No. 87.
Mr. Hall to Mr. Bayard.

No. 652.]

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.,

Henry C. Hall.
[Page 119]
[Inclosure 1 in No. 652.]

Mr. Hall to Mr. Cruz.

Mr. Minister: I beg to “be permitted to invite the attention of your excellency to a matter of grave importance affecting the commercial relations between Guatemala and the United States.

In the official newspaper of this Republic of the 15th instant is announced the transfer of a contract made a year ago by the Government of Guatemala and those of the other Central American states for the establishment of a line of Spanish steamers between Panama and San Francisco. Assurances also are given that it will be carried out.

It is understood that the contract referred to stipulates on the part of the Government of Guatemala, in addition to a money subsidy, for a rebate of 5 per centum of the customs duties upon all merchandise imported in the vessels of that line, and that this privilege shall not be extended to any other line of steamers during the existence of the contract. This stipulation practically closes the Pacific ports of Guatemala to American vessels; it excludes them from participation in the commerce between the same ports and San Francisco; indeed, with such an enormous discrimination against them they could not, even from their own ports, import merchandise of American production and manufacture into Guatemalan ports on the Pacific in competition with the Spanish line. Of course such consequences were not contemplated at the time of signing the contract, otherwise such discrimination could hardly be considered as a friendly act of the Government of your excellency in favor of American vessels. Moreover, such an alteration in the national tariff assumes the form of a discrimination against all foreign vessels in favor of the Spanish line, and affords ground for remonstrance as being at variance with that spirit of equality and comity recognized in modern international treaties of commerce and friendship.

The treaty between Guatemala and the United States, concluded on the 3d of March, 1849, but no longer in force, stipulated substantially that “no higher duties shall be levied and collected upon merchandise imported into the Republic of Guatemala in American vessels than shall be levied and collected upon merchandise imported in vessels of any other nationality.” The United States have treaty stipulations of the same tenor now in force with the other Central American Republics, and the National Constituent Assembly of Salvador, to which the same contract with that Republic was submitted for ratification, rejected the clause conceding a rebate of duties upon the ground that it is a violation of the treaty of the 6th December, 1870, between that Republic and the United States.

I trust your excellency will be pleased to admit these observations in the same friendly spirit in which they are offered, and in the interest of that good understanding and cordial intercourse happily subsisting between Guatemala and the United States.

This occasion affords, etc.,

Henry C. Hall.
[Inclosure 2 in No. 652.—Translation.—Published in the official newspaper of Guatemala of the 7th May, 1887.]

Contract between the Guatemalan Government and Messrs. Irigoyen and March for the establishment of a line of Spanish steamers between Panama and San Francisco, Cal.

To the Minister for Public Works:

Sir: We have the honor to transcribe to you the following report:

Legislative Assembly: The committee on public works has studied with due interest the contract made with Messrs. Irigoyen and March for the establishment of a line of Spanish steamers for the service of our ports with San Francisco, Cal., and Panama.

The inconveniences which the nation has suffered for want of competition in this service are well known in having to submit to the payment of heavy freights as well upon merchandise imported as upon exported products of the country. The same thing occurs in regard to the payment of passage-money and the lack of good service to those who travel by the established line.

[Page 120]

This same want of competition has caused delays at the ports, and in consequence expenses and losses to agriculturists and merchants. The committee believes that upon the establishment of the newly projected line and a useful competition these inconveniences will cease.

Article 2 of the contract fixes as the maximum of freights and passages 20 per cent. less than are paid to-day to the Pacific Mail Steamship Company, and, in addition to the rebate of 20 per cent. in passages, these are to be paid in the current money of the country.

Article 8 imposes upon the company the obligation to instruct every year two young men who may desire to become navigators; one as engineer, another as quartermaster; and, in addition, six launchmen as wheelmen and seamen; the company binds itself to instruct and maintain them, and, besides, give them such wages as may be assigned to them.

The committee finds the concessions made to the company for this service just and equitable, and is of the opinion that only the rebate of 5 per cent. be modified in the maritime customs duties upon merchandise coming in these steamers by reducing it to 3 per cent., inasmuch as this concession has for its sole object, as regards the company, to increase the amount of cargo coming by its steamers, and the benefit of the rebate would be solely in favor of commerce.

The committee does not believe that the concessions made to Messrs. Irigoyen and March affect in anyway the commercial equality that should be observed with respect to all nations, inasmuch as they can all enjoy the rebate of 3 per cent. in maritime customs upon all merchandise, whatever its place of production, provided it comes by the line of vessels that they (Irigoyen and March) establish.

In view of the considerations set forth we propose, as the main points of the resolution, deferring always to the better judgment of this high body, the following:

Let the contract made on the 17th February, 1886, between the minister for public works and Messrs. Irigoyen and March be approved, with a modification of the article of the concessions, reducing from 5 to 3 per cent. the rebate in customs duties.

