United States relations with Nicaragua concerning an interoceanic canal, 1850-1903

Authors Rasp, Harold Andrew, 1942-

Publisher The University of Arizona.

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Link to Item http://hdl.handle.net/10150/318075 UNITED STATES RELATIONS WITH NICARAGUA CONCERNING

■ AN INTEROCEANIC CANAL, 1850-1903

by

Harold Andrew Rasp

A Thesis Submitted to the Faculty of the

DEPARTMENT OF HISTORY

\ . In-.Partial Fulfillment of the Requirements For the Degree of ■

MASTER OF ARTS

In the Graduate College

THE UNIVERSITY OF ARIZONA

1 9 6 9 STATEMENT BY AUTHOR

This thesis has been submitted in partial fulfill­ ment of requirements for an advanced degree at The University of Arizona and is deposited in the University Library to be made available to borrowers under rules of the Library. - .

Brief quotations from this thesis are allowable without special permission, provided that accurate acknowl­ edgment of source is made. Requests for permission for extended quotation from or reproduction of this manuscript in whole or in part may be granted by the head of the major department or the Dean of the Graduate College when in his judgment the proposed use of the material is in the inter­ ests of scholarship. In all other instances, however, permission must be obtained from the author.

.SIGNEDs

APPROVAL BY THESIS DIRECTOR

This thesis has been approved on the date shown below:

X C.HOTN] ate Professor of HEstory PREFACE

As an undergraduate at The University of Arizona, I became interested in Latin American history while taking

Dr. Mario Rodriguez's course in that subject. His lectures and example compelled me to study the field in other courses and through individual research. I found Central

American history to be a field worth exploring and was particularly interested in United States relations with the area. I decided to write a thesis on United States-

Nicaragua relatipns because of America's special interest in the latter's canal route. Most of the research was done in The University of Arizona Library. The thesis is based primarily on diplomatic correspondence and seeks to describe and analyze the United States policy towards

Nicaragua's canal during the latter half of the nineteenth century.

While researching and writing the thesis I received help from numerous people, but I alone bear full responsi­ bility for the work. I wish to thank The University of

Arizona History Department for purchasing the microfilms entitled Despatches from United States Consuls in Managua,

1884-1906, and Notes from the Nicaraguan Legation in the

United States to the Department of State, 1862-1906, which provided invaluable information. The University of Arizona

iii iv

Library and especially, staff member Joseph Park also helped me gather information. Dr. Russell C. Ewing guided my efforts through the whole project. His advice and criticism were of great assistance especially during the writing phase of the work. Dr. George Brubaker helped improve the style of the thesis with his critique of the first draft.

They as well as other faculty members and fellow graduate students provided the support and encouragement which enabled me to complete the project. TABLE OF CONTENTS

Page

ABSTRACT ...... vi

CHAPTER

1. INTRODUCTION ...... 1

2. UNITED STATES AND THE.NICARAGUA CANAL, 1850-1860 ...... 10

3. PERIOD OF TRANSITION, 1860-1877 ...... 67

4. AN AMERICAN CANAL . 87 .

Conclusion ...... 147

SELECTED BIBLIOGRAPHY ...... 151

v ABSTRACT

In 1825, Secretary of State Henry Clay formed the policy of a neutral canal open to all nations on equal terms and dominated by no one country. This was the policy

America followed in regard to the Nicaragua canal until

1880. Under the neutral canal policy the United States

•removed British influence from Nicaragua's canal route

•through the 1850 Clayton-Bulwer treaty and guaranteed

American rights in the canal with the Dickinson-Ayon treaty of 1867. During President Grant's administration the neutral canal idea was challenged, but was not completely reversed until 1880 under President Hayes. All succeeding administrations, except Cleveland's, followed the policy of an American controlled canal. _ Washington had consistently encouraged American private enterprise to construct the

Nicaragua canal but none of the efforts succeeded. In the late 1890's the United States knew it had to build the canal itself. However, Nicaragua refused to grant America complete control of the canal and treaty negotiations failed in 1902. Congress, meanwhile, decided to build the canal in Panama thereby ending American efforts to construct the Nicaragua canal. CHAPTER 1

INTRODUCTION ' .

This thesis is a study of United States relations with Nicaragua concerning a transisthmian canal. The study

starts at 1850 because by that year the United States had decided to take an active part in Central American affairs.

America wanted to curtail Great Britain's influence over

the Nicaraguan transit route as well as make the route a neutral highway open to all. In the decades following

1850, the United States encouraged its citizens to build

the Nicaragua canal. When private enterprise failed to

complete the work, Washington resolved to construct the

canal itself. In 1880, America decided to control the

canal uni laterally, but did not attain its goal until 1903.

The 1903 acquisition of the Panama route ended America's

interest in constructing the Nicaragua canal. At this point the thesis ends.

The Nicaraguan canal project first came to the attention of the United States in the 1820's. In 1823 the provinces of Central America separated from Mexico and formed the. Republic of Central America. The new government sent Antonio Jose Canas to the United States as its repre­ sentative. In 1825, Minister Canas informed Secretary of 1 2

State John Quincy Adams that his government wanted a

transisthmian canal constructed through Nicaragua. He

asked Washington to encourage Americans to undertake the

enterprise because Central America lacked the means to

build the canal. Secretary Adams left office without

acting upon the suggestion.^

Henry Clay, Adams' successor, was very interested

in the Nicaragua canal. However, he refused to commit the

United States to the project without adequate information.

The Secretary of State instructed the American representa­

tive in Central America to determine the feasibility and

cost of the canal, but warned him not to encourage Central

American hopes for American aid. America's representatives

to the 1826 Panama Congress were also directed to gather

information about the canal. Clay instructed these dele­

gates to tell the assembly that the United States wanted

the canal to benefit all the nations of the globe. The message was not delivered, but indicated America's attitude

toward the canal. The United States desired an inter­ national waterway open to all and dominated by. no one

■^William R. Manning, collector, Diplomatic Corre­ spondence of the United States concerning the Independence of the Latin-American Nations Vol. II (New Yorks Oxford ” University Press, 1925), pp. 881-882, Note of Antonio Canas, Central American Minister to the United States, to John Quincy Adams, United States Secretary of State, February 8 , 1825, hereafter cited as Independence« nation. This idea was a cardinal principle of American 2 canal diplomacy during most of the nineteenth century.

