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in Article XV of this treaty, shall be held inoperative and void until the holders of such grants and contracts shall recognize the concessions made in this treaty to the Government and citizens of the United States with respect to such interoceanic routes, or either of them, and shall agree to observe and be governed by these concessions as fully as if they had been embraced in their original grants or contracts; after which recognition and agreement said guarantee and protection shall be in full force; provided that nothing herein contained shall be construed either to affirm or to deny the validity of the said contracts.

ART. XIX. After ten years from the completion of a railroad, or any other route of communication through the territory of Nicaragua from the Atlantic to the Pacific Ocean, no company which may have constructed or be in possession of the same shall ever divide, directly or indirectly, by the issue of new stock, the payment of dividends or otherwise, more than fifteen per cent per annum, or at that rate, to its stockholders from tolls collected thereupon; but whenever the tolls shall be found to yield a larger profit than this, they shall be reduced to the standard of fifteen per cent per annum.

ART. XX. The two high contracting parties, desiring to make this treaty as durable as possible, agree that this treaty shall remain in full force for the term of fifteen years from the day of the exchange of the ratifications; and either party shall have the right to notify the other of its intention to terminate, alter, or reform this treaty, at least twelve months before the expiration of the fifteen years; if no such notice be given, then this treaty shall continue binding beyond the said time, and until twelve months shall have elapsed from the day on which one of the parties shall notify the other of its intention to alter, reform, or abrogate this treaty.

ART. XXI. The present treaty shall be ratified, and the ratifications exchanged at the city of Managua, within one year, or sooner if possible.

In faith whereof the respective Plenipotentiaries have signed the same and affixed thereto their respective seals.

Done at the city of Managua, this twenty-first day of June, in the year of our Lord one thousand eight hundred and sixty-seven.




(Concluded November 18, 1901; ratification advised by Senate December 16, 1901; ratified by President December 26, 1901; ratifications exchanged February 21, 1902; proclaimed February 22, 1902)


I. Convention of April 19, 1850.

II. Construction of canal. III. Rules of neutralization. IV. Change of sovereignty.

V. Ratification.

The United States of America and His Majesty Edward the Seventh, of the United Kingdom of Great Britain and Ireland, and of the British Dominions beyond the Seas, King and Emperor of India, being desirous to facilitate the construction of a ship canal to connect the Atlantic and Pacific Oceans, by whatever route may be considered expedient, and to that end to remove any objection which may arise out of the Convention of the 19th April, 1850, commonly called the Clayton-Bulwer Treaty, to the construction of such canal under the auspices of the Government of the United States, without impairing the "general principle" of neutralization established in Article VIII of that Convention, have for that purpose appointed as their Plenipotentiaries:

The President of the United States, John Hay, Secretary of State of the United States of America;

And His Majesty Edward the Seventh, of the United Kingdom of Great Britain and Ireland, and of the British Dominions beyond the Seas, King, and Emperor of India, the Right Honorable Lord Pauncefote, G. C. B., G. C. M. G., His Majesty's Ambassador Extraordinary and Plenipotentiary to the United States;

Who, having communicated to each other their full powers which were found to be in due and proper form, have agreed upon the following Articles: ARTICLE I. The High Contracting Parties agree that the present Treaty shall supersede the afore-mentioned Convention of the 19th April, 1850.

ART. II. It is agreed that the canal may be constructed under the auspices of the Government of the United States, either directly at its own cost, or by gift or loan of money to individuals or Corporations, or through subscription to or purchase of stock or shares, and that, subject to the provisions of the present Treaty, the said Government shall have and enjoy all the rights incident to such construction, as well as the exclusive right of providing for the regulation and management of the canal.

ART. III. The United States adopts, as the basis of the neutralization of such ship canal, the following rules, substantially as embodied in the Convention of Constantinople, signed the 28th October, 1888, for the free navigation of the Suez Canal, that is to say:

1. The canal shall be free and open to the vessels of commerce and of war of all nations observing these Rules, on terms of entire equality, so that there shall be no discrimination against any such nation, or its citizens or subjects, in respect of the conditions or charges of traffic, or otherwise. Such conditions and charges of traffic shall be just and equitable.

