OR THE Republic of Nicaragua, TO THE OE t NEW YORK. 18S7. i ^ 6 y (kv Vv President^ FRANCIS A. STOUT. Treasurer, HORACE L. HOTCHlvISS. Secretary^ J. \V. MILLER. Attorney and Counsel, CHARLES P. DA LA". Execidi De Covimittee: Francis A. Stout, Horace L. Hotchkiss, J. W. Miller, Charles P. Daly, Alonzo B. Cornell, A. S. Crovvninshield, Frederick Charles H. Stehihns, Henry C. Taylor, C. Ridgely Goodwin, Hiram Hitchcock, A. C. Cheney, J. F O’SlIAUGHNESSA', Billings. THE PRESIDENT OF THE REPUBLIC To the Inhabitants thereof. KNOW YE V That Congress has ordered as follows : The Senate and Chamber of Deputies of the Republic of Nicaragua do hereby Decree. Only Article.— The contract fora maritime interoceanic- canal entered into the 23d of March, ult., between Dr. Adan Cardenas, commissioned es^iecially by the supreme government, and Mr. A. G. Menocal, member and repre¬ sentative of the Nicaragua Canal Association organized in New York, is hereby ratified. This contract shall be adaw of the Republic if Mr. Menocal accepts it as soon as‘ he be notified, with the following modifications and upon the fol¬ lowing terms: “The undersigned, Adan Cardenas, Commissioner of the Government of the Republic, party of the first part, and Aniceto G. Menocal, representative of the Nicaragua Canal Association, party of tlie second part, both having suffi¬ cient powers, liave entered into the following contract for the excavation of an interoceanic canal through the terri¬ tory of Nicaragua. Article I. The Republic of Nicaragua grants to the aforesaid Nicar¬ agua Canal Association, and Mr. A. G. Menocal, represen- ative of the said Association, accepts on its behalf, for the purposes set forth in Article 7, the exclusive privilege to excavate and operate a maritime canal across its teri-itory, between the Atlantic and Pacific Oceans. 2 Article II. The canal shall be ol* sufficient dimensions for the free and commodious passage of vessels of the same size as the large steamers used for ocean navigation in Europe and America, provided that no locks used in said work shall be less than five hundred and fifty (550) feet in length and thirty feet in depth. Article III. The State declares this work to be one of public utility. Aim CL E IV. The duration of the present privilege shall be for ninety- nine (99) years, to be counted from the day the canal shall be opened to universal traffic. During the aforesaid period the Company shall have the right to construct and operate a railway along the whole extent of tlie canal, or those parts of the same that may be considered convenient for the better service and operation of the said work. Article V. The State binds itself not to make any subsequent con¬ cession for the opening of a canal between the two oceans during the term of the present concession, and also to ab¬ stain from granting a concession for a railroad, such as might compete with the canal for the transportation of merchandise, during the same period ; but nothing in this article shall prevent the Government of Nicaragua from constructing or permitting the construction of such rail¬ ways as it may deem advisable for commerce and internal traffic. Said Government also to have the right to con¬ struct or permit the construction of an interoceanic railway if, in course of time, it be demonstrated that the canal is not sufficient to satisfy the demands of the traffic of all nations. The grantee company shall have the right to establish such telegraph lines as it may deem necessary for the con¬ struction, management and operation of the canal. The 3 Government shall have the right to occupy these lines for the public service without any remuneration to the Com¬ pany. Article VI. The Government of the Republic declares during the term of this concession, the ports at each extremity of the canal, and the canal itself, from sea to sea to be neutral, and that consequently the transit through the canal in case of war between two powei's or between one or more and Nicar¬ agua, shall not be interrupted for such cause ; and that merchant vessels and individuals of all nations of the w.orld may fi-eely enter the ports and pass through the canal without molestation or detention. In general, all vessels may pass through the canal freely, without distinction, exclusion or preference of persons or nationality, provided they pay the dues and observe the regulations established by the grantee company, for the use of the said canal and its dependencies. The transit of foreign troops and vessels of war, will be subjected to the prescriptions relating to the same established by treaties be¬ tween Nicaragua and other powers or by international law. But entrance to the canal will be rigorously prohibited to vessels of war of such powers as may be at war with Nicaragua or with any other of the Central American Republics. Nicaragua will endeavor to obtain from the powers that are to guarantee the neutrality, that in the treaties that shall be made for that purpose they shall agree also to guarantee a zone of land parallel to the canal and also a maritime zone in both oceans, the dimensions of which will be deter¬ mined in such treaties. Article VII. This present agreement, with all its charges and advan¬ tages, shall be the object of a Company of execution in agreement'with Articles I., X., and those following there¬ after. Said Company shall be the grantee, and whenever said name is used, in this present contract, reference is made to it. 4 Article VIII. Tlie j)resent concession is transferable only to such com pany of execution as shall be organized by the Nicaragua Canal Association, and in no case to governments or to for¬ eign public xxiwers. Nor shall the Company cede to any oreign government any |)art of the lands granted to it by his contract; but it may make transfers to xirivale parties under the same restriction. The Republic of Nicaragua cannot transfer its rights or shares by selling them to any government. Article IX. The people of all nations shall be invited to contribute the necessary capital to the enterprise, and it shall be suffi¬ cient for the fulfillment of this requirement to publish an advertisement for thirty (30) consecutive days in one of the principal daily x^apers of each of the cities, New A^ork, London and Paris. The cax)ital stock of the final Company shall be composed of shares, bonds