Henry Clay's information gathering activities did.

• not result in an American commitment to Nicaragua's canal

project. However, an American firm, Aaron Palmer and

Associates of New York, became interested in the enterprise

and negotiated a canal construction contract with the

Central American government in 1826. The company could not

raise enough.capital in New York or London and the project 3 collapsed. After this failure no American government or

company expressed great interest in the Nicaragua canal

until the late 1840's. . •

The only noteworthy exception to the trend occurred

in 1830. Qeneral Verveer, a plenipotentiary from the King

of the Netherlands, arrived in Guatemala City and began

negotiations for a canal concession. In 1830, Verveer, on

2 Manning, "Independence, Vol. I, pp. 239-241, Note of Henry Clay, United States Secretary of State, to William Miller, United 'States Charge d 'Affaires to Central America, April 22, 1825; Miles P. Du Val, Cadiz to Cathay (Stanford^ California: Stanford University Press, 1940), pp. 5-6. 3 ‘ ° Hubert Howe Bancroft, History of Central America Vol. Ill (San Franciscos The History Company, Publishers, 1887), pp. 741-742; William R. Manning, collector, Diplo­ matic Correspondence of the United States Inter-American Affairs 1831-1860 VoTI III (Washington: Carnegie Endowment for'International Peace, 1933), pp. 94-98, Note of Juan Galindo, Special Agent of Central America to the United States, to John Forsyth, United States Secretary of State, June 26, 1835, see enclosures, this source hereafter cited as Inter-American Affairs.. behalf of a Dutch company, received a canal concession from

the Republic of Central America.^ Washington learned of

the grant from its consul in Guatemala and took immediate countermeasures. Secretary of State Edward Livingston

instructed the United States charge d'affaires to Central

America to obtain a copy of the concession and to protect

American rights in the canal. The United States wanted the same canal privileges as any other nation. American objec­ tions to the Dutch canal were not presented because the enterprise quickly folded when the King of the Netherlands did not provide financial support. This incident illus­ trated' America's desire for a canal in which all nations 5 had equal rights.

In the 1840's Great Britain threatened the American concept of an international canal. Ever since the seven­ teenth century British influence in Central America had grown. By 1841, England possessed a settlement at Belize

^Manning, Independence, Vol. I, pp. 890-891, Note from Henry Savage, Acting United States Consul at Guatemala, to Martin Van Buren, United States Secretary of State, September 3, 1830; Manning, Inter-American Affairs, Vol. Ill, pp. 92, 102, Note from Juan Galindo to John Forsyth, June 26, 1835, see enclosures; Du Val, Cadiz, pp. 27-28. 5 Manning, Inter-American Affairs, Vol. Ill, pp. 3- 9, Note from Edward Livingston, United States Secretary of State, to William N , Jeffers, United States Charge d'Affaires in Central America, July 20, 1831, and p. 134, Note of Juan Galindo to John Forsyth, June 26, 1835, see enclosures. r 5

(British Honduras), controlled the Bay Island of Ruatan,

and had a protectorate of the Mosquito Indians. The

Mosquito Indians occupied land along the Caribbean coasts

of Honduras and Nicaragua. Great Britain's representatives

advised, protected, and, in effect, governed the area which,

the Indians occupied. As a result, England controlled the

Caribbean approaches of the Nicaragua canal route. English

agents in Central America produced this situation in order

to stop United States expansion. They acted on their own 6 initiative, but Great Britain did not disavow their deeds.

The Mexican-American War and the 1846 United

States-New Granada canal treaty convinced Great Britain

that America intended to annex Central America. As a

result, Lord Palmerston adopted a policy designed to stop

American expansion. Accordingly, Great Britaih consoli­

dated her position on the Mosquito Coast by seizing San

Juan del Norte on January 1, 1848 claiming the town, as part 7 of the Mosquito Protectorate.

Nicaragua protested the seizure of her main t Caribbean port,to the United States. America had ignored

^Mary Wilhelmine Williams, Anglo-American Isthmian Diplomacy, 1815-1915 (New Yorks Russell and Russell Inc., reissue,1965), pp. 3-4; Dexter Perkins, A History of the Monroe Doctrine (Boston: Little, Brown and Company, 1963), pi 74 5 Mario Rodriguez, A Palmerstonian Diplomat in Central America, Frederick ChatfTeld, Esq. (Tucson: University of Arizona Press, 1964), pp. 235-236, 244-249, 266. 7 ✓ Rodriguez, Palmerstonian Diplomat, pp. 282, 284- 287. 6

her previous protests against other British encroachments.

However, Washington could not ignore the 1848 seizure because San Juan del Norte was the eastern terminus of the

Nicaragua canal route. Great Britain controlled the canal

route. American expansionists demanded a strong stand

against the British action* and the Polk administration 8 complied, in part.

In June, 1848, Secretary of State James Buchanan

sent Elijah Hise to Central America in order to protect

American interests. He instructed Hise to encourage the

reunion of the Central American republics so that they

could resist British aggression. Hise was also directed to obtain information on the extent of British encroach­ ments in Central America. The Polk administration was hostile to the encroachments, but did not know what to do about them.^ The Hise mission was a stopgap measure.

Elijah Hise found the Central American union beyond

rebuilding and decided to sign treaties of protection with the several states. In June, 1849, he formed a treaty with

Nicaragua which granted the United States the privilege of constructing a canal in return for protection of

^Ibid., pp. 287-288, 291; Manning, Inter-American Affairs, VoI. Ill, pp. 254-258, Note from Pablo Puitrago, Minister of Foreign Affairs of Nicaragua, to James Buchanan, United States Secretary of State, November 12, 1847.

^Manning, Inter-American Affairs, Vol. Ill, pp. BO­ SS, Note from James Buchanan to Elijah Hise, United States Charge d'Affaires in Guatemala, June 3, 1848. Nicaragua's territory. Hise exceeded his instructions, in

negotiating the treaty and his government rejected it. He

failed to reduce British control of the canal route. \ Ephraim George Squier succeeded Hise as United

States representative in Central America. He believed in

the Manifest Destiny of the United States and pursued an 11 active anti-British policy in Central America. On

September 3, 1849, Squier signed a commerce and navigation

treaty with Nicaragua. One part of the treaty pledged the

United States to defend Nicaragua's canal route. Squier

also formed an agreement, with Honduras which temporarily

ceded Tigre Island in the Gulf of Fonseca to the United

States. These agreements were designed to destroy British

influence in Central America, but were made in violation of 12 Squier's instructions.