2. The canal shall never be blockaded, nor shall any right of war be exercised nor any act of hostility be committed within it. The United States, however, shall be at liberty to maintain such military police along the canal as may be necessary to protect it against lawlessness and disorder.

3. Vessels of war of a belligerent shall not revictual nor take any stores in the canal except so far as may be strictly necessary; and the transit of such vessels through the canal shall be effected with the least possible delay in accordance with the Regulations in force, and with only such intermission as may result from the necessities of the service.

Prizes shall be in all respects subject to the same Rules as vessels of war of the belligerents.

4. No belligerent shall embark or disembark troops, munitions of war, or warlike materials in the canal, except in case of accidental hindrance of the transit, and in such case the transit shall be resumed with all possible dispatch. 5. The provisions of this Article shall apply to waters adjacent to the canal, within 3 marine miles of either end. Vessels of war of a belligerent shall not remain in such waters longer than twenty-four hours at any one time, except in case of distress, and in such case, shall depart as soon as possible; but a vessel of war of one belligerent shall not depart within twenty-four hours from the departure of a vessel of war of the other belligerent.

6. The plant, establishments, buildings, and all work necessary to the construction, maintenance, and operation of the canal shall be deemed to be part thereof, for the purpose of this Treaty, and in time of war, as in time of peace, shall enjoy complete immunity from attack or injury by belligerents, and from acts calculated to impair their usefulness as part of the canal.

ART. IV. It is agreed that no change of territorial sovereignty or of the international relations of the country or countries traversed by the before-mentioned canal shall affect the general principles of neutralization or the obligation of the High Contracting Parties under the present Treaty.

ART. V. The present Treaty shall be ratified by the President of the United States, by and with the advice and consent of the Senate thereof, and by His Britannic Majesty; and the ratifications shall be exchanged at Washington or at London at the earliest possible time within six months from the date hereof. In faith whereof the respective Plenipotentiaries have signed the Treaty and thereunto affixed their seals.

Done in duplicate at Washington, the 18th day of November, in the year of Our Lord one thousand nine hundred and one.


Senator MCKELLAR. Now, Mr. Chairman, some years ago-I do not remember the exact date and it is not important-Senator Walter E. Edge was chairman of this committee. I had a bill in at that time similar to the one before you now. Senator Edge introduced a resolution providing for an investigation and survey to ascertain the

practicability and cost of providing additional locks and other facilities at the Panama Canal and of constructing and maintaining an interoceanic ship canal across Nicaragua.

The CHAIRMAN. That is what is known as the 1931 report?

Senator MCKELLAR. That is the 1931 report. That was transmitted to the President by Mr. Patrick J. Hurley, Secretary of War, and includes the report of Gen. Lytle Brown. Mr. Chairman, this is a short report, and I will read it to you right now:


Washington, December 5, 1931.

Subject: Interoceanic communications via the Central American Isthmus:
To: The Secretary of War.

1. I submit, for transmission to the President, the report of the investigation and survey authorized by Public Resolution No. 99, Seventieth Congress (S. J. Res. 117), approved March 2, 1929.

2. The purpose of this investigation was to ascertain the practicability and cost of providing additional locks and other facilities at the Panama Canal, and of constructing and maintaining an interoceanic ship canal across Nicaragua. 3. The report on increasing the capacity of the Panama Canal was, under the instructions of the Secretary of War, made by Col. Harry Burgess, Corps of Engineers, Governor of the Panama Canal Zone. The report on the Nicaraguan route was made by Lt. Col. Dan I. Sultan, Corps of Engineers. A provisional battalion of engineer troops was employed on the work in Nicaragua for a period of nearly 2 years.

4. Both reports were referred for review to the Interoceanic Canal Board appointed by the President. The report of that Board as well as the two basic reports are herewith.