or obligations of any other kind, in such proportion as it may deem convenient. The issue and transfer of these obligations shall be exempt from stamp dues and from any other imposts or taxes established or that may be hereafter established in the Republic. Of the capital with which the Company shall organize, and which it proposes to distribute among the different countries interested in the enterprise, there shall be reserved at least five (5^) per cent, for the Central American Govern¬ ments and citizens that may desire to subscribe. As soon as the Company is ready to oiien subscription books it shall advise the Government of Nicaragua which will invite the other governments and through them private parties, to subscribe. All such shares not taken within six months following the date on which the Government shall have been advised of that circumstance, shall remain sub¬ ject to the free disposition of the Company. Article X. The Company shall be organized in the manner and under the conditions generally adopted for such companies. 5 Its principal office slrall l)e ill New York, or where it may be deemed most convenient, and it may have branch offices in the different countries of Europe and America, where it may consider it expedient. Its name shall be the “Maritime Canal Company of Nicaragua,” and its board of directors shall be composed of persons, one-halt at least, of them shall be chosen from the promoters who may yet preserve their quality as such. Article XI. The Government of Nicaragua in its character of share¬ holder in the company of execution, as hereinafter pro¬ vided, shall have the perpetual right of naming one direc¬ tor, who shall be an integral part of the board of directors of the Company, with all the rights, privileges and advan¬ tages conferred upon them by the statutes of the Company and the laws of the country under which it shall organize. The Government shall also have the right in its aforesaid capacity of shareholder to take part in such elections as the Company may hold. Article XII. The Company is bound to keep a representative in Nica¬ ragua vested with all powers necessary for the proper con¬ duct of the service and for the transaction of its business with the Government. Article XIII. The canal will follow the valley of the River San Juan to Lake Nicaragua, through which will be designated the most convenient route for communication with the Pacific Ocean, In any event the Company shall have the most ample freedom^to select the route which it considers most convenient between the two oceans for the excavation of the canal and its dependencies and its ports, x)articularly those serving for entrance and exit on both oceans. The Company shall have the same liberty to adopt the i-oute which may be deemed most advantageous and economica 6 4 for the construction of the canal, after the final surve}^ by a coniniission of competent engineei's. However should the Company, after the survey of the river San Juan, find it necessary to abandon, in any jjlace, the bed of the river, and cut a lateral canal, the Govern¬ ment of Nicaiagiia reserves tlie riglit of requiring from tlie Company the duty of establishing a communication Joe- tween the part of the San Juan not used for canal ])ur- poses, and the dividing level of the canal, by means of a lock, or a series of locks, suitable for the navigation of ships of six feet draft. As soon as the final plans are adopted and laid before the Government, it shall notify the Com¬ pany within one month after their receipt whether or not they meet with its approval, in order that the Company may proceed in accordance therewith. It is understood that this duty does not in any manner comiDel the Com¬ pany to place or to maintain in navigable condition for small craft the lower part of the river which these locks may be intended to place in communication with the canal. Article XIV. Within three 3 ^ears, to be counted from the commence¬ ment of the work upon the Interoceanic Canal, the Compan}^ shall, at its own exj)ense, construct a navigable canal be¬ tween Lake Managua and the navigable part of the Tipitapa river, near Pasquier, of sufficient dimensions to admit of the free passage of vessels drawing six feet and of 150 feet in length. When completed, this canal shall be taken possession by the Government of Nicaragua, and will be, after that date, the property of the Republic which, by virtue of its ownership, shall be bound to bear all expenses required in the future for the service, maintenance, repair and operation of the canal. But the Company shall have the right to make use of it for all purposes useful for the maritime canal enterprise, and to pass through it freel}^ with its ves¬ sels and those belonging to contractors employed in the service of the Interoceanic Canal during the term of this concession without being subject to any charge whatever, or to pa}^ tolls or contributions of aii}^ kind to the Govern¬ ment of Nicaragua, or to nnj iierson or company that ma}^, 7 through any cause, be in charge of the administration and operation of the work and its dependencies. The Government of Nicaragua will place at the disposal of the Company, free of all expenses and charges, all the lands that may be required, as well as the materials found thereon, or on those belonging to the Government and that may be utilized by the Company in the execution of this work. Article XV. All expenditures for surveys, construction, maintenance and operation of the Interoceanic Maritime Canal shall be borne by the concessionary company, without any subven¬ tion in money nor guaranty of interest on the part of the Kepublic, nor other concessions than those specified in the present agreement. Article XVI. The Company shall construct, at its ex]3ense, and main¬ tain, in good condition, two large ports, one in the Atlantic and one in the Pacific, to serve as termini of the canal, each of them to have a lighthouse of the first order. It shall also construct at the two points on the borders of the lake, where the canal disembogues, two ports of lesser size, with tlie respective lighthouses. The Company is also obliged to maintain and improve said ports by means of dredges, dikes, piers, embankments or any other works it may deem advisable, having always in view the good service of the traffic through the canal. It