construc- tion of the Eailway. Besides the Federal debt, there was a claim of the firm of Hart for the sum of 7,300, arising from a sale of guns to the Government ; and this firm opposed every negotiation of Honduras in the market, unless an arrangement were also made with it in regard to that debt. Then the creditors of the Federal debt held a meeting, and the Commissioner of the Government proposed to them- as an arrangement, to acknowledge 5 5,0 00 for capital and interest, instead of the 90,075 capitalised ; on condition of paying the 55,000 by giving new bonds for the said sum, which were to bear an annual interest of 5 per cent. At the same time there was no other remedy but to pay the firm of Hart its claim, or at least to give it security for payment with the same kind of bonds ; and besides it was necessary that the operation should provide for the expenses of commission, of drawing the bonds, and some others, to commence the operations which were contemplated for the Eailway. So the arrangement was made by issuing 90,000 nominal in bonds with 5 per cent, interest, which bonds were distri- buted in the following manner : To the former holders of bonds of the Federal debt, new bonds were de- livered to the value of . With Messrs. Hart & Co. new bonds were deposited as security for their effective claim of 7,300 to the amount of ..... Delivered to the Commissioner, Senor Don Leon Alvarado, for expenses,&c. including 2,000 in bonds to Mr. Haslewood the broker . Total amount of bonds } 55,000* 15,000 20,000 issued to pay the old Fe- I 90,000 deral debt of Honduras I = It was intended to redeem these bonds in due course, with funds which would be destined for the purpose, arising from the loans intended for the construction of the Eailway, in accordance with the powers and instructions sent by the Government ; and as a security for the fulfilment of this arrangement the revenues of the Custom-house of Amapala were pledged, upon which there was already a lien by order of Congress for the pending debt of Messrs. Hart. 10 It should be borne in mind that there are in England some other claims against the Government of Honduras, which are under the official safeguard of the English Government. One, called the Carmichael claim, dates from 1852, and amounts to 54,830 dollars, as was allowed by the commission which assembled at Guatemala, in 1802, to decide respecting the English claims against Honduras, in accordance with the convention, signed at Comayagua, on the 28th of November, 1859, known by the name of the " Mosquito Convention." The Honduras Government offered to pay that sum to the representatives of Mr. Carmichael in mahogany; but was not able to fulfil that arrangement, and the English Govern- ment has in consequence made serious and repeated reclama- tions which are still pending. Mr. Carmichael has also another pending claim against the Government of Honduras for 15,000 dollars, according to the convention called " Chatfield-Cruz," signed in 1852, for the payment of which and of other lesser claims included in the same convention, the proceeds of the Custom-houses of Trujillo and Omoa were pledged to Sir C. Wyke in 1856. This claim of Carmichael, and others which are annexed to it, amount without interest to the sum of 26,761 dollars, on account of which sum, according to a memorandum of Lord Granville's, dated 5th June, 1873, the Government of Great Britain has received 3,345 dollars S lj cents, proceeding from the Custom-houses of Trujillo andOmoa, and 1800, or 9000 dollars, paid on account by the Minister in London, Serior Gutierrez. There is also a third claim of the English Government against the Government of Honduras still pending, which arises from the stipulation in the Treaty between Her Britannic Majesty and the said Eepublic, signed at Comaya- gua, on the 28th of November, 1859, the ratifications of which were exchanged, at Comayagua, on the 18th April, 1860, by which Treaty the British Government has trans- ferred the Bay Islands and the Mosquito Territory to Hon- 11 duras. The second paragraph of Article III. of the said Treaty reads textually thus : "The Eepublic of Honduras wishing to educate the Mos- quito Indians, and to improve their social condition in the district occupied by them, will grant an annual sum of jive thousand dollars in silver or gold, during the next ten years, for that purpose, which shall be paid to the chief of the Moscos in that district, that payment being guaranteed by a lien upon all the timber and upon all the other natural pro- ducts (whatever they may be) of the uncultivated lands in the Bay Islands and in the Mosquito territory. " These payments shall be made by half-yearly instalments of 2,500 dollars each ; the first of these payments shall be made six months after the exchange of the ratifications of the present Treaty." During all the time that has elapsed since the Bay Islands were transferred to Honduras, only one instalment of 500 has been paid by the Minister of Honduras in London, D. Carlos Gutierrez : this was to the British Minister, Lord Russell, on the 26th of August, 1861 ; but both this instal- ment, and the 1,800 paid on account of the Carmichael claim, came from the funds of the loans, which will be spoken of further on, contracted for the construction of the Honduras Railway. In order to conclude the history of the so-called " Federal debt," it is necessary to anticipate some facts, without attend- ing to their chronological order. Since the arrangement of the debt was made, the following sums have been regularly paid to redeem the bonds of the said debt, and this from funds taken from subsequent loans for the construction of the Eailway. 12 Redemption of tie Federal Debt, according to the Arrangement 0/1867. October, 1868, redeemed at par April, 1869 October, 1869 April, 1870 October, 1870 April, 1871 October, 1871 April, 1872 October, 1872 Bedeemed at par . . . 11,150 From this it appears that 11,150 of the Federal debt (which was, as has been said, 90,000 nominal) having been redeemed, there remains the sum of 78,850 to be redeemed. Moreover, five entire years of interest of the said debt, at the annual rate of 5 per cent., have been paid, that is, the years 1868, 1869, 1870, 1871, and 1872, which payment has required 21,550 cash; so that, to meet the interest and the reduction of the Federal debt during five years, the following sums have been paid in London on account of the Eepublic of Honduras : For five years' interest . . . 21,550 For redemption, 5 years . . . 11,150 Total paid .... 32,700 It is needless to say that these 32,700 were taken from the produce of the loans for the construction of the Bail way; and the regular payment of this debt, so far as was possible, could on no account be neglected, because of the absolute necessity of maintaining the credit of the Eepublic in London, in order not to find in those creditors powerful enemies who EREATUM. Page 12, line 3, for " at par," read "at market price." : might oppose the operations necessary for the completion of theEailway, according to the orders of the Honduras Govern- ment. So soon as the payment of the interest and the redemption of this debt ceased, which was in April, 1873, Messrs. Hart, who had the value of 15,000 in bonds in their possession, and who had been receiving the interest upon those bonds, peremptorily insisted that their claim should be paid to them in cash. It was necessary to do this. Under a fresh agreement they were paid 6,000 in cash to cancel their claim, and they then returned the 15,000 in bonds, which they held in deposit as a guarantee, and which now belong to the Govern- ment of Honduras, and are in the possession of Mr. Edward Haslewood, as may be seen by the following account of the present state of the said Federal debt. State of the Federal Debt of Honduras on the \st of January, 1874. Total amount of the bonds issued for the "*) arrangement of the Federal debt in [ 90,000 1867 J Deduct the Bonds redeemed at par, from 1 1868 to 1872, both inclusive . j Eemains unredeemed . . 78,850 In possession of Mr. Edward ^ Haslewood, returned by }* 15,000 Hart . Balance of those delivered to ~] D. Leon Alvarado, for I payment of Commission, &C/&C. J Belonging to the Government 17,900 Remaining in Circulation . . 60,950 14 The sum of 17,900 in bonds of the Federal debt, which belong to the Government, may be cancelled whenever it chooses ; and in that case the bonds still remaining for redemp- tion will be reduced to 60,950, the amount of those in circulation. But it must be borne in mind that there are two years' interest already due upon those bonds, which amount approximately to some 8,000. It may also happen, although it is not probable, that the Government may put the 17,900 in bonds above-mentioned into circulation again, in which case the Federal debt to be redeemed would mount up to 78,850. Before concluding this Chapter, it will be well to give a brief statement of the sums already mentioned as having been paid in London on account of the debts in arrear of the Eepublic of Honduras, in order to maintain its credit in the English market, and all those taken from the funds of the loans intended for the construction of the Eailway : Interest and Eedemption of the Federal "i Debt, payments made from 1868 to j- 32,700 1872 ...... J Debt paid to Hart .... 6,000 Paid to Lord Russell for one Instalment for the Mosquito Indians Paid to Lord Granville on account of the Claim of Carmichael and others ) . ) If these 41,000 had been applied to the construction of the Eailway, they would have been sufficient for eleven miles of the said Line. 15 III. HONDURAS LOAN OF ONE MILLION STERLING. LONDON, 1867. WHEN the difficulty of the Federal debt had been arranged in 1867, attention began to be paid to the basis for the first loan to be applied to the construction of the Eailway, the Government of Honduras being represented therein by its own Commissioner, D. Leon Alvarado, and by the two accredited ministers of the Eepublic at Paris and in London, Monsieur Herran and Serior Gutierrez. It will be easily understood that the Eepublic of Honduras had not that state of material development, density of population, favourable condition of finances, or- ganised resources, or industry and commerce, to be in the most appropriate position for the issue of a loan of a million sterling > with probabilities of success in the English market ; that is, a loan thirty-six times greater than that part of the Federal debt belonging to Honduras, which had just been arranged, and the interest on which the Eepublic had neither been able to pay, nor to give anything on account of it for forty years, although the amount of that interest was then only 1,632 a year. Besides, what guarantees, what pledges, what securities satisfactory to the public could they offer who were com- missioned to launch that loan on the market in the name of the Government of Honduras ? The revenues of the Custom-houses of Omoa, Trujillo, and Amapala, which are very moderate and absolutely necessary to the Government itself, to provide for the necessities of its administration, were already pledged ; besides, they would not suffice to guarantee a loan of a twentieth part of that sum. 16 Nevertheless, the construction of the Inter- oceanic Railway across Honduras is of such vital importance to the commerce of the whole world and to the future lot of that Republic, and the mere idea of initiating that important work so alluring, that it appeared to the Government, as well as to all the enthusiasts for that Line, that, though not easy, it was at least possible to overcome all the difficulties by perseverance, assiduity, and energy; so, in spite of those difficulties, and the hope of overcoming them, it was determined to launch first loan of a million sterling on the London market. To introduce loans of this kind to the monetary markets of Europe, whatever may be the purpose of such loans, it is the established custom to arrange the conditions of them with some banking-house of great reputation, which introduces and conducts the operation, and undertakes, if so agreed, all the preliminary expenses and gives credit to the operation, taking more or less interest therein for a commission of so much per cent, which is offered to it and forms part of the terms of the arrangements, and frequently receiving also a certain number of bonds at a lower price than that stipulated for offering them to the public. Generally the public does not care to investigate the reserved conditions upon which the banking-house introduces the loan, nor yet to dive into the validity of the guarantees or pledges which the house has accepted for launching the loan. The public very specially regards the name and posi- tion of the house which conducts the operation, and takes it for granted that when a respectable house lends its name for the management of such an operation, and for the con- sequent combinations in the market, it must have well and minutely studied the securities and risks of the operation. The antecedents which have been referred to in regard to the economical position and the resources of Honduras, kept back those bankers who usually manage such operations. Nevertheless, after many favourable reports, arguments, and ; efforts, the influential banking-house of Messrs. Bischoffsheim, Goldschmidt, & Co., taking into consideration the great utility of the projected Bail way, and the purpose of the loan, con- sented to undertake the management of the operation, after stipulating the conditions with the two Ministers of Hon- duras, who had received instructions and powers to that effect. The Prospectuses of the first Honduras loan of 1,000,000 appeared in July, 1867. It was divided into bonds of 100, 500, and 1,000, with 10 per cent, annual interest payable half-yearly ; 3 per cent, sinking fund, so as to be redeemed in seventeen years ; and the price of issue was 80 per cent. that is, that for each 100 bond which the public subscribed for, 80 were to be paid, which, after certain deductions for interest on the various instalments, were reduced in reality to 73. 11s. IQ^d. for every nominal 100. The subscription was to be paid in six instalments, the first on subscribing and the last on the 1st April, 1869. This arrangement was made to give the public every kind of security for the subscription, and also to provide that no interest should become due except upon the money actually employed. To explain the matter more fully, here is the Prospectus of the said loan : ff HONDURAS GOVERNMENT RAILWAY LOAN, ff 1,000,000. "In Bonds to Bearer, of 100, 500, and 1,000 each, bearing 10 per cent. Annual Interest, payable half-yearly in sterling. (i Issued at 80 per cent,, and to be redeemed at par, in sterling, within 17 years, by Yearly Drawings, by means of an Accumu- lative Sinking Fund of 3 per cent, per annum. " The first Drawing will take place on December 31st, 1869. ff The payments by Subscribers will be as follows : 18 . s. d. . s. d. 5 p&r cent, on application . 500 10 on allotment . 10 10 on January 1st,, 1868, less interest . . 9 4J 9 10 7 15 on July 1st, 1868, less interest . .111 3 1389 20 on January 1st, 1869, less interest. .210 1710 20 on April 1st, 1869, less interest . .1176 1826 80 per cent. 73 11 " Interest will be payable on the 1st July and the 1st January in each year, at the London and County Bank, and, for the first instal- ment of 15, will date from 1st October, 1867. " In default of payment of any of the respective instalments, all previous payments will be liable to forfeiture. "The instalments may be anticipated at any time at Bank of England rate. (t The Government of Honduras having agreed to appropriate to the Subscribers a moiety of the net profits of the Railway during 15 years after the complete repayment of the present Loan, Sub- scribers will receive as bonus, within one month after allotment, with each 100 Bond, one 10,000th deferred fully paid-up Eailway Share to Bearer, entitling the holder thereof to receive his proportion of such net profits. " PKOSPECTUS. " The President of the Republic of Honduras, being duly autho- rized, has given full powers to Mons. Victor Herran, Minister at Paris, and Seiior Don Carlos Gutierrez, Honduras Minister in London, to contract on account of the Government a Loan, to be applied towards the construction of an Inter-oceanic Railway from Puerto Caballos, on the Atlantic, to the Bay of Fonseca, on the Pacific. " To show the importance attached by the British Government to the Honduras Inter-oceanic Railway, it may be stated that the line has been surveyed on the part of Her Majesty's Government, by Lieutenant- Colonel Stanton, R.E., and a detachment of Royal En- gineers sent out for the purpose. Colonel Stanton reports, ' that the harbours at both termini are unexceptionable/ and that the road 19 can be constructed f without any sharper curves or heavier gradients than are to be found on existing lines over which locomotives work without difficulty. 5 " The new Treaty between Honduras and Great Britain declares that, ( In order to secure the construction and permanence of 1 the route or road herein contemplated, and to secure for ' the benefit of mankind the uninterrupted advantages of 1 such communication from sea to sea, Her Britannic ' Majesty recognizes the rights of sovereignty and property ' of Honduras in and over the line of the said road, and for ' the same reason guarantees, positively and efficaciously, ' the entire neutrality of the same. And when the pro- ' posed road shall have been completed, Her Britannic ' Majesty equally engages, in conjunction with the Eepublic f of Honduras, to protect the same from interruption, ' seizure, or unjust confiscation, from whatsoever quarter ' %e^tempt may proceed.' (f Treaties signed by the Honduras Government with France and the United States contain the" same provisions, and the French Government, considering the public utility of the Honduras Railway, has promised the official quotation of the Honduras Loan on the Paris Bourse. " The following official report by Rear- Admiral Davis, made to the Secretary of the Navy of the United States Government, in com- pliance with a resolution of the American Congress on the 19th of March, 1866, demonstrates likewise the importance which the United States Government attaches to the construction of the Honduras Line : f The reader who follows the course of the surveyors, f naturalists, and geologists from the capacious, safe, and ' excellent harbour of Puerto Caballos, through regions ' remarkable for their salubrity, fertility, great variety of ( climate and productions, and valuable mineral resources, f to the waters of the splendid harbour of La Union (Bay of ( Fonseca), cannot but regret that capitalists have not found 1 it to their interest to carry out one of the most promising ( and one of the least embarrassing enterprises of the day/ " The Line of Railway has been carefully selected and surveyed by Mr. Trautwine (late Engineer-in- Chief of the Panama Railway), and an efficient staff ; and a contract has been entered into for the con- struction of the whole Line, with Stations and Rolling Stock, for a Jr. 30 stipulated sum of about 8000. a mile, including every outlay, and the works are to be proceeded with in sections. "From time to time, as the instalments of the present loan are eived, the proportion to be applied to the construction of the first Jtion of the Railway will be handed to and held by trustees, in ^ to pay the contractor the instalments on his contract, as certified by the Government Engineer. The balance of the loan be applied in clearing the forests, and in payment of engineer- I ing and other incidental expenses. rf The Interest and Sinking Fund of the Loan are specially aranteed by a first charge upon the intended Railway itself and 3 revenue, and also by a first mortgage upon the whole of the omams and mahogany forests of the State of Honduras which according to official report, are of immense value. "It is arranged that the whole of the produce of the above mort- gaged State Domains and Forests shall be consigned direct to London by the Honduras Government, to Messrs. Bischoffsheim and schmidt, who will pay over the proceeds of the sales towards the Annual Interest and Sinking Fund, and the construction of the re- maining sections of the Railway. "It has been further arranged in the contract, that, as soon a* any portion of the Railway is completed, the Contractor shall bring down to the Terminus, free of charge, by the return empty waggons, any produce of the Government Forests and omams that may be ready for shipment to England. Beginning at the harbour of Puerto Caballos, on theAtlantic, the nlway will proceed over the table-land of Honduras, in a line of miles, to the Bay of Fonseca, on the Pacific. "The ports at either end are spacious, safe, and easily accessible i or the largest ships. :( The steaming distances from Liverpool to San Francisco, touch- ing at Jamaica are :-by way of Panama, 7,980 miles; Nicaragua, ) miles; Tehuantepec, 7740 miles ; Honduras, 7320 miles The distance between New York and San Francisco, by Panama, t miles; by Nicaragua, 4700 miles; by Tehuantepec, 4200 i by Honduras, 4121 rniles-a saving by way of Honduras, as compared with Panama, the only Line on which a Railway is already constructed, of 1103 miles. ' f The difference in actual distance, coupled with the superiority of ports, the facilities of embarkation and disembarkation, and the connection with the American coast lines, will effect a saving in time, as compared with the Panama route, of no less than five days between the Atlantic and Pacific ports of the United States. 