rectly 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 tells shall be found to yield a larger profit than this, they shall be reduced to the standard of fifteen per cent. per annum. [Inclosure No. 11.] Mr. Fish to United States ministers. DEPARTMENT OF STATE, Washington, February 28, 1877. SIR: For many years past the subject of an interoceanic canal, connecting the Atlantic and Pacific Oceans, at some point in or adjacent to Central America, has occupied the public mind in this country and abroad. On more than one occasion the matter has been discussed between the United States and several of the States of Central and South America, and treaty negotiations have been entered upon, with a view to facilitate the work. Nicaragua and some of the Central American powers have also entered upon treaties with other powers touching this question, and yet, notwithstanding all that has been written, the surveys that have been made, and the amount of consideration and study which has been given to this enterprise, no active steps have been taken to construct such a canal over any of the contemplated routes. Dr. Adan Cardenas was accredited to this country some months since in the character of envoy extraordinary and minister plenipotentiary, mainly with a view of negotiating a new treaty with reference to this work; and for some time past negotiations to that end have been carried on at Washington. A draught treaty was prepared here, to which it was proposed to obtain the accession of the principal maritime powers and of such other governments as might seem advisable, and under which it was hoped capitalists might be induced to obtain a concession and really enter upon the work of building the canal. It has been found, however, to the regret of this govern- . ment, that the views entertained by the Government of Nicaragua would not permit the negotiation of a treaty, either in the form proposed or in any form that would address itself to the approval of this government, or that seemed at all calculated to obtain the confidence or co-operation of the principal maritime powers in furthering the scheme. The matter, however, has evoked considerable interest, not only among our own citizens and public men, but also among the foreign diplomatic representatives accredited to the United States; and so much inquiry has arisen that I have deemed it important to forward to you, as I do herewith, a copy of the proposed treaty referred to, and of the views of the representative of Nicaragua, as contained in a counter-draft, with certain correspondence on the subject which has taken place. These papers will inform you of the points on which the two governments have failed to agree. Should you be applied to concerning the subject, you are authorized to permit the correspondence in question to be perused by the authorities of the country to which you are accredited, in order that the position and views of this government may be clearly seen; or you may explain such position and views, as contained in the draught treaty and the correspondence of the department herewith sent, to such persons as may be interested in the question. I am, sir, your obedient servant, Señor Cárdenas to Mr. Fish. [Translation.] HAMILTON FISH. LEGATION OF NICARAGUA, SIR: The undersigned, envoy extraordinary and minister plenipotentiary of the Republic of Nicaragua, has the honor to inform the honorable Secretary of State that, having caused the draft of a convention between the United States of America and the Republic of Nicaragua, which the honorable Secretary of State did him the honor to deliver to him in person, to be translated, and having now read its contents, he is able to state his opinion concerning it. The undersigned takes pleasure in informing the honorable Secretary of State that, the government of Nicaragua being disposed to favor and accept, as he has repeatedly had the honor to assure him, anything tending to facilitate the construction of an interoceanic canal through its territory, it seems to him that the draft of a convention which has been communicated to him is in general acceptable in its spirit and purposes; although as to its details and some of its specific provisions it is desirable to introduce in it such changes as are indispensable to cause it to harmonize with the constitution and laws of the republic, the important object which it has in view being favored at the same time, since, however favorable may be the disposition of the government of Nicaragua as regards this matter, its liberty of action must necessarily be circumscribed within these limits. For the explanation of the changes which this circumstance obliges the undersigned to suggest a conference is necessary, which he begs the honorable Secretary of State to do him the honor to grant him. In addition to this, however, and in order to make his views more clearly understood, it has seemed to the undersigned that it was of the highest importance to prepare at once and communicate to the honorable Secretary of State, previously to the conference in question, the articles which, in his opinion, should be inserted in the convention. The undersigned hopes, therefore, that the honorable Secretary of State, considering the aforesaid articles, which he has the honor to inclose, as an integral part of this note, will be pleased, when he shall have read them, to appoint a day for the