No. 71.
Mr. Hall to Mr. Bayard .

No. 718.]

Sir: With further reference to your instructions numbered 476, 489, 494, and 499, the last dated the 8th ultimo, and to other correspondence relating to the Spanish Central American Line of steamers of the Marquis de Campo, I have the honor to inclose a translation of a contract, concluded on the 1st of July last, between the same party and the Costa Rican Government. This contract stipulates for a rebate of 5 per centum on all merchandise imported by the steamers of that line into the Pacific ports of Costa Rica.

I have postponed until now communicating with the Costa Rican Government, in regard to the above mentioned rebate, for the reason that the general agent of the Pacific Mail Company for Central America had informed me that he had been assured by the local agent in Costa Rica that the Government, following the example of Guatemala and Salvador, would of its own accord extend the same concession to all regular lines of steamers, whether under contract or not. The Government, however, has thus far done nothing of the kind; in the meantime the Spanish Central American steamers have commenced their voyages between Panama and San Francisco I have therefore determined to communicate at once to the Costa Rican Government and in the tenor of your instructions above referred to. A copy of my note of this date to the minister for foreign affairs is inclosed herewith.

I have, etc.,

Henry C. Hall.
[Inclosure 1 in No. 718.—Translation.]

Contract between the Marquis de Campo and the Government of Costa Rica relative to the establishment of a line of steamers between Panama and San Francisco and intermediate ports.

[From La Gaceta Oficial of Costa Rica of the 19th July, 1887.]

No. 41.

The constitutional congress of the Republic of Costa Rica decrees:

only article.

The ratification of the contract made in this city the 1st day of the present month, between the secretary of state in the marine department, duly authorized by the President of the Republic, and Carlos P. Irigoyen, in representation of the Marquis de Campo, for the establishment of a line of steamers between Panama, San Francisco, Cal., and intermediate ports, for the service of transportation of passengers, cargo, and correspondence.

The tenor of the contract referred to is as follows:

Apolinar de Jesus Soto, secretary of the department of war and marine of Costa Rica, duly authorized by the President of the Republic, and Carlos Francisco Irigoyen y Montero, etc., resident of Guatemala, in the name and in representation of Señor Don José Campo y Perez, Marquis de Campo, etc., resident of Madrid, capital of the Kingdom of Spain, as per power of attorney in due form exhibited, have agreed to enter into, ad referendum, the following contract:

Article 1.

The Marquis de Campo binds himself with the Government of Costa Rica in the terms hereinafter expressed.

[Page 84]

(a) To establish, a line of mail steamers to ply between San Francisco, Cal., and Panama and intermediate ports, which shall be employed for the service of cargo, and shall have sufficient accommodations for carrying passengers.

The line shall be styled the “Spanish Central American,” and shall consist of seven mail steamers, whose names shall be Centro America, Costa Rica, Nicaragua, Salvador, Honduras, Guatemala, and Mexico. The two first named shall sail under the flag of Costa Rica, and the others under the flags of the other Republics of Central America.

The company may employ auxiliary steamers, which may carry the Spanish flag, and the latter shall have the same rights and obligations stipulated in the present contract in regard to those previously mentioned.

The steamers shall touch at the port of Punta Arenas, and at any other which the Government may open on the Pacific, at least once a week, with the obligation of remaining therein ordinarily twelve hours, and six hours more when the authority, by notification to the agent or to the captain of the vessel, shall demand it two hours before the time designated for sailing, save in every case the time required for loading and discharging.

The company shall give notice to the marine department of the dates upon which the steamers should arrive at the port or ports of the Republic, and others of the route, according to the established itinerary, and shall also give public notice thereof in the official newspaper. In the same manner notice shall be given of any change in the dates of the arrival of the steamers.

(b) To charge as a maximum of freight and passage the rates designated to-day in the tariff of the Pacific Mail Steam-ship Company, with a rebate of 20 per cent in addition; the passages are payable in soles, in money of Guatemala or Honduras, of in their equivalent in Costa Rican money. But for material and munition of war, as well as any other articles which the Government may import for its own account, the company shall rebate 25 cents from its adopted tariff.

(c) To give, upon the order of the respective departments, a free passage in its steamers from Costa Rica to any of the ports of their itinerary, and vice versa, to the diplomatic ministers and employés of the Government traveling in commission. In addition to this there shall be placed at the disposal of the Government every year four first-class round passages between San Francisco and Panama or intermediate ports.

(d) To carry at half the tariff rates troops in the service of the Government upon the presentation to the agent or supercargo on board of the order of the respective department in which the class of passage to be given shall be designated. Also to carry for one-half the steerage rates laborers arriving in or leaving the Republic with the authorization of the Government, the fact to be verified by a competent authority. In either case, upon an emergency, the order may be given by the captain of the port.