21 "The Line will afford the easiest, safest, and speediest route between Great Britain and British Columbia ; it will also afford the increased facilities of first-class ports for the establishment of speedy intercourse with Australia and New Zealand, and will bring Jamaica, Belize, and other British possessions in the West Indies, into the direct line of communication. ' ' Last year the dividend paid by the Panama Company was at the rate of 24 per cent, per annum on a capital of 1,600,000, in addition to a Bonus of 40 per cent, from accumulated profits. The Honduras Line will, in all probability, return as much profit as the Panama Line, if not considerably more. " Sufficient of the proceeds of the present issue will be applied to the construction of the first section, from Puerto Caballos to Santi- ago. This section will enable the exportation of the mahogany, &c., to take place, the means of transport now existing being too expensive to be remunerative. Careful estimates have satisfied the Honduras Government that the surplus revenue of the State Domains and Forests will be amply sufficient to complete the whole Line, without any further issue of Stock; but incase it should be found advantageous, on account of increasing traffic, to accelerate the opening of the Railway from sea to sea, by raising more money, further Stock will be issued for the construction of the remaining sections of the Railway. " The several contracts and other documents can be inspected at the Office of Messrs. Baxter, Rose, Norton, and Co., Solicitors, No. 6, Victoria Street, Westminster. " Applications for the Loan will be received from Monday, llth November, to Friday, the 15th November, by the London and County Bank, 21, Lombard Street, and Branches, where Prospec- tuses and Forms of Application can be obtained ; and in Paris, by Messrs. Bischoffsheim, Goldschmidt, and Co., 26, Rue de la Chaussee d'Antin. Payments on application for the Loan can also be made at the Bank of France and Branches." It may be seen, by the conditions of the foregoing Prospec- tus, that if the whole of the loan had been subscribed for at the price of issue, the nominal 1,000,000 would have produced on the 1st of April, 1869 (the date of the last instalment), the available sum of 735,937, from which sum the com- mission on the negotiation, and all the expenses, would then have to be deducted. 2:2 But that did not happen. The first Honduras loan, in spite of all the advantages which it offered to the subscribers, and the high respectability of the house which managed the operation, was received by the public with perfect indifference, with profound contempt ; and according to the deficient and vague information which reached the Legation, there were hardly any other subscriptions than one of about 10,0( made by the firm of Bischoffsheim itself. As soon as a loan is introduced to the public, it is necessa] to obtain the official quotation of its bonds on 'Change ; thai is, the permission of the Directors of the Exchange for buying and selling the said bonds therein, with the privileges which they have in such cases. If the subscription has not been entirely filled up, and the official quotation is obtained, the sale of the bonds may go on subsequently by degrees, accor- ding to the price at which they are quoted in the market. This latter was what happened to the Honduras loan of 1867. The expenses of introducing it to the public having been already incurred, and they are always very considerable, the contractors of the said loan, seeing the failure of the subscription, determined to go on with the sale of the bonds little by little on 'Change. But for this it was necessary that the public should see that the works of the Railway were commenced, that Engineers had already been sent out for that purpose, and that everything manifested a fixed deter- mination to proceed with the work. For this purpose a sum of at least 40,000 was required, and this sum was advanced by Mr. Eoutelidge, Shipbroker, on receiving bonds of the said loan as security, and moreover the signature of the Minister himself. A Committee of Trustees of the Honduras Government had already been appointed to administer the funds produced by the aforesaid loan, and it was composed of Messrs. Philip Thomas Blythe, William Henry Cotterell, Henry Luke Robinson, and Charles Lefevre ; and these Trustees were able to send 23 [r. MacCandlish, and other Engineers to Honduras, to begin the works of the Railway with the small sum of money collected. By giving publicity to the commencement of the works, some confidence was imparted in regard to th& under- taking, and a few bonds began to be sold. But this sale was tardy, and it was necessary to accept prices much below that of the issue of the bonds, on account of the commission which had to be paid for negotiating them, and because the very fact of offering those bonds for sale in the market continually depreciated the price of quotation, in spite of all the prudence displayed in regard to the failure of the subscription on issuing them. With the first proceeds of these sales it was necessary to meet some urgent payments ; chiefly for the interest and re- demption of the compounded Federal debt, which had to be paid every six months ; then the 40,000 advanced by Eoutelidge, which it was needful to return ; and again the funds which had been promised to the Government to enable it to provide for pressing internal requirements, and to maintain peace in the Eepublic ; and lastly, what remained, to meet expenses of administration, and to attend to the con- struction of the Eailway. It will be easily understood that the operation of converting the bonds of the aforesaid loan into money on 'Change was necessarily very slow ; and besides, the net produce of the sale of those bonds, after deducting commission and depre- ciation in the market, and providing for urgent requirements unconnected with the construction of the Railway, left but .very little to meet the regular instalments which had to be paid to Messrs. Waring Brothers and MacCandlish, the contractors for the construction of the Line. In the first contract of loan with Messrs. Bischoifsheim and Groldschmidt, it had been stipulated as a condition, that no other loan should in future be issued for the Railway, un- less it were likewise contracted for and issued to the public 24 by the firm of Messrs. Bischoffsheim and Goldschmidt ; and ' in fact no one could appreciate the opportunity and the cir- cumstances for having recourse to a fresh operation for the Railway so well as that firm, which knew the secrets of the results of the first loan, and was acquainted with the sacrifices which were still incurred in placing the bonds of that first loan ; but this prudent clause, which concentred the respon- sibility of final success in the firm of Messrs. Bischoffsheim and Goldschmidt, was unfortunately destined to be without effect. < K *tt IV. HONDURAS LOAN OF 207,509 BONDS OF 300 FRANCS EACH. PARIS, 1869 SOME months after the issue of the first loan to the public, the Minister of Honduras at Paris, M. Herran, in concur' rence with S r D. Leon Alvarado, began to take steps for contracting a loan for the Honduras Railway in France, with the firm of Messrs. Dreyfus, Scheyer, & Co., on the ground that the loan issued in London had turned out a complete failure, and the proceeds of the bonds which were sold on 'Change were not sufficient to provide for the increasing requirements of the Railway and the interest of the loan itself. Messrs. Dreyfus, Scheyer, & Co. offered the Minister at Paris to put the' said loan on the market, to the amount of 62,252,700 francs, divided into 207,509 bonds of 3 4 00 francs nominal value each ; and they engaged to subscribe themselves for a third part, of course at a price much below that of issue. The issue of this loan was contrary to the agreement made on starting the first loan with the firm of Bischoffsheim and Goldschmidt ; and as the London firm refused to have any- thing to do in regard to the loan with the Paris firm that was bringing it out, there was a very serious quarrel 25 between the houses of Bischoffsheini and Dreyfus, Scheyer, & Co., and with the Minister Herran. But the latter took such pains to carry out the affair, and the contentions arising from the opposition of Bischoffsheini and Gold- schmidt threatened such serious complications, that the London house at last consented to the operation, though with dislike and apprehension of the result. There had also been disagreements between the Trustees of the Government, as almost always happens when there is a diversity of opinion on difficult and complicated matters. One of the Trustees was dead, and the others did not want to remain ; so it was necessary to appoint another new Committee in London, and the members of it were Messrs, Barnes, S. Davids, and Charles Lefevre. At the time when the second Honduras loan was about to be issued in France, which was in May, 1869, only a small portion of the first loan had been realized in Eng- \ land, which had not produced much more than a hundred thousand pounds in cash, the remaining bonds being in possession of the Trustees. This was the state of affairs when the Prospectus of the French loan appeared. The following is a translation of it. .: "INTEK-OCEANIC KAILWAY CONNECTING THE ATLANTIC WITH THE PACIFIC. " Secured Loan to the Government of Honduras (Central America). " Subscription, 207,509 Bonds. : " Price of the bonds 225 francs, payable as follows : 25 francs on subscription, "j With the right of paying one 50 allotment or more of these instalments 50 1 June (1869), in advance, and receiving a 50 1 July discount at the rate of 6 per 50 1 August J cent, per annum. 26 " Returns. Repayment. Participating Shares. "INTEREST. Twenty francs a year, paid half-yearly on the 1st of March and the 1st of September, at Paris, Brussels, Antwerp, Geneva, in cash without any tax or deduction, and also at Berlin, Hamburg, Amsterdam, Frankfort, Genoa, New York, at the rate of the day. The first coupon is due on the 1st of September next. " REPAYMENT. At par in seventeen years by half-yearly drawings before a Notary at Paris ; the first drawing will take place on the 1 st of August next. The bonds drawn will be paid in cash on the 1st of September, without any tax or deduction whatever. " PARTICIPATING SHARES. Each bond will be replaced as soon as it is drawn by a PARTICIPATING SHARE, which will entitle the owner, after the repayment of the Loan, and during a period of fifteen years, to a proportional share in the third part of the revenues of the Line. " This participation is estimated by the engineers at a minimum of 50 francs per annum. 1 ' As the periods of the different payments and profits since the first of March last reduce the price of the subscription to about 220 francs, the produce of the debentures,* taking into consideration the premium of repayment, exceeds 12 per cent., without reckoning the value of the Participating Share. {( Guarantees for the Debentures. \ " (a.) MORTGAGE on the Railway and on ITS REVENUES. " (6.) MORTGAGE on the domains and forests OF THE STATE, of which the annual revenue, according to the official report of the engineers, amply exceeds the sum necessary for the } regular payment of interest and redemption. " (c.) Convinced of the commercial and political importance of the Inter-oceanic Honduras Railway, the Governments of France, England, and the United States have, by inter- national treaties, specially guaranteed the inviolability and neutrality of the undertaking, from the opening of the Line. " (d.) A Commission has been appointed to superintend the em- ployment of the Loan, which is to be exclusively devoted j to the completion of the Line already in process of construc- tion. * The nominal value of th and 110 man who knows anything about Honduras can have the slightest doubt about it. " Dr. BERN HARD, " Special Commissioner of the Government of Honduras." This statement is certainly encouraging, and I cannot but think that there is a fair hope that your interests will not suffer after all. The CHAIRMAN (who was most cordiallygreetedwith loud cheers when he made his appearance, and frequently vehemently applauded during the delivery of the most marked portions of his speech) his narrative of the treatment he had received from the official representatives of France creating lively indignation and general cries of " Shame, shame " from all parts of the crowded hall), then said : I have now only to invite you to consider the expediency, in the existing position of our affairs, of appointing a committee with ample powers to inves- tigate everything, whether affecting our financial position or the pro- gress and prospects of the Railway ; and, subject to your approbation, I would suggest the adoption of the following resolution: ' ; That a committee (not exceeding nine), of which Messrs. Pirn, Kerferd, and Haslewood shall be invited to be members, shall be and is hereby appointed " 1. To investigate the position and ascertain the prospects of the Kailway and of the finances of Honduras in respect to each of the exist- ing % loaiis. "2. To recommend to a future meeting of the bondholders two independent railway engineers of position and experience to be sent, if necessary, to Honduras, for the purpose of making a special survey of the unfinished portions of the line ; what sum is really necessary for the completion of the undertaking and the purchase of plant, machinery, and rolling stock ; and within what period the line might reasonably be expected to be finished and in working order. "3. To consider what steps should betaken for the purpose of raising the necessary funds for the prosecution of the work, and for securing the rights and interests of the existing bondholder?, and placing their affairs on a satisfactory basis," 64 I may mention that this resolution has the entire concurrence of His Excellency and of Dr. Bernhard, both of whom pledge themselves, on behalf of their Government, to afford the committee every facility in the prosecution of their inquiries. I hardly like to put the resolution from the chair, because I want the report to go out to the world that everything done here to-day has been done by yourselves that you have been guided by no one, but have exercised your own indepen- dent judgment. (Cheers.) I will only say that I believe most sincerely that the proposed committee, if formed, can in a very short time, with the means and appliances, and the documents which will be supplied to them, form a sound and accurate opinion upon the whole subject, and call you together to submit a scheme by which your interest may be protected, the property completed, and a great and useful work remain for the benefit of all parties. I should have personally preferred not to have been named as a member of the com- mittee. I have not now the strength of mind and limb that I had some years ago. The severe physical exertion I have had to make lately has, you may be sure, not improved my health. In China, hard work and wounds did something to impair my health ; but I can assure you that, if I am appointed with the other two gentlemen named in the resolution, who are your Trustees, I will be the faithful servant of the committee. Every scrap of paper, every document which can throw any light on the position of your affairs, shall be cheerfully and frankly laid before them. (Cheers.) I hope, how- ever, under the circumstances, that some gentleman in the room will move the resolution. A BONDHOLDER : Why does not the gentleman who drew it propose it, if he is a large bondholder ? The CHAIRMAN : The gentleman was Mr. Pike a well-known official of the House of Commons. A BONDHOLDER : There can be no objection to the motion being proposed from the chair. Another BONDHOLDER : Is the chairman a bondholder ? The CHAIRMAN : No ; I am not. A BONDHOLDER : I cannot see how we can do better than have the resolution proposed by the chairman. He has stated so clearly tho reasons why it should be adopted, that it can come from no better quarter. (Cheers.) The CHAIRMAN : Well, if that is your feeling, I will move the resolu- tion, in the hope that it will be seconded by some bondholder on the other side of the table. A BONDHOLDER : Why not fix a time when the committee shall make their report? Say in the second week in March ? The CHAIRMAN : No, tliat is not necessary ; a month at the utmost will do. In fact, I think that, if the committee go to work vigorously with the materials which will be at their command, they will be able to present at least a first report in little more than a week or ten days. (Cheers.) A BONDHOLDER suggested that the committee should consist entirely of bondholders and of gentlemen who, in that capacity, had a large stake in the concern. They should do nothing that could be made a handle of against them by their enemies, and the larger the stake of the members of the committee in the undertaking the better. (Cheers.) In deference to a warm and general expression of feeling on the part of the meeting, Captain Pirn was about reluctantly to move the resolution, when The Rev. Mr. FITZGERALD said he would be happy either to propose or second it. The CHAIRMAN : The gentleman who last rose is Mr. Fitzgerald. At the last meeting he gave me a great deal of trouble, and he has a very large stake in the concern, so that I hope you will hear him. Mr. Fitzgerald, except as a bondholder, is a stranger to me ; and if he chooses to propose this, I shall be much obliged to him. Mr. FITZGERALD : If it is your wish, I shall have much pleasure in seconding this resolution. (Cries of " Propose it.") Then I will propose it. (Cheers.) In doing so, gentlemen, I .think I am con- sidering your interest as well as my own, for I am sure that nothing will so tend to give public satisfaction or confidence as the fact that a committee of independent bondholders has been appointed, consisting of gentlemen who hold a large stake in the concern. The first duty of that committee will be to report to you at an early meeting what have been the financial arrangements of the Govern- ment with respect to these loans. I understand the members of this committee are to have access to all books and papers, and everything connected with the affair, and that it will then be their duty to inquire into the state of the Railway as regards the second and third issues. I understand the first section is entirely completed, and in good working order. The committee will have to inquire what time it will take to complete the Line, and it will be their duty to recommend to an adjourned meeting what financial arrangements can be made in conjunction with the Minister at St. James's and our friend here, Dr. Bernhard, to raise funds sufficient to complete the Railway and pay the bondholders a certain rate of interest. (Cheers.) One word more : in my humble judgment and I have had some little to do with business the sooner the resolution is passed, and 66 the gentlemen appointed, the better it will be for all parties con- cerned. Mr. J. WALKER seconded the resolution. The reasons for its adoption had been so clearly stated by the chairman and the mover, and so completely commended themselves to the common sense of all present, that it was quite unnecessary for him to add one word in commendation of the resolution. The CHAIRMAN : Before putting the resolution to the vote, I shall be happy to hear any one who has any observations to make upon the various questions embraced in this very comprehensive resolu- tion. I can, in all sincerity, assure you that I do not wish for any- body to take anything upon trust. I want you all to go away thoroughly satisfied. Mr. ROBERTS rose and said he had no objection to the appointment of a committee, but he had some questions to ask. (Cries of " Name, name !" "Are you a bondholder?" and interruption.) The CHAIRMAN : Pardon me, Sir ; will you give me your name, in order that I may ascertain from the book before me whether you are entitled to speak ? Mr. ROBERTS : I am a bondholder personally, and I represent rela- tions who also have larger stakes in the concern than myself. The CHAIRMAN looked at the Register ; not finding Mr. Roberta's name on the list, he asked him if he really was a bondholder, which he declared he was, amidst such interruption and uproar that made it difficult to gather the purport of his observations. As we understood, Mr. ROBERTS said : I wish to propose an amendment. (Loud cries of "No, no;" "Order;" "Turn him out," &c.) I have a great objection to any gentlemen being on that committee who are not bondholders, and who, consequently, will not look after our interest. I wish to put this question Where has the money gone to ? Mr. FITZGERALD : That is a question the committee will answer. Mr. ROBERTS : You say that this Railway will pay as well as the Panama ; but what does the Panama pay? It pays 1 per cent. ; and if this railway only pays the same amount, it will not pay at all. (Cries of " Question," " Time," &c.) I know the country well. I am engaged in commerce, and know as well as possible the cargoes of mahogany brought home here did not pay. (Cries of " Question," and interruption.) Why should they have sent the mahogany from another place than that through which our Railway runs ? (Renewed cries of " Time," " Sit down," &c.) Gentlemen, I see you are not at all inclined to listen to me to-day; but I will call a meeting my- self, and I hope that some of you will attend. Several BONDHOLDERS : Dr. Bernhard. Dr. BERNHARD, who on presenting himself in response to the cal| of the bondholders, was received with cheers, said : I hope, Gentle- men, you will excuse me if I speak very bad English, for I am a foreigner. I may not now be able to make myself heard, for I am a little affected in the throat. Captain Pirn has read a letter which shows that I am sent by the Government to see how the Railway can be built, and how things stand here in Europe. The letter read in my name by the chairman contains the expressions of the views of the Honduras Government, which I represent in conjunction with Mr. Gutierrez, the Minister of Honduras at the Court of St. James's. I left Honduras on the 20th of November. In the pre- vious month of October I saw 20 leagues, or more than 60 miles, of the Railway in working order ; and trains running every day ; while for the second and third sections of the line a great part of the metals are provided. In the place where I live, Tiger Island, there were more than 34 miles of rails stored with locomotives, and every- thing to commence working when the unfortunate war with Salvador broke out. The materials are there still, and the Government intends to go on with the works at any cost or sacrifice to Honduras. The Government is not at present in a position to pay you your! coupons. After two years of war it has no money, but it has thq produce, and when once the Railway is finished and emigration comes to the country, the Government will be in possession of funds. It is a beautiful country, that can be cultivated by white emigrants ; and when emigration began they would soon see what Honduras produced. I may mention one article of great value that will be forthcoming, and that is copper. There are absolutely mountains of copper, but no roads to bring it down to the coast. I can only repeat that it is the fixed intention of the Government to do all in its power to protect the bondholders, and at the same time to complete the Railroad. (Cheers.) Mr. FITZGERALD : Gentlemen, if you will allow me, I will tell you my impression of what Dr. Bernhard has said. (Cries of " Spoke/' &c.) One section of the railway is entirely completed. (Renewed cries of " Spoke/' &c.) Mr. GRIFFITHS : As to the importance of this resolution, no two opinions can be entertained. Mr. Fitzgerald has spoken well to the point, and I think we are all agreed a committee should be appointed ; but, on the other hand, it is necessary that that