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

No. 766.]

Sir: During the year 1881 the Guatemalan Government granted to three American citizens, Messrs. Lyman, Bunting, and Fenner, a concession for the construction and operation of a railway from the port of Champerico, on the Pacific, to Retalhuleu, an interior town about 30 miles distant

The concession was subsequently transferred to an association in San Francisco, Gal., and a company was organized for earning it out, under the laws of that State and the name of the Champerico and Northern Transportation Company of Guatemala.”

[Page 109]

This company carried out their concession satisfactorily; the road was completed and was formally accepted by the Government in 1884.

It is stipulated in article 2 of the concession that the grantees shall have the right to operate a railroad between the two places mentioned during the term of twenty-five years, and that during that period no other person or association shall have the right to construct another railway within a less distance than 15 leagues on either side of the line.

Notwithstanding the explicit terms of the article above mentioned, the Guatemalan Government has recently granted another concession , to parties who style themselves Messrs. J. L. Bueron & Co., to constuct a railway from the Port of Ocos to Quesaltenango. The distance from Champerico to Ocos does not exceed 8 leagues, or about half of the distance stipulated in the Champerico Company’s contract. The concession has been accorded in the face of a respectful protest of the managing director and of irrefutable proof that it is a flagrant violation of the Champerico Company’s rights.

I have had no official correspondence with the Government in regard to this matter other than to advise the minister for foreign affairs that a copy of the protest referred to, herewith inclosed, had beep filed in this legation; indeed, there was no time to give attention to it, as the contract was rushed through the department of public works and the assembly with most unseemly haste. However, upon the receipt of the notification that such a protest addressed to the minister for public works had been filed in this legation, the minister for foreign affairs referred the question to Professor Rockstroh, a member of the Guatemalan and Mexican boundary commission.

I inclose a copy and translation of his report, in which it is demonstrated, beyond the shadow of a doubt, that the Ocos concession is an infringement on the rights already conceded to the Champerico Company.

This Ocos contract was signed by the minister for public works on November 7 last past, and was confirmed by the assembly on the 14th of the same month. The Government appears to have held the matter under advisement for nearly a month. It was not until the 15th ultimo that the President signed it. I have not deemed it necessary to forward a copy and translation with this dispatch; the other inclosures sufficiently show its object, and, if carried out, the effect it will undoubtedly have on the Champerico Company.

In addition to the before mentioned inclosures I have the honor to transmit a translation of the concession and contract of the Champerico Company with the Government.

I have, etc.,

Henry C. Hall.
[Inclosure No. 1 in No. 766.]

Mr. Robinson to Mr. Hall.

Sir: I have the honor to hand to you herewith a correct copy of a communication and protest that I have this day personally delivered at the office of the minister of fomento of Guatemala, addressed to him, and to beg of you that you will place the said copy on file in the legation of the United States for such future reference as may be necessary.

I have, etc.,

Sanford Robinson,
Managing Directory etc.
[Page 110]

To the Minister of Public Works:

When the national constituent assembly was discussing the project of a railway from the port of Ocos I presented to that body a respectful protest, showing that the enterprise could not be carried out without prejudice to the interests of the Champerico Railway, and without violating article 2 of the contract made with this company, which definitely prohibits the construction of another line at a distance of less than 15 leagues.

The national representatives, setting aside the just considerations which I submitted to their judgment, paying no attention to my demands, approved the project referred to by a small majority.

Under such circumstances I should remain silent, were it not that such silence might be supposed to signify an acquiescence, a tacit submission to the law passed by the assembly, and if, as the managing director of the company, I did not consider myself bound to exhaust every effort in defending the important interests confided to my care.

I appeal, therefore, to the Government of the Republic in demand of protection for the interests of the Champerico Railway, so seriously menaced by the assembly’s act in approving the project of a railway from the port of Ocos. I appeal to the Government in demand of justice; I ask nothing else when I ask that the stipulations contained in article 2 of our contract shall be respected; that the anterior rights acquired by the same company shall be respected. And that protection which I demand, Mr. Minister, is not alone in benefit of the Champerico Railway; it is in benefit of the whole country; in benefit of the credit of the nation.

If to-day the Government consents to this new project by approving the law of the assembly, to-morrow it will be said abroad, and with good reason, that in Guatemala neither compacts nor stipulations nor agreements formally contracted are respected; that in Guatemala the irrevocably-acquired rights for great undertakings are continually being trodden under foot; and in this way capital, which might otherwise be invested in public works and new industries, so much needed in Guatemala, is driven away.