5. The Panama Canal in its present condition accommodates the existing demands for interoceanic traffic. The Gatun Dam has heretofore afforded sufficient storage of water for the operation of its present system of twin locks. The water supply is now being augmented, as provided in the original plans, by the construction of a dam at Alhajuela, which will form the Madden Reservoir. The CHAIRMAN. The Madden Reservoir has been completed now. Senator MCKELLAR. That is true, Mr. Chairman.

The Madden Reservoir has been completed.

When this project is completed, the water supply will be more than sufficient for the operation of the present locks, at maximum capacity. An additional set of locks would increase this capacity still further. The expansion of the Panama Canal by building a third set of locks, thereby providing for three-way traffic, is feasible and can be successfully accomplished at an estimated cost of $140,000,000. The additional locks considered would be 125 feet wide and 1,200 feet long in the clear, sufficient to accommodate the largest vessel reasonably to be expected in interoceanic traffic over the next century. The additional set of locks with the increased water supply now being provided would increase the capacity of the Canal more than 40,000,000 tons per year and would provide a total capacity approaching 110,000,000 per year.

6. The conversion of the Panama Canal into a sea-level canal would involve the expenditure of a billion dollars or more. It could be accomplished in from 25 to 30 years without serious interruptions to traffic through the canal; but it would involve certain unavoidable hazards through the necessity of underpinning portions of the lock walls, and of making certain alterations to the gates and anchorages. Because of the difference in tides in the Atlantic and Pacific oceans, tidal locks would be required for a sea-level canal.

7. The most practical route for another interoceanic ship canal is across Nicaragua from Greytown on the Atlantic Ocean to Brito on the Pacific Ocean by way of the Deseado and San Juan Rivers and the Great Lake of Nicaragua. A lock canal over this route is practicable and involves no problems that cannot be solved successfully. This canal would be 172.8 miles long with a set of two-way triple-flight locks near each coast. The lock chambers would be similar in size to that proposed for the additional Panama Canal locks, 125 159231-39-2

feet wide and 1,200 feet long in the clear, with a minimum depth over the sills of 42.5 feet. Satisfactory foundations for these locks have been found. The minimum depth of water in the canal would be 40 feet, while the width would vary from 300 to 1,000 feet. Adequate artificial harbors and terminal facilities would be provided at each end of the canal. The summit-level section would be 150.8 miles long, of which 70 miles would be in Lake Nicaragua. The regulated water elevation of the summit level would vary from 105.5 feet to 110 feet above the sea level. Two feet above 110 feet would be reserved for flood storage, although this additional storage would be seldom, if ever, needed. Flood damage is not feared. The water supply is ample. Such a canal could be constructed in 10 years and would cost $722,000,000, including $25,000,000 for acquiring rights, franchises, and land. The annual cost of maintenance would be $10,800,000. It is estimated that this canal would have a capacity in excess of 80,000,000 tons per year.

8. The present traffic seeking transit through the Isthmus and the prospective increase in such traffic in the next few years do not require that any steps be taken now to provide further capacity at Panama. A second canal would have important advantages, including a saving in time and increased dependability to shipping, an increase in trade and commerce, improvement in international relations, and added safety and special speed in the mobilization of our naval forces in the event of a national emergency. However, the advantages do not appear to be sufficient at the present time to warrant immediate action for the construction of a canal across Nicaragua.

9. I recommend that the reports herewith, together with their appendixes and maps, be published. Authorization should be made by the Congress to continue the collection of hydrological data in Nicaragua at an estimated cost of $5,000 per annum.


Major General,
Chief of Engineers.

(Enclosures: Report of the Interoceanic Canal Board; report of the Governor of the Panama Canal; report of officer in charge, Nicaragua Canal survey, with seven appendixes, including maps.)

Senator McKELLAR. I do not want all those enclosures referred to in this record. We can refer to them because they have been published in full, and I would not want to increase the publicatiion. They are all to be found in House Documents, volume 12, No. 139, United States Army and Interoceanic Canal Board Reports, Seventysecond Congress, first session, 1931-32.