may, for this purpose, select on the coasts of the two oceans, within the territoiy of Nicaragua, the localities which the surveys made indicate as preferable. Article XVII. All the space necessary, whether on the main land, in the lake, and its islands at the ports, roadsteads or rivers of the two oceans for the establishment of the canal, its paths and embankments, for depositing the materials from the excavations and cuttings for the necessary spaces to be 8 occupied by water after raising tlie dains wliich are to be constructed in tlie bed of tlie i‘iver, for all necessary devia¬ tions of streams, as well as for reservoirs, dikes, spaces about the locks, stations, lights and beacons, storehouses, buildings and workshops, deposits for mateiials, and also all those spaces necessary for the routes, service railways and canals of the same nature for the transportation of the materials to the line of the work and for feeders for the canal; in short, all lands and ])laces necessary to the construction and operation of the canal, as laid down in the drawings and plans made by the engineers of the Com¬ pany, shall be placed at the disposal of the Company by the State, under the conditions set forth in the following articles. Article XVIII. Said lands belonging to the State will be given to the Company without aii}^ compensation whatever ; and, with regard to those belonging to private parties, the State charges itself with their exprox^riation if the Com^^any so requests. The compensation which may be required in this case shall be xiaid by the Company. Article XIX. In all relating to the exx^ropriation that may be made in conformity with the x'>i'eceding article, the Comxmny shall enjoy all the immunities and privileges which the laws of the countiy accords to the State ; so that in no case shall the Company be obliged to x')ay more than the State would under similar circumstances. Article XX. The Government obliges itself to x>*^ce the Company, within six months after its request, in x'>ossession of to one thousand (1000) manzanas of land between the lake and the Pacific, at such x^laces as the Conix)any shall designate, but they are to serve exclusively for cutting the canal, its havens, ports and other accessory works. The Govern- 9 merit shall on its own account cause the necessary expro¬ priation to be made, and the Company shall pay to it for all indemnity the sum of fifty thousand dollars ($50,000.00) American gold. This payment to be‘made by the Com¬ pany in Managua within four months after the date of its request. Article XXI. The Company shall have the right to take, free of charge, from the jiublic lands for the purpose of construction, oper¬ ation and maintenance of the canal, whatever materials may be found on them, esxjecially timber for construction and for fuel, the lime, stone, clay for bricks and earth for fillings as may be necessary. As regards materials found on pri¬ vate lands, the Company shall jiay for what it may need thereof, enjoying in this respect the same rights and xn'ivi- leges which the State enjoys according to law. Article XXII. Should theComxmny require to occupy, tem^ioraril}^ and during the construction of the canal, lands in the territory of Nicaragua which aie not included in those designated in Articles 17, 18 and 21, it shall not be obliged to pay any indemnity for them if they are xiublic lands ; and the State shall not have the right to sell or disclose of them in any other manner after the Company has determined to occuxiy them, unless under the reservation of this right, whose limit shall be the completion of the works on the Inter- oceanic Canal. Should the lands belong to ]3rivate xiarties, the Conqian}^ shall enjoy, in regard to their temporaiy occu¬ pation, all the rights and x^rivileges wliich the law accords to the State, with the special privilege of occupying them immediately after the declaration of necessity and utilit}^, and after xiaying the comxiensation, which shall not exceed that which the State should be comxielled to x^^^y in a sim¬ ilar case. 10 Article XXTIL The Republic of Nicaragua, desiring to assist the Com¬ pany efficaciously in the construction of tlie Interoceanic Canal, a work in which it takes tlie dee])est interest, cedes in fee simple to the said Company the public lands herein¬ after mentioned, in alternate lots with other similar ones which it reserves to itself, and of the dimensions and in the places as si^ecilied hei’einafter : 1st. On the left bank of the River San Juan, from the Atlantic to Castillo Viejo, lots of three miles frontage on the canal and six miles in depth from the banks of the river. Where the canal diverges more than six miles from the banks of the river the lots are to be measured on both sides of it and shall be three miles wide and six miles deep. And where this distance is’ less than six miles the lots shall be three miles front and three miles deep, and they shall be measured from the bank of the canal to the river, taking what may be lacking from the ojoposite bank (»f the canal. 2d. Three miles distance from Castillo up stream, on the right bank and up to the Lake, lots of two miles in depth and two of frontage on the canal. From the lake along its south shore to the River Sax)oa and thence to the River Lajas, lots of one mile frontage and one mile dex^th. On the left bank of the river from a x^oint in front of Castillo and ux) to the lake, lots of three miles of frontage on the canal and four miles in depth. 3d. On the north shore of the lake as far as the River Tule, lots of two miles frontage on the lake and two miles deeiD. 