committee should have the confidence of the bondholders at large. It seems to me that it would be unwise to limit the number of the committee to nine. Appoint nine, but give them power to add to their number any man of note any man who will take an interest in and devote himself to the work. Nine is so small a number, that there will be a difficulty , 68 on occasions in getting a quorum. I therefore propose that the words be added to the resolution "that the committee, though consisting of nine, should have power to add to their number/' The CHAIRMAN : Allow me to say that you simply anticipate No. 2 resolution, which is to this effect " That the committee consist of the following gentlemen, with power to add to their number."" The motion was then put, and carried with three dissentients. The result was received with loud cheers by the meeting. A BONDHOLDER : Now you have carried your favourite resolution. (Cries of l< Shame/' "Chair/* &c.) The CHAIRMAN : It is not my favourite resolution. It was not drawn by me. My position is this. I come forward to help the bondholders. I have done so for the last six months, and I have no more to do with the loans that have been issued than with that bottle. You must not, therefore, talk about my favourite resolution. You can speak to the second resolution, if you like. Mr. GRIFFITHS : It is rather illogical and ungrammatical to say that the committee shall not exceed nine, and then afterwards say that they shall have power to add to their number. However, I agree with and therefore propose (C That such committee do con- sist of the following gentlemen, with power to add to their number, and to call for the production of all necessary books, accounts, and papers, and such oral or documentary evidence as they may deem necessary for the thorough prosecution of their inquiries; and that they report from time to. time the result of their deliberations to such future meetings of bondholders as they may deem it expedient to call together." Mr. PICKERING : Mr. Chairman and Gentlemen, I have much pleasure in seconding that ; but, at the same time, with regard to the names of the persons who should form that committee, it ap- pears to me that it would be almost impossible to carry that out at a meeting like this. There are cheers or groans at every observa- tion that is made, and therefore it is almost impossible to hear any- thing that is said. I would therefore suggest that some arrange- ment should be made whereby the chairman, by putting his office at the disposal of the bondholders, might take the responsibility of appointing the committee himself. (Cries of " No, No.") You cannot appoint a committee here ; let the chairman select from any list you like. Mr. WHITLEY : Mr. Chairman and Gentlemen, "With pleasure I rise to support the resolution. I am a working man and a bond- holder, and represent a body*6f working men in the West Kiding of Yorkshire. I have come all the way to take a report back to them, 69 we have no less than 8000 of the bonds. I have listened to the remarks that have been made, and I have great pleasure in support- ing the resolution. (Loud cheers.) The resolution was then put and carried unanimously. The CHAIRMAN : I beg to announce the resolution is carried unani- mously. (Loud cheers.) I wish to add, that I have heard what Mr. Whitley, from the West Riding, has said with great pleasure, and if he will send the addresses of the working-men bondholders, I shall be happy to forward to each of them a paper containing the report of this meeting. A BONDHOLDER : We should come to an understanding that no gentlemen^ except those who hold rather a large stake in the under- taking should be on the committee. Another BONDHOLDER : Say 10,000. The CHAIRMAN : It strikes me there is not one of you holds 10,000. A BONDHOLDER : I represent upwards of 20,000 worth of bonds. The CHAIRMAN : Gentlemen, it seems to me that there are many men who hold only 100, who have as much brains as those holding 10,000. (Laughter and loud cheers.) A BONDHOLDER : I propose Mr. William Gill. Another BONDHOLDER : Who is he ? The BONDHOLDER : He is not only a bondholder of 20,000, but he is a man of plenty of brains, and brains in the right place. (Cheers and laughter.) Another BONDHOLDER : Before that name is put, I should like to make one or two observations. If you go into the question whether a man has brains and where they are placed, I do not think you will ever come to a satisfactory conclusion. If you do that, it will be a matter of impossibility to come to anything satisfactory. If you go into the question of who has brains and who has bonds, how can you, because they do not go together in the Honduras loan ? (Laughter and cheers.) It is impossible to discuss this at a meeting of this description. I have heard with painful interest from Captain Pirn a statement of what took place in Paris, and I think that it calls for our sympathy more than anything that I have ever known. I am confident that Captain Pirn will use his best endeavours in the interest of the bondholders, and I there- fore propose that the names of the committee be selected by the chairman. (Loud cheers, and " No, No.") The CHAIRMAN : I certainly should nob undertake the task. After a rather prolonged and desultory discussion as to the best 70 mode of proceeding with the nomination of the members of the com- mittee, The CHAIRMAN said he did not wish in the slightest degree to interfere with the full liberty of the bondholders, but he ventured to suggest that, as the Railway was an international as well as an inter- oceanic one as four nationalities were concerned in it, Honduras, France, England, and the United States it would be well that American interests should be represented on the committee. Two gentlemen of New York, who occupied high positions, and who were also engineers of great eminence, had been suggested he meant Mr. Sickles, and Major General Course, of the United States Engineers. He hoped the suggestion would be fairly considered. (Cheers.) The election then proceeded, and the following gentlemen were declared by the chairman to be duly appointed : Messrs. Fitzgerald, Walter Armstrong, J. Higgins, Sickles, Digby Seymour, and Major General Course. The BONDHOLDER who nominated Mr. W. Gill said he thought that gentleman had been elected. The CHAIRMAN said his name had not been put to the meeting, but that it was competent for the committee, acting upon the power granted to them by the resolution, to appoint Mr. Gill, or any other bondholder who might be desirous of serving upon the committee, and who possessed the necessary qualifications. For his own part, he should certainly urge that course. MR. DIGBY SEYMOUR, Q.C., said he had been called upon to propose a resolution. (Prolonged interruption.) The learned gentleman, on resuming, said he should not detain the meeting long, and he did not doubt but that the bondholder at the end of the room would have ample opportunity of speaking to the resolution he had to propose. And he might assure him that, for his part, he would be the first to cheer him and endeavour to obtain for him an audience. And he desired to take this opportunity of expressing the opinion he held, that he did not think that there should be any attempt to silence any one who desired to address the meeting; but at the same time, and speaking rather for those he represented, connexions and friends as well as his own interest, he could not help thinking that it would be eminently desirable for the good of all concerned, if the meeting were to refrain from entering into any lengthened and detailed discussion, which would occupy their time to no benefit, and which was the very province of the committee they had resolved to appoint. Nothing, in his opinion, would prove so injurious to their interests as hastily-put questions involving hasty and inconsiderate replies. Now, passing on from that, however, to the resolution which had been put into his 71 hand for submission to the meeting, he might say that the resolution he had to propose was one which appealed at once and directly to the hearts, and feeling, and right-minded sympathy of every gentleman and lady in this assembly it was the presentation of the cordial thanks of the meeting to Capt. Bedford Pirn. (Loud and prolonged cheering.) He asked the permission of the meeting to refer briefly to a somewhat personal matter. On entering the room that day, he had not had the slightest intention or idea that his name would be proposed as a member of the committee ; butVhen Mr. Fitzgerald thought it his duty to select his name as one of the gentlemen to be appointed to act on behalf of the general body of bondholders, and had made it an appeal to him as a matter of duty to accept such a position, then he hoped that he should be the last man to shrink from any responsibility so con- ferred. (Hear, hear.) And having accepted the position imposed upon him by the unanimous voice of the meeting, of a member of that committee, he would pledge them his word that as much time as he could devote, and all the care and attention he could command, should be given to answering and satisfying all the questions which had been put, and which occupied the minds of the bondholders as to the financial position of the Government, and the condition and pro- gress of the railway itself. (Cheers.) Now, the cordial vote of thanks which he was about to propose should be presented to their gallant chairman, Captain Bedford Pirn, had for its object the tendering of their respectful appreciation of his long and tried services in the in- terests of the Honduras bondholders (cheers) and for expressing their deep condolence and sincere sympathy with him in the late unmerited persecutions he had experienced while engaged in the promotion of their interests. (Prolonged cheers.) Naturally, he (the speaker) had his own views, as a lawyer, on the monstrous pretence under the name the sacred name of law, but which was, in fact, the violation of all law, whether domestic or international, which had been suffered in the person of Captain Pirn. But it was not even a question of the view which a lawyer might take of the matter. He rather spoke in the common sentiments of their common humanity when he distinctly affirmed that in the indignities their chairman had undergone the very first rights of citizenship had been grossly invaded. (Hear, hear.) He did not know what government ruled over Paris at the present moment, nor did he care whether Paris was regarded as being still in a state of siege ; but this he knew, that if the cold, inanimate clay which then laid breathless at Chislehurst, and which had so long and ably ruled the destinies of France, once again held the reins of power, he firmly believed that such a wrong would not pass unavenged and unenquired into. (Loud applause.) 72 He could only hope, in the absence of any action being taken abroad, that the attention of Lord Granville would be called to the indignity and outrage done to Captain Pirn, upon an ex-parte statement put forward by interested persons, and when, without an opportunity being afforded their worthy chairman of communicating with his friends so as to obtain his release, he had been sent for two nights into the cold miseries of a Paris dungeon, and had been twice brought before the city magistrates manacled like a common felon. (Loud cries of " Shame.") The resolution he held in his hand expressed better than he could, and in more solemn language, that which he believed went direct to the opinions and sympathy of every right-minded person in the room. (Hear, hear.) It was as follows " That the cordial thanks of the meeting be and hereby are tendered to Captain Bedford Pirn for his able and courteous conduct in the chair, for his persistent efforts in the bondholders 5 behalf, and for the full and candid explanation given by him of the recent events in Paris (especially of the unjustifiable proceedings by which his efforts were frustrated when on the eve of being crowned with success), together with the expression of deep condolence and sympathy with him under the sufferings and indignities to which he has been subjected, and of strong indignation for those parties whose interference led to such disastrous results, and who wantonly and deliberately sacrificed the interests of the country they represent, and of the bondholders also, to their own personal interests. A BONDHOLDER seconded the resolution. Mr. CUFF, amidst much confusion, addressed the meeting. He concluded his remarks, the point of which was lost in the general clamour, by putting the question to Captain Pirn whether he were the authorized agent of the Honduras Government ? The CHAIRMAN replied distinctly in the affirmative. (Cheers.) The resolution was then put, and carried with acclamation. On the motion of Mr. POLLARD, seconded by the Rev. Mr. FITZ- GERALD, the following resolution was unanimously passed " That it be an instruction to the committee just nominated that they should forthwith convey to the Government of Honduras the expression of the conviction of the bondholders that the conduct of Messrs. Herran and Pelletier is such as to call for their immediate dismissal from office, in order to show the bondholders that the Government are resolved to protect their interest to the fullest extent." The proceedings, which occupied fully two hours, were then brought to a close. 73 The following letters refer to the evidence that Messrs. Herran and Pelletier were fully conscious in every respect of Captain Pirn's appointment as Special Commissioner, and, in fact, of all his pro- ceedings : " Jan. 9, 1873. " Dear Sir, I have been pained and astounded to hear of the indignities recently offered you in Paris, in consequence of your issuing the prospectus of the new loan for the completion of the Honduras Inter-oceanic Bailway. " No one, perhaps, outside the circle of those immediately engaged in the enterprise, knew more about it than myself, owing to the accidental circum- stance of my accompanying His Excellency Don Carlos Gutierrez to Brussels, and there becoming acquainted with all the particulars of the projected loan. " It is but just to you that I should mention a few facts of which I have been an eye-witness and an ear-witness, which will corroborate what Senor Gutierrez had said in his despatch to you, dated Jan. 6, 1873, a copy of which is before me. " In the first place, I know that Seiior Gutierrez not only gave you full powers to issue the loan in question, but repeatedly expressed himself to me perfectly confident that your energy and ability would make it a success. Again, I know that the loan contract of Dec. 3, 1872, was signed by Senor Gutierrez, subject to the approval and counter-signature of Don Victor Herran, the Honduras Minister Plenipotentiary in Paris. "I can also bear unequivocal testimony to the painstaking, anxious, and I must add, scrupulous efforts made by Senor Gutierrez, not only by means of letters to Don Victor Herran, but in repeated instructions to yourself by word of mouth and by writing, to associate his colleague in Paris in the enter- prize ; so much so, that Senor Gutierrez gave Don Victor Herran full powers to modify the conditions of the loan contract as his judgment and prudence should direct, binding himself (Senor Gutierrez) to accept and approve of such modifications. " Moreover, I remember the morning when an interview took place at the Hotel Belle Vue, Brussels, between Senor Gutierrez and M. Pelletier, the son- in-law of Don Victor Herran, M. Pelletier distinctly said in my presence that he was commissioned to declare his father-in-law had no power to take part in issuing the loan. Don Carlos Gutierrez replied that his own powers from the Honduras Government were so ample that he could associate Don Victor Herran in the undertaking ; whereupon M. Pelletier distinctly stated his father-in-law's instructions were to confine himself to diplomatic matters, and not to interfere in financial arrangements. I also know that Senor Gutierrez would not sign the contract till he was assured of the non-official approval of his colleague in Paris. I may also say I never, in my experience, witnessed any man, in any matter of business, proceeding with more caution and acting with more straightforwardness and integrity than Seiior Gutierrez. ISTo man, I believe, could have discharged more conscientiously the responsible duty that rested on him ; and no man, in my judgment, could have been more solicitous to use every honest effort to protect the interests of the Honduras bondholders, and to save the credit and promote the prosperity of his country. 11 1 am, dear Sir, yours truly, " Captain Bedford Pirn, R.N." " J. CONNOLLY." 74 " Ecdhill, Chislehurst, Jan. 8, 1873. *' Dear Sir, As I understand that M. Eugene Pelletier, in a protest (which has led to serious results in many ways), has asserted that he was not aware of, and did not co-operate in, your efforts to issue a new Honduras Govern- ment Loan in Paris, I feel it my duty to state the following facts. " On the 5th of December last I was informed that an amended contrac with reference to the said new loan had been signed by His Excellency Don Carlos Gutierrez, the Honduras Minister in London, subject to the approval and joint-signature of His Excellency Don Victor Herran, the Honduras Min- ister in Paris ; and I was further informed that M. Victor Herran, although favourable to the means proposed for raising a new loan, declined to sign the contract, on the ground of having had special instructions from his Government (which had not been rescinded) not to interfere in any financial operations, as full power to control and act as was thought best in all Honduras financial matters in Europe was centred solely in His Excellency Don Carlos Gutierrez ; and I further understood that he was willing to write His Excellency Don Carlos Gutierrez to this effect, but that under the advice of his son-in-law M. Eugene Pelletier, Consul-General for Honduras in Paris, he thought it best to send the latter gentleman, M. Pelletier, to personally communicate the same to His Excellency Don Carlos Gutierrez. Therefore M. Mori and myself, under your instructions, met M. Pelletier by appointment the same afternoon, and proceeded with him to Brussels where he (Don Carlos) was temporarily staying in order to get His Excellency to remove the proviso regarding M. Victor Herran, in reference to the previously signed amended contract ; and I distinctly remember M. Mori showing M. Pelletier, during our journey, the said contract, which he read, and seemed, so far as my observation went, to approve of. The following morning M. Mori and myself met M. Pelletier by appointment at the rooms of His Excellency Don Carlos Gutierrez, where, after an interview of about two hours, His Excellency the Minister, in the presence of M. Pelletier, cancelled the proviso concerning M. Herran's joint signature ; at the same time observ- ing in English, that he would not have done so had not M. Pelletier assured him that he had the moral co-operation of M. Herran, and that he (M. Pelletier) considered that the signature of the amended contract, in order to enable Captain Bedford Pirn to take the necessary steps for the issuing of a new loan, was the best means umlu- Liie circumstances of saving the credit of Hon- duras, or words to that effect. " The above facts I can declare, in any way that may be most useful to you, and it is owing to my imperfect knowledge of French that I am unable to speak more strongly on the matter, which my companion, M. Mori, would doubtless be able to do, as he conversed freely with M. Pelletier in that lan- guage ; but I can declare that, in every step which was taken by M. Mori and myself in order to the final signature of His Excellency Don Carlos Gutierrez, M. Pelletier appeared to give us his sympathy and cordial co-operation, and certainly by no word or sign expressed to us any disapproval of your declared object viz., the carrying out our instructions for facilitating the issue of the new loan. "Yours obediently, li (Signed) " C. F. DENNY." " To Captain Bedford Pirn, B.K, 4, Westminster Chambers." 75 The first meeting of the committee was held at the offices of the Central American Association, 4, Westminster Chambers, Victoria Street, London, S.W., on Tuesday, Jan. 14, 1873. Digby Seymour, Esq., Q.C., was elected Chairman, and Mr. Tucker, Secretary. A draft letter to His Excellency the President of Honduras, enclos- ing the " Instruction" of the general meeting of bondholders, passed on the 10th instant, was agreed to, and ordered to be forwarded at once. IX. THE MINISTER M. HEREAN AND THE CONSUL GENERAL M. PELLETIER'S JOINT ANSWER TO CAPTAIN PIM'S ACCUSATIONS, THE different charges brought by Captain Bedford Pirn, at the meeting on the 10th of January, against the Minister of Honduras at Paris, M. Victor Herran, and against the Consul General M. Eugene Pelletier, were an- swered by the latter gentlemen in a letter addressed to the London " Daily Telegraph/' and their letter was also pub- lished in some French newspapers. It is inserted here in the original language, in order to preserve its native force and vigour. " A M.le Proprietaire Redacteur-en-chef du 'Daily Telegraph/ a Londres.