individual citizens of Colombia with profits upon the outlay to be made by the patrons themselves.

4. The modification proposed by me in regard to the restoration of portions of domain at the expiration of the convention sufficiently explains itself.

ARTICLE III.—(Newly proposed by this government.)

"The United States of Columbia stipulate not to undertake or allow the opening of any other interoceanic canal, or of any new railway through their territory, from the Atlantic to the Pacific Ocean, without the consent of the United States."

EXPLANATION.

1. The intelligent economists who have been consulted are of opinion that the article as originally proposed and as approved by the Colombian ministers, would be ineffectual as an inducement to capital without excluding any new interoceanic railway, as well as any other interoceanic canal.

ARTICLE IV.

"The outlay, cost and expense of the survey, location, construction, and equipment of the said canal and its ports, stations, depots, and harbors, including damages paid for private property, and the indemnity that may correspond to the Panama Railroad Company, should the case arrive, in accordance with the contract, celebrated by the Government of Colombia, and approved by Congress on the 15th of August, 1867, shall be for the account of the United States of America, but exclusively with reference to the purposes of this convention. The objects devoted in Article II by the United States of Colombia for the work of the canal shall be delivered to the United States of America, but exclusively for the purposes of this convention."

EXPLANATION.

The Colombian ministers amendment seems to be reasonable and proper, and is accepted..

ARTICLE V.—(New as now proposed by this government.)

"The United States of America shall construct the said canal, with its appendages. and appurtenances, and may employ the necessary force of skill, art, and labor for that purpose, and may also maintain a neces-ary military and naval force. The civil employés engaged being subject to the laws and Governmment of the United States of Colombia; and the United States engage that the military and naval employés so engaged shall always conform themselves to the laws and Government of the United States of Colombia. The naval and military forces shall, in no case, exceed one thousand, rank and file, of both armies, unless the express consent of the United States of Colombia shall have been first obtained."

EXPLANATION.

1. The original Article V, on revision, seems to require amendment so as to prevent possible differences between the two nations in regard to the employés.

Civil employés will be directly subject to the laws of the Colombian Government as administered by the authorities. The United States guarantee that the military and naval forces, while remaining under the command of their own officers, will respect and obey those laws.

2. Doubtless five hundred, rank and file, would be an adequate force to protect surveyors against hostile Indians or other disturbers of the peace; but in prosecuting a work of so great magnitude as the proposed ship-canal, the number of workmen employed at times might well be expected to fully exceed the number of five hundred or one thousand.

The Secretary of War of the United States has been consulted, and he is of opinion that, to secure the public peace and a continuance of work in the contingency of surprise, it would be well to stipulate for a force of one thousand.

There would be no reason in any case to apprehend that the United States would be disposed to employ a force unnecessarily large. Every consideration of convenience and economy will incline them to use the smallest number possible The United States have never shown a disposition to maintain military forces for political purposes in foreign countries.

"ARTICLE VI.

"As fast as the canal and its apendages and appurtenances shall be constructed, the control, possession, direction, and government of the same shall belong to and be exercised by the United States of America, the Government of the United States of Colombia at the same time being always at liberty after the exchange of this convention to maintain a permanent committee of agents, with a right to examine the accounts, inspect the operations concerned, measure the tonnage of vessels, and report thereupon to the Government of Colombia; but not to interfere with the survey, control, management, direction, and working of the canal."

EXPLANATION.

This government acquiesces in the modifications proposed by the Colombian ministers.

"ARTICLE VII.

"The Government of the United States shall establish a tariff of tolls and freights for the said canal. Such tariff shall be upon a basis which shall not allow of more than an aggregate of twenty-five per cent. of net profits after first deducting the outlay upon the survey, location, construction, management, operation, and control of the canal, including in the cost of construction the damages which shall necessarily be paid for private property and indemnities, if any shall be found necessary and proper, to the Panama Railroad Company. Further, such tariff shall be on a basis of perfect equality for the two nations, and for all other nations who shall be at peace with both the United States of America and the United States of Colombia. But nothing herein contained shall be construed to prevent the two governments from agreeing upon such a modification of the tariff as will enable the United States of Colombia to receive a reasonable proportion of such net revenue as is before mentioned, or such modifications as may discriminate in favor of both nations, if any political necessity now unforseen shall at any time require it."

