Mr. Baker to Mr. Gresham.

No. 293.]

Sir: On Sunday, the 3d instant, I received your further cable instructions in regard to the Nicaraguan interoceanic canal, and on Monday morning I made an early call upon Mr. José Madriz, the minister for foreign affairs of this Government. There were present Mr. Román Mayorga Rivas, the subsecretary, and Gen. Daniel Macauley. Mr. Madriz had been out of the city for a week, and Gen. Macauley’s letter addressed to the Government, a copy of which I here inclose, had just been referred to him for report. The minister informed us that he would take up the matter at once, and would very soon make a written report thereon to the President and cabinet.

A few minutes before leaving the legation I received from Capt. J. C. Watson, commander of the U. S. S. San Francisco, then at Colon, a cable message informing me that he had received copies of instructions, sent to me from Washington, dated the 12th and 24th of May, concerning the Argüello case, and that he was ready to assist with all his force. Unfortunately my latest Washington dates by mail were May 1, therefore I was in the dark as to the instructions referred to; but I assumed, for my purpose with this Government on this occasion, that they were something pretty perpendicular, containing a genuine American ring. Remarking upon Capt. Watson’s cable and the supposed tenor of my instructions referred to, I said that it was to be deeply regretted that the recent course of Nicaragua toward Americans and American interests, both in the matter of the canal and in affairs at Bluefields and Rama, was of such a nature as to make a most serious impression at Washington of the apparent unfriendliness of this administration toward the United States, a great Government which is and desires to continue to be a sincere friend to Nicaragua.

You express to me, Mr. Minister, your friendship for the United States, and the President does the same; and then you jump on us with both feet and spit in our faces. Your action in the canal matter has advertised to all the civilized world your own lack of good faith and your indisposition to protect the capital that would come here and develop your naturally splendid country. Nothing is so sensitive as credit; not even capital is so timid, for credit—good faith—must go [Page 463]before capital. This is the rock upon which capital builds. Your notice of the forfeiture of the canal concession, even though it be upon a frivolous ground and one not warranted and not founded in law, not only destroys the credit of the Interoceanic Canal Company, but it is the most ghastly stab under the fifth rib of the credit of your own Government which could be inflicted by the keenest Damascus blade.

Your Government will, I am sure, Mr. Minister, withdraw the offensive notice of forfeiture; but every hour’s delay is dangerous. I feel authorized to say to you that President Cleveland, his Cabinet Ministers, and the Senatorial Committee on Foreign Affairs are all awaiting with deep concern the early and further action of the Nicaraguan Government, in both the canal and the pending troubles at Bluefields. This is evidenced by the presence of two powerful war steamers on your eastern coast. You must admit, Mr. Minister, when you reflect candidly, that the United States has been most forbearing and patient with your Government, and that their action toward you has been in marked contrast with the brusque manner in which some of your other good neighbors have dealt with you. I hope it is not true that you have failed to appreciate this kindly spirit, that you have misconstrued it, and that, therefore, you have ventured to treat us with a measure of contempt which is usually only accorded to an adversary who is sadly lacking in spirit. I am sure you could not have held this view, albeit your actions might be so construed.

Gen. Macauley then presented the case of the canal company to the minister in brief terms, and we withdrew.

I have, etc.,

Lewis Baker.
[Inclosure.]

Gen. Macauley to the Minister of Foreign Affairs.

In behalf of the Maritime Canal Company of Nicaragua, which holds your concession to construct the Interoceanic Canal, I have the honor to present to you the following facts:

Article 14 of the concession provides, in brief, that within three years from commencement of the work upon the Interoceanic Canal (October 8, 1889) the company shall construct the Tipitapa Canal.

For many reasons—some of them certainty not the fault of the company—the Tipitapa Canal has not been finished within the specified time.

On the 26th of April, 1894, the president of the Maritime Canal Company received in New York from Minister Horacio Guzmán a copy of a letter addressed on April 2 or.7, 1894, by Minister Gamez to the “Agent of the Interoceanic Canal Company” in “Granada,” reading as follows:

National Palace, Managua, April 7, 1894.