* " Paris, 16 Janvier, 1873. " Nous lisons, dans votre journal du 11 Janvier, imprime a Londres, et vendu a Paris, sous la rubrique, f Honduras Railway Loans,' le compte-rendu d'un meeting tenu par le ' Capitaine Bedford Pirn.' * [TRANSLATION.] " To the Editor of the Daily Telegraph, London. " Paris, 16 January, 1873. " We have read, in your number of January llth, printed in London and sold at Paris, under the heading ' Honduras Bailway Loans,' the report of a meeting held by ' Captain Bedford Pirn/ Q 76 "Dans ce meeting notre nom est prononce, et il est fait, a notre sujet, des declarations tellement inexactes et insensees que nous ne doutons pas un seul instant que votre impartialite ne donne acces a notre lettre de rectification dans votre plus prochain numero. ' f ' Le Capitaine Bedford Pirn dit que M. Victor Herran, ministre plenipotentiaire, et M. Eugene Pelletier, consul general du Honduras, n'ayant pu obtenir de lui, par 1'entremise des banquiers du Honduras a Paris, Fun une somine de 40,000, Pautre une de 16,000, se sont opposes a Remission projetee en France ; il ajoute que tout effort sera tente pour amener M. Herran et M. Pelletier devant la justice, et que, de concert avec ses associes, il a formule une demande en revocation au Gouvernement du Honduras ; que des que M. Herran et M. Pelletier seront destitues et ne se retrancheront pas derriere des immunites, il exercera ses revendications centre eux ; qu'en vue de cet evenement il a pris des dispositions pour les empecher de quitter le territoire francais. " Avant de porter une plainte en diffamation centre les auteurs de ces calomnies, sans savoir si cette mesure aurait son effet a Londres, nous mettons au defi M. Bedford Pirn de venir en France repeter ce qu'il a dit ; nous lui donnons le dementi le plus formel et le plus categorique, et nous le sommons de dire, sous peine d'imposture, le nom des Banquiers auxquels il pretend faire allusion, nous reservant une enquete a ce sujet. ' ' II n'y a aucun effort a tenter pour amener un coupable devant " At that meeting our names were mentioned, and such incorrect and absurd statements were made in regard to us, that we cannot for a moment doubt that you will, out of impartiality, insert our rectification in your next number. " Captain Bedford Pirn said that M. Victor Herran, Minister Plenipotentiary, and M. Eugene Pelletier, Consul-General of Honduras, having been unable to obtain from him, through the medium of the Honduras bankers at Paris, the one a sum of 40,000, and the other a sum of 16,000, opposed the projected issue in France ; he also said that every effort would be made to bring M. Herran and M. Pelletier to justice, and that, in concert with his companions, he had drawn up an application to the Honduras Government requiring their dismissal ; that as soon as M. Herran and M. Pelletier should be dismissed, and could not entrench themselves behind their immunities, he would take his revenge upon them, and that, in expectation of that event, he had taken pre- cautions to prevent them from leaving French territory. " Before we bring an action for defamation against the propagators of these calumnies, without knowing whether such a measure would be effective in London, we defy Mr. Bedford Pirn to come to France and repeat what he has said ; we give him the lie most formally and categorically ; and we challenge him to tell, on pain of imposture, the name of the bankers to whom he pretends an allusion, reserving to ourselves an inquiry on this subject. "Nothing can be done to bring a delinquent to justice in France. "We 77 la justice fransaise. Nous declarons que, si le Gouvernemeufc du Honduras n'approuve pas hauteinent notre conduite, dontle caractere de loyaute est si eleve qu'il efconne M. Bedford Pirn et consorts, nous le prions de recevoir notre demission; et libres de toute attache, nous poursuivrons une enquete dont les revelations offriront plus d'une surprise a M, Bedford Pirn et consorts. Afin que M. Bedford Pirn puisse agir de suite et sans entrave centre nous, M. Victor Herran depose immediatement ses immunites diplomatiques ; et quant a M. Pelletier, consul-general d'un pays etranger, mais toujours citoyen franais d'origine, et ne jouissant d'aucune immunite, il n'a nulle intention d'en invoquer, et nulle envie de quitter le territoire francais. Faut-il demontrer ce que chacun touche deja du doigt, 1'inanite de la tentative Bedford Pirn ? Aucuns pouvoirs n'etaient enonces dans les prospectus de 1'Emprunt, aucunes des formalites essentielles n'avaient ete remplies ; sans autorisation du Ministre des Affaires etrangeres, comme sans avoir pu faire inserer sa souscription au Journal Officiel, doit-il s'etonner M. Bedford Pirn d'avoir eveille les susceptibilites du ministere public, sauvegarde de la societe ? " Qu'il ne s'en prenne done qu'a lui-meme de sa mesaventure, et qu'il s'informe et nous apprenne ce qui adviendrait a Londres a un sujet frangais agissant dans les conditions analogues. " Nous devons nous abstenir, en raison de ^instruction qui se poursuit, de juger cette tentative avortee ; mais nous tenons a hon- neur de declarer, haut et ferme, que 1'opinion publique ne saurait etre declare that if the Honduras Government does not approve our conduct in every respect, the character of which is so high that it astonishes Mr. Bedford Pirn and his confederates, we beg it to accept our resignation ; and, freed from every tie. we will prosecute an inquiry of which the revelations will surprise, once and again, Mr. Bedford Pirn and his confederates. In order that Mr. Bedford Pirn may go on and act without obstruction against us, M. Victor Herran at once relinquishes his diplomatic immunities; and as for M. Pelletier, Consul-General of a foreign country, but still a French citizen by birth, and not enjoying any immunity, he has no intention of claiming it, and no wish to depart from French territory. Is it necessary to show that everyone must be already aware of the absurdity of Bedford Pirn's attempt ? No powers were announced in the prospectuses of the loan none of the essential formalities were observed. Without the authority of the Minister for Foreign Affairs, and without having been able to insert his subscription in the Official Journal, could Mr. Bedford Pirn be surprised that he had awakened the attention of the public prosecutor, the safeguard of society ? " Let him blame himself, then, for his mishap, and let him inquire and inform us what would happen in London to a French subject under similar circumstances. ' As an investigation is going on, we will abstain from passing judgment G2 78 faussee plus longtemps par les manoeuvres de ces homines, et que le credit du Honduras en France a ete sauvegarde par Tenergie de ses representants officiels. " (Signe) " VICTOR HEREIN. " EUGENE PELLETIEB." This unfortunate and unexpected affair between MM. Herran and Pelletier and Captain Pirn again produced ex- citement, and led to lamentable contention between those persons, who were bound to proceed in concert and sincerity to promote the undertaking ; and again those eternal quarrels went on which had so often occurred amongst the various persons more or less connected with these affairs. Fortu- nately the diverse nationalities of MM. Herran and Pelle- tier and Captain Pirn, and the difficulty in regard to the competency of the courts before which the question might be brought, postponed the matter sine die. The Committee of Investigation appointed at the meeting of bondholders on the 10th of January, 1873, reported in March of the same year as follows : " REPORT OF THE COMMITTEE APPOINTED BY THE HONDURAS BONDHOLDERS AT A PUBLIC MEETING HELD ON THE lOxn JANUARY, 1873. " The following are copies of the Resolutions which were passed at the meeting : " That a Committee (not exceeding nine), of which Messrs. Pirn, Kerferd, and Haslewood shall be invited to be mem- bers, shall be and is hereby appointed : " 1. To investigate the position and ascertain the prospects of the Eailway and of the Finances of Honduras, in respect to each of the existing Loans. " 2. To recommend to a future Meeting of the Bondholders two independent Railway Engineers of position and experience to be sent (if necessary) to Honduras for on this abortive attempt ; but it is our bounden duty to declare, loudly and confidently, that public opinion can no longer be misled by the manoeuvres of these men, and that the credit of Honduras in France has been saved by the energy of its official representatives. (Signed) " VICTOR HEURAN, " EUGENE PELLETIEII." . the purpose -of making a special survey of the un- finished portions of the Line, what sum is really neces- sary for the completion of the undertaking, and the purchase of plant, machinery, and rolling-stock, and within what period the Line might reasonably be ex- pected to be finished and in working order. '' 3. To consider what steps should be taken for the purpose of raising the necessary funds for the prosecution of the work, and for securing the rights and interests of the existing Bondholders, and placing their affairs upon a satisfactory basis. " 4. That it be an instruction to the Committee just nominated that they should forthwith convey to the Government of Honduras the expression of the con- viction of the Bondholders that the conduct of Messrs. Herran and Pelletier is such as to call for their immediate dismissal from office, in order to show the Bondholders that the Government are resolved to protect their interest to the fullest extent. 000 Stock of 1870 Loan, ditto, 168 Bonds 7 . OA lOj^b'lU at 80 per cent ) Cash in the hands of the Trustees . 13,000 2,014,540 0* Leaving a balance of about . . . 721,39710 2,735,937 10 " This sum of 721,000 has been disbursed in various expenses and outlays over a period of six years, including the Commissions on the Loans, and the large amount before referred to as expended by the Government in * maintaining its credit ' daring the wars in Honduras and on the Continent. " The Committee abstain from further comment on the above figures, partly because your Committee are not clothed with sufficient powers to investigate details or distinguish responsibilities, owing chiefly to the fact that the loss and expenditure are mainly the direct acts of the Honduras Government, or have received its express sanc- tion, or that of its accredited representatives, and still more because the Gpvernment of Honduras is prepared to make concessions of great magnitude and value to compensate for the losses of the Bond- holders, and secure the ultimate completion of the Inter-oceanic Eailroad. " Your Committee conceive it to be in the interest of the Bond- holders not to provoke any inexpedient or inopportune discussion with the present executive of Honduras, which has shown every dis- position to deal with the Bondholders in a spirit of fairness and cordial co-operation. "The representatives of the Honduras Government in London have expressed the willingness of that Government to cede in fee simple as security to the Bondholders, and as an annex to the Inter- oceanic Eailway, a tract of country equal to 2i miles on each side of the Eailway, from sea to sea, free of all liability to taxes and charges of every description, with power to work, or grant concessions to * Sic in original Report, but should be 2,024,540. work, such of the unappropriated silver and copper mines of the entire State of Honduras as the representatives of the Inter-oceanic Railway shall select. "Your Committee requested the attendance of Dr. Bernhard, Special Commissioner for Honduras, Consul at Honduras for the German Empire, and resident for upwards of 20 years in Central America, to state his views as to the resources of Honduras, and the present condition of the country. He prepared a Report.* 1 ' A further Report from the pen of Mr. G. B. Kerferd, Member of your Committee, and a gentleman of lengthened practical experience in the commerce of Honduras, will be found in the Appendix (No. III.). " Since the Public Meeting, three important and encouraging letters, dated the 2nd and 3rd days of December, have been received from Mr. W. A. Brooks, for many years Chief Engineer to the Com- missioners of the river Tyne, and the Engineer sent out by Captain Pirn to Honduras to report on the position and prospects of the Railway, a gentleman in whose ability and good faith the Committee have grounds for placing implicit confidence. f "The Commissioners of Honduras in London have cordially co- operated with your Committee in affording every information in their power, and have furnished the funds necessary to send to Honduras two American Engineers of your Committee's nomination, who are now on their way to investigate, examine, and report upon the present state of the fifty -six miles of the Railway which have been completed, the progress made with the remaining portion, the ulti- mate cost of completion, and the prospects of the whole under- taking. " Several schemes for raising further Capital have been submitted to the consideration of your Committee for completing the Inter- oceanic Line of Railway. Whatever scheme may be ultimately adopted, your Committee are unanimous in recommending that the financial department, now under the control of the Honduras Govern- ment, should be transferred to European administration. Your Committee are assured of the willingness of the Honduras Govern- ment to transfer all their interest in the Railway to a Limited Joint Stock Company, to be incorporated for the purpose of raising the necessary Capital for the completion of the Railway, the purchase of rolling stock, &c., or to acquiesce in any arrangement by which the interest of the Bondholders through the completion of the Rail- way can be secured. ee From inquiries instituted by your Committee, they feel no hesi- * See Appendix, No. III. f See Appendix, No. III. 83 tation in saying that an arrangement can be effected with responsible Contractors, on, satisfactory terras for the early completion of the entire Line. " Your Committee calculate, so far as they have estimates to guide them, that, to provide the necessary funds for such a purpose, it may be necessary to raise a Capital up to 2,000,000. " Your Committee, in considering the foregoing scheme, have not overlooked the interests or position of the present Bondholders; and, in the event of the Company being formed, they recommend that the Bondholders should have the option of exchanging their \ Bonds at a price and under conditions to be hereafter determined 1 for Preferential Debentures of the proposed Company, or some such : arrangement as shall equitably adjust the security between the new \Capital to be provided and that already raised. " (Printed by Order of the Committee) " JOHN TUCKER, "March, 1873. Hon. See." " Offices 4, Westminster Chambers, Victoria Street, Westminster." The first part of this Eeport is unfortunately as absurd as it is incorrect, and one can hardly understand how the men of business who formed the Committee could draw up an account from the materials before them in the manner they have done. They charge the loan of 1367 and that of 1870 at the prices of issue to the public, that is, the first at 73. 11s. W^cL, and the second at 80. This might have been done if the loans had been wholly subscribed for at the time they were issued. If that had been the case, the account would be clear and decisive, and there would have been no necessity for the expedient of showing a deficit of 721,397 for unknown expenses, and for cc maintaining the credit " of Honduras. How much more simple would it have been for the Committee to state the average price at which the loans were placed, for it is notorious that at the beginning of 1872, about half the bonds of those loans were still for sale, and it was necessary to place very many of them at less than 40 per cent, of their value. . 84 The Committee has made another and a greater mistake in the above Report. It is that of not separating the sums produced by the tardy sales of the debentures of the French loan, deposited with Messrs. Bischoffsheim and Goldschmidt and with the Trustees. These had not been subscribed for in Paris at the time of the issue, and they amounted to about a third part of that loan ; they were brought to London when the war broke out between Germany and France, for they could not be sold in Paris. From this Eeport it appears that the London loans, even omitting the deficit of 721,397, put down by the Committee to balance the account, produced an average of 57^ per cent., when in reality, as already stated, they did not produce more than 45 per cent. Some of the figures on the credit side are also incorrect, especially the amount of 1,236,800 for redemption and interest of the said two loans. And, in consequence of this erroneous Eeport, unjust suspicion of malversation has fallen upon the persons who have had the direction of these affairs, and on the Government which was endeavouring to (< main- tain its credit/' and thereby diverted enormous sums ; when what the Government and its agents endeavoured to do, was to sell the bonds at the only price at which they could place them on 'Change, and apply the proceeds to so many urgent engagements. The remainder of the Report is devoted to the purpose of showing the bondholders that the Government was disposed to make very important concessions, in order to establish a Company to finish the Eailway, and with that object was studying various projects presented to the Committee. It was announced that 2,000,000 were required to complete the Eailway, and that it would be necessary to ask the public for them ; it was also stated that the Government had very important documents in its possession, recommending the Line and the great resources of the forests and mines of the Ee- public of Honduras, forwarded by Mr. W. A. Brooks, the 85 engineer sent to Honduras by Captain Pirn, by Mr. Of. B. Kerferd, a member of the Committee, and by Dr. C. E. Bernhard, the Government Commissioner. The Committee of Investigation went on with its labours in concurrence with Dr. C. E. Bernhard, and the Trustees, in order to form a Company for the completion of the Eailway, and discussed the conditions for its constitution, as well as the concessions it was necessary to require from the Government. Finally, the contracts were made, and they were sent to Honduras to be approved by the Government of the President Don Celeo Arias, if they were considered satis- factory. X. MEETING OF BONDHOLDERS ON THE 24 TH AUGUST, 1873. FORMATION OF THE COMPANY TO CONSTRUCT THE RAILWAY. ANOTHER meeting of bondholders was held at the London Tavern, on the 24th of August, 1873, for the purpose of re- ceiving from the Committee appointed on the I Oth of January its final Eeport upon the investigation of the facts and the means adopted to proceed with the construction of the Line. Mr. Digby Seymour was in the chair. The Chairman, in a long and eloquent speech, stated the object of the meeting, which was to submit the proceedings of the Committee to the consideration of the bondholders, and to await their judgment on them. He stated that the three Trustees, Captain Bedford Pirn, Mr. Haslewood, and Mr. Kerferd, had retired from the Committee, because they, having been invited at first to join the Committee, rather represented the special interests of the 86 Honduras Government. Colonel Peel, Mr. A. Clark, and Dr. Evan Desmond had been appointed to fill these three vacancies. The Chairman afterwards proceeded to give the results of his investigations in regard to the loans ; his figures were hardly at all compatible with those given in the Eeport pre- sented in March, and much less so with the real amounts. He said that no particulars respecting the French loan could be obtained for the last Report, but that some had since been received. He said that there were then in circulation 29,638 Bonds of 100 each, representing a nominal value of 2,963,800; there were also in circulation 8,970 Shares of 20, amounting to 179,400; 177,135 Bonds of 12, representing 2,125,620; and lastly, 789 Shares of 100, representing 78,900 (belonging to the Federal debt). This gives a grand total of 5,347,720. Neither is this second Eeport correct. The nominal total of the three loans issued, without including the Federal debt, amounts to 5,990,108 ; and if, at the date when the Chairman reported, there had only been in circulation (exclusive of the cancelled bonds) the total amount which he stated, then there would have been at the same date the balance of 721,288 in possession of the Trustees (always deducting the Federal debt) cancelled or for sale. The Chairman then gave an account of the concessions obtained from the Government, for the purpose of serving as a basis for the formation of a Company to complete the Eailway ; first, the concession of the whole line of the said Eailway from Port Cortez in the Atlantic to the Bay of Fonseca in the Pacific, including the 56 miles already constructed ; second, five miles of land on each side of the line, from beginning to end ; third, the concession of the mines in Honduras belonging to the Government. He afterwards indicated the principal bases for the formation 8? of the Company to complete the Bail way, and the great hopes entertained on account of the concessions obtained and on which the Company was founded. In consequence the meeting passed a resolution approving and confirming all that the Committee had done, and engaging the bondholders to use every kind of exertion to promote the success of the said Company. Here is the " Memorandum of Association of the Honduras Inter-oceanic Eailway Company," as it appears in the Prospectuses circulated : "MEMOBANDUM OF ASSOCIATION OF THE HONDURAS INTER- OCEANIC EAILWAY COMPANY (LIMITED). ' ' 1 . The name of the Company is the Honduras Inter-Oceanic Eailway Company, Limited. tf 2. The Registered Offices of the Company will be in England. " 3. The objects for which the Company is established are the ollowing : (A) To obtain from the Government of the Republic of Honduras and accept concessions or grants of all or any of the following Railways, works, lands, rights, powers, and privileges, viz. : (a) Such portion of the Honduras Inter-Oceanic Railway as is already completed and open for traffic, or is in course of construction, together with all the stations, houses, buildings, wharves, quays, jetties, and ap- purtenances thereto belonging or attached, or forming part thereof, together with all the rolling stock, plant, machinery, rails, materials, stores, equipments, and other effects belonging to the Government, and used, or intended to be used, for the construction, equip- ment, maintenance, or working of the said Railway with its appurtenances, or for any of the purposes thereof. (b) The land required for the completion of the said Railway from the Atlantic Ocean to the Pacific Ocean, with all necessary and proper wharves, quays, jetties, and other conveniences. 