Miguel Urrutia, J. Pablo Maldonado, Gregorio Enriquez, R. Aceña, Juan M. Rubio, Gustavo E. Guzmán:

In discussing the report the following amendment was considered, approved, and accepted by the committee:

“That the Executive be authorized, in case of necessity, to concede a rebate up to 5 per cent. of the customs duties upon the cargo or merchandise that the said steamers carry under the conditions of this contract.”

Pedro Molina Flores: In bringing to your knowledge the resolution of this high body, we have the pleasure to renew to you the assurances of our distinguished consideration and esteem.

Miguel A. Urrutia.

Damaso Micheo.

Contract referred to in the resolution which appears in the respective session of this number.

The secretary of state in the department of public works, with the authorization of the President of the one part, and Carlos F. Irigoyen and José A. March of the other part, have entered into the following contract:

Article I.

Irigoyen and March agree to establish a line of Spanish-Central American steamers for cargo, with good and commodious cabins for passengers, to run between San Francisco and Panama and way ports, binding themselves to touch once a week at each of the ports of San José, Champerico, Ocos, and any other port which the Government may hereafter open whenever there maybe cargo, and remaining twelve hours in each one of the mentioned ports for the necessary loading and discharging of cargo.

Article II.

To charge as the maximum of freight and passages 20 per cent. less than what is charged to-day by the Pacific Mail Steamship Company, it being understood that passage-money, in addition to the rebate of 20 per cent., shall be payable in current money of the country.

[Page 121]

Article III.

To carry and to bring the mails of the nation to the ports of itinerary, which the enterprise may have established, without any cost to the Government.

Article IV.

To convey, passage free, to any of the ports of the itinerary all ministers accredited by the Government.

Article V.

To carry at half the tariff of passage rates to any of the ports of the Republic troops and other civil and military employés of the Government when in active service and traveling by special order of the Government, to which effect they shall present to the agent, or to the purser on board, an order of the respective minister, in which shall be designated the class of passage that shall be given them.

Article VI.

To convey at half of the passage rates of steerage artisans, mechanics, or other persons who desire to immigrate to the Republic, whenever they come under contract with the Government and they present the contract to the agents.

Article VII.

To remain in port six hours longer than stipulated in Article I whenever the Government requires it and gives notice thereof directly to the respective agent of the company two hours before the designated time of sailing.

Article VIII.

To carry on board of their vessels and receive each year (at the end of the course) two young men who, having gained by competitive examination the required degrees of the polytechnic school, have chosen the career of navigators; they shall be maintained by the company. At the end of two years they shall present themselves for examination, and with their titles of officers they may elect employment in their class, with the usual wages of the vessels of the company. To carry also a young man to learn the occupation of an engineer, and another that of quartermaster, and also six launchmen to learn the occupation of helmsmen and seamen; these, besides their instruction and maintenance, shall receive the wages the company may assign them.

Article IX.

The names of the seven vessels which the company agrees to establish shall be Guatemala, Salvador, Honduras, Nicaragua, Costa Rica, Mexico, and España.

Article X.

The direction of the company shall be in the city of Guatemala, and the flags of the vessels shall be Spanish.

Article XI.

War materials and implements which the Government may import for its own account shall pay 25 per cent. less than the freight designated by the company. The company binds itself not to carry in its steamers war material and ammunition from the parts at which they touch to ports of Guatemala if there should be reason to suppose that such materials are to be used against Guatemala or for the purposes of war or pillage; it also agrees not to land arms in any port of the Republic when they do not come expressly for the Government.

The Government on its part concedes to the contractors, Carlos F. Irigoyen and José A. March, or to the company to which they may transfer it:

A concession for ten years for the foreign and coastwise trade on the Pacific coasts of the Republic, and 5 per cent. less in the customs duties upon every class of cargo or merchandise which may arrive at any of the ports of the Republic by this.
A pecuniary subvention of $20,000 a year, payable in current coin of the country by monthly installments during the first five years; during the following five years the subvention shall be $18,000, payable in the same form as during the first five years.
Exemption of the steamers of the company from the payment of the present port dues, such as tonnage, roll, light, water, etc., and those which may hereafter be established.
The right to weigh anchor and leave the port without previous permission of the respective authority in case of bad weather or any other maritime incident.
Exemption from dues, taxes, and imposts now in force, or which may hereafter be established, upon property, movable or immovable, of the company destined exclusively for its service.
The Government will instruct the captains of the port to enter and dispatch the steamers of the company promptly both by day and by night; in the latter case the steamers shall make signals to be admitted to free-pratique.
Exemption from military service of all the employés of the company, those on board as well as those on shore.
The mails shall be received and delivered from alongside the vessels.
The company shall establish for its own account a port light in each one of the ports of San José, Champerico, Ocos, and those which may hereafter be opened by the Government, so much needed by all navigators, and for the better service of the vessels.

Additional Articles.


