History of Central America, Volume 3, 1801-1887 / The Works of Hubert Howe Bancroft, Volume 8

by Hubert Howe Bancroft

Between the years 1838 and 1844, Central America was distracted by civil wars, and all action relative to the canal was suspended. In 1844, Don Francisco Castellon, minister from the republic of Nicaragua to France, made a contract with a Belgian company, acting under the patronage of the king of Belgium, for the construction of the canal. But this contract was as unsuccessful as its predecessors. In 1846, Mr Marcoleta, Nicaraguan chargé d'affaires to Belgium, made a contract with Louis Napoleon (the present French emperor), then a prisoner at Ham, for its construction. With his characteristic vanity, he stipulated that it should be called 'Canal Napoleon de Nicaragua.' Napoleon wrote and published a pamphlet in London, upon the subject, and made a feeble attempt to awaken the attention of capitalists, but without success. His pamphlet had only a limited circulation, but was afterward republished by M. Belly. On the 16th of February, 1849, William Wheelright made a proposition in behalf of an English company for the construction of the canal, but it was not acted upon.

On the 14th of March, 1849, Mr D. T. Brown, in behalf of certain citizens of New York, and General Muñoz, commissioner for Nicaragua, entered into a contract for the construction of a canal, but it was neither ratified by the executive of that republic nor by the company in New York, within the stipulated time. The seizure of Greytown by the English, in 1848, and the pretext of a Mosquito protectorate, were rightly regarded by the Nicaraguan government and our own, as directed to obtaining command and permanent control and dominion over the only possible route for an interoceanic canal.

On the 21st of June, 1849, Mr Hise, U. S. chargé d'affaires to Nicaragua, concluded a convention with commissioners appointed by that republic, giving the United States a perpetual right of way through that republic, of erecting forts, and protecting the transit. This convention was not approved by our own government, or by that of Nicaragua. On the 4th of March, 1850, General Taylor was inaugurated president of the United States, and soon after sent Mr E. G. Squier to Central America to supersede Mr Hise, as chargé d'affaires to Guatemala, with special commissions to the other states of Central America, "with full power to treat with them separately on all matters affecting their relations with this republic." Upon his arrival in Nicaragua, Mr Squier found an agent of Cornelius Vanderbilt, and others of New York, who was endeavoring to obtain a grant from that government for the construction of a canal. The government was at first indisposed to listen to his overtures, until assured by Mr Squier that the United States government would guarantee any charter, not inconsistent with our public policy, that might be granted by Nicaragua.

On the 27th of August, 1850, a contract was signed between the government of Nicaragua and the agent of the New York company, and afterward ratified on the 23d of September following, containing the following provisions, viz.:

1. That the American Atlantic and Pacific Ship Canal Company may construct a ship-canal, at its own expense, from San Juan to Realejo, or any other point within the territory of Nicaragua, on the Pacific, and make use of all lands, waters, or natural materials of the country for the enterprise.

2. The canal shall be large enough to admit vessels of all sizes.

3. The grant is for eighty-five years from the completion of the work; the surveys to be commenced within twelve months; the work to be completed within twelve years, unless interrupted by unforeseen events. If not completed within the stipulated time, the charter will be forfeited, and all work done shall revert to the state. At the end of eighty-five years the canal shall revert to the state; the company, nevertheless, shall receive fifteen per cent annually of the net profits for ten years thereafter, if the entire cost of the canal does not exceed twenty million dollars; but if it does, then it shall receive the same percentage for twenty years thereafter.

4. The company to pay the state ten thousand dollars per annum, during the progress of the work, and to give it two hundred thousand dollars of the capital stock, and to pay twenty per cent of the net profits for twenty years, and twenty-five per cent thereafter.

FURTHER CONTRACT PROVISIONS.

5. The company to have the exclusive right to navigate the interior waters of Nicaragua by steam, and within twelve years to open any land or other route, by means of transit or conveyance across the state, and pay ten per cent of the net profits of such transit to the state, and transport on such transit, and the canal, when finished, the officers and employés of the republic free of charge.