In view of the foregoing, as director of the Champerico Railway, and with the respect due to the high functionary whom I have the honor to address, I ask you, Mr. Minister, to present this memorial to the President of the Republic, with the object that the supreme Government may be pleased to refuse its compliance with the assembly’s law approving the contract for the railway from the” port of Ocos, and otherwise to acknowledge as presented this formal protest which I make for the damages and injuries, caused by this violation of article 2 above mentioned, to the Champerico Railway Company.

Sanford Robinson,
Managing Director, etc.
[Inclosure 2 in No. 766.—Translation.]

Mr. Rockstroh to Señor Montufar.

report upon article ii of the contract of the champerico railway company with the government of guatemala.

Mr. Minister: I have the honor to present to the minister in the following a report upon article 2 of the contract between the Government of the Republic and Messrs. Lyman, Fenner, and Bunting, for the construction of a railway between Retalhuleu and Champerico, signed the 12th of March, 1881.

This article 2 relates to the exclusive privilege conceded to the association for the term of twenty-five years, first, to operate a railway between Champerico and Retalhuleu, and second, the construction of other railroads within a certain zone on both sides of the line.

The first part of the said article is so clear that there can be no doubt in regard to it. It says:

“The grantees shall have the exclusive right during the term of twenty-five years, commencing from its opening to public service, to operate a railway between the places mentioned (Champerico and Retalhuleu).”

The second part of the article mentioned says:

“No other rail way shall be constructed by any other association or person during the same term at a less distance than 15 leagues on either side of the line.”

[Page 111]

In regard to this paragraph the question has arisen whether it is to be understood, first, whether at a distance of 15 leagues on both sides of the line no other association or person shall construct any railway to unite Champerico and Retalhuleu, or second, whether at a distance of 15 leagues on both sides of the line no other corporation or person shall construct any railway, whichsoever may be its starting point and termini.

In the first hypothesis the paragraph would be altogether superfluous, and one would be at a loss to understand why it was inserted in the contract. The association having the exclusive privilege of operating a railway between Champerico and Retalhuleu, any other railway from one of these points to the other would be excluded, although it might have a great deviation from a straight line between the two places.

Moreover, the construction of a railway from Champerico, deviating 10 or more leagues to the east or west to terminate afterwards in Retalhuleu, would be an absurdity. This contingency is certainly not to be taken into consideration.

The Champerieo-Retalhuleu Railway Association evidently wished, by this clause, to prevent the construction of a railway which would come into competition with their line, especially in the department of San Marcos, depriving it of a great part of its principal traffic (transportation of coffee) now monopolized by this company in all the zone, comprising Costa Grande, Costa Cuca, and Costa de San Marcos.

I think that the second explanation only can be given to the paragraph referred to, according to which no railway can be constructed within a distance of 15 leagues from both sides of the line. By this line is understood a straight line between Champerico and Retalhuleu, so that this association would have the exclusive privilege for twenty-five years of constructing railroads in a zone formed by two right-angled parallelogram’s having for a common base the straight line between Champerico and Retalhuleu, and each one being 15 leagues in length.

The territory which a railway between Retalhuleu and Qnezaltenango would cross would be excluded from this zone, while the western parallelogram embraces all the coast as far as the river Suchiate, which there serves as the boundary between Guatemala and Mexico.

The distance from Champerico to the mouth of the Suchiate River is equal to 31 minutes of a degree upon the parallel of 14 degrees north.

A degree on the fourteenth parallel measures 108, 021.4 meters; consequently a straight line from Champerico to the mouth of the Suchiate River measures (31 minutes) 55,809.3 meters, or 11.162 leagues of 5 kilometers; 13.952 leagues of 4 kilometers; 13.367 leagues of 5,000 varas (of 835 millimeters.)

With assurances of the most distinguished consideration, etc.,

E. Rockstroh.
[Inclosure 3 in No. 766.—Translation.]

The Champerico Railway concession.

Delfino Sanchez, secretary of state for public improvements of the Government of the Republic, with authorization and instruction of the general president, for one part, and for the other J. H. Lyman, D. P. Fenner, and J. B. Bunting, have celebrated the following contract:

Article 1.