EXPLANATION.

1. Due consideration has been bestowed upon the amendments to this article proposed by the Colombian ministers. The result is that the United States find themselves obliged to decline all of those proposed amendments.

The seventh article, as originally written, proposed that the tariff of tolls and freights shall be on a basis of perfect equality for both nations, and for all other nations who shall be at peace both with the United States of America and the United States of Colombia.

The Colombian ministers, on the contrary, propose that the tariff shall be on a basis of equality for all nations, whether at peace or war. If, unhappily, Colombia shall at any time engage in war with a foreign nation, the United States of America do not suppose that the Colombian Government would expect to furnish unlimited transportation to its armed enemy. Nor could the United States of America consent to guarantee that Colombia would adhere to any possible stipulation for the practice of such magnanimity.

If, unhappily, the United States of America should be involved in a war with a foreign nation, a contingency which is not expected to take place within the life of the proposed convention, no administration here could permit itself to allow the foreign enemy to use a work constructed by the United States, or their citizens, for the advantage of that enemy and to the prejudice of the United States of America.

With all due respect to the Colombian ministers, we think that the amendment proposed in this respect is impracticable and visionary.

2. The original Article VII proposes that the tariff shall be upon a basis which shall not allow a profit of more than twenty-five per cent. upon the entire cost of the canal, with its indemnities, &c.

The Colombian ministers propose to strike out this limitation of the revenue profit of twenty-five per cent., with a view, doubtless, that by allowing larger profits the two governments may derive revenue from the canal.

The proposed ship-canal, like any other artificial channel of trade, will, all other things being equal, command business in proportion as its tariff of revenue is reduced. It is a thing hitherto unheard of that any such public work of internal improvement yields or can yield permantly a profit of more than twenty-five per cent. upon its cost. It remains to be seen whether the Darien ship-canal will be more productive. It is certain, however, that every dollar of revenue that either the United States of America

or the United States of Colombia can derive from the canal will be a tax, serving to abate its effectiveness for the purposes for which it is designed. If there are capitalists who would invest their money in constructing this canal with the purpose of affording direct revenue to either the United States of America, or the United States of Colombia, it is believed this is the first instance where capitalists have ever shown so great devotion to any government. The principles of political economy which prevail in the United States of America forbid, and will continue to forbid, this government from ever taking even one dollar of net revenue from the construction of any channel of navigation or transport.

In opposition to such a policy the United States of America encourage capitalists by offering them adequate and liberal rewards, and by reducing pr. fits encourage business upon artificial highways. Government revenues are only expected to be derived from the increase of values and production which result from the construction of such works.

The Government of Colombia is invited to consider whether it is not impracticable for it to construct works of improvement upon principles different from those which are here perhaps too sharply expressed.

If it shall turn out that we are mistaken in our present anticipation that the work shall prove sufficiently productive to yield revenue for the two governments, Article VII, as originally prepared, reserves for consideration after that the development should be made the proceedings to be adopted for the division of those profits.

3. The commissioners propose (1) a stipulation that the annual expense of the undertaking shall in no case exceed thirty per cent. of the annual proceeds, without the consent of both contracting parties; (2) that the net proceeds of the undertaking corresponding to the United States of America shall be preferentially applied from the first year to the reimbursment of the capital invested; and (3) that to determine the net proceeds of the undertaking no deduction shall be made for interest on the capital invested in the work, nor for the amount destined as a reserve for the sinking fund. Upon careful inquiry, I am satisfied that the restrictions thus proposed would defeat a subscription of the necessary capital for the construction of the work.