88 (c) Such other lands, adjoining or near to the said Railway, as may be agreed on between the said Government and the Company, with such exclusive rights of cutting and exporting timber grown thereon free of duty and other charges, as may also be agreed on. (d) Such of the Mines belonging to the Government of Honduras, and at present unallotted, and at the dis- posal of the State, as may be agreed on between the Government and the Company, subject to such royalty (if any) whether fixed or fluctuating, as may also be agreed upon. (B) To construct, complete, maintain, equip, and work the said Railway, and to work, let, manage, and grant licenses for the working of all or any of the Company's lands, land rights, timber, mines and mineral rights, and to export sell, and dispose of the produce thereof. (C) To sell, demise, or otherwise dispose of, all or any of the lands, mines, rights and privileges, or other property of the Company (including the said Railway, with its appurtenances) . (D) To acquire any other concessions, grants, or privileges from the Government of Honduras, or any other foreign Government, and to enter into any contracts with any Government, Corporation, or persons, for any of the purposes of the Company. (E) To obtain the incorporation of the Company as a Societe Anonyme, or Sociedad Anonima, according to the laws of the Republic of Honduras, or any foreign state, relating to joint stock companies. (F) To do all such other things as are incidental or conducive to any of the foregoing purposes. " 4. The liability of the members is limited. " 5. The capital of the Company is 5,347,720, divided into 30,427 Shares of 100 each, to be called A Shares; 177,135 Shares of 12 each, to be called B shares; and 8,970 Shares of 20 each, to be called C Shares. The shares may be issued as fully paid up to the holders of the bonds of the Honduras Government Railway loans, issued in London in 1867 and 1870, or the loans issued in Paris in the year 1869, or of the Federal debt of the State of Honduras issued in 1867, in exchange for their bonds in the proportion of one 100 share for 89 every bond for 100 in either of the said loans, and so in proportion for bonds of any larger or lesser denomination. The Company may accept from any of the subscribers of this Memorandum bonds of the said Honduras Government loans of 1867, 1869, and 1870, or of the said Federal debt in or towards payment of the shares subscribed for by them respectively at par." In accordance with this Memorandum of Association, the Prospectus* was published, to convert the bonds of all the Honduras loans into shares of the Company formed to com- plete the Bail way. By means of that conversion the Hon- duras Government was to be entirely freed from the heavy burden of its loans, the bonds of which were to be converted into shares of the Company, and to be freed also from the general mortgage on all the uncultivated lands and the forests of the State. In exchange, the Government granted to the said Company the whole of the Line already constructed, with all the buildings and materials belonging to it ; the necessary lands for the completion of the Line from sea to sea, its sta- tions, piersyrdocks, and buildings ; the right of importing, free from every tax or charge, the materials, engines, and all that should be necessary for, or connected with, the completion of the Line ; the right of constructing, fitting up, maintaining, and working the Eailway, and of receiving the proceeds of the traffic ; all the State lands comprised in a band of territory ten miles wide, or five miles of territory on each side of the Line throughout ; a concession for ninety-nine years of all the mines of antimony, copper, iron, silver, and others, including those of coal and marble, belonging to the State, subject to a royalty of 10 per cent, only upon the net profit, after paying a dividend of 10 per cent. These concessions and conditions were stipulated in two contracts, which bear date the 12th of July, 1873, entered into by the Minister in London and the Special Commissioner, * See Appendix, No. IV. 90 Dr. C. E. Bernhard, as representatives of the Honduras Government, on the one part, and by the Company on the other part ; ajid in another additional contract, bearing date 1st of December, 1873, entered into by Dr. C. E. Bernhard, as representative of the said Government, and the aforesaid Company. The Governm nt of Honduras, under the Pre- sidency of Serior D. Cleo Arias, ratified those contracts, refer- ring the final approval of them to the Congress which assem- bled at the close of his Presidential period, and this also ratified them. But the conversion of the bonds of the Honduras loans into shares of the " Inter-oceanic Eailvvay Company" in no way advanced the Company in regard to the most urgent and direct object, which was to procure the necessary funds for the completion of the Line ; and the " Inter-oceanic Eailvvay Com- pany" was obliged to have recourse to the money market by issuing 20,000 Preference Shares of 100 each at par, as part of the 25,000 Shares of this class, which its regulations gave it power to issue. . Here is the Prospectus of this new combination for the completion of the said Kailway : " FIRST ISSUE OF 20,000 TEN PER CENT. FIRST MORTGAGE DEBENTURE BONDS OF 100 EACH AT PAR, " Being part of 25,000 which the Company have power to issue. "THE HONDURAS INDEK-OCEANIC KAILWAY COMPANY LIMITED. " Debenture Capital 2,500,000. " It is proposed to issue this Capital in Bonds o/100 each, bearing interest at 10 per cent, per annum. " The Bonds to be redeemed at par by Annual Drawings, and by the operation of a Sinking Fund, in 2/5 years. "The first Drawing to take place en the 31st of December, 1876, 91 id the drawn Bonds will be paid on the next succeeding 15th day of January, when the interest thereon will cease. " The Bonds will be issued to bearer, with Coupons, payable half- yearly on the 1st January and 1st July in each year, at the offices of the Company. " The first payment of interest to take place on the the 1st July, 1874. 1 "PKOSPECTUS. " These Bonds stand as a first charge by the Railway Company upon all its lands, estates, properties, and revenues, comprising such por- tion of the Railway as is already in operation, completed or in course of construction, together with the rolling stock, stations, materials, buildings, chattels of every kind, and all rights and privileges con- ferred by the terms of the Concession held by the Company, including the lands necessary to complete the Line from sea to sea, " The revenues also, under a Concession for 99 years, from all mines and minerals belonging to the State, subject only to the payment of a small deferred royalty, are included under the same charge. "In the Concession obtained from the Government are also included almost inexhaustible supplies of hard and other woods, namely, maho- gany, rosewood, pine, and other timber of the finest growth and quality; and which, when the means of transit have been completed for conveyance of the same to the ports for exportation to the European markets, one of the largest and most certain sources of profit will be opened up for the bondholders. " The grants made by the Government of Honduras to the Company have been subsequently confirmed by the existing legislative powers of the State, and take effect immediately. " It will be seen at once that the varied resources of the Company are abundant, and, when developed, more than sufficient to guarantee prompt payment of interest upon and redemption of the Bonds, as well as to provide for the working expenses of the Line. " Indeed, when the opening of the Line from sea to sea has been accomplished, experience shows that the revenues will rapidly and progressively increase. " It may fairly be estimated that the minimum amount to be written off will certainly not be less than after the rate of 80,000 per annum. H 92 " For every 100 debenture the price will be payable as follows : On application, deposit . . . 5 On allotment 5 On 2nd March, 1874 10 On 1st June, 1874 10 On 7th September, 1874 .... 10 On 7th December, 1874 . . . .10 On 1st March, 1875 . . . .10 On 7th June, 1875 .... 10 On 6th September, 1875 .... 10 On 6th December, 1875 . . . .10 On 1st March, 1876 10 100 Or the full amount may be paid at any earlier date under discount at 5 per cent. " Scrip will b issued, which will be exchanged for Mortgage Debenture Bonds on payment of all the instalments. ' ' In case of no allotment being made, the deposit of the applicant will be returned without deduction. " The Company reserve to themselves the right to issue the remain- ing 5,000 Debenture Bonds, which, when issued, vfi]\rarik.paripassu with the present issue of 20,000 Debentures. 1 ' Applications in the form annexed to be sent to the Bankers of the Company,* or to C. F. Denny, Esq., Secretary of the Company, 4, Westminster Chambers, Victoria Street, S.W." "23rd December, 1873." The subscription for these Preference Shares was received by the public with the same indifference as those for the Honduras loans ; and although it was not officially known at the time how much had been subscribed for, because the Company thought proper to keep this secret, it afterwards came out that the said subscription had not exceeded 30,000, an insignificant sum towards enabling the Company to take serious steps for the development of its projects. Nevertheless, the conversion of the bonds of the Honduras Loans into shares of the Company, began to be effected with * Messrs. Glyn, Mills, Currie, & Co., Lombard Street. 93 tolerable success, so far that in London and Paris very nearly a third part of the bonds representing the loans had been converted ; from which circumstance it may be readily pre- sumed that, if the issue of the Preference Shares had had such success as to assure the intentions of the Company already formed, all or nearly all the bonds would have been eventually converted. At the very time when the Inter-oceanic Eailway Company was endeavouring in Europe to convert the bonds of the Honduras loans into railway shares, and was issuing pre- ference shares to obtain capital in order to complete the work, there was a revolution in Honduras to upset the Government of the President, Senor D. Celeo Arias. That revolution succeeded, and His Excellency Senor D. Ponciano Leiva was raised to the Provisional Presidency of the Eepublic by the national will in consequence. He immediately issued the following manifesto : " PONCIANO LEIVA, " PROVISIONAL PRESIDENT BY THE NATIONAL WILL, " To the People of the Republic. " Hondureans : The war which it was indispensably necessary to undertake against the Dictatorship of Senor Licentiate Don Celeo Arias has terminated fortunately. I congratulate you, and rejoice with you on this auspicious event. " The Hondurean nation, like a traveller escaped from shipwreck, rescued from the anarchy into which it seemed about to be plunged, has entered upon the enjoyment of peace and order inestimable advantages which the Government intends to secure, by means of the good sense of the nation, and the co-operation of the most enlightened members of society, who are responsible for the irregu- larities of the rest. " In accordance with my promises in the manifesto of November 23, after discussion with the Council of Ministers, it has been resolved as follows : " 1. A decree of amnesty shall be issued for all Hondureans, who are out of the territory of the Kepublic for political reasons. " 2. The Judicial Power shall be provisionally reorganized; and H .2 94 " 3. A National Convention shall be convoked to proceed to the political reorganization of the country, in the form which it may deem most expedient. " Meanwhile, Hondureans, your safeguards and rights not secured by law shall be respected by the Government, which will in every case be guided by considerations of justice and public convenience. " Fellow citizens : it is not for me to boast that I am about to implant liberal principles in Honduras, for they have been proclaimed and adopted by our predecessors, ever since the year 21 ; my feeble efforts will only be directed to perfect them in practice. This is my purpose ; and, as far as regards yourselves, you are in pos- session of all your rights : make that legitimate use of them to which you are entitled, without forgetting at the same time your duties towards the State. " PONCIANO LEIVA." "Comayagua, 24th January, 1874." This change of Government gave rise to doubts and dis- cussions as to the legality of the Congress assembled during the Presidency of Senor D. Celeo Arias, and as to whether the ratification of the concessions made in favour of the Company by the previous Government, and by the Congress assembled during that Government, were binding, or whether the new Government and the Congress which it might convoke would repudiate them. These doubts were very soon dispelled by the Government of the President Senor D. Ponciano Leiva, which lost no time in declaring that it was determined to support everything that could tend to the completion of the Railway, and to liberate Honduras from the insupportable engagements which burdened the Eepublic on account of the loans. Notwithstanding this declaration, and the praiseworthy intentions manifested by the Government of the President SenorD. Ponciano Leiva, the Inter-oceanic E/ail way Company found itself entangled in a net of difficulties which prevented its development and consolidation. On the formation of the Company, its promoters, who were the members of the Com- mittee of Investigation appointed by the bondholders at the 95 meeting of January lOfch, 1873, reckoned upon the support of the contractors for the previous loans, that is, Messrs. Bishoffsheim and Goldschmidt, Mr. Lefevre, and Messrs. Dreyfus, Scheyer, and Co. These gentlemen were not willing to support the Company after its formation, to the extent which the Directors of the Company expected they would ; from whence arose most serious complaints, complications, and even legal proceedings. On the other hand, the bond- holders of Paris began to make complaints against the Company, the result of which was, that many of them com- bined to take legal proceedings in France, and altogether refused to have anything to do with the said Company. The Directors of the Company had very serious discussions among themselves, and made complaints and accusations against each other, which were rather induced by having to contend with so many mischances than by well-founded reasons. The Special Commissioner of the Honduras Govern- ment himself could not escape very serious personal attacks upon questions in which not Dr. C. E. Bernhard personally, but the powers of the Special Commissioner of the Honduras Government were involved, and whether he was or was not proceeding in accordance with law, and as legally representing the interests of the Eepublic. Immediately after the meeting of January 10, 1873, two engineers, Messrs. W. A. Brooks and Charles A. Alberga, had been sent to Honduras, to inspect and survey the Rail- way Line already constructed, as well as the two sections traced out, and to report thereon. Their report, which bears date April 25, 1873, was published in the " Foreign Times " of London on the 1 2th of July following. Finally, in Sep- tember, two other engineers, Messrs. Seymour and Huston, also went to Honduras, by order of the Directors of the Inter- oceanic E ail way Company. They were to take measures on the spot to proceed with the construction of fifteen miles of the Eailway on account of the Company ; but it appears that 96 those gentlemen withdrew without doing anything to show that the works were about to be begun. While this was going on, the bonds of the Honduras loans, which had not been converted into the Company's shares, went down in price until they were quoted at 6^- per cent. ; and all the efforts of the Directors of the Company to inspire confidence and give hope had not the slightest effect in restraining this depreciation. The Company convoked two meetings of the shareholders in October and November last, to give an account of the diffi- culties against which it was contending, in consequence of the bulk of the bondholders not having decided to convert their bonds into shares of the said Company, on account of the poor subscription for the preference shares, and because Messrs. Bischoffsheim and Lefevre refused to give the moral and financial support which they had proffered on the formation of the said Company ; but nothing positive was settled at those meetings to relieve the Company from its pressing engage- ments. On the contrary, those meetings were a fruitful source of bitter recriminations and personal attacks, which were cer- tainly not the best means to meet the great crisis, nor to overcome the enormous difficulties. The Honduras Government convoked the National Congress to meet at Comayagua, the capital of the Republic, at the end of January, 1875. That Congress was to examine the state of the affairs connected with the Railway, with the loans con- tracted to construct it, and with the condition of the Company formed to complete it ; so that it might, on consideration of the previous proceedings, give the necessary directions and pass definitive resolutions. For this purpose a delegate of the Company, Mr. John William Atkinson, departed for Comayagua, by way of Omoa, in the steamer which left Southampton on the 17th of Decem- ber ; and the special Commissioner of the Government, Dr. C. E. Bernhard, also left by the same steamer, and with the 97 same destination, to give an account of what he had done in Europe for the last two years, exclusively occupied in directing in some measure, the affairs of the unfortunate Bail way. It is to be hoped that the Congress, in consideration of such difficult circumstances, which cannot be easily remedied, will pass a vote of confidence in favour of the President and Govern- ment of Honduras, so that such measures shall be taken as, according to circumstances, may be deemed most suitable for the praiseworthy object of rescuing this undertaking. This is, briefly narrated, the history of the Honduras Eailway, from the time when its construction was first attempted up to the present. XL CONCLUSION. AFTER having suffered such a series of mischances, failures, and difficulties such an array of obstacles, disappointments, and annoyances it seems at first sight that the Honduras Inter-oceanic Eailway is a project pursued by misfortune, and never to be achieved, because all the combinations to obtain funds for its construction have been exhausted, and all have met with disaster in one way or another. Fortunately it is not so. Great projects do not perish thus in modern times. They may suffer mishaps, delays, crises, crashes, and all kinds of calamities ; but human pride de- lights in overcoming and surmounting whatever appears most difficult and insuperable ; and for this very reason the Hon- duras Eailway, in spite of the misfortunes which have be- fallen it, is destined to become a reality sooner or later to unite the two oceans, and to develop the untold wealth of that favoured section of the New World through which it is traced. 98 We have read carefully and with interest all that has been written concerning the Honduras Bailway, and the territory through which it is to pass. More than thirty volumes, pam-. phlets, reports, and memorials, in various languages, have been published in Europe during the last few years ; and they all agree upon the importance of this great work, and the natural riches of the Honduras territory. We have ourselves seen those riches, in a delicious climate, in a picturesque country, which only requires hands to work and roads for communi- cation, to convert it into an emporium of production and commerce. But what has attracted our attention most is the very important " Beport," in 102 printed folio pages, presented by Mr. Squier, in the year 1859, to the Directors of the Company which was then formed in London, and which broke down under the circumstances mentioned in the first Chapter. That Beport founded on the information of first-class engineers, and other experienced men and travellers worthy of entire credit, and on actual surveys and obser- vations on the spot gives a most complete and favourable idea of the Line, of the sea-ports at each end of it, of the climate and resources of Central America, and of the practicability of the Line without other than the most ordinary difficulties which are met with in every undertaking of this kind. There can be no doubt as to the magnificent forests of Honduras these are well known to everyone by their valuable timber ; but the interior of the country is not so well known, with its millions of pines of enormous dimen- sions, which must in time give rise to immense trade and employment in the exportation of timber, the extraction of resin, turpentine, and other products. Nor can there be any doubt of the mineralogical riches of Honduras, especially its gold-washings and inexhaustible mines of silver and copper. Neither can there be any question as to the fertility of the 99 country, of its excellent climate, favourable for European immigration, agriculture, and cattle breeding. What has been doubted by some people who are not acquainted with those regions, is the practicability of the Line ; and we are therefore about to conclude this Pamphlet by giving the official statements, obtained from the surveys of the Engineers, and well attested. They show that the construction of the Honduras Inter-oceanic Railway need not meet with any particular or extraordinary obstacle that can even be considered as a difficulty of an average character. The highest point which the Honduras Eailvvay has to pass is 2956 feet above the level of the sea; and that will be reduced to 2926 by a cutting to be made at that height. The point referred to is at a distance of 165 miles from the Atlantic, and 68 miles from the Pacific. The gradients of the Line meet at that culminating point ; but the disposition of those gradients is favourable to the direction and the kind of traffic for which the Line is to be used. The following Table will show the importance of these gradients for the whole length of the Railway. Sections. Distance. Gradient. 1. From Port Cortez to Mauricios . . 67 miles . . 2.83feet 2. Mauricios to Ojos de Agua . 40 . . 2T.27 3. Ojos de Agua to Ilampa . . 23 . . 29.21 4. Ilampa to Kio Grande ... 26 . . 20.12 5. Bio Grande to Rancho Chiquito 9 . . 84.50 6. Rancho Chiquito to San Antonio 22| . . 95.00 7. San Antonio to Caridad . . 5| . . 48.72 8. Caridad to the Bay of Fonseca 40 . . 13.50 Total ... 233 miles 25.33 feet The steepest gradient is from San Antonio to Eancho Chi- quito, but that may be reduced by making some slight varia- tions in the track. 