in the form of tolls. If the work is, as we confidently believe, one of transcendent value to the United States-worthy to be done by a great nation-which will cost only its credit without being a burden to the taxpayer, one that will not in any event cripple its resources, but will be a monument of its power and its beneficence more enduring than the monuments of antiquity, a realization of the dreams of all nations for four centuries, it ought to be undertaken not by a corporation alone, but aided by the United States for the benefit of the American continent and the commercial world. It is an act worthy to commemorate the beginning of the second century of our existence as a nation and of the public policy upon which we have entered of uniting the Republics of America by works of peaceful development.

The practical difficulty of the committee was in determining in what manner and to what extent the United States should aid in this enterprise. Nicaragua and Costa Rica were quite willing that this Government should directly construct the work, but for the reasons stated the treaty for this purpose was not ratified. The Maritime Canal Company was interposed by act of Congress. Composed exclusively of citizens of the United States, they were not desirous of surrendering what they regarded as a favorable business enterprise. The plan proposed in the accompanying bill was dictated by this committee, and, after many conferences, agreed to by that company, subject to the approval of Congress. The company is now actively engaged in construction, and it is but fair to it that if the bill is to become a law Congress should act as speedily as possible, so that the company may not be delayed in its contracts.

The bill herewith reported is founded upon the theory that the cost of the completed work shall be represented only by bonds and stock to the amount of money actually spent in construction and the accruing interest paid in its progress.

The bill proposes to limit the stock of the Maritime Canal Company to 1,000,000 shares of $100 each and no more. By the concessions of Nicaragua that country is entitled to 6 per cent. or $6,000,000 of the stock of the company for the liberal grants made to and privileges conferred by that country upon the Maritime Construction Company, a copy of which is hereto attached. Costa Rica for similar concessions on her part is entitled to $1,500,000 of this stock.

By the terms of these concessions the Maritime Canal Company became entitled to $12,000,000 of the capital stock, and this amount has been, by the agreement with the Construction Company, transferred to the latter company. The agreement heretofore referred to between the Maritime Company and the Construction Company provided for the transfer of the residuum of the stock and also 150 million dollars of bonds to be issued in pay ment for the work as performed. By that agreement the ownership and control of both companies would follow the ownership of the stock and bonds. By the bill proposed all certfi

d

cates of stock and all contracts, assignments, and transfers of stock other than the stock to which the Governments of Nicaragua and Costa Rica are to be surrendered and canceled, except the sum of $3,000,000, which is to be retained by the Maritime Company or its stockholders in full payment and satisfaction of the concessions and agreements and advantages obtained by them.

The United States is to reimburse the Maritime Canal Company the amonnt expended in promoting the enterprise and in the surveys and construction of the work thus far performed, including all expenditures in connection therewith upon statements to be made, but subject to the approval of the Secretary of State and the Secretary of the Treasury. The canal shall thereafter be constructed from the proceeds of the bonds of the Maritime Company, guarantied, as aforesaid, in payments as the work progresses, not less frequently than every sixty days. All contracts or engagements of whatever name or nature now existing or outstanding not consistent with the provisions of the bill are to be canceled and set aside, and the work is to be proceeded with upon estimates made by United States engineers and to be paid for at actual cost by bonds, or the proceeds of bonds, of the kind and description mentioned. All the expenses of the work, including interest on the guarantied bonds issued, are to be paid by the Maritime Canal Company of Nicaragua, and upon the failure of said company to pay the interest as it accrues, it is to be paid by the United States. The interest proposed on the bonds is 3 per cent., payable quarterly, and running for a period of twenty years.

To indemnify the United States from all liability upon its guaranty $70,000,000 of stock of the Maritime Company is to be deposited with the Secretary of the Treasury and no stock other than that already named is to be issued except when, in the opinion of the President of the United States, the installments of the mortgage bonds shall be insufficient to meet the current requirements of the company in respect to the enterprise. The Secretary of the Treasury has power, at his discretion, to vote the stock pledged to the United States, either in person or by proxy, at any meeting of the stockholders of said company, and the United States is entitled to a representation of six members upon the board of directors composed of fifteen persons.

These, in brief, were the terms suggested by your committee to the Maritime Canal Company and the Construction Company, and, after many conferences, a full report of which is hereto attached, the officers of said companies agreed to the terms and conditions proposed. This bill, if it should become a law, would, in the opinion of your committee, secure, without reasonable doubt, the prompt completion of the Nicaragua Canal at its actual cost, and secure to the United States a reasonable and proper control in conformity with the concessions granted by Nicaragua and Costa Rica. The management and conduct of the work is left with the Maritime Company, but under such restraints as will

insure economy and with the strongest inducement to limit its obligations to the actual cost of the work, so that the tolls upon it will not be swollen to pay for watered stock or bonds of doubtful credit.