The agreement with Honduras produced a crisis when

Frederick Chatfield, Great Britain's Consul General, in

,Central America, seized Tigre Island in October, 1849.

i n Ibid., pp. 310-311, Note of Elijah Hise to Eusibio Orellana, Minister of Foreign Affairs of Honduras, March 2, 1849, and pp. .376-381, Note of Elijah Hise to John M. Clayton, United States Secretary of State, September 15, 1849; Mario Rodriguez, Central America (Englewood Cliffs, New Jersey: Prentice-Hall, Inc., 1965), p. 84. 11 ^ Rodriguez, Palmerstonian Diplomat, pp. 301-302.

^/~Ibid. , pp. 302-303; Manning, Inter-Amerlean Affairs, Vol. Ill, pp. 360-361, Note from Ephraim George Squier, United States Chargd' d'Affaires in Guatemala, to John M. Clayton, September 10, 1849, and pp. 393-401, Note of Ephraim George Squier to John M..Clayton, October 10, Chatfield took the island in order to give England control of both ends of the Nicaragua canal route. Squier claimed the seizure was an aggression against the United States and demanded evacuation of the island. Chatfield refused to rescind his action. The dispute angered the American public and almost ruptured Anglo-American relations. How- Z' ever, neither government supported the actions of its 13 representative and the crisis passed.

Meanwhile, the United States and Great Britain began negotiations to settle the Central America problem.

Secretary of State John M. Clayton wanted to check British expansion in Central America and guarantee American rights in any future canal. He preferred to settle the dispute through diplomacy and thereby avoid a violent confrontation with Great Britain. England decided to negotiate because she feared Palmerston's aggressive policies might result in a war with the United States.^

John M. Clayton and Sir Henry Bulwer, Great

Britain's Minister to the United States, negotiated a

13 Williams, Isthmian Diplomacy, pp. 6 6 , 94=95; Manning, Inter-American Affairs, Vol. Ill, pp. 416-417, Note from Ephraim George Squier to Jose Maria Rugana, Honduras Minister of Foreign Affairs, October 23, 1849, and. pp. 55-56, Note from John M. Clayton to Ephraim George Squier, November 20, 1849; Rodriguez, Palmerstonian Diplo­ mat , pp. 314-315. 14 Pqrkins, Monroe Doctrine, p. 96; Du Val, Cadiz, p. 53; Rodriguez, Palmerstonian Diplomat, p. 294; Williams, Isthmian Diplomacy, p. 80. settlement of the Central American issue. The resulting

Clayton-Bulwer treaty of 1850 provided for a neutral canal in which each party had equal rights. Both nations agreed to refrain from exercising dominion over Nicaragua, Costa

Rica, the Mosquito Coast, or any other part of Central

America. Other parts of the treaty encouraged the building of the Nicaragua canal. With this treaty the United States achieved its goal of a neutral canal wherein American rights were protected. The United States also thought that the treaty ended the Mosquito Protectorate. However, Great

Britain soon demonstrated that she had a different inter- 15 pretation of the treaty.

Hunter Miller, editor, Treaties and other Inter­ national Acts of the United States of America Vol. 3 (Washington: United States Government Printing Office, 1933), pp. 671-675. CHAPTER 2 L UNITED STATES AND THE NICARAGUA CANAL, 1850-1860

The United States signed the Clayton-Bulwer treaty with England to secure its rights to an interoceanic canal across the isthmus of Central America. During the turbu­ lent 1850's the American government continued to uphold its rights with both Nicaragua and Great Britain. The State

Department attempted to make the canal an international waterway in which all nations had equal rights of usage.

United States persistence in this course led to great difficulties with England over the interpretation and enforcement of the Clayton-Bulwer treaty. Although Great

Britain was willing to abandon the Mosquito Protectorate almost immediately, she insisted on doing so under honorable circumstances. At the same time the United States, after

1853, demanded complete British withdrawal from Central

America. Not until 1860 was the situation settled in a manner acceptable to all concerned. The quarrel with Great

Britain over the Clayton-Bulwer treaty was the main concern of American canal diplomacy, during the 1850*s. It was a problem of vital interest to Nicaragua and the other

Central American states who had long since grown weary of

British intervention in their affairs. ' 10 11

Before the difference of interpretation over the •

treaty developed, the United States and Great Britain

seemed to have achieved an amicable settlement in the terms

of the Clayton-Bulwer treaty. Secretary of State John M.

Clayton's original analysis of the treaty gives one an idea

of the American government's attitude during the period

shortly after the treaty's completion. Clayton stated that

the treaty secured the neutrality and protection of the

Nicaragua canal by the British government thus achieving

the main object of the negotiation. He was also convinced

that Britain would extinguish the Mosquito Protectorate.

Clayton based this judgment on the wording of the first

article of the treaty and believed that the protectorate 1 would be reduced to a shadow and soon cease to exist.

Thus the United States government supported the treaty as

an effective settlement of its problems with Great

Britain.

The British government had a different view of the

terms of the Clayton-Bulwer treaty. Lord Palmerston and

the members of the Foreign Office did not agree with

Clayton's opinion that the Mosquito Protectorate had been

weakened. The British government contended that the

treaty had not made any change in thq status of the

i Manning, Inter-American Affairs, Vol. Ill, pp. 59- 61, Note of John M..Clayton to Ephraim George Squier, May 7,.1850. 2 Mosquito Protectorate. This attitude was a precursor to

the eventual British interpretation that the Clayton-Bulwer

treaty was wholly prospective in effect. Obviously,

British and American views of the treaty were contra­

dictory. The situation was quickly revealed in the cor­

respondence between the two governments and both sides

recognized the need for a further settlement. Neither

government desired another crisis like that of 1849 and a 3 spirit of cooperation formed between them.