100 The works to be done throughout the Honduras Inter- oceanic Bail way, with the materials and labour, are calculated as follows : LINE FEOM POET COETEZ TO THE BAY OF FONSECA. (283 miles of Raihvay.) CLASS OP WORK. QUANTITIES. ESTIMATE. Excavation in rock . earth. . . Embankment 4,457,000 cubic yds. 1,712,000 8,496,000 59,700 272,149 6,120 feet run 451,605 cubic 'yds. 235| miles 231 miles 10 per cent. 4,457,000 dols. 342,400 2,127,000 298,500 1/204,440 367,200 451,605 2,355,000 267,000 60,000 570,000 500,000 1,304,334 Tunnels Masonry of all kinds . . Ballast Sleepers, rails, &c. . . Water stations, workshops,"! &c Piers Preparatory road . . Professional services . . Contingencies .... Cost Der mile J 62 ' 110 dollars -* Total cost f 14 >347,679 dols. | 12,242. >fc ( 2,869,000. On examination of the above particulars it will be clearly seen that there is no insuperable obstacle or difficulty in the way of the possible construction of the Honduras Eailway. The only difficulty is to obtain the estimated funds for the completion of the work. If the bondholders in London and Paris understood their real interests, they would at once subscribe the necessary capital, in proportion to the bonds which they hold ; and with that capital, strictly administered, the Line might be finished * Author's Note. This estimate appears very much exaggerated. The line can be completed, including the necessary rolling stock, at the rate of 9,000 per mile. 101 in two years, and thus all the immense interests would be secured. At present the bonds of the Honduras loans are quoted in the European Exchanges at 6^ per cent., which is as much as to say that the whole of them are not worth a great deal more than 450,000 in the market, for they could be bought for that sum. "Well, then, the part of the Eailway already constructed is worth about double that sum ; and the concessions made by the Go- vernment in favour of the Company for constructing the Eail- way are worth, without exaggeration, twenty times that sum, if they are properly managed. If every bondholder would sub- scribe 30 per cent, more in cash upon the nominal value of the bonds in his possession, the Eailway would be finished, and it would be the property of the said bondholders ; the concessions of the Government would be turned to account, and would be a source of immense riches ; the bondholders would then have no reason to complain of former disasters and damages, and the Honduras Government would see its wishes fulfilled in the endowment of the Eepublic with an Inter-oceanic Eailway which would afford a solid basis for the development and utilization of its natural riches. Certainly it is difficult, exceedingly difficult, to convince all and each of the bondholders, by serious calculations, of what they ought to do for the protection of their own interests, and to extricate themselves from the ruin into which they have fallen. It is certain, also, that many of the bond- holders have not the means of advancing 30 per cent, more in cash on the nominal value of their bonds. Nevertheless, in regard to the first expedient, it has never been attempted in any way perhaps no idea of attempting it has ever been entertained; and yet, if the attempt were made, it might produce favourable results. In regard to the second, those who really cannot afford the extraordinary addition of 30 per cent, to the bonds which they possess, have three resources : 1 . To keep their bonds, in order to assert their 102 rights in future, if there should be an opportunity. 2. To sell them at the quotation price. 3. To sell a part of them for the purpose of providing the extraordinary addition of 30 per cent, on the nominal value of those which they retain. The great difficulty or rather the great necessity, if such an operation is to be made practicable is to know how to combine, to introduce, to explain, and to carry it out; to examine in due time, without exaggeration or deprecia- tion, its inconveniences and its advantages ; to smooth down the former beforehand by foresight and practical remedies, and to make the latter available by energy and activity. Messrs. Bischoffsheim and Goldschmidt, Dreyfus, Scheyer, and Co., and Mr. Lefevre, are the men who ought to bring about an effective combination; and they would certainly succeed, if they took pains, and procured the aid of efficient administrators, able professional men, honourable contractors for the material works of the Railway, and practical, energetic and active persons, exclusively devoted to the purpose of developing the value of the Government concessions and turning them to account, by promoting emigration, working the mines, cutting timber, and other lucrative occupations. This great enterprise of the Honduras Eailway has engaged the attention of many, too many, speculators, stock- jobbers, intruders, busy critics, officials indifferent to the fate of Honduras, intriguers, and others whom we must not mention ; but, on the other hand, it has always wanted a competent man for an enterprise rendered most difficult and complicated by the circumstances which surrounded it a man alike theoretical and practical, financier and engineer, contractor and director equally capable of discussing finan- cial plans and combinations with the bankers, and surveys and designs with the engineers as able to direct and control 103 the accounts as to maintain a strict inspection over the works of the Line and to instruct the workmen in the use of their tools a man of mental and physical force, with ability to take the lead over all parties, with no other aim than the object proposed, with no other ambition than that of attaining it a man after the fashion of M. de Lesseps, who would know what to do in any unforeseen contingency, whether financial, professional, or practical. Mr. Squier, who conceived the idea of the Railway, is the man who most nearly approaches this type. He proposed the problem with intelligence and industry; but he was unfortunate he lacked material support and good health. The last Trustees in London, Messrs. G. B. Kerferd, Edward Haslewood, and Captain Bedford Pirn, undertook the trust, and received it from their predecessors when the enterprise was given over and expiring. The first two represented the integrity of commerce and the Exchange, the last was characterized by enthusiasm and energetic will; but the difficulties were already beyond their abilities and their means of action. The Special Commissioner, Dr. Bernhard, was a pattern of an industrious and indefatigable man ; but, after two years of constant labour and arrangements, he found out that he had to do with people who trusted much more to their own projects and to chance, than to substantial and well-considered plans. And, finally, the Minister in' London, Seiior Gutierrez, represents good faith, disinterestedness, and the spirit of conciliation. He has frequently been the victim sacrificed on one side for the interests of the Railway and of his country, and on the other for the complaints of the bondholders and the difficulties in Europe. But it is a manifest injustice to require that this public man should be able, and ought to serve at the same time interests so opposed and heterogeneous to obey the instruc- tions of his Government, to arrange differences and quarrels, 104 to examine and correct professional projects, to instruct the bankers, check the accounts, avoid ruinous operations on 'Change, foresee the consequences of political revolutions, do business with usurers, pay the bondholders, give publicity to events, maintain the reserve required by his diplomatic position, counsel the unwary not to meddle with hazardous operations, maintain credit, pay the dividends, finish the Bail way, and all this, as well as many various exigencies on all sides, without any other aid than officious criticism from some, and empirical advice from others. Of course, the representative of a foreign country, whoever he may be, looks after the interests of his country, and gives it an account of his official acts ; but it would be ridiculous for him to pretend to advise, in a foreign and essentially speculating country, upon the risks which are run by invest- ing capital in usurious transactions, or in speculations on 'Change without judgment. Messrs. Bischoffsheim and Goldschmidt, Dreyfus, Scheyer, and Co., and Lefevre, were the contractors for the loans. Under the auspices of the first two firms, the bonds were offered to the English and French public, and bought by the present holders (at whatever price it may have been), not so much on the strength of the guarantees offered by the Republic, as in consideration of the respectability of those firms, and by reason of the efforts which they themselves made to dispose of the bonds. Those bankers, then, are morally bound to come to the aid of the Honduras Government, by devising a substantial combination for the completion of the Eailway, to rescue the many sacrifices which have already been made, and the considerable part of the Railway already constructed, from utter failure, and the interests both of the bond- holders and of the Honduras Government from complete destruction. Were they to do so, they would nobly respond to what their honour and credit require, and to what the bondholders and the Honduras Government have a right to 105 expect ; and they themselves, by resolving, at a time ot peril, to undertake once more the provision for the Eailway, would reap the desired returns from a grand enterprise which, when in danger, will have been rescued by the support and energy of two respectable banking houses, which are firmly determined to carry it out and succeed in their purpose. APPENDIX TO THE ENGLISH EDITION. 109 No. I. OFFICIAL DOCUMENTS. LEGISLATIVE ADVERTISEMENT. Comayagua, 30tf& May, 1868. The President of the Republic of Honduras to the Inhabitants thereof. NOTICE is hereby given : That the Sovereign Congress of the Republic, after examination of the documents transmitted to the Supreme Executive Power from the Legation in London, concerning the Loan intended for the construction of the Honduras Inter-oceanic Railway, and those relating to the execution of that work by the Contractor, William MacCandlish, DECREES: Sole Article. The Contract No. 1, and the additional agreements concerning the construction of the said Line, are approved throughout. Given at the Sessions Hall, Comayagua, the 18th of February, 1868. JUAN LOPEZ, Deputy, President. CARLOS MADRID, Deputy, Secretary. JERONIMO ZELAYA, Deputy, Secretary. To the Executive Power. THEREFORE, let this be executed. JOSE MARIA MEDINA. TRINIDAD FERRARI, Minister for Foreign Affairs. Comayagua, 2Qth February, 1868. LEGISLATIVE ADVERTISEMENT. Comayagua, 3Qk May, 1868. Authorizing the Executive Power to organise the working of the Mines on account of the State. i 2 110 The President of the Republic of Honduras to the Inhabitants thereof. NOTICE is hereby given : That the Sovereign Congress of the Eepublic, considering that the Government ought to work the National Mines, as one of the means to be applied to the redemption of the Loan which is to be employed for the construction of the Honduras Inter-oceanic Eailway ; in the exercise of its powers, DECREES : Article 1. The Supreme Executive Power is authorized to regulate and organize on account of the State the working of the National Mines in the circle of Aramecina, and which cannot be claimed by private persons. Art. 2. Within six months from the publication of this law, the Government shall specify the abandoned Mines in the Eepublic which are to be worked on account of the State, and within that period no claim to an abandoned Mine shall be allowed. Given at Comayagua, in the Sessions Hall of the National Congress, on the 24th of February, 1868. JUAN LOPEZ, Deputy, President. CARLOS MADRID, Deputy, Secretary. JERONIMO ZELAYA, Deputy, Secretary. To the Executive Power : THEREFORE, let this be executed. JOSE MARIA MEDINA. TRINIDAD FERRARI, Minister of the Interior. Comayagua, 28th February, 1868. LEGISLATIVE ADVERTISEMENT. Comayagua, 15th April, 1872. DECREE, No. 15. The President of the Eepublic of Honduras to the Inhabitants thereof. NOTICE is hereby given : That the Sovereign Congress of Ill the Eepublic, having before it the Government Decree of 4 December, 1870, which ratifies the Agreement concluded in London on the 17th of July of the same year by Serior D. Carlos Gutierrez, Minister Plenipotentiary to Her Britannic Majesty, duly authorized by the Government to negotiate a Loan of 2,500,000 sterling nominal value, intended for the completion of the Honduras Eailway, on the one part, and Mr. Henry Louis Bischoffsheim and Goldschmidt, on the other part, DECREES : Sole Article.' The aforesaid Decree is approved throughout. . Given at Comayagua, in the Sessions Hall of the National Congress, on the 20th of February, 1872. MANUEL COLINDRES, Deputy, President. PEDRO FERNANDEZ, Deputy, Secretary. ESTEVAN FERRARI, Deputy, Secretary. To the Executive Power. THEREFORE, let this be executed. JOSE MARIA MEDINA. VALENTINE DURON, Minister for Public Works, &c. Comayagua, 23rd February, 1872. DECREE, No. 17. The President of the Eepublic of Honduras to the Inhabitants thereof. NOTICE is hereby given : That the Sovereign Congress of the Eepublic, having before it the Government Decree of 4th August, 1871, which ratines the Agreement concluded on the 21st of April of the same year between S r D. Carlos Gutierrez, Minister of the Eepublic of Honduras to Her Britannic Majesty, and Messrs. Bishoffsheim and Gold- schmidt, concerning the bonds of the Paris Loan of 1869, DECREES: Sole Article. The said Decree is approved throughout. 112 Given at Comayagua, in the Sessions Hall of the National Congress, on the 20th of February, 1872. MANUEL COLINDRES, Deputy, President. ESTEVAN FERRARI, Deputy, Secretary. PEDRO FERNANDEZ, Deputy, Secretary. To the Executive Power. THEREFORE, let this be executed, JOSE MARIA MEDINA. VALENTIN DURON, Minister of the Interior, of Public Works, &c. Comayagua, 23rd February, 1872. DECREE, No. 18. The President of the Eepublic of Honduras to the Inhabitants thereof. NOTICE is hereby given : That the Sovereign Congress of the Eepublic, having before it the Government Decree of 7th August, 1871, which ratifies the Agreement concluded in London on the 2 1st of April of the same year, between S r D. Carlos Gutierrez, Minister of Honduras to Her Britannic Majesty, and Mr. Charles Lefevre, concerning the payment and advance of certain sums of pounds sterling, which have taken place on account of the Honduras Inter-oceanic Kail- way, DECREES : Sole Article. The aforesaid Decree is approved throughout. Given at Comayagua, in the Sessions Hall of the National Congress, on the 20th of February, 1872. MANUEL COLINDRES, Deputy, President. ESTEVAN FERRARI, Deputy, Secretary. PEDRO FERNANDEZ, Deputy, Secretary. To the Executive Power. THEREFORE, let this be executed. JOSE MARIA MEDINA. VALENTIN DURON, Minister for the Home Department and for Public Works &c. Comayagua, 23n? Februanj, 1872. 113 Eepublic of Honduras. Ministry of Foreign Affairs. Comayagua, 29 December, 1873. " SIR, I have the pleasure of inclosing to you herewith a copy of the Decree by which the Sovereign Congress of the Eepublic ratifies the approval given by the Provisional Government to the Contract concluded by you and the Com- missioner Bernhard with the Honduras Inter-oceanic Eailway Company Limited, for the construction of the Inter-oceanic Eailway of this Eepublic. As you will see by the above-mentioned Decree, the Su- preme Congress only requires that the Contract in question shall be duly executed, and that all the formalities and re- quirements prescribed for such documents by the English laws shall be observed and fulfilled, so that the said Contract may become a State document. You, then, in concurrence with Mr. Bernhard, will take all such proceedings with the Company as are necessary, and adapted to obtain, in regard to the formalities of its execution, all the proper securities for its validity as understood in the approval granted by this Government, previously com- municated to you, and in the subsequent ratification of the Sovereign Congress, which I now forward to you duly attested. I am, M. le Ministre, Your very obedient Servant, JEREMIAS CISNEROS. Serior Don Carlos Gutierrez, Minister of Honduras, London. Indosure in the above Letter. Eepublic of Honduras. Ministry for Foreign Affairs. The President of the Eepublic of Honduras to the Inhabitants thereof. NOTICE is hereby given : That the Sovereign Constituent Congress has decreed as follows : 114 The Sovereign Constituent National Congress of the Republic, Considering that the fresh negotiations entered into by the Minister Plenipotentiary Senor Don Carlos Gutierrez and the Special Commissioner, Dr. Don C. E. Bernhard, with the Limited Company for the construction of the Honduras Inter-oceanic Eailway Company remove the great difficulties presented by the system adopted for the completion of that undertaking ; and considering that they tend to promote one of the greatest interests of the Republic, the Assembly, with the respective documents before it, DECREES: Art. 1. The Contract concluded in London, on the 12th day of July of the present year, by the aforesaid Messrs. Gutierrez and Bernhard, with the Limited Company, is approved, on the same terms as it was approved by the Pro- visional Government of the Republic, for the continuation and completion of the works of the Inter-oceanic Railway. Art. 2. In order that the aforesaid Contract may have full effect, and Honduras be bound to the Contracting Com- pany, it is indispensable that the members of the latter should authorize the deed of the aforesaid Contract by the signatures of their legal representatives, in the form and according to the regulations prescribed by the laws of Great Britain for the execution and fulfilment of Contracts of this nature. Given at Comayagua, in the Sessions Hall of the National Constituent Congress, on the 24th of December, 1873. R. MIDENCE, Deputy, President. P. HERNANDEZ, Deputy, Secretary. PEDRO RIVERA BUSTILLO, Deputy, Secretary. THEREFORE, let this be promulgated and printed. CELEO ARIAS. JEREMIAS CISNEROS, Minister for Foreign Affairs. Comayagua, December 25, 1873. A true copy. Comayagua, December^ 29, 1873, CISNEROS, 115 No. II. CUTTING THE TIMBER AND WORKING THE MINES IN HON- DURAS, TO APPLY THE PROCEEDS IN PART PAYMENT OF THE DIVIDENDS OF THE LOANS CONTRACTED IN EUROPE FOR THE CONSTRUCTION OF THE INTER.QCEANIC RAIL- WAY. WHEN the first loan was contracted for with the firm of Messrs. Bischoffsheim, Goldschmidt, & Co., in J8G7, for the construction of the Inter-oceanic Kailway, the Supreme Go- vernment issued a Decree appointing a Board of Works under the denomination of " National Committee of Honduras/' for the purpose of proceeding with certain funds assigned to the Government in the Contract itself, to cut mahogany and other timber, and to work some of the rich mines which there are in the country, and to develope other branches of industry, in order to remit the proceeds to Messrs. Bischoffsheim & Gold- schmidt, the Government Agents in London, The said "National Committee" was composed of men of reputation and honour, such as D. Francisco Alvarado, D. Manuel Colindres, D. Eamon Yalenzuela, D. Celeo Arias, and others of similar position. They made the greatest efforts to discharge the duties imposed on them by the Government in order to send the proceeds to London. On the other hand, the Government entered into contracts with Messrs. Debrot of Omoa, Morris and Co. of Amapala, and another firm at Belize, to cut timber and send it to Europe ; whilst mining engineers and overseers were sent out from London to undertake some of the principal works of the various mines about Aramecina. But before the fruits of these efforts could be reaped, the Government received information that some of the bills drawn against the funds placed at its disposal for this purpose in London had been protested, because the bonds of the loans could not be sold so fast as 116 was necessary ; and this, together with political disturbances in the country, was the reason that the Government was unable to send to London the timber and minerals which had been announced to its representatives, and which were to have been consigned to Messrs. Bischoffsheim and Gold- schmidt. The engineers who went to Honduras to commence the mining operations in the neighbourhood of Amapala, were Messrs. Mauduit, Emmerson, and Mercer. Here follows the decree of the Honduras Government dissolving the "National Committee"; it was published in the Official Gazette of June 14, 1870. " SUPREME DECREE OP 28 MAY, 1870. "Jose Maria Medina, Captain- Gen era! and President of the Eepublic. "WHEREAS, the National Committee having suspended its drafts upon the funds in London and Paris, on account of the difficulty of getting the Bills of Exchange paid, this Board, which was organised to negotiate, has no further purpose. As I wish to reconcile economy in expense with the indispensable security in the management of those funds, "I DECREE: Article 1. The National Committee, created by decree of the 2nd of May last, for the management of the funds negotiated for undertakings in the Eepublic, is dissolved; but the contracts made by that Board remain, just as if they had been concluded with the Government. "Art. 2. A Special Treasurer is appointed for the administration of those funds; he is to have the same qualifications and to give the same security as are required by Art. 47 of the Treasury Law for a Treasurer General. His salary is to be 1,000 dollars a year ; he will have a clerk with a salary of 240 dollars, and an office as may be necessary. 117 "Art. 3. The Committee will proceed to liquidate and present its accounts to the Minister of Finance, according to the regulations ; and will deliver what it has in hand, with the goods and chattels, to the Treasurer, as soon as it receives notice of his appointment and acceptance of office. " Art. 4. The Treasurer will keep his accounts in the same book as the Committee, will compare the items with the orders of the Treasury, balance the cash monthly, and render his account to the Ministry of Finance for the approval of the Government. "Art. 5. Any bills that are hereafter to be drawn, will be drawn by the Ministry for Foreign Affairs, as they were before the appointment of the Committee. "Art. 6. Let this be communicated to the Ministers of Honduras in London and Paris, and to any one else whom it may concern ; and the Ministers of Finance and of Foreign Affairs are charged with the execution of this Decree. " Given at Gracias, the 28th of May, 1870. " JOSE MARIA MEDINA. " FRANCISCO ALVARADO, Minister of Finance." No. III. APPENDIX TO THE REPORT OF THE COMMITTEE APPOINTED BY THE HONDURAS BONDHOLDERS AT THEIR MEETING ON THE lOTii OF JANUARY, 1873.* No. 1. 4, Westminster Chambers, Victoria Street, S.W. ; January 18th, 1873. YOUR EXCELLENCY, I have the pleasure to enclose a print of certain Reso- lutions passed at a General Meeting of the Honduras Bondholders, held at the London Tavern on the 10th instant, and respectfully to ask that, in conformity therewith, you will be good enough to furnish * See page 51. 