The contract shall commence to have effect after the termination of the contract between this Government and the Pacific Mail Steamship Company, and the contractors bind themselves to have their steamers ready for the stipulated service from that day, and in case they should not be ready the concession shall be declared to have lapsed.


The payment of the subsidy shall commence from the month in which the first ordinary voyage shall take place; these voyages shall be precisely upon the dates fixed in the foregoing article.


The company may omit to touch at any of the ports designated in its itinerary in the fortuitous event of being impeded by any maritime contretemps, without being held responsible for such failure.


The term of the concession shall commence to run from the day mentioned in Article I. And the ten years of its duration shall commence from the first regular voyage of the steamers.


The dates upon which the steamers shall touch at the ports shall be designated by the same company and notice thereof given to the minister of public works. The same shall be done in case of a change of itinerary.


The capital stock of the company shall be considered foreign.


The company shall have the right to select in the ports of the Republic localities belonging to the Government upon which to establish warehouses, deposits of coal, offices, etc., and the Government shall cede them gratuitously.


All materials, tools, machinery, etc., for the construction of warehouses, offices, store-rooms, etc., which the company may have to import from abroad, shall be entered free of all duty and impost, as also the supplies for its consumption.

[Page 123]


At the expiration of the term of this contract the company shall have the right of preference over other enterprises of the same nature under equal circumstances, in case it should suit its interests to continue the service under a new contract, as also when the Northern Railroad shall have been built, the company shall have the same rights in the establishment of lines of steamers on the Atlantic.


The company shall be exempt from its obligations under fortuitous circumstances, or force majeure when substantiated.


In case of the opening of the Panama Canal the Government shall arrange with the company the form in which the contract shall be continued, it being understood that under equality of circumstances it shall have every preference over other similar enterprises.


Whatever differences may occur between the contracting parties shall be settled by arbitrators, appointed one by each of the parties, and these in turn shall appoint a third.


The contractors have the right to form a company either between themselves or by issuing stock, as also to transfer, sell, or hypothecate this contract, or the line of steamers established or to be established, to any corporation or person.

  • Carlos Herrera,
    Minister of Public Works.
  • Carlos F. Irigoyen.
  • José A. March.

Department of Public Works.—Resolution relative to the addition to a contract made in February, 1886.

Taking into consideration the memorial of Messrs. Carlos F. Irigoyen and José A. March, in which they ask that there be added to the contract made with this department relative to the service of steamers on the Pacific, the following clause: “During the term of this contract the Government shall not concede to any other enterprises or companies equal or greater advantages than those herein stipulated for the service between San Francisco and Panama;” and desiring to afford to the contractors the facilities which they consider indispensable for the realization of the purposes they entertain, the general in charge of the Presidency, in conformity therewith, decrees that the above-transcribed article shall be considered as an integral part of the contract signed by them and the secretary for public works on the 17th of the current month.

Let it be communicated.

Signed by the President:
[Inclosure 3 in No. 652.—Translation.

Señor Irigoyen to Señor Rodrigues.

To the Minister of Public Works:

I have the honor to communicate to you that the contract for the establishment of a line of steamers to do service between Panama and San Francisco, Cal., touching at the principal intermediate ports, made between the Government, José A. March, [Page 124] and myself, has been formally transferred by us on the 9th of March last to Marquis de Campo, a Spanish subject residing in Madrid.

His high position, and the abundant resources which this opulent ship-owner can dispose of, and the great desire which animates him to draw each day closer the commercial relations between these Republics and Spain are a solid guaranty of the stability of the line of steamers which will soon be inaugurated.

In communicating this to the minister, permit me to congratulate the Government, so much interested in the welfare of the country, for the complete success which this enterprise will undoubtedly meet with, and which must afford positive service to the agriculture and commerce, the sources of our public wealth.

With the greatest, etc.,

Carlos F. Irigoyen.
[Inclosure 4 in No. 652.]

Señor Rodrigues to Señor Irigoyen.


I have the pleasure to reply to your courteous note addressed to me yesterday, informing me that the contract for a line of steamers to do service between Panama and San Francisco, Cal., touching at the principal intermediate ports, made between the Government of this Republic and yourself in union with Don José A. March, has been transferred to the Marquis do Campo, a Spanish subject residing in Madrid.

The very recommendable conditions of the Marquis de Campo and the desire, as you intimate that animates him to draw closer day by day the commercial relations between these Republics and Spain, are, in effect, a guaranty for the stability of this new line of steamers, which will count upon the support that the Executive can give it within the limits of his attributions.

In these terms the President has instructed me to reply to you, and to manifest at the same time his appreciation of your congratulations, addressed to the Government, on account of the good effect this enterprise is bound to have upon the agricultural and commercial interests of the country.

I am, etc.,

Juan J. Rodrigues.
  1. Reduced to 3 per cent. by the Guatemalan Congress, with authority to increase to 5 per cent. in the discretion of the Executive.