Mr. Hall to
Guatemala , May 11, 1887. (Received June 7.)
Sir: In the official newspaper of Guatemala of the 7th instant is published and promulgated a contract, entered into in February, 1886, between Messrs. Irigoyen and March, Spanish subjects, and the Guatemalan Government, relative to the establishment of a line of Spanish steamers between Panama and San Francisco, Cal., touching at the intermediate ports of Guatemala. This contract, as will be seen, was signed fifteen months ago, and is now published for the first time, twelve days after its ratification, by the Legislative Assembly.
I have referred to this contract in my No. 515 of the 17th of June, 1886, in reporting to the Department a similar agreement of the same parties with the Government of Salvador. Señor Batres, then minister for foreign affairs of Guatemala, said to me, with reference to it, that it was at variance with the policy of his Government; that although Guatemala had no commercial treaties with other nations, she had hitherto observed international comity in not discriminating against or in favor of any one * * * and he was confident that when the contract should be submitted to the Assembly, the objectionable features would be stricken out. Similar assurances were given to my colleagues. Moreover, the fact that Irigoyen and March were irresponsible bankrupts, with no standing or credit, financial or otherwise, in the country, gave reason to suppose that they would be unable to obtain the required capital or steamers mentioned in the contract.
In the mean time the parties failed to fulfill their stipulations with some of the other States, that their steamers should be ready for service in October last, giving still further reason to suppose that the project would Ml altogether. The stipulation in the contract with Guatemala fixes the time, at the termination of the Government’s contract with the Pacific Mail Steamship Company, in September next.
The before-mentioned contractors, after offering their concession in New York and Liverpool, have finally transferred it to the Marquis de Campo, an enterprising ship-owner of Spain, and the probabilities are that it will now be carried out.
I respectfully invite your attention to some of the conditions of this contract. The Guatemalan Government concedes to the parties, for the term of ten years, the privilege of the foreign and coastwise trade of Guatemala on the Pacific; a subvention of $20,000 a year during the first five, and of $18,000 a year during the last five years of the contract, and exemption from all port charges whatsoever.
The Government further concedes a rebate of 5 per cent.* in customs duties upon all cargo or merchandise imported into the ports of the Republic by the Spanish line. This rebate, as will be shown hereinafter, can hardly be considered otherwise than as a premeditated, unfriendly discrimination against American as well as other foreign vessels, and the effect can be no other than their exclusion from the Pacific ports of Guatemala, and even from our own port of San Francisco. This rebate exceeds in many cases the current freight upon every class of merchandise of American production or manufacture that could be imported in American vessels.[Page 118]
A merchant of this place, who imports largely of American domestic goods, has given me the following statement, showing conclusively that the discrimination in favor of the Spanish line precludes everything like a fair competition by American vessels:
The merchant imported from New York, via Panama, four bales of bleached cotton sheetings; the freight thereon by the Pacific Mail Company’s steamers was $20.75.
Import duties paid in Guatemala, $508.12.
The rebate of 5 per cent. on these duties, if imported by the Spanish line, would be $25.40, or, say, $4.65 more than the freight paid to the American line.
The same merchant received four bales of brown sheetings from San Francisco, the freight thereon amounting to $17.
Import duties paid in Guatemala, $329.12.
The rebate thereon of 5 per cent., if the same goods had been imported by the Spanish line, would be $16.45, or 55 cents only less than the freight paid to the American line.
It is evident that under such an enormous discrimination there can be no importations by American vessels into Guatemala.
The transfer of the above-mentioned contract to the Marquis de Campo was announced in the official newspaper of this Government about two months ago. Up to that time it had not been submitted to the Assembly, and the probability of its being carried out was entertained by no one.
In a conversation with Señor Cruz, minister of foreign affairs, he gave me to understand that he was decidedly opposed to the ratification of the contract, and one of the reasons he assigned was that it would deprive the Government of revenue to the extent of nearly $250,000, for which neither it nor the country would receive any compensatory equivalent. He also gave me to understand that the President shared his views. To my colleagues, the British and German ministers and the French and Italian charges, he expressed himself in the same way, and at his invitation all of them addressed him communication upon the subject.
* * * * * * *
A copy of my communication to the minister is inclosed. I inclose also copies and translations of the contract and of the correspondence between Señor Irigoyen and the minister of public works concerning the transfer of the contract to the Marquis de Campo.
In my dispatch No. 603, of the 6th of January last, I mentioned the fact that there is a line of German steamers established between Hamburg and the Pacific ports of South and Central America by way of the Strait of Magellan. Large quantities of dry goods are imported into Guatemala by this line at low rates of freight compared with the Panama route. The German minister has exhibited to me to-day a comparative statement, carefully prepared by a German merchant, showing that upon nearly every description of merchandise usually imported by that line the rebates hi duties, which shippers by the Spanish steamers will enjoy, is greatly in excess of the tariff of freight rates by the German steamers. Naturally he imagines there is no room left to the latter for a fair competition.
I have, etc.,
- Reduced to 3 per cent. by the Guatemalan Congress, with authority to increase to 5 per cent. in the discretion of the Executive.↩