(e) To receive on board the steamers each year and to maintain at his expense four young men, who, in the opinion of a commission appointed by the Government, have made the needful studies to become apprentices in navigation; four others, two of whom to learn engineering and two the duties of quartermaster, and twelve others to acquire the knowledge and practice of wheelmen.

The four first, after two years, shall be examined, and should they prove to be fitted, shall receive a diploma, and they shall be employed according to their class and the wages assigned the station; the next four and the twelve last named shall earn wages from the time they are received on board, and these, as well as those previously mentioned, shall not be dismissed from the service, except for faults of a grave character or for manifest incapacity.

The company is bound to notify the minister of marine, when for any of the causes mentioned in the foregoing paragraph the apprentices may be dismissed, so that the Government may replace them.

(f) To carry the mails of Costa Rica in his steamers for the places at which they may touch, and those for the Republic that may be delivered to the steamers, as also to be responsible for their care and preservation on board. The correspondence shall be delivered and received by the intermediary of the postmasters.

The officers of the steamers are prohibited absolutely from receiving letters outside of the mails, except those that may be delivered on the high seas or after the closing of the mails; but in such cases the letters shall be delivered to the authorized functionaries of the Government, who shall collect the postage thereon, unless already franked with stamps.

Notwithstanding, the company may carry outside, apart, all letters or papers of or from its employés, and upon the business of the company.

The correspondence must be delivered alongside of the steamer, and the captain shall be bound to receive it at any moment up to the hour of sailing.

(g) To prove, under penalty of $100 fine for each infraction, should it be necessary, that a steamer may have been compelled by circumstances to sail without awaiting the corresponding permit of the captain of the port.

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(h) To submit to a line of $200 for each failure of the steamer to touch at the port or ports of the Republic upon the designated dates, it being understood that if it should occur three times consecutively the fine shall be $500, and if four times consecutively the fine shall be $1,000, and if the failures should be five or more times consecutively the Government shall have the right to collect as a penalty $2,000 for the last, and in addition to declare the contract to be de facto rescinded.

(i) Not to carry on board of their steamers troops or elements of war from the ports of their itinerary to the territory of the republic without the express consent of the Government, and in every case the company bind themselves not to land arms nor ammunition of the class before mentioned in the ports of the nation, unless expressly consigned to the Government.

(f) To observe strictly the laws and regulations relative to maritime traffic, saving the exceptions contained in this contract.

Article 2.

The Government of Costa Rica binds itself with the contractor, the Marquis de Campo.

(a) To rebate 5 per cent, from the customs duties upon whatever merchandise may be imported by the steamers of the line in the ports of the Pacific. But the company may import, free of customs duties, stores and utensils, purely naval, required for its vessels, conditional with a previous presentation of a memorial to the treasury department, so that note thereof may be taken and the respective authorization conceded if in conformity with the stipulations of this contract.

(b) Not to demand of the steamers of the company for all port dues more than $10 in the aggregate each time that one of them touches at the port or ports of the country upon their contracted service; and to exempt the movable and immovable property of the company in the Republic for maritime service from taxes of every kind, which in future may be levied.

(c) To concede to the company gratuitously eighteen lots of public land in the port or ports at which the vessels may touch in fulfillment of this contract for the construction of buildings and for marine service.

(d) To instruct the captains of ports to receive and dispatch the steamers without delay, by day and by night, the company paying for the extra labor of the employés.

(e) To give the company a pecuniary subvention of $10,000 a year during the five first years, and $8,000 a year during the remaining five, said subvention to be payable monthly in current money of the Republic, commencing from the 16th day of December, 1888, upon which the existing contract between the Pacific mail steamers shall cease.

(f) Not to concede to any other company or companies greater advantages than those which by this contract are conceded to Spanish Central American line of steamers in whatever relates to the service between San Francisco and Panama.

Article 3.

The duration of this contract shall be for ten years, commencing in conformity with clause (e) in the foregoing article on the 16th of December, 1888. Notwithstanding, with the exception of the pecuniary subvention, both contracting parties agree that the service of the Spanish Central American Line shall commence on the first of October of the present year, with all other covenanted obligations and rights.

Article 4.

The contractor may transfer or hypothecate by whatever title the line of steamers mentioned in this contract, it being understood that such transfer or hypothecation shall not be in favor of any foreign Government nor to the prejudice of the stipulations in this convention.

Article 5.

In case the Panama Canal should be opened during this contract, the company may propose to the Government a modification or amplification of its conditions; but if it should not be accepted, the said contract shall for the same reason terminate.

Article 6.

The capital of the company, wherein it does not conflict with the foregoing clauses, shall be considered as foreign capital.

[Page 86]

Article 7.

The company shall have an agent in the capital of this Republic with sufficient powers to represent it in all cases.