On the subject of this article generally, I may be excused for saying that the United States of America have been able to secure the undertaking of the Pacific Railway, now in such prosperous progress, through the territory of the United States only by allowing to capitalists guarantees more liberal, and promises of reward more munificent, than those which are stipulated in this Article VII, as now invested upon, with a view to the construction of a ship-canal by capitalists of the United States in a foreign and distant country.

"ARTICLE VIII.

"The United States of Colombia shall retain their political sovereignty and jurisdiction over the canal and the territory pertaining thereto, but they shall not only allow, but guarantee, according to the constitution and laws of Colombia, the peaceable enjoyment, control, direction, and management of the same, as before specified."

EXPLANATIONS.

The amendments proposed by the Colombian ministers to Article VIII seem reasonable, and are accepted.

"ARTICLE IX.

"The United States of America and the United States of Colombia shall have right to use the canal for the transportation of troops and munitions of war, but no other nation shall have such right without the consent of the two contracting parties, and in case of war, in which neither the United States of America nor the United States of Colombia shall be parties, the canal shall be neutral to all other nations."

EXPLANATIONS.

The projected treaty comes back with the words, "rejected by Colombia," written opposite this Article IX. No explanation for the rejection has been communicated. By expunging that article the treaty would leave the proposed ship-canal to become a common military road for the transportation of armies, and of military and naval munitions by all belligerents of whatever nation they might be.

If it may be supposed, by way of illustration, that Great Britain and France are belligerents in the East, or that China in the East and Great Britain in the West, or that Austria and Prussia, or that Spain and the South American Republics, or that

Russia and Japan, should become belligerents, and that there might not only be one war between some of those parties at one time, but half a dozen wars prosecuted among so many belligerents at the same time. In that case, according to the view of the Colombian convention, not only one of those belligerents but both the parties engaged in one actual war, and, indeed, all the parties engaged in all the conflicts concurring at the same time, would have a right to use the Darien Ship-Canal as a military road.

Is it to be supposed that those belligerents in the heat of conflict would conform themselves to the regulations which the United States of America might establish for the use of the canal, or would submit themselves to the laws and police of the United States of Colombia in the use of it, for such hostile and probably fatal purposes?

One of the two belligerents might think it would gain an advantage over its enemy by burning the ships that were carrying munitions and troops through the canal; another, or a confederacy of others, might think it would be advantageous to their cause to destroy the canal itself. Is Colombia able and willing to guarantee to the United States of America the maintenance of the neutrality which she thus proposes to all belligerents?

What inducements does Colombia offer to the United States of America to give such guarantee on their part?

Even though one of the belligerents should be at war with Colombia itself, the Darien Ship-Canal must nevertheless be neutral ?

The armed enemy of Colombia must be allowed to introduce his armies through the terminal ports and the canal to the very capital of Colombia, and to substitute itself in the place of Colombia as depositary of the key which unlocks the American continent to the ambition of foreign powers.

The United States of America have less reason perhaps than any other nation has now or ever has had to desire, fear, or expect to be engaged in war with any foreign State; but can the Republic of Colombia expect, in the event the European States should attempt singly or by confederacy to overthrow republican institutions and to restore by force imperial or despotic power in the American continent, that in such a case the United States of America would allow a public enemy of the American continent the use and advantage of a work constructed by two American nations? Even if the two nations were to be so shortsighted as to leave such advantages open to an enemy of either or both nations, the capitalists of any country who should be invited to engage in constructing a canal would instinctively decline to grant the solicited investment. Article IX, as originally submitted, carefully consults the sovereignty, integrity, and safety of the United States of Colombia, while in case of war it saves all necessary advantages to both countries.

The Secretary sincerely hopes the Colombian ministers will reconsider their rejection and accept the article.

"ARTICLE X.

"Colombia shall impose no tolls or duties of any kind on vessels, passengers, money, merchandise, and other objects which may be conveyed through the canal from one ocean to another, but such effects as may be destined for home consumption or trade in Colombia, shall be liable to such duties as are or may be established.”