4th. In the xhaces which the Comx'^any selects in accord¬ ance with the government of the existing x^tiblic lands, forty (40) lots, each four miles frontage by five miles deexi, reserving always the acquired rights. It is understood that the Government reserves around each of the forts Castillo and San Carlos, the lands included in a circle of one and one-half (14) miles radius, whose cen¬ ter shall be the resxiective fortresses. As a general rule, at the extremities of the Interoceanic Canal and at its points of contact with the lake, the oxv 11 posite lots will be allotted one to the Government and one to the Company, but if this be not possible the lirst will belong to the Government. From the Atlantic to the lake, that part of the river bed occupied by the canal shall be considered as part of the latter for all ])iirposes of this article. The measurement and setting out of all lands ceded by this contract shall be made at the expense of the grantees under the supervision of the Government. The State shall vest in the Company the possession of said lands so soon as the said Company shall begin opera¬ tions on the canal. Operations shall be regarded as begun when the provisions set forth in Article 47 shall have been complied with. The final title deeds shall not be granted except as the work of the canal progresses and in due pro¬ portion. Article XXIY. In the unforeseen case that anew survey should show the necessity of adopting another line for the construction of the canal, which varies wholly or in part from the line set forth in Article 13, the Company shall have the right to the lands and other elements necessary for the construction of the canal according to Articles 16, 17, 18, 19, 21 and 22. The Company shall, in that event, also have the right to the lands mentioned in the preceding article, in the same proportions, conditions and dimensions therein established with the single proviso that if it alter the line, the localities whence these lands shall be taken shall be altered accord- ingly. Article XXV. The State reserves the right to occupy, in the several lots of land granted the Com})any, such places as it may need for such roads and public buildings as it may deem conve¬ nient. In the same manner it may use timber and other building materials found on such lands whenever they may be necessary for any work upon which it may detei mine. However, these lands, with all their products, vegetable 12 and mineral, sliall be subject to the laws of the country so soon as tliey become tlie })io})erty of individual citizens, by transfei' from the company, and then, should the State need them for the ends set I'orth in this aidicle, or for any others, it shall make compensation to their owners according to law, without any right on tlie part ot the expi' 0 ])riated owners to i-eclaim against the Company. Should the Company have improved the lands so taken for 2 ^nrposes of use, ornament or pleasure, the State shall be bound to reimburse it for such damages as it may have suffered, according to the assessment of experts. Article XXVI. Mines of coal, stone, gold, silver, iron or other metals situated in the lands granted to the Company, shall belong to it b}" right, without need of jirevious “ denounciation, ” it having the right to work them when considered ex^iedi- ent, subject to the laws of the countiy. Article XXAMI. The Company shall also have the right to utilize for its account, for sale or exportation, the lund)er in the forests situated in tlie lands ceded to it by the State, from the time they enter into possession of them in accordance with this contract; that is, from the time of commencement of the works, always saving the acquired rights. Article XXYIII. From the day on which the present concession is ratified by Congress, the public lands included in those necessary for the construction of the canal cannot be sold, nor can any of those ceded to the company on the banks of the canal, by Article 23. Nor can they be leased to tlie prej¬ udice of the CompaiyL 13 Article XXIX. The Company sliall have the right, throughout tlie extent of the canal as well as at its mouths on both oceans, and in the lake and throughout the extent of the lands ceded by virtue of Articles 16, 17, 22 and 23, to enter upon the work of locating, leveling, excavating, dredging, and in general any other work of whatsoever nature that may be judged useful for the establishment and feeding of the canal, or for its operation, preservation and maintenance. The Company is specially authorized to execute along the canal line and on the banks of the River San Juan and its affluents, within the territory of Nicaragua, and also on the tributaries of Lake Nicaragua, the lakes or watercourses which can be utilized in their flow to the Pacific, the system of dikes, rectifications, dredgings, embankments, dams, cuts, location of buoys, and in general all the works that in the opinions of the engineers of the Company are deemed indispensable for the construction, feeding, navigation and operation of the canal. The Company may also do all Avorks of like character deemed necessary at the entrances of the canal into Lake Nicaragua, as well as in the lake itself, in accord¬ ance with the route that may be determined upon in order to secure in it easy navigation, and as may be found neces¬ sary in the other lakes or lagoons that are to be traversed. The embankments, fillings and dikes formed in the mouths of the canal in the lake and in the ports on the oceans, by deposits of materials resulting from the excava¬ tions of the canal, shall belong in fee simple to the com¬ pany ; the Government having the right to use them if nec¬ essary, after compensation made. But it may never obstruct said ports nor widen the beaches in front of them, unless there is absolute necessity .to do so, and in this case the embankments and fillings that it may be necessary to construct in front of the ports shall belong to the Republic. In general the Company shall have the right to use all the lakes and rivers of Nicaragua, the waters of which may be necessary, in the judgement of the engineers of the Com¬ pany, for the construction and supply of the canal and for maintaining its operations. It being understood that the damages caused to private parties by the deviation of the water courses shall be compensated for by the Company 14 according to a just assessment by experts in agreement with tlie laws of the Jlepiiblic. AliTIOJ.E XXX. The Cornpa.ny shall not impoil mei'chandise into the terri¬ tory of the Kepubli(5 for the j)urj)ose of traflicing without paying the import duties esiablished by law. Jbit it may import free of custom duties, and of any tax whatsoever, the articles needed foi* the works of tlie enterpi'ise, sucli as sur¬ veys, examination of localities, (;onstruction, use, opei-ji- tion, maintenance, repairs and improvements of the canal; for the telegraphic service and foi* that of the railways ; for running the woiksho])S the company may keep in opera¬ tion ; and such articles may consist of tools, machinery apijaratus, coal, limestone