desired conference. The undersigned avails himself of this occasion to renew to the honorable Secretary of State the assurances of his most distinguished consideration. AD. CÁRDENAS. Hon HAMILTON FISH, &c., &c., Sc. Remarks on the draft of Mr. Fish. [Translation.] ARTICLE 1. Each of the contracting parties to this convention pledges itself to request the other nations with which it is on terms of peace and friendship to subscribe to the obligations contracted by Spain, France, Great Britain, and the United States of America, accepting the advantages already granted by the Government of Nicaragua to the governments of the above-named countries, and to consider as binding upon themselves the stipulations of Article XIII of the treaty of Madrid of July 25, 1850, those of Articles XXVII, XXVIII, XXIX, XXX, XXXI, and XXXII of the treaty of Washington of April 11, 1869, those of Articles XX, XXI, XXII, XXIII, XXIV, XXV of the treaty of Managua of February 11, 1860, and those of Articles XIV, XV, XVI, XVII, XVIII, and XIX of the treaty of the same city of Managua of June 21, 1867, concluded respectively between the Government of Nicaragua and that of His Catholic Majesty; that of His Majesty the Emperor of the French; that of Her Britannic Majesty; and the President of the United States of America, which are not abrogated, and which have lost none of their binding force. ARTICLE 2. In addition to the proposal and request of adhesion referred to in the foregoing article, the Government of the United States and the Government of Nicaragua also agree to invite, each on its own part, the aforesaid powers with which they are on terms of peace and friendship, including France and Spain, likewise to subscribe to and consider as binding upon themselves the stipulations which were adopted in respect to this matter of the interoceanic canal, the construction of which it is designed to facilitate, by the Government of the United States and that of Great Britain in Articles I, II, III, IV, V, VI, and VII of the treaty concluded at Washington April 19, 1850, between the two nations. ARTICLE 3. The Government of Nicaragua, on its part, pledges itself to the aforesaid powers, in return for the obligations which they will contract by their adherence to this treaty, as set forth in the foregoing articles, not only to fulfill and carry out with scrupulous exactitude what it has therein promised, but also to do as follows: 1. To make a grant in favor of such person or persons, corporation or company, as may solicit it, and as, in the judgnient of the Government of Nicaragua, may offer the necessary guarantees, for the term of ninety-nine years, said grant to contain, for the greater encouragement and benefit of the commerce of the world, the privileges and favors to be enumerated hereafter in article 6. 2. To protect the person or persons, corporation or company, in whose favor this grant shall be made, from the time of the commencement of the work until its completion, barring the cases provided for in article 7, against every measure of embargo, confiscation, detention, or violence of any kind. It is, however, understood that this does not imply the impunity of the persons to whom this exemption is granted for any violations that they may commit of the laws of Nicaragua within the territory of the republic. 3. To protect in like manner, from embargo, confiscation, interruption, or injury, the aforesaid canal, when it shall be completed, together with its appurtenances, so that it shall forever remain free and open to the vessels of all nations, as herein provided. 4. To consent that the neutrality already secured and guaranteed to the canal itself by Spain, France, Great Britain, and the United States of America, and which shall be secured and guaranteed in the same manner by the nations accepting the invitation referred to in articles 1 and 2 of this convention, be extended to a strip of the territory of the republic running alongside of the canal, parallel to its course, and measuring miles in width on both sides; and likewise to that space in both oceans over which the Government of Nicaragua has jurisdiction on both sides of the ports of ingress and egress circumscribed by the arc of a circle drawn from the mouth of said points as its center, with a radius of one hundred and fifty nautical miles. 5. To protect, by all means in its power, using for this purpose its own force, or appealing to that of friendly nations, as agreed in the treaties referred to in article 1 of this convention, not only the neutrality of the canal and of the territory and waters described in the foregoing paragraph, but also the innocent use of said canal, and the security of the persons and property belonging to the enterprise and being within the neutral territory. 