EXPLANATION.

The amendments proposed by the Colombian ministers are accepted.

"ARTICLE XI.

"Notwithstanding what is before said of guaranty, if a military or naval force shall be at any time found necessary to maintain the protection and service of the canal, it shall be maintained at the equal expense of the contracting parties.

"Either party failing to contribute its proportion of such force shall indemnify the other for excess of force and expenditure."

EXPLANATION.

The Colombian ministers have raised no objections to this article, and it stands as originally drawn.

"ARTICLE XII.

"The neutral rights and privileges hereinbefore specified shall continue for the period of one hundred years after the canal shall have been brought into operation, at

the end of which time the canal and its appendages and appurtenances shall revert to the United States of Columbia on their paying to the United States of America an amount equal to the original cost of the survey, location, and construction of the canal, and expenditures for the same, deducting any net profits that shall have been received by the United States of America exceeding an interest of ten per cent."

EXPLANATION.

We have carefully considered the amendments proposed by the Colombian ministers and are of opinion that they could not prudently be accepted. The whole article is rather visionary than practical.

The reversion of the canal to the United States of Colombia is delayed an hundred years. No one now living can foresee the financial, political, and social condition which will exist in the two countries at that distant period. Indeed it is very probable that such changes may occur in both countries that the parties will, by common consent, agree more than once to modify the agreements now made long before the period assigned.

It may be foreseen that such modifications will be desired by the Republic of Colombia if it shall go on increasing in resources, population, aud strength, as it is to be hoped it may. The terms of revision mentioned in Article XII were fixed in anticipation of some such early reconstruction of the agreements, rather than with a view of their being insisted on only at the end of one hundred years. What seems conclusive upon the subject is that capitalists could not be expected to invest funds in such an enter-. prise with a condition of a future surrender of their property in the canal, unless they had reason to expect that they should be allowed by the government to realize ten per cent. upon their investments if they shall find it possible.

"ARTICLE XIII.

"The United States of America may by law devolve all its rights, franchises, and duties, property and obligations touching survey, construction, or preservation of the proposed canal herein contained upon any individualcitizen or incorporated associations of citizens of the United States, and in that case such citizen or citizens shall enjoy all the rights of property and privileges, and be subject to all the obligations and engagements herein contained, and they shall always be subject to the control and direction of the United States of America as declared by law. But the political obligations herein assumed by the United States of America and the United States of Colombia are permanent and indefeasible."

EXPLANATIONS.

We feel obliged to disallow the amendments proposed by the Colombian ministers, and to insist upon the article as it was originally written.

1. The amendments of the Colombian commissioners are supposed to have arisen under a very natural misapprehension of facts and circumstances. The commissioners seem to suppose that the United States of America stand not only well disposed but fully prepared and impatient to commence, prosecute, and complete the projected shipcanal by a direct application of executive and administrative powers and faculties. It must have been this belief on the part of the Colombian ministers which induce them to propose that the United States of America shall not at all devolve the construction of the canal upon any private company, and that the care and conduct of the canal itself shall not be devolved upon any such company until the canal shall have been fully constructed and brought into operation. It is supposed that the commissioners persisted under the same belief in prescribing contingent forfeitures of the rights of the anticipated company. Frankness on the part of the United States requires me to say that in regard to these important points the Colombian ministers are acting under a grave misapprehension. The territory of the United States is full of canals and railroads and other works of material improvement. The length of canals in this country is measured by thousands of miles, the length of our railroads by tens of thousands of miles. Nevertheless there is not, and there never was, within the territory of the United States of America one mile of railroad or canal which was directly constructed by the government of the United States of America, or over which the United States of America exercises directly rights of property or control.

The United States construct only fortifications and other works of military strategy or defense, and navy-yards, light-houses, custom-houses, and the like. Every work of internal improvement in the United States has been made either by States or by corporate companies or by private individuals. What the Government of the United States do and always do in regard to such works of internal improvement is to accept