118 the Committee of Investigation with the particulars of the Loans made by the Honduras Government, the amount realized thereon, and the disposition thereof, or the names and addresses of the persons from whom the particulars can be obtained j and also any further information which you may think necessary to enable the Committee to carry out the terms of the Eesolutions passed at the Meeting. As the Committee meet again on Tuesday next, and are anxious not to delay their duties, they will be obliged if you will reply before that date. I am , Sir, &c., CHAIRMAN OF THE COMMITTEE. To their Excellencies, Don Carlos Gutierrez, London ; and Don Victor Herran, Paris. No. 2. Potrerillos Station (three miles South of the BiverVenta, or Santiago, and 59 miles from Puerto Caballos) ; December 2nd, 1872. Dear Captain BEDFORD PIM, The Belize steam-ship was put into quarantine on its arrival at Belize, because there had been one or two cases of small- pox in the interior of Jamaica; and I was, therefore, detained at Belize until the return of the schooner from Omoa, in which schooner (the Puerto Gaballos) I sailed for Omoa on the 16th ult.; but on arriving off the coast of the State of Honduras, I had the good luck of a heavy south-wester springing up, which compelled the master to change his course for the noble harbour of Puerto Caballos. On the 23rd ult. I left by the morning train for San Pedro, and thence to the terminus of the first section at the river Yenta, or Santiago, 56 miles distant from Puerto Caballos. We went at the rate of twenty- five miles an hour ; but the condition of the Kailway would have safely afforded a rate of forty miles an hour. The works on the line of Rail- way had been respected by the adverse parties in the late intestine troubles, during which a considerable quantity of mahogany, cedar, and dye-woods were sent down the line. The agent of Mr. Debrot, the British Yice- Consul of Omoa, came up the line in the same car- riage with me, and told me that Mr. Debrot had already sent down the Railway for shipment at Puerto Caballos this year about 1,300,000 cubic feet of mahogany, besides a large quantity of rosewood, fustic, and other dye-woods, and that he was making arrangements for send- ing down the line next year 3,000,000 cubic feet of mahogany ; and he (the agent) was satisfied that the timber sent by Mr. Debrot alone 119 would maintain the line already made, by the amount of dues paid for the use of the Railway. Above 200 mules are daily employed in conveying goods from the present terminus of the Railway, 56 miles from the port, to the city of Comayagua, and also to Tegucigalpa. This traffic will vastly increase the progress of the Inter-oceanic Rail- way further to the southward on the second section. I have carefully examined the plan and sections of the first district of the second section, which is of exceedingly easy construction ; the cuttings and embankments for 2f miles of it are already executed. I have also, during the past week, been as far as Bajo Grande, three leagues south of Azufral, or 83 miles from Puerto Caballos, and am prepared to advise the immediate rapid completion of the bridge over the Yenta, and the completion of the Railway to Las Lagunetas, a distance of rather more than 14 miles, which can easily be made available for railway traffic by eight or nine months' work, and enable a further vast quantity of valuable timber to be brought 'down the line. I have not had time to estimate the cost of the timber bridge over the Yenta, which will be 450 feet in length ; but Mr. Innes says that he can readily procure enough in a mouth for its construction ; and, owing to the advantage of the convenience afforded for getting the timber from the forests on each side of the 56 miles of the existing Railway, this is a work which can be cheaply executed, under the immediate superintendence of the Engineer of the first or 56-mile section. There is a large stock of plant on the ground, and about 300 mules and 60 oxen. Thirty of the mules went off to Comayagua with goods, vvhich had just come by the Railway. The traffic along the Railway is already so considerable, that it is high time for the bondholders to have the benefit of the profit for carrying the goods. I am, Yours very truly, W. A. BEOOKS. Potrerillos Station (three miles to the southward of the River Yenta, or Santiago, or 59 miles from Paerto Caballos) ; December 2nd, 1872. Dear CAPTAIN PIM, Mr. has expressed to me his desire to contract with you for the formation of a portion of the line of Railway, being the com- mencement of thesecond section; and, after much discussion, Isketched out a letter or tender, which that gentleman has copied and signed, and it is now enclosed. You will see the importance of the immediate progress of this work, which I am satisfied can and will be executed in the time named. The extra quantity of timber which will be brought 120 down the line in the next two years will pay for the construction of these 14 miles and 1,480 feet. You will remember how strongly I insisted upon the paying capabilities of the line, independent of any inter-oceanic traffic, and the amount of timber now being sent down the line proves the soundness of my opinion. Messrs. Guild & Co., of Belize, and other parties, have a large number of men engaged also in getting out mahogany and other valuable woods ; and their united forces will be fully equal to Mr. Debrot's, from whose works we may depend upon having 3,000,000 cubic feet of mahogany and rosewood come down the line. The rosewood trees which I saw at Puerto Caballos were magnificent specimens of timber, 16 and 18 inches in diameter. A large French barque was lying in the harbour laden with mahogany, ready for sea, and a Norwegian barque of about 600 tons register came into port the day before I left. On the night pre- vious to my arrival at Puerto Caballos we had a " Norther," which came on suddenly, and drove a large French barque upon the beach of the Ulua River, smashing her in less than a quarter of an hour into pieces not bigger than a table, according to the statement made to rne by the mate, who walked, with seven of the crew, from the Ulua to Puerto Caballos. I think it of such importance that these 14 miles of Eailway should be forthwith completed, that I advise your ac- ceptance of the tender made by Mr. . The works consist of a number of small cuts and embankments, with which I could easily execute and complete the line within six months, if there were suf- ficient rails, &c., on the ground. I believe there are only about three miles of rails at Puerto Caballos, which can be at once transferred to this work. I recommend you to take the tender to my experienced friend Mr. , and ask him to examine it, and make such alterations or additions as he may think advisable, remembering that the tender was sketched out by me in great haste. Mr. is agreeable to put down any other pattern of rails, if you can get them more readily than those now used. It will take about 80 tons of rails. I think it of so much consequence to the Bondholders that this work should be proceeded with, that I do not hesitate to advise you per- sonally to enter into an immediate contract to execute these 14 miles and 1,480 feet, including the supply of all rails, &c., you employing Mr. to execute the works tendered for by him ; the difference between the amount of his tender, added to the cost of the rails, &c., being a security to you for extra works such as those referred to in Mr. '& tender and schedule of prices for them. You will see that I have provided for other contracts going on, which will open out nearly five-sixths of the Railway, leaving the larger cuts to be executed in the period of two years, and making a temporary road for mules to con- t!21 ey the goods and passengers from one line of Railway to another ntil the whole line is completed. I shall return to Puerto Caballos in time to meet Mr. Alberga, and go with him over the whole of the (ine to Amapala. I am, yours very truly, W. A. BROOKS. Potrerillos, 59 miles from Puerto Caballos ; December 3rd, 1873. Dear CAPTAIN BEDFORD PIM, Yesterday I sent a long letter addressed to No. 4, West- minster Chambers, which will arrive at your hands by this mail. Last year three ships lying off the bar of the Ulua, for the purpose of taking in cargoes of mahogany, were totally wrecked, and this year two have also been wrecked. Two barques are now comfortably taking in their cargoes in the harbour of Puerto Caballos. In order to induce all ships to come to Puerto Caballos, I am sure you will agree with me that the following advertisement, to be inserted in the Shipping and Mercantile Gazette, will promote the welfare of the State of Honduras and its bondholders : " Notice to Shippers of Spanish Mahogany, &c., from Puerto Caballos, in the State of Honduras. All ships taking in their cargoes of mahogany and other timber or produce, brought along the Hon- duras Inter-oceanic Railway, will have their ballast taken out at the Bteam-crane ballast wharf, free of all charges. Ships of any tonnage can lie alongside of the wharf, as there is a depth of water of 30 feet at all times." The ballast can be taken out for sixpence a ton, which is a trifle compared to the tonnage got from the mahogany which comes along the line of railway, and the ballast is much wanted to form founda- tions for the houses and streets of Puerto Caballos. I have already planned the new town in such a manner that a single locomotive will be able to pass continuously along all the principal streets. I have done this upon a scale of 100 feet to the inch. Directions should also be at once given to the engineer at Puerto Caballos to build a framework beacon, or lighthouse, of 80 feet in height, at the western extremity of the neck of land which forms the harbour. This will cost little, as there is plenty of timber to be got alongside of the Railway. At English Kay, the entrance to Belize harbour, they have only two ship's lanterns run up to the top of a mast. You will want a 122 good beacon, however, which can be seen when the high land of the coast three miles south of the beacon is covered with mist, or invisible, as I found it. A very large sum of money can be raised by the sale of the town- land building sites. I shall have all this fully prepared for you on your arrival, and some other harbour works, independent of the report on the Eailway, by my colleague and myself. This beacon is purely a work which ought to be executed at the expense of the Government; but if there is not money to be got for it, I would erect it, on being remunerated by a grant of land up the country. It is so important to have this beacon properly erected, that I trust you will not think I have erred if I press its formation on the Government when Mr. Alberga and myself are in Comayagua. I am, Yours very truly, W. A. BKOOKS. P.S. I shall send this off by the schooner which sails to meet the Belize steamship with the mail from England (and I hope Mr. Alberga), for fear a "norther" should come on and prevent the possi- bility of the return of the schooner to Belize with answers to letters brought by the mail from England. Mr. Bain has just shown me a list of the stores. The preparations for the works have been very great, even to articles which I did not expect to meet, such as levels and theodolites, and 10 of GhuWs iron safes, on the 2nd section of the line; and 160 houses at various places. There is a great deal which will account for a large expendi- ture over and above the 8,000 per mile. No. 3. GENTLEMEN, In accordance with the desire of the Committee, I have the pleasure of stating, to the best of my belief, the means and resources of Honduras. The principal income of the Government is derived from duties paid on imports of merchandise, and some export duties. There is the tariff of 30 per cent, more or less on certain classes of merchandise ad valorem, though taken on the gross weight, in the following manner : When the amount to be paid is $100, you pay 40 per cent, in coin, 35 per cent, in Government paper (worth about 40 per cent, in coin), and 25 per cent, in liquida- tions that is, in paper issued by the Government to officers in the army, which represents sometimes one-half or one-third, or even only one-quarter of the nominal worth. 123 The value of the import of foreign merchandise in the three sea- ports of the Republic, and (very little) by the land frontiers of the neighbouring states, is about $1,500,000. It is proposed now that the duties on the merchandise should be paid in coin, but reducing them from 30 to 25 per cent., being the same rate as is paid in Salvador; this would give the Government a clear income of $375,000. Out of this would have to be paid $120,000 for interest yearly on the floating debt, which will be consolidated in a 6 per cent, interest-bearing paper, and $27,000 for paying interest and sinking fund for the small loan of 90,000, which is secured upon the Custom Duties of Amapala, and which loan results out of the settlement of the old Federal debt of 1827. The rest and what the Government gets out of the sale of stamped paper, with duties on the exportation of raw silver, the monopoly on tobacco, duty on slaughtering cattle, total $100,000 would give to the Govern- ment a very comfortable income of about $260,000, being $100,000 more than it now has. Gold mines in quartz, or wash gold in rivers, are to be found, but not in any sufficient quantity to be worked alone. Gold is to be obtained from the silver ores, as most of the silver ores contain gold. Silver mines are to be found in nearly all parts of the Cordilleras, and have been worked by the Spaniards ; and I can assure you that not one- third of these mines have been worked, or even claimed. There exist silver mines in and around Aramacina and Caridat, the second and third towns on the Railroad from the Pacific coast. A little further on, in the district of the Indians, near Curaren, rich silver mines are worked. The Indians themselves continually find gold containing silver, and bring it to market, but never show their workings, and jealously prevent any one seeing their mines. You will therefore comprehend how rich such mines must be, when people without any knowledge, implements, or machinery annually bring for sale 5,000 or 8,000 marcs. The emigration and the Rail- road will bring all these mines into the hands of the people. There are rich silver mines yielding a good profit on the north and north-east side of Tegucigalpa; every year the people there find more veins. On the north-east of Comayagua are others, one of which the Government has begun to work without much effect, from want of knowledge. Other mines, of world-wide fame, are in the department of Cholutaca (below the town of Corpus), and in the department of Jus'c'uaran or El Paraiso. I consider the copper mines of Honduras of much more importance than the silver mines. They are always on the surface of the land and K 124 go sometimes down to a depth of 100 yards, and yet there is not one of them really worked, "When copper coin was made in Honduras, they took the metal where they could get it best from the surface. The surface copper is often mixed with iron and tin, and it is only necessary to melt the sulphate and oxide of copper, and coin it. Such deposits are to be found in the departments of La Victoria (Nacaome), Comayagua, Gracias, Tegucigalpa, Cholutaca, JusVuaran ; but the greatest attention, I think, is due to one of the largest deposits,lying very near the railroad track of the third section. About fifteen miles from Aramacina Silver Mines, but divided from them by a high ridge of Cor- dilleras, is a small town of the name of Lugaren, or Alubaren. Coming from the town of Nacaome (40 miles distant), there is a hill called La Questa de los Camerones, about 2,000 or 3,000 feet above the sea, where the road passes over a tract of decayed sulphate of copper. For nearly two miles nothing can be seen but the grey-greenish colour of the decayed copper salt, without any more vegetation thaa stunted bushes here and there, the atmosphere being impregnated with the salt. The Timber. All the north and east coast, far up the rivers run- ning into the Atlantic, has a growth of the largest and finest timber. We may reckon that about 5,000 square miles of the territory are thickly covered by mahogany and other trees of fine timber ; which, when properly worked by different gangs, using the rivers for bring- ing down, and all the numerous inlets of the sea for loading, in four or five years may be got out to the extent at least of five millions of trees. Now, these enterprises must be, and will be, undertaken by private companies, which, when paying only a royalty of eight shillings per tree, will give 2,000,000. Lands. Honduras contains 40,000 square miles, of which about 5,000 are in private hands, or town lands. The others are Tierres Vadillas, that is to say, land of which the Government can dispose. The common law is, that any private individual who proves that the lands he desires are free, may take them for cultivation or cattle grazing at, a price of $200 in paper bonds of the Government, which generally vary from 40 to 50 per cent, in coin value. One square mile contains about 49 Caballerias. Taking for granted that, from the total area of Honduras, 5,000 square miles are in private hands, and 18,000 are not available on account of sterility mountains, rivers, lakes, swamps there are yet 20,000 square miles. Granted that only 2,000 square miles, or 100,000 Caballerias, would be taken when the Railway is finished by speculators ; by paying for each Caballeria only 10 in coin, we should have 1,000,000 more at the disposal of the Government. Yours very respectfully, E. BEENHARD. 125 No. 4. Central America has, within the last few years, made rapid progress, and its commerce and resources have been considerably developed. The difficulties and expense of bringing the produce to the coast have, however, in many instances checked, if not completely impeded, the exportation of many articles of low value. Mahogany, cedar, and other furniture woods are found in abun- dance, but only in the interior of the country and in the mountainous districts, and the heavy expense of bringing them to the ports of ship- ment has prevented the expansion of the trade. The present high prices of mahogany have lately induced merchants to turn their attention once again to Honduras and Nicaragua, and a fair amount of export has taken place. It is, however, difficult to over-estimate the amount of wood which might be exported from these countries, should an easy access be provided, and combined with moderate freight. The growth of sugar and coffee has largely increased, but the former article cannot bear the heavy freights at present ruling over the Isthmus ; and the trade is, therefore, principally carried on by sailing vessels. The freight of these vessels is, however, also very high, being on an average 3. 10s. to 3. 15s. or 4 per 20 cwt. ; and the time employed in bringing the cargo round the Cape (an average of 5 to 5| months), the heavy marine insurance, the loss in weight, and the loss of interest on capital employed, may be said to increase the freight by very nearly 1 per ton. This heavy freight, and the difficulty of finding suitable vessels, has diverted much of the trade, and large quantities of sugar find their way to California and the South Pacific ports. These remittances would certainly not take place, should a more reasonable freight be offered ; for without doubt the produce would be more easily placed on the European markets, or on that of New York, by taking advantage of the Honduras Inter- oceanic Railway. Many articles are at present shipped to the United States, and thence re-shipped to Great Britain and the Continent ; but there can be no doubt that the proposed Railway would afford a more economical route, and therefore secure the whole of this traffic. Many articles which are not at present exported from Central America, owing to the difficulties and high rates ruling, would no doubt be shipped at a profit, and so considerably increase the returns of the Railway. No positive estimate can be formed of the amount of traffic so stimulated, but I have no hesitation in stating that it would be considerable within a very short period; and, as an instance, K'2 126 I may say that the local traffic created by the 57 miles of rail now in working order, has been far beyond all anticipations ; for, although the Line does not as yet pass through any large centre, its earnings will more than cover its working expenses. There seems no doubt that, when the whole Line is opened, the local traffic of Honduras will suffice to pay all the working expenses of the Company ; and such trade as may be brought by other countries, and the transit of goods and passengers, will form a good margin of profit. The States which would furnish the greater traffic are : Honduras. Having at present a population of 600,000 inhabitaiits, and an extent of 43,000 English square miles. The principal products are mahogany, cedar, cotton, sugar, tobacco, coffee, and indigo. Its mineral wealth is great ; and, should the Eailway be completed, this branch of industry would receive a new impulse, and furnish not only employment to many emigrants, but also bring a fair amount of traffic along the Line. The poorer classes of ores cannot be dealt with in the country, the process being too expensive, and the freights to the coast are so high that they are not exported. There is no doubt that what has hap- pened in Mexico would take place in this country, and that large quantities of mineral stones would be brought to the coast by the Eailway, and shipped to England and Germany, where the metal is extracted by a more economical process. Mahogany has of late years been but little exported ; the roads are in a wretched condition, and the cost of bringing the wood to the ports is so enhanced that no good result can be anticipated by the exporter. However, since the 57 miles of Railway now completed have been opened to traffic, the export has been resumed ; and it has been stated by the engineers and commissioners lately sent out to examine the Line, that the mahogany traffic alone would, if continued on the same scale as at present, suffice to pay the working expenses of the whole Line. The production of sugar and coffee is but in its infancy in Hon- duras, only the lands lying most immediately along the coast being available, on account of the want of roads ; but the greater part of the country is capable of producing most excellent coffee and good sugar. Cotton is grown, but on a very small scale, owing to the same cir- cumstances, but it is confidently expected that this would be one of the great sources of income to the Railway. The cotton grown is of good quality, much resembling the " Peruvian/' under which deno- mination it is sold in this country, and obtains high prices. As stated above, the receipts from the local traffic of Honduras are confidently expected to be amply sufficient to pay all the working 127 expenses of the Line. The incidental receipts from goods and pro- duce brought from other countries would, therefore, form a basis for the calculation of the profits which may be anticipated. Guatemala. Population, 1,000,000; area,, lfe,000 square miles. Produce coffee, sugar, cochineal, hides, . sarsaparilla, mahogany, cedar, and rose- wood. The chief exports are coffee, sugar, cochineal, and hides. Wood is very little exported, owing to the difficulty of bringing it to the port. A Railway is, however, in course of construction to bring the produce to the port at San Jose (on the Pacific), and this line will bring a considerable amount of goods to the Honduras Railway, this being the shortest and most economical means of placing them in a port of the Atlantic. The production of sugar and coffee has doubled in Guatemala within the last ten years ; and the plantations lately made, and still in progess, show that the increase which may be expected within the next ten years will at least be as large. The production of sugar is also largely increasing in quantity, and the care now bestowed on this branch of agriculture has so much improved the quality that this class of sugar is much sought for in these markets. It is difficult to estimate very accurately the amount of sugar exported from Guatemala, large remittances being made from the smaller ports, in small craft that run along the coast, and take their cargoes to California. This trade will, however, be done away with as soon as the Railway now in construction shall afford an easy access to the port of San Jose de Guatemala, whence the pro- duce can be shipped per sailing vessels round the Cape, or conveyed in steamers to the Honduras Inter-oceanic Railway, which will convey the cargo to the Atlantic port at almost the same rate of freight as that paid for sailing vessels, and will thus secure a large portion of the traffic. The difficulty in obtaining carts and other means of transport is so great in Guatemala, that in some years (1871 for in- stance), the cane has been burned, or allowed to rot, sooner than pay the enormous expense of forwarding it to the ports. The freight by steamer, and across the Isthmus of Panama, is at present 5 to 5. 