6. To allow the company receiving the grant and the management of the canal to establish and maintain, at their own expense, such force of special police as they may deem necessary for the security of the interests of the enterprise, provided that the aforesaid police force be subjected to regulations approved by the Government of Nicaragua, and act only within the limits of the canal and its dependencies, subject to the constitution and laws of the republic. It is understood, however, that none of these conditional concessions, which are offered as a stimulus to the completion of the work, and in return for the advantages and guarantees solicited, or the declaration of the neutrality of the territory and waters above mentioned, or any other clause, expression, or sentence in this convention, or in the treaties referred to in its article 1, shall ever be interpreted as involving any renunciation or impairment of the jurisdiction and sovereignty of the republic over the whole of its territory and waters, which jurisdiction and sovereignty are hereby recognized and guaranteed. ARTICLE 4. Neither of the two contracting parties, and neither of the two nations signing the stipulations and guarantees above mentioned, shall consider itself obliged to recognize or pay any claims which may be presented or claimed to be presented by governments, corporations, companies, or individuals, or associations of individuals, who, previously to the exchange of the ratifications of this convention, shall have undertaken the construction of the canal, or done anything connected with it. Nevertheless, the Government of Nicaragua hereby declares that there exists, at this date, no grant or grants that can impede, delay, or embarrass the work which shall be undertaken according to the grant which it pledges itself to make on the terms of article 6 of this convention; and it agrees that, if any claim shall be presented on this ground, and it be attempted thereby to hinder the work, or if it be found necessary, from any other cause, to remove and terminate it (i. e. the claim) definitely, the Government of Nicaragua will see that this be done. ARTICLE 5. All the powers signing or adhering to this convention before the commencement of the work, and not availing themselves of the privilege of withdrawal from it, which is stipulated in the treaties referred to in article 1, shall at all times, both in peace and war, have the right of transit through the canal when it shall be completed, and shall enjoy the benefit of the neutral waters at its extremities for the vessels entitled to carry their flag, and also for the cargoes of said vessels, on terms of perfect equality with each other. Those adhering after the completion of the canal shall enjoy the same rights and benefits after the expiration of years from the date of their adhesion. ARTICLE 6. The Government of Nicaragua agrees, as stated in paragraph 1 of article 3 of this convention, that the grant to be made in favor of the person or persons, corporation or company undertaking the construction of the interoceanic canal, shall contain, as indispensable circumstances and conditions, the following: 1. That the aforesaid canal, with its entrances and appurtenances, shall be constructed for and adapted to the passage of vessels not exceeding- 2. That the transit or passage duties to be imposed upon vessels shall be calculated upon the gross tonnage. If the vessel be not laden, or in ballast, the dues to be paid shall be fixed according to the volume of water which she draws. The measurement of the tonnage shall be performed according to the Moorsom system; and when the vessel shall belong to a nation that has adopted that system, and shall be provided with an official register or certificate in which is stated the number of tons which it measures, such statement shall be deemed satisfactory, and no measurement shall be made. 3. That the fixing and alteration of the charges or passage dues to be paid by vessels passing through the canal or any part thereof shall belong exclusively to its board of directors or managers, within the limits allowed by the existing treaties in behalf of the canal. 4. That more than one dollar per head shall never be charged for each passenger passing through the canal or any part thereof. 5. That a discount of 25 per cent. be made from the passage dues fixed by the scale in favor of vessels belonging to the nations which have given in their adhesion to this treaty, or which shall hereafter do so, as provided in article 5. 6. That in order better to secure the execution of the treaties on the part of the person or persons, company or companies receiving the grant, the Government of Nicaragua, and each of the governments of the nations adhering to this convention, or which shall hereafter adhere thereto, shall have the right to appoint two persons, in order that they may jointly constitute a kind of superior board of vigilance, of an international character, which shall be called the governmental board. The members of this board shall choose, from among their number, their own presiding officer, and shall organize in such manner as they may determine at their first meeting, or in case of their holding no meeting, according to their wishes, expressed in writing, the will of the majority being adopted, whatever may be the number of those present, or of those who, by letter or otherwise, shall take part in the deliberation. 7. That this governmental board shall have charge of everything connected with the general inspection of the enterprise of the canal in that which relates to its general use and in any way affects the interests of the commerce of the nations adhering to this convention, and shall take care that the stipulations of the treaties and of the grant made be rigidly observed and fulfilled, and that the regulations, dispositions, and measures which shall be adopted by the enterprise and its directors or managers be not in opposition, either in letter or spirit, to the absolute equality which, according to the agreement made, must be observed among the nations which shall have adhered to this convention, and that the lofty objects of civilization and progress aimed at by this work be not defeated. 