Article 8.

Every question which shall arise between the contracting parties with respect to its rights and obligations shall be submitted, in accordance with the laws of the country, to the decision of the arbitrators, one named by the Government and the other by the company; and if they should disagree in their report, it shall be decided by a third, to be mutually agreed upon by the same arbitrators at the time of accepting their appointment.

Article 9.

This contract is subject to the approbation of the legislature of the Republic. In faith whereof they sign the present contract at the national palace of San José, the 1st day of July, 1887.

A. de Jesus Soto

Carlos Irigoyen.

Presidential Palace.

Let the foregoing contract be approved and submitted to the Constitutional Congress for its ratification.

Soto.

To the executive power.


  • A. Esquivel ,
    President.
  • Maximo Fernandez ,
    Secretary.
  • Fran’co M. Fuentes.
    Proto-Secretary.

Let it be executed.

Soto.
[Inclosure 2 in No. 718.]

Mr. Hall to Señor Esquivel ,

Mr. Minister: The Department of State of the United States in several of its instructions to the writer assumes that the rebate in customs duties which the Government of Costa Rica has recently granted to the so-called Spanish Central-American line of steamers is contrary to the spirit and intentions of all modern treaties of commerce and friendship, and especially to the spirit and intentions of the existing treaty of friendship, navigation, and commerce between the United States and that Republic.

Under date of the 1st July last past, as appears in the official newspaper of Costa Rica of the 19th of the same month, a contract was concluded between the Government of your excellency and Don Carlos F. Irigoyen, as agent of the Marquis de Campo. This contract (article 2, clause a) stipulates, in addition to a money subsidy, for a rebate of 5 per centum in custom duties upon all merchandise imported into Costa Rica by vessels of that line; it stipulates also that this privilege shall not be extended to any other line of steamers during the existence of the contract (article 2, clause f); elsewhere in the contract it is provided that the duration of the contract shall be ten years.

The first-mentioned stipulation practically closes the import trade of the Pacific ports of Costa Rica to American vessels for a period of ten years; it excludes them from participation in the same import trade from San Francisco and any other ports of the United States on the Pacific. Article 2, clause f, appears to be contrary to the spirit and intentions as well as the letter of Article 3 of the before-mentioned treaty.

The treaty of 1851 between the United States and Costa Rica stipulates that there shall be reciprocal freedom of commerce between the two countries. It also stipulates, substantially, that no higher duties shall be collected upon merchandise imported [Page 87] into Costa Rica in vessels of the United States than shall be collected upon merchandise in vessels of any other nationality; at all events, it will no doubt be apparent to your excellency that the framers of that treaty could have never contemplated the possibility that merchandise imported into Costa Rica by American vessels would, under any circumstances, ever be subjected to higher duties than those imposed upon merchandise imported by the vessels of any other nationality whatsoever.

My Government would be very reluctant to imagine even that the Government of your excellency entertains the unfriendly purpose of excluding vessels of the United States from the import trade of the Pacific ports of Costa Rica, and to compel American shippers of San Francisco and other ports of the United States to make use of the so-called Spanish Central American Line in order to enjoy the rebate of 5 per centum in duties; still, as the contract now stands, there can hardly be any other conclusion. As an example of the injustice and inequality of this rebate of 5 per centum, it is alleged that upon very many classes of goods it will exceed the amount of freight money from San Francisco, New York, and even from Europe by every route.

In the same connection I am authorized by my Government to say that the proposed alterations of the national customs tariff for the benefit of a special enterprise, as in this instance, overpass all legitimate limits of subsidies to vessels, and operate to destroy American shipping interests, which have been built up in good faith and in the faith of treaties, and that the differential duties it is proposed to establish to the prejudice of those interests call for an urgent protest. Should its respectful representation be insufficient, my Government will be compelled, however reluctantly, to recommend to the Congress of the United States the adoption of some legislation which will effectually protect those interests, and if it should result in the imposition of differential duties upon the products of Costa Rica imported into the United States by the Spanish Central American Line, the Government of your excellency will surely have no just cause to complain.

But to avoid such retaliatory measures and to promote by all legitimate means the friendly relations of commerce between the two countries, I beg leave respectfully to suggest that your excellency’s Government shall immediately extend to all vessels of the United States arriving at the Pacific ports of Costa Rica the same rebate of 5 per centum in duties which have been accorded to the Spanish Central American Line.

My Government has a right to expect such a resolution of your excellency’s Government as being in accord with treaty stipulations; it would, moreover; obviate further controversy upon a disagreeable subject.

I trust these observations will be received in the same friendly spirit in which they are offered, and in the interests of the cordial relations which have always subsisted between the United States and Costa Rica.

With renewed assurances, etc.,

Henry C. Hall.