Anglo-American cooperation was the policy of the

Millard Fillmore administration, a continuation of the Whig

policy followed by Taylor. President Fillmore and his able

Secretary of State, Daniel Webster, wanted to protect

American rights in the isthmus, but refused to follow the

suggestions of Congressional anglophobes. They thought it best to try and reach a more perfect Central American

settlement with Great Britain. Fillmore, particularly, wanted the British presence at Mosquito eliminated. The

continued existence of the protectorate along Nicaragua's

transisthmian route was a threat to the completion of the

canal. In attempting to secure British adherence to the

2 Richard W. Van Alstyne,."British Diplomacy and the Clayton-Bulwer Treaty 1850-1860," The Journal of Modem History, XI (June, 1939), p. 159. 3 Williams, Isthmian Diplomacy, pp. 131-132. 13

American view of the Mosquito Protectorate,, President

Fillmore pursued a policy of persuasion.^

Anglo-American desire for a settlement was threatened by an incident in 1851, but at the same time the incident demonstrated the urgency of a settlement. The incident involved the steamship Prometheus. This ship belonged to the Accessory Transit Company which had a charter from Nicaragua granting it the exclusive right to transport passengers and goods across Nicaragua from San

Juan del Norte on the Caribbean to San Juan del Sur on the

Pacific. The transit route opened in July, 1851, under the personal direction of company president Cornelius Vander- • bilt. From that point relations between the company and the authorities of Greytown (the British name for San Juan del Norte) deteriorated.^

On November 21, 1851, the authorities of Greytown made another attempt to collect harbor dues from the

Prometheus. Before this time the company had refused to pay the charges. Again the ship's captain and Vanderbilt, who happened to be aboard, refused to pay and expelled the

Greytown officials from the Prometheus.. Vanderbilt said that the Clayton-Bulwer treaty forbade the collection of

^Robert J . Rayback, Millard Fillmore (Buffalo, New Yorks Henry Stewart Inc., 1959), pp. 301-30%; Williams, Isthmian Diplomacy, pp. 131-132. 5 ✓ Rodriguez, Palmerstonian Diplomat, p. 328. 14

duties by the Mosquito authorities of Greytow. Great

Britain's agent on the scene took the town's side and asked

the commander of the H.M.S. Brig of War Express to support

the demands of the t o w . The Express thereupon prevented

the Prometheus from leaving port by firing a shot across her bow and Vanderbilt paid the dues under duress. The

Prometheus then sailed to New York where her captain related 6 the incident.

The American public was shocked by the event and an

immediate apology was demanded P The Fillmore administra­

tion lost no time in protesting this flagrant violation of

American rights and wanted to know if the Captain of the 8 Express had acted under orders. Great Britain realized

the seriousness of the incident and Lord Granville replied

that the Captain of the Express acted without orders. He

also expressed Britain's firm intention to abide by the 9 Clayton-Bulwer treaty. Granville's statement was not

enough to satisfy the United States Minister, Abbott

^Ibid., pp. 328-329; Manning, Inter-American Affairs, Vol. VII, pp. 73-74, Note of Daniel Webster, United States Secretary of State, to Abbott Lawrence, United States Minister to Great Britain, December 3, 1851. 7 Rodriguez, Palmerstonian Diplomat, p <; 330. 8 ' Manning, Inter-American Affairs, Vol. VII, pp. 4 4 4 -4 4 5 , Note of Abbott Lawrence to Lord Palmerston, December 19, 1851.

^Ibid., pp. 446-447, Note of Lord Granville to Abbott Lawrence,December 30, 1851. 15 10 Lawrence, who wanted a complete disavowal of the event.

Lord Granville did not disavow the event because of inade­

quate information, but as soon as the intelligence arrived he issued a complete disavowal and apology for the act of

Captain Fead of the Express. With that the unfortunate 11 affair ended.

The Prometheus incident had important consequences

for Anglo-American relations. In England, Lord Palmerston's aggressive diplomacy received a death blow. Since 1850,

Palmerston had been under fire at home from critics who believed his gunboat diplomacy hurt British interests.

Palmerston left office in December, 1851, and the British government committed itself to a settlement of the Central 12 American problem and to a retreat in that area.

Another factor that made an agreement between the

United States and Great Britain necessary was the smolder­

ing boundary dispute between Costa Rica and Nicaragua. The

definition of the boundary of the Mosquito Kingdom also had

a bearing on the dispute. The quarrel was of recent origin

and seemed to be prompted, on Costa Rica's part, by the

imminent completion of a transisthmian communication.

10 / Rodriguez, Palmerstonian Diplomat, p. 335. 11 - Manning, Inter-American Affairs, Vol. VII, pp. 448-449, Note of Lord Granville to Abbott Lawrence, January 10, 1852. TO' > . Rodriguez, Palmerstonian Diplomat, pp. 335-336. Costa Rica claimed the right bank of the San Juan River and

on this basis believed that the land grants of the canal company violated her rights. She wanted an indemnity for the violation as well as a share in the agreement with the

transit company. Costa Rica maintained that for any agree­ ment concerning the interoceanic route to be valid her

13 ■ . participation was absolutely necessary. Nicaragua

refused.to recognize what she considered to be extravagant

Costa Rican demands and maintained that the whole San Juan

River, including the right bank, was within her territory.

These mutually contradictory views made a settlement of the dispute very difficult.

The United States and Great Britain* became involved

in the dispute due to their interests in the area and the

inability of the participants to reach agreement. The

United States wanted the transit between the two Oceans to remain open. Costa Rica's claims and Nicaragua's counter claims might lead to warfare which would close the transit«

Therefore, the United States decided to cooperate with

Great Britain in an attempt to reach a general settlement of the problems of Central America. England also wanted

------L3~ Manning, Inter-American Affairs, Vol. IV, pp. 195-196, Note of Felipe Molina, Costa Rican Minister to the United States, to Daniel Webster, March 28, 1851*

^Ibid., pp. 195-196, 254, Note of Jose de Marcoleta,-NTcaragua's Minister to the United States, to Daniel Webster, December 5,1851. the transit to remain open and wanted the Mosquito Shore 15 problem solved. When Costa Rica and Nicaragua appealed to the signatories of the Clayton-Bulwer treaty to inter­ vene in their boundary dispute, the invitation was 16 ' accepted. The ministers of the four states gathered at

Washington and a settlement attempt followed.

The negotiations did not go smoothly, however.

Jose' de Marcoleta, the Nicaraguan representative, was not invited to take part because of inadequate instructions.