The CHAIRMAN. That may be included in the record. At the same time I wish to introduce into the record a letter from the Secretary of War, dated March 16, 1939, transmitting the report of the Governor of the Panama Canal Zone.

(The document referred to is here printed in full, as follows:)


Washington, D. C.

WAR DEPARTMENT, Washington, March 16, 1939.

DEAR MR. PRESIDENT: Pursuant to the provisions of Public Resolution No. 85, Seventy-fourth Congress, approved May 1, 1936, I submit report, dated February 24, 1939, of the Governor of the Panama Canal of his investigation of the means of increasing the capacity of the Panama Canal for the future needs of interoceanic shipping.

I concur in the conclusions of the Governor, and in the interests of defense and of the future needs of intercceanic shipping, I recommend the immediate adoption of the project substantially as proposed in the report of the Governor. Very respectfully,


Secretary of War.

BALBOA HEIGHTS, C. Z., February 24, 1939.

The Honorable the SECRETARY OF WAR,

Washington, D. C.

SIR: 1. I submit herewith the following report, pursuant to Public Resolution" No. 85, Seventy-fourth Congress, approved May 1, 1936, which reads as follows: "Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That the Governor of the Panama Canal is hereby authorized and directed to investigate the means of increasing the capacity of the Panama Canal for future needs of interoceanic shipping, and to prepare designs and approximate estimates of cost of such additional locks or other structures and facilities as are needed for the purpose, and to make progress reports from time to time of the results thereof."


2. The Canal administration has long foreseen that it would be necessary to increase the capacity of the Canal to meet the needs of increased commercial traffic by the construction of an additional system of locks. The administration has continuously felt the responsibility for studies of traffic trends with a view to predicting well in advance the time when the additional system of locks would be needed, and observation and studies on this important subject have been carried on through the years since the completion of the Canal. Until the year 1931, however, the results of this work were not consolidated or published in readily available form.

3. In accordance with Public Resolution No. 99, Seventieth Congress, approved March 2, 1929, a survey and investigation of a proposed canal in Nicaragua was made under the direction of the Chief of Engineers of the United States Army and the report was submitted to Congress by the President on December 20, 1931, and published in House Document No. 139, Seventy-second Congress, first session. In connection with that report, there was also submitted a report by the Governor of the Panama Canal on a project for an additional system of locks at the Panama Canal. The latter report appears in House Document No. 139 at pages 23 to 31, inclusive. It will be referred to hereinafter as the 1931 report. For the 1931 report the data and experience accumulated by the Canal organization were available and were analyzed carefully to furnish the basis for the opinions and conclusions presented therein. All of that material has been considered in the preparation of this report, and reference to the printed 1931 report will serve to clarify detailed studies of the subject as presented in this one. As far as practicable, repetition of the discussions in the 1931 report has been avoided here. It does, however, seem desirable to quote the following: the capacity of the Panama Canal is limited by the capacity of the locks, for the channel sections are entirely adequate now to transmit any number of ships that may be passed by the locks, and, with improvements under way and projected, this statement will still be true after the construction of a third set of locks."

* * *

4. In the 1931 report, the locations of the additional locks were proposed to be immediately adjacent to and alongside the present locks, and the lock chambers were to be 125 feet wide with 422 feet available depth. No special provision was made for protection from air attack and sabotage. The cost was estimated at $140,000,000 and the time required for construction at about 10 years. The report concluded that this additional system of locks would probably be necessary about 1970, but the Interoceanic Canal Board and the Chief of Engineers, United States Army, in reviewing the project, arrived at the conclusion that it would be needed by 1960. The additional study which has been given to the future needs of commercial traffic appears to support the conclusions of the Chief of Engineers and the Interoceanic Canal Board, as will be brought out later.


5. Although it did not seem probable that the additional locks would be needed for commercial purposes before 1960, Public Resolution No. 85 was advisable because, first, in case the commercial needs were to be the governing factor, it was contemplated that the investigation be conducted with deliberation over a considerable period of time by a relatively small force, but at such a rate as would insure the completion of the plans in time to begin construc

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