TEHUANTEPEC INTER-OCEAN RAILROAD, MEXICO. SYDNEY 3 *? 5 UN'VERSSTY of ILLINOIS I 1 Tehuantepec Inter-Ocean^ Railroad, Locality. Mexico, one hundred miles southegst^rl^ hvm * / / j ' Vera Cruz, connecting the Gulf of Mexico with the Pacific Ocean across the Isthmus of Tehuantepec. Route. From the harbor of Coatzacoalcos on the Gulf to the Port of Safina Cruz on the Pacific, one hundred and sixty-five miles. Topography. The Isthmus presents an exceptionally favorable surface for the construction of the road. The At- lantic plains, intervening between the Gulf and the base of the mountain range, and covering nearly one-half the entire fine, are similar to “ bottom lands,” with transverse ridges which form an undu- lating surface. The middle section embraces the northerly slopes of the mountain range, the plains of Tarifa and Chivela, the several “ passes” through the crest of the mountains, and the short, steep in- cline from the passes to the Pacific plains, which have a gradual inclination to the Pacific of about ten feet to the mile. The middle and Pacific sections are mostly through open country, free from engi- 2 neering difficulties, excepting such as will be en- countered in descending from the summit “pass” selected, to the Pacific plains. Location. The surveys and explorations made by the Com- pany, and which supplement those made in 1851, 1859 and 1871, by Gen. Barnard, TJ. S. A., Gen. Si- dell, TJ. S. A., and Com. Shufeldt, U. S. N., re- spectively, show that upon final location a maxi- mum grade of about one per cent., or 52.8 feet per mile, can be obtained, unless the direct short line of Gen. Sidell, from Chivela Pass down the moun- tain slope, with a continuous grade for nearly four miles of about two per cent., shall be found more advantageous than the longer and more tortuous lines from either of the other practicable “ passes.” Climate, Soil and Productions. The climate, soil and productions are different on the three divisions. On the Atlantic plains, fifteen miles from the coast, the temperature ranges from 60° in the winter to 90° in the summer. In the Cordilleras division the temperature ranges from 60° to 85°, and in healthfulness, purity of at- mosphere and general attractiveness, this division will compare favorably with any section on the con- tinent. The Pacific division has a dry atmosphere, except during the autumnal rains — temperature from 60° to 90°. The soil on the Atlantic division is exceedingly 3 rich, producing tobacco, coffee, sugar, cotton and Indian corn, and all tropical fruits ; valuable woods, mahogany, cedar, pine, live and white oak, &c., abound, and asphaltum and petroleum are found. The soil of the Cordilleras division yields similar products and excellent pasturage in its immense plains and valleys, and the neighboring mountains are known to be rich in the precious metals. The soil of the Pacific division is very productive, even with the imperfect irrigation of the Indians. When for this purpose the abundant mountain streams shall be used by future settlers, the produc- tion will be immense. The population of the Atlantic division is gathered in Indian villages of from one to six thousand souls, at intervals of six to ten miles. These Indians cul- tivate tobacco, coffee, &c., for export. On the Cor- dilleras the population is sparse, but upon the Pa- cific division it is very large, some of the villages containing from ten to thirty thousand persons. Relations to Commerce. This Isthmus route shortens all lines of communi- cation between the principal ports of the Atlantic and Pacific Oceans, and will attract to it a large por- tion of the trade of California, Oregon, China, Japan, Australia, New-Zealand, Manila, Java, Ba- tavia, and the numerous fertile islands of the Pa- cific, and will compete for South American “ West Coast” trade, which now passes over the Panama road. The gross tonnage, inward and outward, to and 4 from these localities in 1878, exceeded 2,500,000 tons, wool, wheat, sugar and tea being the most prominent. Australian wool by this route can be delivered in England in fifty or fifty-five days, giv- ing an advantage in time of from fifty to seventy- five days ; and California wheat can be so delivered in fifty days, with a time advantage of from seventy to ninety days, and an avoidance of any damage from twice crossing the equator. Ordinary drafts against shipments by this route may be provided for by sales and actual delivery before maturity. As a passenger route, the line will offer the inducements of favorable latitude, salubrious