The Costa Rican minister did participate in the negotia­ tions, but he did not sign the finished document. Essen­ tially, then, the agreement was formed by John F. Crampton,

Great Britain's Washington representative, and Daniel 17 Webster.

The Webster-Crampton Agreement of April 30, 1852, was a set of proposals recommended to the Republics of

Nicaragua and Costa Rica as a basis for the settlement of their differences. It also involved a settlement of the

Mosquito problem. In general the terms of the agreement provided for a definition of the Mosquito territory

^ Ibid., pp. 14-17, Note of Daniel Webster to Robert M. Walsh, United States Special Agent to Costa Rica, April 29, 1852.

^ Ibid. , pp. 250-251, Note of Jose de Marcoleta to Daniel Webster, October 30, 1851. 17 ' Ibid. , pp. 18-23, Note ^of Daniel Webster to John Bozman Kerr, United States Charge d'Affaires in Nicaragua, April 30, 1852. boundaries giving to Nicaragua the lands south of the Rama

River including Greytown. In return, Nicaragua had to pay the. Mosquito Indians an indemnity of ten per cent of the net customs receipts at Greytown for three years. The

Mosquito Indians received .the right to voluntarily join

Nicaragua. These provisions with other minor clauses pro­ vided for the settlement of the Mosquito™Nicaragua dispute.

However, the United. States had conceded a great deal, in effect, by recognizing the existence of the Mosquito

Kingdom; something which the American government had 18 refused to do previously.

The agreement defined the Costa Rica-Nicaragua boundary. Nicaragua retained the San Juan River from its confluence with the Colorado River down to the Caribbean.

Above that point,Costa Rica had the south bank and part of the south shore of Lake Nicaragua. From fhe lake a line was drawn to the mouth of the La Flor River on'the Pacific

Ocean. Costa Rica received the right to navigate the San

Juan and obtained the district of Guanacaste. The settle­ ment was a compromise with Nicaragua giving up more territory but retaining control of the San Juan. As a counter part of the boundary agreement, the convention provided for recognition of the canal and transit companies’ contracts and for the unobstructed functioning of the transit. The United States and Great Britain promised to 19 protect the transit. Although the agreement left much to

be desired from the United States viewpoint, it still

secured the canal and that was the object of Fillmore1s

policy. -

The whole settlement depended upon the acceptance

of Nicaragua and Costa Rica. Both nations were jealous of

their rights and had misgivings about various terms of the

agreement. Costa Rica, while feeling she was conceding too 20 much, accepted the convention in June, 1852. Nicaragua

refused to accept the proposals. She strongly objected to

that part of the Webster-Crampton Agreement which, in

effect, recognized the British conquest of San Juan del 21 Norte. Nicaragua proposed modifications to the agreement

on several occasions in 1852, but the changes she proposed p 9 were completely unacceptable. Thus after much work the

United States and Great Britain were no closer to a settle­

ment of the Central American question. The era of

90 Ibid., pp. 288™290, Note of Joaquin Bernardo Calvo, Costa Rican Foreign Minister, to Robert M. Walsh, . June 24, 1852.

^ Ibid., pp. 313-319, Note of Jose de Marcoleta to Charles M.' Conrad, Acting Secretary of State of the United States, November 2, 1852.

^ Ibid. , pp. 301-303, Note of Francisco Castelion, NicaraguanHMinister of Foreign Affairs, to John Bozman Kerr, July 29, 1852. 20

cooperation initiated by the Fillmore administration came

to a close with the victory of the Democrats in the 1852

election.

The Democrats, particularly the faction led by

Stephen A. Douglas, were advocates of expansion and believed

it was the destiny of the United States to expand through­ out North America. As expansionists, they were inherently hostile to the British presence in Central America. Their hostility increased when the Bay Islands were declared a

British colony on March 20, 1852. That event led to the adoption of an extreme United States position on the 23 Clayton-Bulwer treaty.

Great Britain's action produced an intense debate

in Congress, during which, the Democrats presented the opinion that the treaty of 1850 had intended the complete removal of British influence in Central America. The

Senate Committee on Foreign Relations issued a report declaring the Bay Islands Colony to be a direct violation of the Clayton-Bulwer treaty. The report was an indication of the mood of the country and evidences a return to the 24 principles of the Monroe Doctrine. These ideas came to the fore during the Pierce administration and formed the basis for its policy concerning the Clayton-Bulwer treaty.

23 Williams, Isthmian Diplomacy, p. 139.

24 Ibid.,.pp. 142-146. 21

However, there was another reason for the adoption of the renunciation interpretation of the Clayton-Bulwer treaty by the Pierce administration. Pierce1s government was very concerned with the opening of a canal or transit route through Central America. Since such a route was already open, the United States wanted to be certain that it would not be disturbed in any way. The continued presence of Great Britain in Central America was a dis­ turbing influence particularly in the existence of the

Mosquito Protectorate. The anomalous situation created along the transit route by the protectorate made operation of the transit difficult. Therefore, the State Department, under Secretary of State William Marcy, followed a policy designed to eliminate all British control and influence over Central American territory. The United States did not want exclusive control of the transit route. On the contrary, Pierce continued to follow the established policy of a neutral transit open to all nations on equal terms.

According to the Pierce interpretation of the Clayton-

Bulwer treaty, Great Britain came under obligation to the

United States to end all her interventions in Central

America. That is, Great Britain must end her Mosquito

Protectorate and the Bay Islands Cplpny. The attitude of 22

the new American administration made relations between the 05 two nations very difficult during the mid 1850's.

When James Buchanan, the new American Minister, went to London, he took the American views on the 1850

treaty. The United States was determined to have Great

Britain recognize its position. Buchanan received instruc­

tions to present the renunciatory interpretation of the

Clayton-Bulwer treaty and to determine the British posi­

tion. He was also empowered to conclude a treaty on the 26 subject. In spite of its dogmatic views on the treaty, f the United States wanted a settlement. However, Great

Britain destroyed all possibility of a settlement when she answered Buchanan's notes requesting a statement of posi­

tion.

The notes caused the British government to consider

its position on the Central American question. There was

some thought of accommodating the United States by . • 27 accepting the Pierce view of the Clayton-Bulwer treaty.

However, Great Britain decided to reject the United States position because she was suspicious of the Pierce

25 Manning, Inter-American Affairs, Vol. VII, pp. 84-95, Note of William L. Marcy, United States Secretary of State, to James Buchanan, American Minister to Great Britain, July 2, 1853.