The supreme Government, in the name of the Republic of Guatemala, concedes to Lyman, Fenner, and Bunting, or to the persons that may legally represent them, authority to construct and operate during ninety-nine years a railroad operated by steam or electricity from the port of Champerico to Retalhuleu via Cabalio Blanco.

On the completion of the ninety-nine years, which shall count from the date that the line is opened to public service, it shall, with all its fixed and rolling material necessary for its operation, stations, warehouses, etc., pass to be national property.

Article 2.

The grantees shall have the exclusive right during the term of twenty-five years that shall run from the opening of the road to public service to operate a railroad between the points indicated; no other person or enterprise during the said term having the power to construct another at a less distance than 15 leagues on either side of the line.

Article 3.

The Government will aid the enterprise with the subvention of $700,000, that it will deliver to them in debentures, amortizable with 20 per cent, of all the maritime duties that goods imported or exported through Champerico may pay.

[Page 112]

The debentures will be given to the grantees when they shall have graded the road to the Encrucijada, but their amortization will not commence until the rails have been laid to Caballo Blanco.

Article 4.

The Government will give to the enterprise the ownership of 1,000 “caballerias” of national lands, in alternate sections of 50 “caballerias” each one, in the places where it may be possible, in such manner that one of said sections shall remain to the Government and the other to the grantees.

On the completion of the work to Caballo Blanco the designation of the lands will be made by the two contracting parties.

When the lands that are selected may surround a town, the space that may be necessary for cemeteries, pastures, looms, parks, etc., shall be left unoccupied.

The expense of measurement, setting land-marks, plans, etc., for all the lands, will be at the cost half each of the Government and the enterprise.

The grantees will be considered as denouncers in fact of all the mines that may be on the lands that may be delivered to them; notwithstanding which, for their acquisition and exploitation, they should be regulated in the manner prescribed by the laws of the Republic.

Article 5.

The titles that, in conformity with the legislation of the country, may be extended over the territorial property conceded to the enterprise, shall be transferable, divisible, etc., in the same manner as private property.

Article 6.

For the whole length of the line the Government will cede gratuitously to the enterprise a strip of land of 100 English feet in width, giving it besides the space that may be necessary for turnouts.

Besides, it will cede to it in each one of the towns of Champerico, Caballo Blanco, and Retalhuleu, four “manzanas” of land, for shops, offices, stations, warehouses, etc., and besides two other manzanas in each one of the points where they may wish to establish a station.

Article 7.

If there should be a necessity for occupying any part of the cart road, the grantees can make use of it, the part not occupied always remaining free for the traffic.

Article 8.

Materials of every species that may be found in national lands, and that can be utilized for the construction of the line, may be taken by the enterprise without any compensation.

In the matter of lands of private property that may he encountered, the enterprise shall enjoy all the rights conceded to the Government for works of public utility.

Article 9.

All the articles, utilities, and materials that the enterprise may import through Champerico, and that may be indispensable for the construction, maintenance, operation, and improvement of the line, shall be exempt from importation duties during the before-mentioned term of twenty-five years.

All that may be necessary for the creation and maintenance of shops, offices, stations, etc., will enjoy an equal exemption and for the same term, as well as the food and clothing that may be imported while the line is being constructed, calculating the first at 25 cents per day per person, and equally the first furniture that is introduced for the offices, shops, and stations.

Article 10.

The letters of exchange and the metal, coined or in bars, that the enterprise may draw or import from the exterior for the business of the said enterprise shall pay no stamp duty nor any other.

Article 11.

During the term of twenty-five years stipulated, the property fixed and movable, bonds and stock of the enterprise shall be free from all fiscal or municipal impost and [Page 113] all forced loans as well in time of peace as in time of war, and its agents and employés that may be foreigners will remain excepted also while they are in its service from direct contributions, forced loans, and military service, and will enjoy all the guaranties and rights consecrated and stipulated for the rights of peoples and in international agreements.

Article 12.

The officials of the enterprise will be invested by the Government with public authority to the end that they can preserve order and police on the road, having the right to demand the aid of the armed force each time that it may be necessary for the defense and guard of the railroad and its dependencies.

Article 13.

During the construction, the enterprise will have the gratuitous use of the Government telegraph, and during the twenty-five years of the concession, of the national mails, it always being understood that the correspondence so transmitted shall refer exclusively to the business of the said enterprise; but it shall construct a telegraph line especially for the road, oh the posts of which the Government can fix wires for the public service.