of all classes, lime, iron, and other metals, raw or manufactured, mining i)owder, dyna¬ mite, or any other analogous substance. These articles may be transported between whatever points they may be 1 ‘equired during the works of opening of the canal, and be discharged and stored free of all local taxes. The Company may im])ort free of duties and taxes, during the work on the canal, iprovisions and medicines absolutely necessary foi* its own consumj)tion. Goods, the commerce of which is not free, are excepted from the privileges contained in this article, which goods, excepting powder, dynamite and other explosives, remain subject to the requisites and duties prescribed by the laws. Akticle XXXI. The vessels employed by the Company as tugboats or lor the service of the canal shall be free ITom all duties and also the materials for their repair and the fuel they use. Tlie vessels and appurtenances from whatever place they may be coming for the use of the Company shall also be exempt from all duties. Akticle XXXIL The Government will establish such regulations as it may judge necessary to prevent smuggling and tomaiiitain pub¬ lic order in the region of the canal. 15 The Company is bound to lend its assistance for the en¬ forcement of such regulations. But in the free zone along the margin of the canal, as liereinafter provided, measures for the prevention of smuggling shall be limited to vigilance on the part of the employe or employees whom it may concern without any further measures being taken against passengers, vessels or their cargoes, excepting when an at- temi)t at smuggling is discovered ; it being the intention of the State that there should be the most ample liberty of transit by the canal for persons and property, with the sole limitations established by this contract. Consequently the Company shall have the right to discharge and reload ships in transit at such x^joints as may be necessary in or¬ der to make repairs, lighten the vessel, shift cargo, or on account of any accident that renders it absolutely neces¬ sary, without being subject to search, exactions or contri¬ butions of any kind, provided that in each case, and before beginning operations, the nearest custom house authority shall be notified. Article XXXIII. The Government shall lend its protection, in conformity with the laws of the country, to the engineers, contractors, employees and laborers engaged in the preliminary sur-’ veys, or in the works of construction and operation of the canal. Article XXXIV. The Company shall be exempt from all forced loans and military exactions in time of x^eace and of war. The foreign agents and employees shall likewise be exeiny)! from direct contributions, forced loans and military exactions during the time they are in the service of the canal, but they shall X)ay the taxes established by the laws, if they acquire real property. 16 Article XXXV. ft The Coinpany may freely introduce immigrants into the lands ceded to it, and the employees and workmen needed in its works and worksho})S. Asiatics, however, are ex¬ cepted. Hoth the immigrants and theem])loyees and work¬ men will be subject to the laws of the Re])ublic and the regulations of the Com])any. The Government assures them aid and jirotection, and the enjo 3 unent of their 1 ‘ights and guarantees in conformity with the constitution and the national laws during the time they retuaiu on Nicaraguan territory. Article XXXYI. The Government of Nicaragua assures to the Company and its agents, under the laws of the country as it does to the other inhabitants, the full enjoyment of tlie guarantees and rights which the constitution and the same laws grant to them. And reciprocally the Company and its agents bind themselves strictly to respect the laws and regulations that are in force in Nicaragua, and especially to comply with the executory judgments of the tribunals without consider¬ ing themselves vested with other rights than those which the laws concede in favor of the Nicaraguans. Article XXXVII. The Government shall establish all along the line of the canal, included between the two terminal ports, such police stations and revenue offices as'in its judgment are necessaiy to preserve order in the region of the canal, and for the ob¬ servance of the liscal laws of the Republic. All expenses incident to this service, including those of buildings, en¬ dowments, salaries and allowances of employees and trans¬ portation of the forces, shall be paid to the Government by the Company on such terms and conditions as ma}^ be es¬ tablished, taking into consideration the requirements and necessities of such service. The Company, however, shall have the power to establish guards and watchmen for the service of the canal and the enforcement of its regula¬ tions. 17 A RTICLE X X X VI11. Contracts for labor on tlie canal sliall enjoy Mie jn ivileges vvliicli the laws of the country accoid lo agricnltinal con¬ tracts, provided they be clothed with the formalities that the laws require in such contiacts. And the contracts in regard to canal labor that the Com})any execute in foreign countries shall be valid and lawful in Nicaragua duiing the term stipulated in them, provided they do not violate the laws of the Republic ; provided also the documents con¬ taining them be presented to the proper authorities, with due authentication, that they may be registered. Article XXXIX. The Company shall be exempt during the peiiod of this concession, in peace and in war, from all manner of taxes upon the real property it may acquire by virtue of this contract, and from every kind of direct contributions, local taxes, or any other tax relating to the propei ty and use of the canal, its buildings and constructions a])pertaining thereto, in its entire length, including those that are situ¬ ated in the ports and maritime establishments on the two oceans, as also the lands conceded to the Company for the whole teim of the privilege. This fianchise is not assign¬ able to those who buy the real estate which the Company may dispose of by virtue of this concession. Article XL. The Republic of Nicaragua shall not establish any ton¬ nage, anchorage, pilot, lighthouse dues or charges of any kind whatsoever upon vessels of whatever class, or upon the merchandise, baggage and passengers which may pass through the canal from one ocean to the other, all such dues being reserved for the benelit of the Company, as hereinafter set forth in Article 43. But all such merchandise as shall be loaded or discharged at any point of the canal, intended for sale, shall pay the import and export duties fixed by the revenue laws of the State. 