To the Agent of the Interoceanic Canal Company, Granada:

In amplification of my communication of the 20th of September last, I have the honor of stating to you that the representative of Nicaragua in Washington, Dr. Horacio Guzman, has not carried into effect up to this date the instructions given him to sue the Interoceanic Canal Company in the courts of the United States for its failure to construct a canal on the Tipitapa River, as it agreed to do under article 14 of the contract entered into with this office on the 23d of March, 1887, because he did not want to render worse the sad condition of the company, which it was desired to help, hoping that it might rise from its present prostration; but the Government of Nicaragua, being now convinced that the rights of Nicaragua may be injured by a continuation of such a condition of affairs, and being convinced that the said contract [Page 464]has already been forfeited by default in compliance with one of its principal stipulations, believes that it is the Government’s duty to avail itself of article 55 of the said contract in order that a court of arbitration may decide about the point in dispute.

My Government, as I have before stated, declares as terminated the aforesaid contract, and protests that only for the purpose of adjusting itself to the provisions of the said contract it submits this point to the decision of arbitrators.

Therefore, it appoints as arbitrators on the part of the Republic, the lawyers Messrs. Buenaventura Selva and Augustin Duarte, and in case of the failure of any of them not acting, and any impediment that may arise from this time to the date on which the court may assemble, the lawyers Messrs. Modesto Bariosand J. Francisco Aguita will act in the order in which they are named.

I hope you will please acknowledge receipt of this present communication, because from this date will commence to run the four months that said contract grants to the company for the appointment of arbitrators on its part.

I am, etc.,

José D. Gamez.

The letter of September 20, 1893, to which the above letter refers, has not yet been received by our company, nor have we any knowledge of its contents, and Minister Gamez’s letter above copied had lost nearly one month before we received even a copy—the original not having yet reached us.

And now, sir, in the most respectful and amicable manner, permit me to suggest that whatever may have been the fault of our company in the noncompletion of the Tipitapa Canal, the remedy sought to be applied by Minister Gamez is not feasible, has no existence in the concession itself, and I am certain will be pronounced by your friendly and honorable Government as untenable and to be withdrawn and canceled without delay.

Article 53 of the concession contains the five distinct and only grounds of forfeiture of this concession, not one of them being in default and not one of them bearing any relation to article 14 or to the construction of the Tipitapa Canal.

That the concession may contain many agreements and stipulations upon breach of which action or claim might rest, including article 14, is perhaps true; but, as said above, there are only five permitting the extreme penalty of forfeiture, and they are clearly and unmistakably set forth in article 53.

I purposely refrain from complicating this single, solitary question with any other in any form, omitting all argument, countercharge, or discussion of any other point as tending to direct attention from the remarkable sentence thus passed upon our company and its great work. I have full faith that your Government, in consideration of its friendly neighbor, the United States (whose good will and confidence our company also enjoys), will promptly remove this surprising obstruction, and permit us to go forward to thorough and rapid success upon the conditions of the concession as they actually exist.

We do not ask or suggest that you waive or abandon any right falling to you under the articles of the concession. We are ready, separately from the question of this attempted forfeiture, to consider in good faith and act upon any claim you may wish to present, whether under article 14 or any other, but we sincerely and respectfully protest that your sentence of forfeiture, where no forfeiture can lie, gravely damages our progress and tends in many ways to retard the prosperity of your own country, for whose fame and happiness you would gladly do so much.

I conclude by giving you the most profound assurances that ah clouds, except this one, are dispelled from the company’s horizon, and that the construction of the Nicaragua Canal now, without delay, is an absolute certainty.

[Page 465]

But primarily we must be released as quickly as possible from the shadow of the mistaken conditions of the letter above referred to, and to that end I submit the petition to your Government.

Pardon me if I modestly suggest in conclusion, that a company which has paid you $150,000 in gold and has expended over $3,000,000 under your concession, might well invoke your kindly forbearance and its continuance under more serious faults than yet appear against us in Nicaragua.

Urging upon you that the emergency calls for your promptest action,

I am, etc.,

Daniel Macauley,
Agent of the Maritime Canal Company of Nicaragua.