No. 2.
Mr. Hanna to Mr. Bayard.

No. 94.]

Sir: A most important bill has passed both houses of the Argentine Congress, fixing a basis of a contract with Mr. Robert P. Houston, representing English capital, for the construction and operation of two lines of ocean steamers, one to ply between the north of Europe and the River Prate, the other between New York and Buenos Ayres. The Spanish text of this measure and translation are annexed as inclosures hereto.

It will be seen the agreement gives Mr. Houston a guaranty of 5 per cent per annum on a sum not exceeding $6,250,000, for the construction of ten steamers, of 4,000 tons each, including four light-draught steam-launches for landing and river service for the North Europe line.

These steamers are to carry the mails for the Argentine Government free of charge.

In case of war the Government to use them at will, or to have the right to take them absolutely by purchase. Each steamer is to carry eight cadets for instruction in arts of seamanship. The ships are all to carry the Argentine flag. The ships are all to carry Argentine doctors. Duration of the guaranty to be fifteen years. Arrivals and departures to be weekly to and from Argentine ports.

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The European ships to have refrigerators of sufficient capacity to carry 3,000 slaughtered sheep, or their equivalent in other fresh meats. These are the most prominent elements of the contract for the European ships.

The ships to run to New York will not contain refrigerators, but the other general features are the same. The details are quite extended. It is a tremendous scheme, and in some of its parts quite puzzling. The guaranty for the New York ships is to be 5 per cent, on a capital of $1,800,000, but annual expenditure in no case to exceed $90,000. This is not as much as was offered our own people and entails many objections and difficulties not imposed by that proposition. But our people interposed too many suggestions, and halting so long, have been left out, at least for the present. Houston proposes, without stops except at coaling stations, to run his ships at the rate of 16 miles per hour, stopping nowhere between this and New York north of Montevideo, and making the run from New York here in less than eighteen days. I have just returned from a call on the minister of foreign affairs, who has the formulation of the contract in charge, and found him in a very happy frame of mind over the situation. He assured me the first ship would run from New York here in April next. Doubts are, however, freely expressed by other steam-ship companies about Mr. Houston’s ability to perform his agreements. I will have more to say about this contract, but for the present have given only its most general features.

I have, etc.,

Bayless W. Hanna.
[Inclosure in No. 94.—Translation.]

Terms agreed upon between the Executive and Robert Patterson Houston for direct navigation between northern Europe and the ports of the Republic.

The National Government proposes an animal guaranty of 5 per cent, upon a capital of £1,250,000 for the construction of ten steam-ships, for the direct navigation between the ports of northern Europe and the Republic, and for the construction of four lighters, to be used in the waters of the Republic for the transportation of immigrants and their cargo brought by said steam-ships.
The immigrants shall be English, Swedes, Norwegians, Germans, Danes, Dutch, Belgians, French, and of such other nationalities as the National Government may indicate.
The vessels shall carry the mail free.
In case of war the Government shall have the right to use said steam-ships as transports under conditions which shall be agreed upon. If used as cruisers or men-of-war, the Government will pay the original cost of them.
On each vessel the Government may place eight naval cadets, to be educated in practical seamanship.
Should the profits of the company exceed 10 per cent., one-half of the excess shall accrue to the Government.
The accommodations for first and second class shall be reduced as much as possible, the preference being given to third-class passengers.
The 5 per cent, guaranty shall commence in the same proportion as the vessels are finished and run from the day they leave for the ports of the Republic, including the four steam lighters, which shall be of light draught and suitable for the navigation of the Parana and Uruguay Rivers.
The velocity of the ten vessels shall be 16 knots per hour.
For the completion of this contract Houston shall present to the Argentine legation in England, where the vessels will be built, the vouchers of the cost of each one, and if the same is considered excessive the amount shall be established by experts.
The duration of this contract shall be fifteen years.
The route shall be direct from the north of Europe to the ports of the Republic—vessels touching only at Montevideo and at such points as are customary for coaling; but on their return they can touch at any point.
One of these vessels shall arrive at least once a week in the ports of the Republic.
Government cargo shall have a rebate of 40 per cent, except coal and iron, which shall have 20 per cent.
It being in the interest of the company to transport as many immigrants as possible from the north of Europe, it will establish at its own cost such agencies as it may deem necessary to bring about the current of immigration.
The price of passage for immigrants shall be agreed upon between the Government and the company without any implication that the company renounces any benefit or premium which the Government may accord at any time to those who bring in immigrants.
In each of the vessels running from Europe to the Republic, the company shall place a freezing apparatus with the capacity of carrying at least 3,000 sheep, or their equivalent in beef.
The fourteen steamers mentioned shall fly the national flag, and each one-will be named for one of the Argentine provinces.
On the expiration of the guaranty, the vessels will continue under the Argentine flag while sailing to or from the ports of the Republic.
Each vessel will carry an Argentine doctor, or one of some other nationality, who shall have passed an examination in the Republic; said doctor shall be named by the Government and accepted by the company.
Fifteen months from the execution of this contract the service shall begin, and within two years from same date all the vessels shall be running.
It is understood that this company is completely independent of that which Mr. Houston has already established between Liverpool and the ports of the Republic, which may continue as before.

Terms agreed upon between the Executive and R. P. Houston, for direct navigation from the United States to the ports of the Republic.

Mr. R P. Houston binds himself to establish a direct line of steamers between the United States and Buenos Ayres, which shall begin running within five months from the signing of this contract by the Argentine Government.
The line shall be served by three or four steamers of the same class and condition as the three for the North European service, and must be built in the same time as fixed for the others, but without freezing apparatus.
In the mean time, the line shall be served by such other steamers as Houston shall place in suitable condition for cargo and accommodations of passengers.
The guaranty shall be 5 per cent, on a capital of £360,000, maximum of said vessels.
The other conditions for the contract for the North European service are applicable to this.