The United States becomes a party strong enough to cope with the magnitude of the enterprise, and to give confidence not only to its securities, but to its safety from injury from internal or external forces. It is believed by your committee that the United States will not be called upon to pay any portion of the principal or interest of the bonds, but that the work itself will amply repay all its cost, and yield its benefits not only to the people of Nicaragua and Costa Rica, but to the civilized world. If it appeared at any time that the interests of the United States are in jeopardy from any cause, it can purchase the majority of the stock and become the controlling owner of the canal by paying its own bonds to an equal amount, and the property, tolls, income, and profits of the canal will be an ample security against the obligations it assumes.

The committee therefore recommend the passage of the bill.

JOHN SHERMAN, Chairman.
GEO. F. EDMUNDS.

WM. P. FRYE.

WM. M. EVARTS,

J. N. DOLPH.

JOHN T. MORGAN,
JOSEPH E. BROWN.

H. B PAYNE.

J. B. EUSTIS.

APPENDIX 1.

TABLE SHOWING DISTANCES IN MILES BETWEEN COMMERCIAL PORTS OF THE WORLD AND DISTANCES SAVED BY THE NICARAGUA CANAL.

NOTE.-The distances are measured by customary routes most convenient for sailing ships and slow freight steamers.

APPENDIX A.

THE NICARAGUA CANAL-ITS DESIGN, FINAL LOCATION, AND WORK ACCOMPLISHED.

By A. . MENOCAL, Chief Engineer Nicaragua Canal Construction Company, (U. 8. N., M. AM. SOC. O. E., etc.)]

The idea of establishing a waterway across the American isthmus dates back from the beginning of the sixteenth century, when the early navigators, perceiving the narrow neck of land separating the two oceans, were forcibly impressed by the advantages to be derived by cutting a canal through it. The Isthmus of Panama, being the narrowest part of that strip of land, and Nicaragua, on account of the evident natural facilities presented by the lake and its outlet, the river San Juan, have always been the main points of attraction as possessing the most favorable features for doing the work, and as early as 1550 the Portuguese navigator Antonio Galvao proposed four routes; one of which was by way of Lake Nicaragua and the San Juan River, and another through the Isthmus of Panama. As the configuration of the isthmus became better known, the belief in the practicability of joining the two oceans by a canal gradually increased; but it was not until the beginning of the present century, when through the indorsement of Humboldt, who had studied the problem on the ground, and later on through the united efforts of the Central American Republics, that the question commenced to assume a well-defined shape. But, while these States and the Republic of New Granada were anxiously soliciting the cooperation of other nations and of capitalists in favor of the undertaking, no regular surveys had been made of any portion of the isthmus; the routes proposed and claimed to have been discovered being the result of imperfect reconnoissances or of the imagination. It was evident, moreover, that the work would require the expenditure of large sums of money; and, while it was universally admitted that the canal would be of great advantage to the world at large, it was not equally clear that the probable traffic seeking it would be sufficient to pay interest on the capital invested. But the gold discoveries following the acquisition of California by the United States, and the subsequent rapid development of the vast commercial and agricultural interests of the Territories lying on the Pacific slope, exerted a powerful influence in attracting attention to the commercial and political importance of the canal. What had until then been regarded as a humanitarian scheme or a geographical desideratum became a political and commercial necessity, and the attention of the American statesmen, capitalists, and scientists was at once directed to finding the most practical solution of the problem.

The idea of establishing a continuous water communication between the two oceans has been always recognized as the only means of satisfying all the requirements of commerce, but a satisfactory solution of all the unknown quantities entering into such a vast undertaking could not be reached without serious surveys of the isthmus, and these required time and the adjustment of political difficulties with other nations interested in the proposed work. In the mean time the Americans, anxious to meet the increasing demand for means of communication between the two oceans consequent to the rapid development of the Pacific coast, turned their attention to an overland route, and, having obtained a concession from the Republic of New Granada, in 1849 organized a company and intrusted the surveys for a railroad to Col. G. W. Hughes and J. C. Trantwine, well-known civil engineers. This was the first authentic survey made across the isthmus, and resulted in the construction of the Panama Railroad between 1850 and 1855.

In the meantime the Government of the United States, alive to the importance of the canal, had ordered a reconnaissance of the Isthmus of Tehuantepec, and, by diplomatic negotiations with Nicaragua, had encouraged and supported the organization of the Atlantic and Pacific Ship Canal Company, which had obtained from Nicaragua the right to build the canal, and, pending the completion of the work, to