18 Article XLI. With the view of securing the most iim})le freedom in the tiansit of persons and property, and in oidei* to remove as fai‘ as }) 08 sil)le o(;casions for disagreeable (piestions, there shall be on eanh side of the canal a free zone, the ex¬ tent of which shall be one liundred yaids measured fi'om the waterbs edge in the canal, it being undei'stood that the boixlers of the lake shall not be considered as margin of the canal for the purposes of this stit)ulation. All traffic declared illegal by the laws of the llepublic shall be prohibited within the said zone, and the revenue authoiities charged with watching and preventing smug¬ gling shall act in conformity with the stipulations in Arti¬ cle 32. It is expressly agreed that every vessel that passes through the canal shall carry on board an officer named by the Government when the authorities think it necessary, and this employe shall act in conformity with the law in case he discovers its infringement. The two ports to be constructed for the entrance and exit of the canal on the two oceans shall be declaied free ports, and they shall be recognized as such from the begin¬ ning of the work to the termination of this concession. The Government in agreement with the Company shall es¬ tablish, by special decree, the limits of the freedom of these ports, which limits shall not extend beyond the waters of the 2 ^ort, which aie those included betAveen the mouth of the canal and the entrance to the said ports. Article XLII. For the proper administration of the canal and its aj)- purtenances, and in order to facilitate its construction and ojieration, the Company shall establish the necessary regu¬ lations, Avhich shall be binding on all persons found in its waters or its appurtenances ; the sole reservation being that the rights and sovereignty of the State be resi)ected. It being understood that the Company in the exercise of the ])Oweis confeired by this Article may not make other regulations than those necessary for the administration and particular management of the canal, and that before 19 executing and enforcing these regulations they shall be submitted to the Government for approval. The State will lend the aid of its authority for the enforcement of these regulations. Article XLIII. By way of compensation for the expense of surveys, con¬ struction, maintenance and operation of the canal, which under the present concession shall be at the cost of the Company during the period of said privilege, it shall have the right to establish and collect for the passage of all kinds of vessels, travelers and merchandise through the canal, and in the waters and ports pertaining to it, taxes on navigation, tonnage and pilotage, towage, storage, lay days, anchorage, light, roadstead dues, wharfage, hospital dues, and any other similar charges in conformity with the tariff to be established by it in accordance with Article LII. of this contract. These tariffs may be modified by the Company at any time on condition that all modifications that may be in¬ troduced shall previously be communicated to the Govern¬ ment, which in case of finding them within the limits estab¬ lished by the said Article LII., shall cause them to be com¬ plied with as if they were regulations enacted by itself. The payment of all the tariff dues shall be exacted with¬ out any exception or preference, and under identical con¬ ditions, from all vessels whatever be the place they come from or their nationality, with the excej^tion stipulated in the following Article. Article XLIV. As compensation for the privileges and concessions that Nicaragua grants by this contract, it is hereby stipulated that the Republic sliall enjoy the special privilege that Ni¬ caraguan vessels sailing under the Nicaraguan flag may navigate the canal at a reduction of fifty (50^) per centum from the general tariff while engaged in the coasting trade or in the recii)rocal trade with the other Republics of Cen¬ tral America. It is declared that the vessels referred to in the preceding paragraph must be exclusively of the Regis- 20 ter of the Republic, and they must not be owned, either in wliole or in ])art, by citizens of otlier counti-ies. A reduction of fifty (50^) i)ei’ceut. from tlie general tariff is also granted to vessels that begin their voyage for a foreign country in any of the ports belonging to the Re¬ public, with a cargo wholly composed of products of the country. All the privileges to which this Article refers shall be extended to the other Republics of Central America whenever Nicaragua shall find itself free from international obligations which may prevent it, or whenever one or more of the said Republics shall form a single nation with Nicar¬ agua. The Company cannot collect any navigation dues whatever upon vessels and craft navigating the Lake of Ni¬ caragua and its prolongations without passing out of the locks. The Nicaraguan vessels of war, and in the case above provided those of the Republic of Central America, shall not pay any dues on x)assing through the canal. Article XLV. In case it ma}' be possible to utilize the waters of the canal and its dependencies for the irrigation of plantations,gardens and streets, or for the supply of towns that may be without it, or as motive power for private enterprises, the Com])any shall have power to supply it, collecting dues in proportion to the amount furnished, accoi’ding to the tariff that it may establish in agreement with the Government. • Article XLVI. In view of the existence of an exclusive privilege granted by the Republic in favor to Mr. F. Alf. Pel las, by’ a con¬ tract ratified on the 16th of Mai*ch, 1877, for the navigation by steam on the lake and river for the purposes of the in¬ ternal commerce of the Republic, the Canal Company shall have the right of expropriation against Mr. Pellas, as re¬ gards his rights and properties, on just assessments by ex¬ perts, after making a corresponding compensation accord¬ ing to the laws of the Republic. 