No. 68.
Mr. Hall to Mr. Bayard.

No. 593.]

Sir: A gentleman who I have reason to believe is well informed in regard to the affairs of the Panama Canal Company arrived here recently from Paris, where he now resides. He has furnished me with a [Page 83] copy of a condensed statement showing very clearly and concisely the present financial situation of the enterprise. This statement, I understand, has been prepared by himself from the official reports of the directors and from other sources which he considers trustworthy. I have the honor to transmit it herewith persuaded that it will be found of interest, should the information it contains not have been communicated to the Department already.

From this exhibit it appears that the company had, up to August last, contracted liabilities to the extent of $270,000,000; that its yearly fixed charges for interest, amortization, and administration, exclusive of the cost of construction, amount to $16,000,000; while as yet no considerable portion of the work has been completed. The conclusion is that the enterprise is hopelessly bankrupt.

I have, etc.,

Henry C. Hall.
[Inclosure 1 in No. 593.]

A condensed statement showing the present financial situation of the Panama Canal Company. The data, it is said, have been obtained from the official reports of the company of the past four years and from other sources believed to be trustworthy.

Number Issues of Panama stock and bonds, etc. Number of shares and bonds. Sums realized in money for each emission Sums to be repaid to the stock and bond holders. Sums to be paid annually for interest, amortization and administration, exclusive of the cost of construction.
Francs. Francs. Francs.
1 600,000 shares, of 500 francs each, interest 5 per cent., of which 10,000 shares were paid for the concession 600,000 295,000,000 300,000,000 15,000,000
2 250,000 bonds, 5 per cent., issued September, 1882, at 487.50 francs, repayable at 500 250,000 109,375,000 125,000,000 6,408,000
3 600,000 bonds, 3 per cent., issued October, 1883, at 285.50 francs, repayable at 500 600,000 171,000,000 300,000,000 9,540,000
4 341,292 bonds, 4 per cent., issued —, 1884, at 333.50 francs, repayable at 500 341,292 113,004,920 170,646,00 7,679,740
5 500,000. These bonds were offered to the public on the 3d August, 1886, but only 458,802 were placed at 450 francs, repayable at 1,000 francs in 42 years, and bearing 30 francs yearly interest:
First year, annual interest 13,764,070
First year, amortization 5,505,000
458,802 206,460,900 458,802,000 19,269,070
The amortization is to increase in the same proportion as the interest decreases, so that the annual charge will be 19,259,070 francs:
Item 1. Annual charges and expenses for the service of the debt, etc. (according to official accounts this item in 1884 was 10,267,841 francs) 10,000,000
Item 2. Annual payment to American committee for service and co-operation 1,500,000
Item 3. Administration expenses in Paris and Panama (taking the average of past five years) 10,631,945
Item 4. Control of the Colombian Governments (?) 24,000
Item 5. Add sundry items (sums) realized during construction up to 30 June, 1885, as per official statements of accounts 19,724,448
Grand totals 2,250,094 914,565,268 1,334,448,000 80,052,755
Total in United States money $270,889,660 $16,010,551
[Page 84]


The foregoing statement shows that the Panama Canal Company has received net, up to August, 1888, 914,565,268 francs, for which they must reimburse stock and bond holders 1,354,448,000 francs. The difference, 439,882,732 francs, represents the sums the company has paid in premiums. The total cost of the Suez Canal was 489,000,000 francs.

It is impossible to ascertain the amount in cash in the hands of the directors after the last emission, but, considering the pending engagements of the company, it can not be large; at all events, it can not go far in the disbursements for construction, for which item there were expended in 1885 not less than 240,000,000 francs.

The number of cubic meters already excavated, according to official statements, is 21,594,318, out of an estimated total of 120,000,000 (?). The fact is, there will be not less than 150,000,000 cubic meters to excavate, including the most difficult part of the work (rock excavations under water, tidal locks, the Chagres dam), which, as yet, have not been touched.

It is asserted that during the year 1885 there were 11,500,000 cubic meters excavated, at a cost of 240,000,000 francs. (Official reports to June 30, 1886.)