cli- mate, direct transit and shortness of sea voyage, with freedom from extremes of heat or cold, and the vicissitudes of navigation around Cape Horn. Merchandise from the East Indies and Northern Pacific ports can be delivered by the Tehuantepec route at Galveston, New-Orleans, St. Louis, Chicago, and all Atlantic ports, and to localities tributary to these points more cheaply than by trans- continental railways ; an expectation of great significance, in view of the consolidations by which naturally competing lines of railway are being merged into a common and monopolizing ownership, and steamship lines are practically being subsidized to prevent com- petition in rates. The saving of distance is uniformly and largely in favor of this route, as is illustrated by the following examples taken from the tables prepared by the U. S. 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O a o K m 9 02 O t* Hon '■O 02 a c3 02 o >-< a o W nU >% 02 a c3 02 o HH rg O a 02 ’O O HH m O -H> o H=> o -t-5 O £ a c3 V, SO c8 a O o >* a o O c3 a o a c-5 02 £ a O) P> c3 > o3 a o £ £ 3 w «+H t c3 02 6 National Relations. In view of the prevailing public attention to the subject of Inter-oceanic communication, and of the transfer of the Panama Road to a foreign ownership, it is opportune to suggest that the geographical position of this road has a highly important political, as well as commercial relation to American interests. The Gulf of Mexico, with its horse shoe outline, extending from the Tortugas of Florida to Yucatan, and flanked by the Island of Cuba, holds such relations to the business and security of many of the United States, and of the States of Mexico, that it should be securely within the exclusive and concurrent control and protection of these Governments. It is worthy of mention that in 1847, before the acquisition of California, our Government authorized Mr. Trist, then U. S. Commissioner to Mexico, to offer an increase of $15,000,000 to the negotiations then pending, provided the right of passage and transit across the Isthmus of Tehuantepec, secured to the United States by the eighth article of the Projet , shall form part of the treaty ; subsequently, viz., in the Gadsden treaty, ratified in 1854, an article was inserted, securing certain rights to the United States in the route, and authorizing that Government “to extend its protection, as it shall judge wise, to it when it may feel sanctioned and warranted by the public and international law.” 7 Harbors. The eminent Government and Civil Engineers who have personally surveyed and investigated the feasibility of the proposed harbors concur in the opinion, that with a comparatively moderate outlay they can be made accessible to the largest class of ships, and will be in all respects suitable and adequate for the transaction of all business which may oifer. Grant and Organization. The Eoad is being constructed under a grant from the Government of Mexico, to Edward Learned, Esq., of which the following are the more prominent provisions : Term of grant, ninety-nine years. Eight of way over public lands. Alternate square leagues public lands adjacent to road, donated. Subsidy of $12,070 per mile, payable by the Gov- ernment as sections of 5 kilometres, (3 T V miles,) are constructed and approved. No subsidy shall be granted to any other enter- prise for similar operations for 20 years. Materials for construction, and machinery, coal, cars and rails for operation, exempt from duties. Capital invested exempt from taxes or imposts for • twenty years. Passengers or merchandise in transit free from duty for thirty years. 8 Ports to be kept open to commerce, and the road to public use for term of grant. Tolls of tliree dollars (in and out) per foot draught, on all vessels drawing over 12 feet, may be collected. Tariff authorized on through business, ten cents per geographical mile for passengers, eight cents per ton per mile for freight, and one per cent, of value for precious metals and jewelry. On local business variable rates, under a moderately remunerative schedule. To utilize the grant without creating personal lia- bilities, the Tehuantepec Inter-Ocean Railroad Com- pany was organized under the laws of Massachu- setts, and became the owner of the grant in due and legal form in November, 1879. The issued stock of the Company is fully paid up, and is held and managed by an Executive Commit- tee of the associate owners for the common benefit of parties now or hereafter to become interested. The capital stock will hereafter be increased, as provided for by law, to $20,000,000, represented by 200,000 shares. [Details of Organization in print.] A mortgage has been executed by the Company, with the sanction of the Mexican Government, to the Central Trust Company of New- York for six million dollars, to secure its six thousand thirty year First Mortgage Bonds, bearing seven per cent, in- 9 terest. This mortgage has been duly recorded, is in full force, and is the only mortgage upon the property. Cost of First Forty Miles. Total payments to date, $1,998,6^.2 44 Less guaranty deposit with Mexican Govern- ment, 86,956 52 $1,911,655 92 Deduct for items paid for, not appertain- ing to first 40 miles : Rails, $226,000 00 Rolling stock, 50,550 00 Steamers and dredge, 83,000 00 Ties on account, 15,718 00 Surveys, work, supplies, &c., on Harbors and on Middle and Pacific Divisions, 115,490 00 Atlantic Division, 25,000 00 Tools, materials and supplies on hand, 93,600 00 Miscellaneous items, 11,500 00 620,858 00 $1,290,797 92 Add labor to complete 40 miles, $75,000 00 General and incidental ex- penses, 75,000 00 150,000 00 Actual cost, 40 miles, $1,440,797 92 10 Cost of forty miles, 81, 440, 797 92 Estimated Cost of Remainder of Road and Harbors. “ Engineer’s Estimate.” “ Clearing, grading and ballasting, |1,800,000 ” “ Bridging and waterways, 600,000 ” “ Track, ties, &c., complete, 1,200,000 ” “ Engineering, superintendence, &c., 400,000” “ Harbors, 1,000,000” $5,000,000 ” Deduct for value of rails, work done, &c., as above stated, $620,858 Less loans, bills and ac- counts payable, 325,000 295,858 $4,704,142 Add for interest, sidings and inde- terminate items, 30 per cent.,. . . 1,411,243 6,115,385 00 Cost of road and harbors, Equipment, $7,556,183 00 1,000,000 00 Total cost, $8,556,183 00 Money Required. For completing first 40 miles, “ remainder of road and harbors For equipment, $150,000 , 6,115,385 1,000,000 Total, $7,265,385 From Subsidy to accrue, $1,908,742 “ Guaranty deposit, 86,956 “ Company’s resources, 5,269,687 $7,265,385 11 Resources. Capital stock issued and paid up, $1,500 First Mortgage 7 per cent, bonds, 6,000,000 Government money, subsidy, 2,000,000 “ land (not yet ascertainable,) .... .... “ Guaranty deposit in Mexico, 86,956 Future increased capital stock, now represent- ed by $6,000,000 Preferred Certificates, even- tually to be converted into 60,000 common shares, 6,000,000 And by $14,000,000 Unpreferred Certificates, to be exchanged for 140,000 common shares, 14,000,000 $28,088,456 $1,637,000 450,000 91,258 2,178,258 Available resources, at par value, $25,810,198 Revenue and. Value. In estimating the revenue of this road, reference is not had to the theories of enthusiasts as to the prospective business of the Pacific, nor to the aston- ishing and vast annual increase established by sta- tistics, but reliance has been placed upon official data of the traffic of 1878, which will derive benefit from this route, and which will doubtless furnish of through business the tonnage claimed. Deduct for bonds disposed of, . ... “ Preferred Certificates, disposed of, “ Subsidy, received,. . . . 12 750,000 tons of freight at $5, (less than forty per cent, of rate allowed,) $3,750,000 15,000 passengers at $10, 150,000 Local business, . . 125,000 Tonnage dues, tolls and all other revenue,.. . . 350,000 $4,375,000 Deduct for operating expenses, repairs and de- preciation, 50 per cent., (excessive,) 2,187,500 $2,187,500 Allowance to Mexican Government, 187,500 Annual net income, $2,000,000 Interest on $6,000,000 mortgage bonds, 420,000 $1,580,000 equal to eight per cent, on par value of the proposed 200,000 shares. Upon the above estimate of revenue , the road and harbors have a value of $30,000,000. General Facts and Conclusions. The delays, disadvantages and loss ordinarily in- cident to incipient operations have in this case been most discouraging and excessive. The locality was remote, transportation uncertain, trained labor, shelter and supplies unobtainable, the country with- out roads, and so covered with tropical vegetation and vines interlaced with timber as to make explora- tion, surveys and work vexatious in progress and extravagant in cost, and much more expensive per mile, in the opinion of those familiar with the now 13 explored and located line of the road, than any other portion, excepting a few miles between Chivela Pass and the Pacific plains. In regard to the above valuation of $30,000,000, based on assumed revenue, it is worthy of note that the recent sale of the Panama road shows a similar gross valuation as the basis of its purchase. The advantages