^Ibid., pp. 99-101, Note of William L . Marcy to James Buchanan, September 12, 1853.

^ V a n Alstyne,."British Diplomacy," pp. 175-177. administration. British diplomats believed the Pierce

government wanted to take advantage of their preoccupation with the Crimean War. Reports of American aid to Russia and the activities of annexationists as well as Captain

Hollins' bombardment of Greytown in the summer of 1854 seemed to confirm British suspicions. Great Britain also believed that the Pierce administration used the diffi­ culties with England to take attention away from the

American domestic situation and to rally supporters.

Therefore, Britain took a hard line in 1854.^

Great Britain presented a new interpretation of the

Clayton-Bulwer treaty that shocked the United States. Lord

Clarendon replied to Buchanan's notes with a long declara­ tion of Britain's position in which he said that the treaty of April 19, 1850 was intended to be prospective in opera­ tion. That is, British rights and holdings in Central

America as of that date were not affected by the terms of the treaty. Great Britain was only prohibited from further expansion. Clarendon continued his discourse and refuted each of the arguments used by Buchanan to demonstrate that

Britain had to end the Mosquito Protectorate,, return the

Bay Islands to Honduras, and return to the original boundary of Belize. His note produced a counter note from

Buchanan which effectively neutralized some of Clarendon's

^ibid., pp. 171-172? Williams, Isthmian Diplomacy, pp. 1 5 7 - 1 5 F T ~ ----- 24 arguments. Neither side would retreat from its position and a stalemate resulted. For almost a year the dispute 29 over the Glayton-Bulwer treaty lay dormant.

President Franklin Pierce initiated a new series of talks in August, 1855. The President directed Secretary of

State Marcy to instruct James Buchanan to make one more attempt at a settlement. In his instructions Marcy explained the American position again and asked Buchanan to get another statement of Britain's position. The United

States wanted a quick solution, but also wanted its inter­ pretation of the treaty to prevail. This was a poor basis upon which to resolve the vexatious Central American 30 problem. , (

James Buchanan presented the American position to the British Foreign Office again and found nothing changed.

Lord Clarendon, in reply to Buchanan's inquiry, stated that

H. M..Government still considered the treaty prospective in operation and therefore of no consequence for British 31 holdings in Central America. William Marcy was amazed

29 Manning, Inter-American Affairs, Vol. VII, pp. 537-552, Statement of Lord Clarendon, Great Britain's Secretary of State for Foreign Affairs, to James Buchanan, May 2, 1854.

~^Ibid., pp. 117-121, Note of William L. Marcy to James Buchanan, August 6, 1855«

^ I b i d ., pp. 615-617, Note of Lord Clarendon to James Buchanan, September 28, 1855. 25

was amazed by Clarendon's reply, but reaffirmed America's

determination to enforce the renuniciatory interpretation

of the 1850 treaty.

Great Britain soon decided to make another attempt

to settle her problems with the United States. The influ­

ence of British public opinion in favor of good relations with the United States was the most important force in V bringing about new negotiations. During the winter of

1855-1856, the English public became increasingly alarmed at the prospect of a war with America. This feeling was

reflected in Parliament where the government's American policy received criticism. Some House of Commons members demanded the correspondence on American relations. Lord

Clarendon tried to stall Parliament by saying that an arbitration offer had been sent to the United States. The criticism did not stop and eventually Great Britain nego- 33 tiated with America.

The announcement that an arbitration offer had been i made startled the United States. No one in Washington knew

of it. A misunderstanding between Buchanan and Marcy

resulted in the proposal going unnoticed. When the United

States learned that Great Britain seriously suggested arbitration of mutual differences, tbe Pierce administration

~^ Ibid., pp. 122-123, Note of William L. Marcy to James Buchanan,October 22, 1855. 33 Williams, Isthmian Diplomacy, pp. 204-206. 26

considered the idea. William Marcy did not believe the

issue could be arbitrated by a third power. An arbitrator

might choose the British view of the Clayton-Bulwer treaty

and thus settle nothing. President Pierce wanted accept­

ance of the American interpretation. While rejecting the

arbitration proposal the United States reaffirmed its desire to enter into direct negotiations for a settle-, m e n t .^

As a result of Marcy1s friendly note, negotiations

started in June, 1856, and resulted in the Dallas-Clarendon

Treaty, a compromise designed to settle the British-

American dispute over the meaning of the Clayton-Bulwer 35 treaty. The treaty defined the boundaries of the

Mosquito Kingdom, gave the Mosquito Indians the right to

govern themselves, and forced Nicaragua to pay them an

annual indemnity. Nicaragua received all territory south

of the Wanx River including Greytown which became a free

port. The treaty also provided for a commission to settle

various disputed questions between Nicaragua and Mosquitia

regarding land grants, the annual annuity, and the boundary.

These proposals would be recommended by the United States

^ I b i d . , pp. 207-209; Manning, Inter-American Affairs, Vol. VII, pp. 128-138, Note of William L. Marcy to George M. Dallas, United States Minister to Great Britain, May 24, 1856. 3 5 Williams, Isthmian Diplomacy, pp. 224-225. 27

and Great Britain to Nicaragua and Costa Rica for action to 'iC. fulfill the treaty.

A section of separate articles attached to the

treaty resolved the other outstanding issues. The Belize boundary was determined as it existed on April 19, 1850,

and, as already stipulated in a pending treaty between

Great Britain and Honduras, the Bay Islands became a free

territory under the sovereignty of Honduras. The Dallas™

Clarendon treaty was a workable compromise and promised an 37 end to the long-standing controversy. } The United States received the treaty with pleasure

President Pierce, in his annual message to Congress, said:.

"Should the proposed supplemental arrangement be concurred

in by all the parties to be affected by it, the objects

contemplated by the original convention will have been 3 8 fully attained." The initial feeling quickly evaporated when the Senate began studying the terms of the agreement. .

The Senate would not accept certain provisions of

the treaty. It wanted the British to concede a little more

and consequently modified the treaty, The most important

^Manning, Inter-American Affairs, Vol. VII, pp. 688-692, Note of George M. Dallas to William L. Marcy, October 17, 1856, see footnote No. 2 for the Dallas™ Clarendon Treaty.

