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

by Hubert Howe Bancroft

6. The canal to be open to the vessels of all nations.

7. The contract and the rights and privileges conceded by it to be held inalienably by the individuals composing the company.

8. All disputes shall be settled by commissioners appointed in a specified manner.

9. All machinery and other articles introduced by the company into the state, for its own use, to enter free of duty; and all persons in its employ to enjoy all the privileges of citizenship, without being subject to taxation or military service.

10. The state concedes to the company, for purposes of colonization, eight sections of land, on the line of the canal, in the valley of the river San Juan, each six miles square, and at least three miles apart, with the right of alienating the same under certain reservations. All settlers on these lands to be subject to the laws of the republic, being, however, for ten years exempt from all taxes and from all public service so soon as each colony shall contain fifty settlers.

On the same day Mr Squier negotiated a treaty with Nicaragua, which provided that citizens, vessels, and merchandise of the United States should be exempt from duty in the ports of Nicaragua; and that citizens of the United States should have a right of way through the republic. The government of the United States agreed to protect the company in the full enjoyment of its rights from the inception to the termination of its grant. The rights, privileges, and immunities granted to the government and citizens of the United States shall not accrue to any other government, unless it first enter into the same treaty stipulations with Nicaragua as the United States has done. This treaty was ratified by the Nicaraguan legislative chambers on the 23d of September following, but was not acted upon by the United States senate, to which it was sent by President Taylor. This treaty was opposed by the British minister at Washington, who energetically exerted himself to secure its defeat.

The Clayton-Bulwer treaty between the United States and England guaranteed the neutrality of the canal, and both governments agreed to protect any company undertaking the work. The object of our government in this convention was to put an end to the Mosquito protectorate.

In August 1850 the company sent a party of engineers from New York to Nicaragua to survey a route from Lake Nicaragua to the Pacific, near the line taken by Galisteo and Baily. Soon afterwards the steamer Director was sent from New York to Lake Nicaragua, and smaller boats were sent to the San Juan River. A new road was opened to the Pacific from Virgin Bay on the lake to San Juan del Sur. A line of steamers was established from New York to Greytown, and from San Juan del Sur to San Francisco.

The new contract made with United States citizens, and ratified and enforced by treaty with our own government, was not consistent with the wishes or policy of Great Britain, but the generosity of our government in throwing open the proposed canal to all nations disarmed hostile criticism, and deprived Europe of any pretext for opposition or protest. It quickened England into new energy, in the assertion of her claims under the Mosquito protectorate. On the 15th of August, 1850, the British consular representative in Central America addressed a note to the Nicaraguan government, in which he stated the boundary claimed by his government as follows: 'The undersigned, her Britannic Majesty's chargé d'affaires in Central America, with this view, has the honor to declare to the minister of foreign relations of the supreme government of Nicaragua, that the general boundary line of the Mosquito territory begins at the northern extremity of the boundary line between the district of Tegucigalpa in Honduras, and the jurisdiction of New Segovia; and after following the northern frontiers of New Segovia it runs along the south-eastern limits of the district of Matagalpa and Chontales, and thence in an easterly course, until it reaches the Machuca Rapids, to the river San Juan.' If this boundary line had been allowed, as claimed, it would have placed the only possible route for the proposed canal in the occupation and control of Great Britain. Daniel Cleveland's Across the Nicaragua Transit, MS., 118-42.