of this route over the Panama are manifest ; its business will be transferred from ships to cars in well protected harbors, by elevators and mechanical appliances, at a minimum cost, while at Panama an expensive lighterage of several miles is incurred, and at Aspinwall, terminal facilities are inadequate and insecure. The Port of Salina Cruz is readily accessible ; that of Panama is subject to calms extending hundreds of miles seaward, which, according to report of Commodore Maury, make navigation uncertain and protracted, a condition which must divert to this route much of the “ West Coast” or South Ameri- can trade. The location of this road is in a healthful and salubrious climate, and its proximity to, and early close connection with, the railway system of Mexico, now being developed, will largely favor this route. The important saving of time and distance between Atlantic and Pacific ports, as compared with Panama or Cape Horn, will attract to this route traffic now impossible to define or estimate. The wheat of California and Oregon, the products of Australia, China, Japan and adjacent countries, and of the islands of the Pacific, will be conveyed 14 more cheaply and expeditiously than by any other route or trans-continental railway. New sources of this business are constantly devel- oping, and its volume will soon overtax the single track capacity of the road ; but, without speculating upon the future, enough is known of the present to warrant the foregoing estimate of revenue. Interest and insurance by this route will be mate- rially lessened. Heavy freights between the Atlantic and Pacific States will be delivered at less cost and in less time than by any existing or projected railway line. The transportation of the wheat of California and Oregon forms so important an item in the estimate of revenue, that it is j)roper to give data which sus- tain the estimate and show the desirability of this route over other existing or projected railway lines, and over either of the other modes proposed for its movement. In 1881 the surplus wheat of these States subject to export was over 50,000,000 bushels, equal to 1,250,000 tons, the rate of freight from San Francisco to K Liverpool via Cape Horn, sixty shillings ($14.70) per ton. On a mileage basis via Tehuantepec the sea rate would be $7.54, to which is to be added for railway charges, $5 =$12.54, equal to 14J per cent, in favor of Tehuantepec. From Oregon to Liverpool via Cape Horn, seventy shillings ($17.15) per ton, via Tehuantepec, $14.15, equal to 17^ per cent. Inasmuch as this wheat can be discharged and loaded at the railroad ports as cheaply as at Chicago 15 or Buffalo, and can be hauled for ]ess than one cent per ton per mile, giving an actual cost of discharge and transfer not exceeding two dollars per ton, com- petition by an ocean route, or by any other Isthmian route, will be practically impossible. In regard to ship-railway and canal projects, with- out discussing the feasibility of either as an engineer- ing possibility, it is sufficient to say that producers, merchants and consumers require cheap transporta- tion ; that investors and capitalists require fair in- come and security ; that these requirements are neither assured nor even probable under experimental schemes which demand an original outlay of hun- dreds of millions of dollars, and which are there- after to be operated in competition with an ordinary railway which will cost less than ten millions , and will have an established trade which it can maintain against any rate, covering expenses only, which its rivals may attempt. Under either scheme, canal or ship-railway, income and interest must be ignored, or cheap transportation will be defeated ; hence, neither is of any present interest to this enterprise. Mexico has entered upon an era of prosperity, which will steadily advance under its now ruling policy, which invites and protects foreign enterprise and capital, and assures investors that no means will be omitted to meet the obligations and intentions of its railway grants, on which so largely depend the development of its resources, the extension of its trade, and the enlargement of its friendly relations and intercourse with its neighbors ; under this im- pulse millions of American capital are being invested 16 in these enterprises, and the good faith of the Gov- ernment is daily being demonstrated in the payment of its subsidies and the liberality of its executive action. Office of the Tehuantepec Inter-Ocean Railroad Company, 52 Broadway, New- York, March 15 th, 1882.