37Ibid. , pp. 691-692. 38 James D. Richardson, A Compilation of the Messages and Papers of the Presidents 1789-1897 (Washington Government Printing Office, 1897j, Vol. 5, pp. 410-411. 28

change was in the separate articles concerning the Bay

Islands. The Senate did not like the creation of a free

territory within the state of Honduras. Therefore, it

changed the article to simply state that the islands were

recognized as under the sovereignty and as a part of

Honduras. The altered treaty received the approval of the 39 Senate and the President's seal in March, 1857.

Great Britain found the American changes to be acceptable in all but one instance. Britain could not accept the. Senate's modification of the separate article concerning the Bay Islands. The amendment was unacceptable because it held out the hope, to Honduras, of better terms

than those of the pending British treaty with that country.

Great Britain feared Honduras would reject the unratified

treaty if London accepted the American version of the

Dallas-Clarendon treaty. Because of this difference Great

Britain did not accept the United States Senate's form of the treaty and another attempted settlement of the Anglo-

American controversy failed

However, the British were so desirous of a settle­ ment that they offered a new treaty to the United States in

39 Manning, Inter-American Affairs, Vol. VII, pp. 692r693, Note of George M. Dallas to William L. Marcy, October 17, 1856, see footnote No. 2 for the American modifications of the Dalias-Clarendon Treaty.

^ I b i d ., pp. 696-700, Note of George M. Dallas to Lewis. Cass , United States Secretary of State * April 16, 1857._ 29

May, 1857. The treaty was identical to the rejected one with the exception of that part dealing with the Bay

Islands which followed British views. Secretary of State

Lewis Cass rejected the treaty after consulting President

James,,Buchanan. The United States would not agree to the

erection of a "free territory" within the boundaries of

Honduras. Buchanan, however, expressed his desire for continued friendly relations with England.With this final word the episode of the Dallas-Clarendon treaty

ended. The failure of the negotiations brought disillu­

sionment to the recently installed Buchanan administration.

President James Buchanan lost faith in the capa­ bility of the United States and Great Britain to reach a

settlement of their differences because of the failure of

the treaty. Under the influence of these thoughts, and following the arguments of some extreme anglophobes,

Buchanan decided that the best solution would be abroga­

tion. If Great Britain would not abide by the terms of the

Clayton-Bulwer treaty, the United States might as well end

its adherence to the document. Such an action would renew

the rivalry in Central America, but Buchanan felt the

United States could hold its own. He thought it was better to fight for America’s interests than be hamstrung by a

——IT"— Ibid., pp. 168-171, Note of Lewis Cass to Lord Napier, Great Britain’s Minister to the United States, May 29, 1857. treaty which only one party followed. Secretary of State 42 Lewis Cass agreed with this analysis. During 1857,

.President Buchanan favored abrogation of the 1850 treaty.

He continued to support abrogation even after Great Britain

indicated a willingness to settle the dispute on American 43 terms. If the British government had not accepted the

United States interpretation of the Clayton-Bulwer treaty,

that treaty might well have been abrogated by Buchanan.

Great Britain's decision to accept the United

States interpretation occurred in 1857. The credit for

changing the British position goes largely to Lord Napier,

Britain's Minister to Washington. Napier, in talks with '

Buchanan and Cass, quickly perceived that the Democratic

administration wanted to abrogate the Clayton-Bulwer

treaty. He communicated the information to London. Napier 1 feared Buchanan would put the matter into the hands of

Congress and cause an outright break in relations. . In his despatches to the Foreign Office, Lord Napier made sugges­ tions that Great Britain accept the American position. He contended that if the Clayton-Bulwer treaty ceased to exist the United States would be free to annex Central America.

With the treaty intact Great Britain could maintain her

influence in Central America and could insure her rights in

^Williams, Isthmian Diplomacy, p. 231. / o Richardson, Messages, Vol. 5, pp. 444-445. the transit. Lord Napier argued that the treaty must be

maintained even if this meant the complete acceptance of

the United States interpretation because if the present

situation remained unsettled war would be the inevitable v

result

Napier's arguments had a telling effect in Great

Britain where the government was determining its course of ■ ; action. Some members of the government argued that the

treaty should be ended because the United States support of

filibusters in Central America had voided it. With the

treaty exterminated Great Britain could pursue her own

course in the Caribbean and would soon dominate there. In . < any open rivalry with the United States, opponents of the

treaty argued, Britain would defeat the Americans. The

English government, nevertheless, decided to opt for

•Napier's solution. By upholding the treaty and accepting

the United States position Britain could protect her vast

interests in the Caribbean. The treaty would then become

an instrument to preserve good relations with the United

States and at the same time protect English interests.

,Thus for practical reasons Great Britain decided to accept

the American interpretation of the Clayton-Bulwer treaty.

^Van Alstynej."British Diplomacypp. 179-181.

45Ibid. After this monumental decision a settlement of the

Central American question became inevitable. Napier

informed President Buchanan of his government's decision

and Buchanan agreed to change his annual message as soon as he received official verification of Great Britain's new

policy. Previously, Buchanan had intended to put the matter of the Clayton-Bulwer Treaty, before Congress. When

Great Britain's intention to settle the matter through

treaties with the Central American states was confirmed;

Buchanan changed his message. This enabled Britain to

settle the dispute without the threat of abrogation by the,

United States Congress V

Great Britain selected Sir William Ouseley to perform the delicate mission of enforcing the terms of the

Clayton-Bulwer treaty through separate treaties with

Guatemala, Honduras, and Nicaragua. Ouseley was not the best man for the position. He did not follow instructions and Great Britain did not accept his treaty with

Nicaragua.Ouseley's poor performance threatened to

^John Bassett Moore, ed. The Works of James Buchanan (Philadelphia: J . B . Lippincott, 1910), Vol. X, pp. 124-126; Richardson, Messages, Vol. 5, pp. 444-445; Lindley Miller Keasbey, The Nicaragua Canal and the Monroe Doctrine (New Yorks G. P. Putnam's Sons, 1896), p. 256.

^Williams, Isthmian Diplomacy, pp. 256-257. 33

wreck the hopes for a solution = The United 'States grew

impatient and suspicious of Britain's intentions.^

Great Britain did not lose hope and continued to

pursue its policy of conciliating the United States.