Article 14.

The concessions, rights, and privileges that by the present contract are executed to Lyman, Fenner, and Bunting, shall be considered as extended to their legal representatives, the same as to other persons, company or companies, to whom in whole or in part they may assign them; but they can not cede them nor hypothecate the line to a foreign Government nor admit it as a partner.

The railroad, as well as the lands to which the present contract refers, shall be considered as the absolute property of the grantees, of their legal associates, representatives and successors, except as specified in article 1; and the financial organization of the enterprise as well as the emission of mortgage bonds and of shares, shall remain entirely at the pleasure of the grantees.

Article 15.

The grantees shall have the right to form an anonymous company in the Republic or outside of it in order to obtain the necessary resources to complete the work.

The mortgage bonds that the enterprise emits shall be considered as recorded in the register of property, without other requisite than the presentation in said office of a copy of the act of hypothecation, certified by notary public and authenticated by the respective minister or consul.

Article 16.

In case that the grantees propose to dispose of the railroad, the Government shall have the right of preference in acquiring it under equal conditions.

Article 17.

This company will not be responsible for damages that, by accident or “force majeure,” the persons and effects that they convey may suffer, whether it may be in its trains, or in its stations, or dependencies.

Only in the event of such damages being caused by the fault or negligence, duly proven, of the employés of the enterprise, will there be any responsibility.

Article 18.

The company will fix its residence where it considers it convenient; but shall have a representative in Guatemala, with all the powers necessary to treat with the Government in the resolution of questions that may arise.

Article 19.

The tariff shall not exceed the following rates on the whole extent of the line: Freight on coffee and other articles of exportation, $8 per ton of 2,000 pounds, or 40 cubic feet; articles of importation. $10 per ton of equal weight or dimensions; danger [Page 114] ous or inflammable freight, pieces that exceed 40 cubic feet in volume or 2,000 pounds in weight, precious metals, jewelry, and animals will remain subject to special agreements between the enterprise and the shippers.

Passengers shall pay $4 in the first and $2 in the second class.

Article 20.

The enterprise can not exact any compensation for the transportation of international mails and of its conductors, it being understood that they make use of the ordinary trains.

Each time that the Government needs a special train for this purpose the enterprise will be obliged to furnish it as soon as may be possible, without collecting other expenses than that they may have in fuel and conductors.

Troops, chiefs, and officials, their equipments, material of war, and employés in commission, will pay only half of the tariff rates.

Article 21.

The railroad shall possess the material necessary to assure the immediate and sure transportation of all the passengers and merchandise that may be presented in any direction; this as well as the fixed material shall be of the best quality.

Article 22.

The road shall have at the least a distance of 1 meter between the rails, which must be of steel; the bridges shall be all of iron; the maximum grade shall not exceed 4 per cent.; and the constructions shall be such as are required for a railroad of the first class.

Article 23.

The enterprise is obliged to begin the works within twelve months and to complete them within two years and a half, which times shall count from the date in which the Government gives its approbation to this contract. In the contrary case it shall be considered as concluded in fact.

Article 24.

As a guaranty of compliance with the present stipulation, the grantees oblige themselves to deposit in the office of the secretary of fomento the sum of $10,000 in current money within the term of one year, that shall run from the date on which this agreement is approved. If the contract should become void by the fault of the grantees, they shall lose this deposit in favor of the Government, but it will be returned to them when they give proof of having imported into the Republic materials for the railroad whose value reaches $50,000.

Article 25.

If between the Government and the enterprise there should arise any question of whatever nature, it shall be submitted to the decision of two arbitrators, named one by each party, and of a third in case of discord, designated by both, whose decision shall be considered as final.

The arbitrators shall be designated within the term of one month, that shall count from the day on which either one of the parties notifies the other that a question has arisen that should be decided in that manner; and if either of the parties refuses to name within this term the corresponding arbitrator, he will be considered as having consented to the opinion or proposition of the other.

Transitory Article.

Before the present contract receives the approbation of the Government, it must be submitted to the “Central Railroad Company of Guatemala,” that it may manifest whether it does or does not make use of the right conceded to it by Article 5 of the agreement signed April 7, 1871.