10^. per ton, being 20 per cent, of the value of the sugar on our markets. The exports of the Sugar are not under . . 40,000 tons. Coffee about . . . 15,000 ' Cochineal, Sarza, &o. . . 10,000 65,000 tons. Total imports 15,000 Forming together 80,000 tons. 128 Salvador. Population, 850,000 ; 7,280 square miles. Salvador, although the smallest state in Central America, is certainly one of the most important, the activity and industry of the inhabitants having much developed the resources of the country. The principal produce is indigo (of which upwards of 500,000 value is annually exported to Great Britain), sugar, coffee, hides, balsam (called " Balsam of Peru"), tobacco, and some little cotton. The trade is princi- pally carried on by means of steamers connecting with the Panama Bailway, but partly also by sailing vessels, the more valuable articles being shipped by the first-named, and the others by the latter means. The freights by steamers are very excessive, being 20 per ton on indigo, 15 on cochineal, 8 per ton on coffee, and 5 to 6 on sugar, &c. Trade is growing rapidly, and facilities of intercourse, combined with more moderate freights, would, without doubt, materially assist the development of the natural resources of the country. The total exports may be estimated at Indigo . . . . 1,500 tons Sugar 20,000 Coffee 10,000 Sundries 8,000 Say in round figures Exports . . . 40,000 tons Imports . . . 20,000 Forming a total of . 60,000 tons. Costa Rica. Population, 200,000 inhabitants; area, 16,250 square miles. None of the Central American Republics have made the rapid progress accomplished by Costa Bica within the last ten years. So considerably has the production of coffee in- creased, that 13,000 tons were shipped to Europe in 1871, and it is estimated that no less than 20,000 tons have been exported in 1872. The production of sugar, although not increasing in the same proportion, has also been developed, and many new plantations are in course of formation. The trade of this country may be confidently expected to in- crease considerably, and it will, without doubt, become one of the most important in Central America. The other productions of the country are hides, iron, coal, and furniture woods ; but none of these are extensively produced. The want of roads, and in some cases the difficulty of obtaining labour, have considerably checked these branches of industry. It may, however, be stated that the 129 Government has lately been able to introduce many reforms,, and that the proceeds of the loans granted to the Government have been applied to improvements of the ports, and opening new and good roads, all of which will tend to increase the prosperity of the State. The Railway now in construction between San Jose (the capital of Costa Eica) and the Port of Punta Arenas (on the Pacific Coast) will also bring further trade in that direction, and will certainly be a great benefit to the Honduras Inter-oceanic Railway. The total exports of Coffee may be estimated at 20,000 tons Sugar and other produce ..... 15,000 35,000 To which we must add for the amount of goods imported 10,000 Thus forming a total of ..... 45,000 tons. Nicaragua. Population, 265,000 inhabitants ; area, 57,000 square miles. This country is densely wooded, the most valuable trees being mahogany, rosewood, Nicaragua-wood, cedar, and logwood. It possesses good and extensive pastures, and abundance of cattle. Its principal produce is the sugar-cane, coffee, cocoa, cotton, indigo, and tobacco, all of which are exported. Also ipecacuanha, aloes, sarsaparilla, and many other drugs and medicinal herbs. One of the principal exports of Nicaragua is also indiarubber, which is found almost all along the coast, and can be shipped at little cost. The northern parts of the country are rich in minerals ; gold, silver, copper, and lead being found. These mines are, however, but inefficiently worked, the principal difficulties consisting in the scarcity of labourers and the expense of transport. The general trade of the country has much increased within the last few years, and the improvement will no doubt continue. It is difficult to estimate very exactly the total amount of the imports and exports of the country. It may, however, be stated that the trade with Europe amounts to Exports, 35,000 tons ; imports, 8,000 tons ; forming a total of 43,000 tons. Beside the trade of the countries above mentioned, the Honduras Inter-oceanic Railway will command a large proportion of the trade now going to the west coast of Mexico by the Panama Railway, and even a certain trade connecting South and Central America with California and China, Japan, and Australia. This trade is at present carried on by means of the Panama Railroad, but the advantages offered by the Honduras route are obvious. 130 The traffic of the west coast of Mexico is certainly not large, but the trade is steadily increasing ; and when produce and goods can be sent to their destination that is, from the ports of Manhattan, Acapulco, San Bias, Tonala, &c., to Europe and vice versa in the space of two months, or even six weeks, instead of three months, now employed by the steamers, or six or seven months required by sailing vessels, there seems no doubt but that the trade will be much increased. The exports of dye-woods, &c., may be estimated at 12,000 tons to 1 5,000 tons, and the export of silver and silver coin, on which an ad valorem freight is paid, is about $3,000,000. Many mineral ores are at present not exported, owing to the expensive freight incurred ; but should lower rates be established, a a large trade might be profitably carried on. It has, in the foregoing statement, been shown that the traffic of the several States of Central America is moderately large, and is steadily increasing year by year, as the different branches of industry and agriculture are developed. It should, however, be added, that the three Eailways now in course of construction in Honduras, Costa Rica, and Guatemala, will considerably increase the production, and consequently the exportation, of these countries. It will now be well to direct attention to the probable pro- portion of this traffic which will be secured to the Honduras Inter- oceanic Railway, and the consequent revenue derived thereby. The exports of the four Republics (Honduras traffic being omitted, on the supposition that for the first few years no revenue will be derived from this source, which is said to be sufficient only to pay the working expenses of the Line) have been said to be Exports. Imports. Guatemala . . 65,000 tons . . 15,000 tons. Salvador . . 40,000 . . 20,000 Costa Rica . . 35,000 . . 10,000 Nicaragua . . 35,000 . . 8,000 175,000 tons. 53,000 tons. Thus forming a total of 238,000 tons, which have to be dealt with. It has been seen that part of this tonnage is conveyed by sailing vessels, and a part by steamers in connection with the Panama Rail- road Company. It is natural to suppose that those articles of low value which cannot at present bear the heavy freights paid for this latter means of conveyance, will still be exported by sailing craft ; but it is also certain that the whole of the traffic now carried on by steamers will make use of the Honduras Railway, this line affording 131 not the only advantage of economy, but also less risk and more rapid voyages. It is also probable that the reduction of freight will induce many shippers to send by this route much produce which at present is shipped by sailing vessels, especially when time is an object ; and it may also be stated with certainty that all importations of the four Republics will cross the Railway which affords the shortest, and therefore most suitable, route for the valuable cargoes of manufac- tured goods sent to these countries. Only the rough goods (hard- ware, iron, and such like) will continue to be received by means of sailing vessels ; at least, it is not expected that this change can be effected for some years. Looking at the figures we have to deal with, and the nature of the merchandise which forms them, it can be confidently stated that one half of the outward traffic will pass over the Line, and certainly three-quarters of the importations of the four Republics. Let it, however, be supposed that the Inter-oceanic Railway only secures o)ie- half of the natural traffic, some 120,000 tons would be car- ried over the line, and produce a fair revenue. Let it again be supposed that, to induce the shipment of articles of small value and large bulk, a very low freight is charged, and that the 119,000 tons (the half of the entire 238,000 tons) carried over the 200 miles of Railway, only produced on an average a freight of 306*. per ton (a miserably low figure as compared with the Panama Railway, which charges 83s. Qd. per ton on the local traffic, and an average of 42s. per ton on transit goods running across the Isthmus, which is only forty-two miles in length), the revenue would amount to . 178,000 Another most valuable source of revenue would be the passenger traffic, which in a very short time must become considerable. The population of the five states may be calculated in round figures at 3,000,000, and supposing that only 2^ per cent, of the population travelled by the Line both ways (an excessively small estimate as compared with other countries), and that for the whole length of over 200 miles, the returns only showed an average rate of j2 per head per journey (the charge on the Panama Railroad being 5 for the forty-two miles), this moderate estimate would give 150,000 travellers, and produce . . . 300,000 To this must be added an average of 25,000 foreigners, who would annually avail themselves of the Line, and thus produce (for both journeys) . . . . . 100,000 Showing a total revenue of 578,000 132 It will be seen that, in the above estimate, only such portions of the natural traffic as will positively pass over the Line have been taken into consideration. It is certain that a large proportion of the 15 ,,000 tons exported from the southern ports of the west coast of Mexico would be brought across Honduras, as also the greater portion of the impor- tations of the same coast, where some 9,000 tons of fine manufactured goods are received. Other channels would also bring a certain amount of goods and produce, and there can be no doubt that the fact of the completion of .the Inter-oceanic Hail way would itself greatly increase the present traffic. Although the same brilliant success cannot be anticipated, it may be stated that the most important lines of railways now existing in the United States were constructed in deserted regions ; and there is no reason to believe that the same means and causes would not likewise attract immigration into Honduras, that the vicinity of the Kailway track would become populated, that the lands lying on either side of the Line would be cultivated, and that large centres would be formed before long. Of this increase of traffic no estimate can be formed, but experience would lead to the belief that the present prospects of revenue would very shortly be doubled. G. B. K. No. IV. APPENDIX TO THE MEMORANDUM OF ASSOCIATION OF THE HONDURAS INTER-OCEANIC RAILWAY COMPANY LIMITED. * Issue of Share Capital for conversion. THE HONDURAS INTER-OCEANIC RAILWAY COMPANY LIMITED. Incorporated under The Companies Acts, 1862 & 1867. Issue for Conversion. The Share Capital of the Company amounts to the sum of 5,347,720, to be represented by the conversion of the Bonds held in the existing Honduras Loans. 29,638 "A.." Shares of 100 each . . . .2,963,800 8,970 "0." 20 .... 179,400 To be exchanged for the outstanding Bonds of the 1867 and 1870 loans. 177,135 "B." Shares of 12 each 2,125,620 To be exchanged for the Bonds of the 1869 loan French Issue. 789 " A. " Shares of 100 each .... 78,900 To be exchanged for the outstanding Bonds of the Federal Debt. * See page 87. -^- T' < ? t 133 Trustees. SAMPSON COPESTAKE, Esq. (Messrs. Copestake, Moore, Crampton,& Co.) Alderman Sir THOMAS WHITE, Ex-Sheriff of London and Middlesex. (With power to add to their number.) Directors (pro tern.) The Committee of HONDURAS BONDHOLDERS. (Specially re-appointed for the purpose.) Bankers. Messrs. GLYN, MILLS,, CURRIE, & Co., 67, Lombard Street, E.G. Auditors. Messrs. DELOITTEE, DEVER, GRIFFITHS, & Co., 4, Lothbury, London. Messrs. JAMES & F. FORD, 76 and 77; Cheapside. Joint- So licitors . JOHN TUCKER, Esq., 28, St. Swithin's Lane, London, E.C. AUGUSTUS BEDDALL, Esq., Baltic Chambers, 108, Bishopsgate St., E.G. Chief Engineer. CHARLES SEYMOUR, Esq., M. Inst. C.E. (New York), Chief Engineer of the Madisonville and Bowling Green Railway, the Henderson Nashville Railroad, the Edgefield and Kentucky Railroad, &c. &c. ; and formerly Chief of Staff on the Atlantic and Great Western Railroad. Secretary. C. F. DENNY, Esq. Office*. IN LONDON, 4, Westminster Chambers, Victoria Street, S.W. IN PARIS, 2, Rue Drouot. PROSPECTUS. This Company has been formed for the following purposes : 1. The acquisition from the Government of Honduras of the Inter- oceanic Railway, and all its rights, privileges, and interests therein. 2. The acquisition and working of the important concessions hereinafter mentioned. 3. The construction, completion, equipment, and working of the Railway. GOVERNMENT CONCESSIONS. The Government of Honduras has granted to this Company the following concessions, which have been confirmed by the existing legislative powers of the State, and take effect immediately : 134 A. Such portion of the Line as is already completed, iu operation, or in course of construction, together with all stations, houses, buildings, rolling stock, materials furniture, and equipment. B. The land necessary for the Line between the Atlantic and Pacific Oceans, with wharves, quays, jetties, landing and navigation rights, &c. C. The right to import, free from all taxation and import duties, all materials, rolling stock, machinery, stores, and everything required for the making, equipping, working, and maintaining the Railway. D. The right to construct, maintain, equip, and work the Railway, and levy and take the tolls, rates, and profits of it. E. All the State lands within a tract of country 10 miles wide, on the course of the Railway, i.e., five miles on each side thereof. This grant is to take effect immediately, as to the ^first section now in operation, and as to the two remaining sections as the Line is formed. F. A concession for 99 years of all the antimony, copper, iron, silver, and other mines, including coal and marble' belonging to the State, subject only to the payment of a royalty of ten per cent, on the net profits, after payment of a dividend of ten per cent, on the capital. The above concessions are accorded by the Honduras Government in consideration of the present Company protecting the interests of the bondholders of the existing loans on the basis hereinafter proposed The Agreement between the Honduras Government and the Com- pany contain, among others, the following important provision- Provided always that, in addition to the privileges of the neutral character of the Railway, as already secured by International Treaties none of the officers, servants, or workmen of the Company, whether x>rn m Honduras or elsewhere, shall at any time whilst in the service the Company be liable to military service, and that no person ccupymg or being in or upon any of the lands ceded so to the Com- pany, either for the purposes of the Railway or under the Lands Agreement, who is not by birth liable to military service under the laws of Honduras, shall be liable to such service. The Government reserves the right to repurchase the Railway at the expiration of 50 years, at a price equal to the Company's nominal bhare Capital and Debenture Debt, with a bonus addition of 20 per cent. 135 CONVERSION OF BONDS OF THE EXISTING LOANS. The Bondholders of the above Loans, upon surrender of their Bonds, will receive in exchange For every Bond of 100 of the 1867 or 1870 Loans contracted in London (including un- paid Coupons) and of the Federal Debt, a Share of 100 For every Bond of 20 of the like Loan, a Share of 20 For every Bond of 12 in the French Loan of 1869 (with all unpaid Coupons) a Share of . 12 The Shares issued in exchange for Bonds will bear two per cent, interest during construction on the amount represented by them. The first Coupon will be payable 1st January, 1875. THE RAILWAY. The Line consists of three sections 1. From Puerto Caballos to La Pimienta, 57 miles. 2. From La Pimienta to Comayagua, 85 miles. 3. From Comayagua to the Bay of Fonseca, 92 miles. Fifty-seven miles of the Railway, from Puerto Caballos to the Rio Venta, have been made and worked at a profit. One firm alone in 1872, according to the Report of Mr. Brooks, paid for timber-freight the sum of 3,283. A great deal of costly preliminary work has been done on sections 2 and 3, which will facilitate their rapid construction. Mr. Brooks, M. Inst. C.E. (for many years Chief Engineer to the Commissioners of the River Tyne), and Mr. Alberga, A. I.E., have carefully inspected the Line already made, and the sections under construction ; and certify that the first section is well built and in good order, and that the local traffic is steadily increasing and already worked at a profit. The Report of Messrs. Brooks and Alberga has been, in all its essential details, fully confirmed by Major- General Gorse, in conjunc- tion with General Wright, who was sent out especially by the Com- mittee of Bondholders, under the authority given them by the meeting of January last. To provide for the completion and equipment of the Line, the Directors have determined to issue First Mortgage Bonds amounting to Two Millions sterling, bearing interest at 10 per cent. Messrs. R. G. Huston and Co., of Poplar Plains, Kentucky, U.S., who are an English firm of Railway Contractors of responsibility and 136 eminence (having carried out important contracts on the Ohio and Mississippi, the Cincinnati, Hamilton, and D/ayton, and other raU ivays and public works in the United States) have co 9,000 per mile, to construct and complete, within three rs from" the present fame, the unfinished sections of the Eailway ; one-fourth or a\ 1; hree ff hs - First Mortgage Bonds of the Company ^^^yy^.s^^^^ s^piteic^ :: - - Considering the revenue to be derived from the freight of mahogany and other woods, from the sale or lease of the adjacent lands and bn.ld.ng sites in the vicinity of towns and stations, as wel a the profits arising from granting licenses to work, and from workin I he mines, there ls every reasonable ^ the additions to the Company's resources. bee^exwufeT* 611 ^""^ ^ ^ Shareh Wers a Deed of Trust has Lo e an L s n Ind' 1 tl!,!'f ai " ^ abS 1Ute Custod ^ ofthe Bonds of the existing J-JUdUy. tiDQ DI1US TlrP^PWC* Tnfo/-*- 11 J.1 1 i " thereto. hypothecations appertaining only Is J9 OOO" Vay ' T h " larg6 and Pr fitable Wa ^ traffic ' w '" ""^ 7 ^ f Honduras aa 137 compared with the Panama route, of not less than five days between the Atlantic and the Pacific ports of the United States. Admiral Fitzroy, well known as one of the most eminent among British explorers of the' Pacific coast of the American Continent, thus writes in his Keport to the Earl of Clarendon, then Prime Minister of England : r proportion than usual of cuttings. ding to Official Reports presented to both Houses of Parlia- Jler Majesty's Government and other statistics, the total beared annually for shipment round Cape Horn is as ">m Great Britain . . 16 millions of tons. other European Countries 10 Central America 8 ,, United States of America 20 ,, Total . . 54 millions of tons. Now, estimating that less than one-half of the said tonnage, viz. twenty-five millions, passes over the intended Ship Railway across Honduras, and a sum of four dollars or sixteen shillings only is charged per ton, leaving, after deducting fifty per cent, for working expenses, two dollars or eight shillings i.et per ton, the Ship Railway would pay a net sum of ten millions sterling per annum. It is therefore evident that a Ship Railway across Honduras would be a profitable enterprise for the Government as well as a great boon for the commercial interest of the world. JAMES BEUNLEES, h, Yictx -'. Westminster ; 2Ist March, 1872. To His Excellency DON CARLOS GUTIERREZ, Honduras Minister in London. EXCELLENCY, I concur with Mr. Brunlees in the opinion that, under the conditions assigned by him in reference to curves, gradients, and security of road-bed from settlement, a Ship Railway can be constructed and- efficiently worked across the Isthmus in Honduras, so as to connect the Oceans East and West. I see no difficulty in carrying out adequate mechanical arrange- ments, such as are described in outline by Mr. Brunlees whether for lifting ships out of the water by hydraulic lifts, for placing them into trucks for transport, for conveying them along the line of Rail- way, and for afterwards lowering them again into the water. The precise constructive details can, I suppose, only be settled definitely after the survey of the line and of the ports has been completed. (Signed) EDWAED WOODS, <% Storey's Gate, Westminster; April 3rd, 1872. * CROSS SECTION OF PERMANENT WAY. Z.C --- ~.v s'.O-- l----: 8 -';----*-"-^-- -* 5 ; :_. * L^HV, SLEEPER ao.dxiaxift* PLAN OF PERMANENT WAY. .77^ >