8. That the Government of Nicaragua shall cause to be duly observed, fulfilled, and executed what shall be decided and determined upon by this board, within the limits of its jurisdiction and authority. ARTICLE 7. On and after the issuance of a grant, as herein agreed, the Government of Nicaragua pledges itself to respect it, and to issue no other grant for the construction of a canal until one of these three things shall have occurred: 1. Until the company or persons in whose favor the grant was made shall declare that they consider the work impracticable. 2. Until the term of two years shall have expired without the works having been commenced, unless the Government of Nicaragua, on consulting with the governmental board, shall consent to an extension of the time. 3. Until, according to the agreement made in the grant, and considering that the company, individual, or corporation in whose favor it shall have been made, do not fulfill its terms nor respect the obligations therein contracted by themselves, it shall be demonstrated that the grant has become null and void. ARTICLE 8. As soon as the canal shall be completed, the Government of Nicaragua shall have the right to require, if it thinks proper, all the laborers, or any part of them, who shall have finished their work, or who shall not be needed for the continuance of the enterprise, or who, during the construction of the work, shall have been discharged from the enterprise, to depart, and not to remain in the territory of Nicaragua. ARTICLE 9. In order to secure the construction of the interoceanic canal, the Government of Nicaragua agrees to make two ports free, one at each extremity of the canal, and also to allow the two ports of San Juan del Sur and Salinas, on the western coast, to be used as places of refuge, and as resting places for vessels having a right to pass through the canal, and which may be obliged to wait there before being able to enter it, or which may have already passed through it. Vessels thus situated shall not be obliged to pay more than half the charges required from those not intending to sail through the canal. All the privileges referred to in this article are to be understood as not preventing the government of the republic from taking the proper measures to protect the fiscal interests and property of the State against any fraud that may be attempted on the plea of a free port and of the privilege herein granted. ARTICLE 10. The Government of Nicaragua further agrees to levy no national impost or duty, ard not to permit any taxes, duties, or contributions of any kind, except those which are permitted by this treaty, to be levied on the canal, the vessels passing through it, or the passengers, goods, or effects on board of the same, or on the capital stock of the company, corporation, individuals, or association that shall undertake the work, or on the towing-vessels, store-houses, wharves, machinery, and works of mechanical construction used in operating the enterprise. And the Government of Nicaragua further agrees that the cargo of no vessels complying with the regulations that shall govern the transit through the canal shall be molested or subjected to examination, provided they do not abuse this privilege to the prejudice of the fiscal interests of the state. ARTICLE 11. In order to afford the greater encouragement to the work and assistance to its execution, the Government of Nicaragua promises to grant, gratuitously, and without any compensation whatever, such portion of the public lands, including the sea and tributary waters, as may be necessary for the location and construction of the canal and its branches, and for supplying the same with provisions, and likewise for its wharves, storehouses, buildings, and other appurtenances of the enterprise, and places for depositing the earth and material excavated or to be excavated. As to the lands belonging to individuals, the Government of Nicaragua guarantees to the enterprise of the canal the privilege of soliciting their appropriation to its use on payment of a just compensation, the whole to be done in accordance with the constitution and laws of the republic, even without the necessity of furnishing legal proof of the public utility of the work, which is hereby recognized and admitted. The Government of Nicaragua further promises that it will give the enterprise all the moral and material aid in its power in order that the important object of this work may be more speedily and easily realized. ARTICLE 12. As soon as the canal, with its dependencies and appurtenances, is completed, it shall be possessed, controlled, and managed during the whole time that the grant shall last, and according to its terms, by the person or persons, corporation or company, receiving the grant, and no obstacle of any kind shall be placed in their way, nor shall any claim be made to exercise greater intervention in their affairs than is allowed by the terms of this treaty and already agreed upon. ARTICLE 13. If differences shall arise between any of the various powers adhering to the terms of this convention, and the person, persons, corporation, or company receiving the |