21 It is also stipulated that the Company binds itself to pay to the Government of tlie Republic all it ma}' from now on expend in any way for the improvement of the navigation of the river and the port of San Juan del Norte. This pay¬ ment shall be made within six months of the date of the beginning of the works of the canal, and according to the original accounts of the corresponding office. Article XLVII. The Company shall undertake at its expense the final surveys of the ground and the location of the line of the canal by a commission of competent engineers, two of whom . shall be appointed by the Government of the Republic, which shall protect as far as it may the said commission. There is granted to the concessionary Company a term^ not exceeding one year, in which to commence the final sur¬ veys for the canal, and one year and one half additional for completing them ; to oiganize the executing Company, and commence the work of construction. Said terms shall begin to be counted from the date of the ratification of the present contract by the Nicaraguan Congress, pub¬ lished in the official paper, which shall be construed as noti¬ fication. Furthermore, said terms are not to be extended, and it is understood that operations are not considered to have been .begun if during the first year of the work two million dollars ($2,000,000) are not expended on it. Article XLYIII. A term of ten years is also granted to the Qompany for the construction, completion and opening of the canal for maritime navigation. However, should events of main force arise duly justified, and sufficient to imj)ede the reg¬ ular progress of the works during the peiiod of the said ten years, an extension shall be granted equal in duration to the time that may have been lost bj’ such delay s. If, at the expiration of the ten years aforesaid, the works should not be completed so as to have the maritime com¬ munication between the two oceans opened, in considera¬ tion of the great capital the Company may have invested 22 in the enterprise, and of the good will and ability it may have shown, and the difficulties encountered, the Republic binds itself to concede a new extension. Arttci.e XLTX. As a guaranty of the fulfillment of the obligations which the Company incurs in accordance with Article 47, it shall de]^osit to the order of the Government of Nicaragua in a bank or in a mercantile house in the city of New York, which the Government may designate, and within sixty (60) days from the date of the ratification of this contract, the sum of one hundred thousand ($100,000) dollars, American gold, which the Company shall forfeit to the Republic if it do not fulfill the said obligations ; and which’ sum other¬ wise shall be considered an advance to the Government on account of the necessary expenses of payment of the police of the canal according to the stipulations set forth in Arti¬ cle 37. This deposit, as soon as made, shall be at the dis¬ posal of the Government. Article L. In consideration of the valuable privileges, franchises and concessions granted to the Company by this contract, the Republic shall receive in shares, bonds, certificates or other securities which the Company may issue to raise the corpo¬ rate capital, six per centum of the. total amount of the issue. Such shares, bonds, certificates or other securities shall be free of all payment on the part of the Republic, being con¬ sidered as paid in full. The six jier centum shall in no event be less than four million dollars ($4,000,000), that is to say, forty thousand shares or obligations of whatsoever kind of one hundred ($100) dollars each. Of said shares, bonds, certificates or securities of whatso¬ ever class, two-thirds shall not be transferable ; but all shall participate in the benefits, interests, partitions, divi¬ dends, sinking fund, rights, privileges, and in all the ad¬ vantages given to paid up shares without any distinction. The Government in its capacity of shareholder shall besides have the right to appoint one director who shall represent 23 its interest in tlie board of directors of the canal company from the time of its definite establishment. The shares re¬ ferred to in this article shall be delivered to the agent the Government may appoint to receive them and as soon as the Company shall be ready to issue the certificates for its capital. Article LI. In order that the canal association may indemnify itself fqr the expenses it may have had to incur for the verifi¬ cations, preparations, explorations and surveys hereinbe¬ fore mentioned, and for all other expenditures that it will have to make until the definite organization of the com¬ pany, it shall have the right from the time of the organ¬ ization of said company to six per cent, in shares, bonds, certificates or other securities which the company may issue for the purpose of raising the corporate capital, and which are to be issued in excess of the capital to be subscribed. These bonds, shares or securities shall be identically like the subscription shares, and issued from the same register or stock book. As a consequence they shall partici¬ pate in all benefits, interests, partitions, dividends, sinking fund, rights, privileges and of all the advantages given to the paid up shares, bonds or securities without any distinc¬ tion whatever. Article LIT. From the l eceipts of the enterprise the Company shall take in the first place the necessary amount to coverall the expenses for maintenance, operation and administration; all the sums necessary to secure the interest which shall not exceed six per centum, and the amortization of the obliga¬ tions and of the shares, and what remains shall foini the net profits, of which at least eighty per centum (80^) shall be divided among the shareholders, it being agreed that after the lapse of ten years after the completion of the canal the Company shall not divide among the share¬ holders in payment of dividends, directly or indirectly, by issue of shares or otherwise, more than fifteen per centum 24 (15^) aniuinll^y or in tins ])i' 0 ])orfion, from dues collected from tlie aforesaid canal and where it shall ai)pear that ‘ these diK^s yield a gieater piolit, they shall be reduced to the fixed limit of lifteen i)er cent. })er annum. Autiolk LIIL The present concession shall be forfeited : 1st. Through the failure on the part of the Compan}^ to comply with any of the conditions contained in Articles 8, 46, 47, 48 and 49. 