  • Delfino Sanchez.
  • D. P. Fenner.
  • J. H. Lyman.
  • J. B. Bunting.
[Page 115]

Brought to view the contract signed on March 12 last past, between Messrs. J. H. Lyman, D. P. Fenner, and J. B. Bunting, for one part, and for the Other the secretary of state and of the office of fomento, duly authorized to celebrate it, and considering that such agreement, relative to the construction and operation of a railroad between Retalhuleu and the port of Champerico, via Caballo Blanco, is found in conformance with the instructions that were given with that object to that functionary, and that the “Central Railroad Company of Guatemala” having allowed to transpire the ninety days conceded to it in which to manifest if, with respect to this contract, it would make use of the right of preference belonging to it, has tacitly renounced the said right relative to the construction of the said road; the general president, desiring to facilitate the realization of all enterprises that contribute to the prosperity and aggrandizement of the country, decrees to concede his approbation to the contract of which mention has been made, it being an indispensable requisite for the validity of the present decree that the grantees accept the conditions that follow:

The enterprise will be always national, even when all or any of its members may be foreigners, and it will be subject exclusively to the jurisdiction of the courts of the Republic in all transactions whose cause and action take place within its territory.
The said enterprise and all the foreigners and successors of those who may take part in its business, whether as stockholders, as employés, or in whatever other character, will be considered as Guatemalans in regard to all it can refer to.
They can never maintain, in respect to the titles and transactions relating to the enterprise, the rights of foreigners under any pretext; and
They will only have the rights and means of making them valid that the laws of the Republic concede to Guatemalans, and in consequence foreign diplomatic agents can not intervene.

Let it be communicated.

Rubricated by the general president.


Modifications to the contract for the construction of a railroad between Retalhuleu and Champerico.

Having noted the desirability of making clear, completing, and modifying some articles of the contract made between Messrs. J. H. Lyman, D. P. Fenner, and J.B. Bunting, dated March 12 of last year, for the construction of a railroad between the town of Retalhuleu and the port of Champerico, the secretary of state and of the office of fomento, with the authority and instructions of the president of the Republic, for one part, and J. H. Lyman, as representative of the grantees, for the other, have agreed on the following points that will be considered as additional to the aforementioned contract:

1. The exclusive right to which Article 2 of the concession refers shall be considered as embracing the prohibition of other analogous enterprises crossing the road, only carts being able to do this in those points in which it may be indispensable for the service of the public.

In those places in which the transit of carts may be constant the company shall construct its grades and bridges in such manner that the traffic can be performed with facility.

2. Article 4 is modified so as to establish that the designation of the lands to which it refers can commence to be made a year after the work shall be completed to Caballo Blanco; and that the lots can embrace an area less than 50 caballerias when the Government and the enterprise shall in common accord so decide.

3. The “manzanas” of land that, according to article 6, the Government will cede to the company for stations, shops, etc., shall be designated as soon as the plan shall be finished, to the end that there may be no delays in the construction of the offices.

4. Article 22, which provides that the line shall not have less than a meter between the rails, is reformed so that the breadth shall not be less than 3 feet English.

5. Although the Government does not impose any limitation on its faculty of altering the maritime duties that are paid in the custom-house of Champerico, taking into consideration that the products of the said custom-house have been reduced on account of the duties heretofore levied on articles of export, having been reduced or abolished in place of the 20 per cent, established by article 3 of the concession, 25 per cent, of all the maritime duties produced by products that may be imported or exported through Champerico is assigned for amortizement of the $700,000 in debentures with which the Government has offered to aid the enterprise.

[Page 116]

6. Stipulating that the enterprise is not strictly obliged to cause the line to pass through the “Encruziada,” although it has to pass through Caballo Blanco, the Government will deliver the debentures as soon as the first 10 miles may have been graded.

7. If it becomes convenient to the enterprise to construct branches that may depart from the principal line for other points, the Government concedes to the company the faculty of making such works.

In such cases all the articles, utilities and materials that the enterprise imports through Champerico, and that may be indispensable for the construction and operation of the roads, shall be exempt from duties of importation during the term of the original concession.

  • Manuel Herrera.
  • J. H. Lyman.

The chief official of the office of the secretary of fomento certifies:

That on this date the general president was pleased to issue the following decree: “The anterior contract having been brought to view and finding all its stipulations arranged according to the instructions that were communicated to the secretary of state and of the office of fomento for its celebration, the general president decrees: To approve the seven articles of which it is composed.

“Let it be communicated.

“Rubricated by the general president.”


D. Estrada.