2d. If the service of the canal, after its completion, be interrupted for six months, except in cases of main force. When the concession shall have been declared forfeited, from whichever of these causes the public lands granted by this convention will revert to the Republic, in whatsoever state they may be, and without compensation even in the case that buildings may have been erected thereon. Such lands shall be exce 2 :)ted as may have been alienated to private parties by the Company, with the formalities prescribed hy law, provided that such alienations shall not have taken place within the six months preceding the date on which the Company may have become legally liable to the penalty herein established. Akticle LIY. On the expiration of the ninety-nine years stipulated in this concession, or in the event of the forfeiture contained in the preceding article, the Republic shall enter upon possession in perpetuity^, of the canal, of works of art, lighthouses, storehouses, stations, deposits, • stores, and all the establishments used in the administration of the canal, without being obliged to pay any indemnity^ to the Com- pa]n\ There shall be excepted from this condition, the vessels belonging to the Company, its stores of coal and other matei'ials, its mechanical work shops, its Hoating capital and reserve fund, as also the lands ceded to it by the State, excepting those in which are established the works indi¬ cated in the first part of this article, and which will revert 25 to the State together with their immediate ai3piirtenances, as necessary for the service of the canal, and as an integral part of the same. But the Company shall have the right at the expiration of the aforesaid term of ninety-nine years, to the full enjoy¬ ment of the free use and control of tlie canal in the ca|)acity of lessee, with all the privileges and advantages granted by the said concession and for another term of ninety-nine years, on the condition of paying twenty live per cent, of the an¬ nual net profits of the enterprise, to the government of the Republic, besides the dividends due to it for its shares in the capital stock. The Company furthermore shall have tlie right to fix at its discretion the dues referred to in Article 43 of this con¬ cession, so that the shareholders still receive dividends not to exceed ten per centum per annum on the whole capital after deducting the payment of twenty-live per cent, of the net gains to the government. At the expiration of this second term of ninety-nine years the government shall enter into perpetual possession of the canal and other properties referred to in the first part of this article, including also in this possession, all that wliich is excluded in the said first part with tlie exception of the reserve and amortization funds. The failure to comply with any of the terms of the lease shall terminate it, and the State shall enter into possession of the canal and other works belonging to it in accordance with the provisions of the preceding paragraph. Article LV. Any misunderstanding that may arise between the State of Nicaragua and the Cojnpany in regard to the interpreta¬ tion of the present stipulations shall be submitted to a court of arbitrators composed of four members, two of which shall be appointed by the State and two by the Comx)any. These arbitrators shall be designated by each of the par¬ ties within the j)eriod of four months from the day on which one of the contracting parties sliall have informed the other in writing of the want of agreement on the point 26 at issue. Sliould one of the parties allow the aforesaid tei’iT) to pass, it sliall be considei’ed as assenting to the opinion or claim of the other. The majority of the votes of the arbitrators shall decide hnallyand without recourse. In case of a tie vote the arbi- tratoi's shall select, by mutual consent, a fifth person who shall decide. If unable to agree to such nomination, they shall draw by lot the names of the diplomatic rei)resenta- -tives accredited to Nicaragua, and the first one drawn out shall exercdse the functions of the fifth arbitrator ; he shall either adox)t the opinion of one or the other of the parties to the controversy, or render his opinion between these ex- tremes, and his decision shall be final and without any ap- I^eal whatever: the fifth arbitrator failing, the second person drawn shall exercise these functions, and so on successively until a decision is reached. Prior to the initiation of the works of opening the canal the Government shall formulate with the concurrence of the Company rules to be observed by the arbitrators in all mat¬ ters relating to procedure. Questions between the Company and individuals residing in Nicai'agua shall be under the jurisdiction of the ordi¬ nary tribunals of Nicaragua, in conformity with the legis¬ lation of the country. In matters x>ertaining to non-resi¬ dents of Nicaragua the rules of international private law will be observed. In witness of the foregoing stipulations, we have signed two instruments of the same tenor in Managua, on the 23d day of March, one thousand eight hundred and eighty- seven. AD. CARDENAS, A. G. MENOCAL. The Government, finding the foregoing contract in con¬ formity with the instructions transmitted, determines to ajv prove it in all its parts and to submit it to Congress for its ratification 27 Managua, April twelfth, one thousand eight hundred and eighty-seven. E. CARAZO, The Acting Sub-Secretary of the Interior. CANTOIN. Done in the Hall of Sessions of the Chamber of Deputies, Managua, April 20, 1887. TOMAS ARMIJO, LEOPOLDO M. MONTENEGRO. LUIS E. SAENZ. To the S. E. P., Hall of the Senate Managua, April 28, 1887. S. Mokales. Therefore : be it executed. JOAQUIN ZAVALA. ELIODORO RIVAS. Managua, April 24, 1887. E. CARAZO. The Sub-Secretary of the Interior in charge of the office. ALEJANDRO CANTON. Accepted on the same date. CANTON. A. G. MENOCAL. I do hereby certify the preceding signature of the Sub- Secretary of the Interior, which reads Alejandro Canton, to be genuine. Managua, April 25, 1887. JOAQUIN ELIZONDO. S ; - . A . r ^ I • ■ V -■' , ■**.. A—fhi**>y., ,. V • ,’'■ » ' . -■'^::' ' , '■'. ‘' v .' - ■ : '- ■•• . -- '■' ^ ^ ^t ■... *' • * « -^•*1 ^ \ ^ .(V'''- - ..’i” f'*( ,., '* ■ ,. ', -•- », ‘ ■ '; • ■ /•■%■ "% .