.Guseley was recalled. In his stead, Charles Lennox Wyke

resumed the negotiations in.February, 1859.^ He used his

. diplomatic skill and some of Ouseley's preparations to

completely settle the disputes with Guatemala and Honduras.

At Managua, on January 28, 1860, Wyke signed with Pedro

Zeledon, the Nicaraguan Foreign Minister, a treaty that

ended the Mosquito Protectorate. Great Britain recognized

the territory occupied by the Mosquito Indians as belonging

to and under the sovereignty of Nicaragua. However, the

Indians were to govern themselves in their territory and

Nicaragua had to pay them an annual sum of $5,000 for ten

years. The Indians received the right to voluntarily

incorporate themselves with Nicaragua. The former Mosquito

controlled port of Greytown went to Nicaragua, but became a 50 free port. By these terms Nicaragua gained Control of

her full domain.and the transit route was no longer subject

^Moore , Works of Buchanan, Vol. X, pp. 315-318. 49 Williams, Isthmian Diplomacy, pp. 257-258. 50 United States, Senate, Report of the Isthmian Canal Commission, 1899-1901Doc. No. 222, 58™ Congress, 2nd Session, 1904, pp. 365-367, hereafter cited as Isthmian Canal Report. to separate jurisdictions. The freeing of the.transit was

a major achievement of American diplomacy.

Great Britain's treaties with the three Central

American states brought an end to its quarrel with the

United States. President Buchanan pronounced his govern- , 51 ment entirely satisfied with the settlement. The

American interpretation of the Clayton-Bulwer treaty pre­

vailed and as a result British influence in Central

America was somewhat reduced. The Nicaragua transit route

was free from the Mosquito Protectorate and the terms of

the Clayton-Bulwer treaty guaranteed its neutrality. The. ,

enforcement of the treaty fulfilled United States canal

policy. Great Britain gained friendly relations with the

United States and guaranteed her rights to an equal posi- .

tion in the transoceanic communication. Both nations had

reached an accommodation„ a balance of influence, in

Central America. The arrangement proved satisfactory to

both until 1880, but was not formally changed until 1901. v- In spite of the struggle with Great Britain over

the Clayton-Bulwer treaty, the United States found time for

significant relations with Nicaragua during the 1850's.

The opening of a canal or transit was important to both nations and this subject dominated•their relations. In view of the mutual desire for a transit route, completion

51 Richardson, Messages, Vol. > 5, p. 63J9. of a canal seemed a certainty. However, the course of

events was not favorable and by the end of the decade rela­

tions between the two nations were strained. The story of

their deterioration unfolds in two parts; the first of

which deals with the opening of the Nicaragua transit by

an American company.

The American Atlantic and Pacific Ship Canal

Company received a concession from Nicaragua in 1849 by

which it had to construct a canal within twelve years. The

contract also granted the company the right to build a

transit across Nicaraguan territory. Since the canal would

take at least twelve years to complete, the company members,

.Cornelius Vanderbilt, Joseph L. White, decided to gain

early profits by opening a transit route. It was designed

to provide quick transit for the thousands swarming towards

'the California gold fields. Although the concession of

1849 allowed the establishment of a transit route, 59 Vanderbilt and associates wanted better terms.

With this ‘in view, Joseph L. White went to

Nicaragua in 1851 to negotiate a new contract. He dis­

covered the country in the midst of civil war. The con­

flict made any progress difficult, but White eventually

secured a contract modification from one of the contesting ■

52 : " Manning, Inter-American Affairs, Vol <> III * pp. 360-366, Note of Ephraim George Squier to John M. Clayton, September 10 , 1849. • . . .. .: ■ ■ . • • ■ 36 groups. The other party protested, but to no avail since

it lost the struggle for power. By the terms of the con­ tract the Accessory Transit Company was created. It received the exclusive right to transport passengers across 53 Nicaragua.

The recent change in the policy of the canal company Owners led some Nicaraguans to believe that the company had duped their government. These people contended that the company had never intended to construct a canal.

Mistrust of the canal company1s motives provided fertile ground for the eruption of disputes with the Accessory . 5 4 • . Transit Company. ;

In 1851, relations between the transit company and

Nicaragua were primarily smooth as operations started.

Vanderbilt's company established terminals at Greytown and

San Juan del Sur. The transit was accomplished by steam­ boat navigation of the San Juan River and Lake Nicaragua.

A twelve mile macadamized road completed the journey from 55 the lake to San Juan del Sur on the Pacific Ocean. The s V Keasbey, Nicaragua Canal, pp. 219-220; Manning, Inter-American Affairs, Vol. IV, pp. 235-238, Note of John Bozman Kerr to Daniel Webster, August 25, 1851. 54 Manning,.Inter-American Affairs, Vol. IV, pp. 235-238, Note of John Bozman Kerr to Daniel Webster, August 25, 1851.

^^Keasbey, Nicaragua Canal, pp. 219-220; Franklin D. Parker, The Central American Republics (New York: Oxford University Press, 1964), p. 224, 37 route flourished for several years transporting thousands of people to and from California. However, completion of the Panama railroad in 1855 severely curtailed use of the

Nicaraguan route and after the Filibuster War it never reopened. During its short life the Accessory Transit

Company managed to disrupt United States relations with

Nicaragua almost to the breaking point. Before that point was reached the parent company did one great service for the N i caragua canal.

According to the contract of the American Atlantic and Pacific Ship Canal Company, surveys of the canal route 57' had to begin within twelve months. The company selected

Colonel Orville W. Childs to conduct a survey of the

Nicaragua canal route. He started work in 1850 and after two years of exhaustive study completed his task. On the basis of his studies Childs recommended a canal of 194 miles with 28 locks following the San Juan River to Lake

Nicaragua. From the lake he continued the canal through the coast range of mountains to the Pacific port of Brito.

Childs estimated the cost of the canal at $31,538?319 and the time necessary for completion at six years. His survey was the most accurate description of the Nicaragua route at

~^Gerstie Mack, The Land Divided (New Yorks Alfred A. . Knopf, 1944), pp. 190-191. 57 Manning, Inter-American Affairs, Vol. Ill, pp. 361-366, Note of Ephraim George Squier to John M.•Clayton, September 10,1849, see footnote No. 2 for the contract. 38 that time. Childs' survey became the basis for many future

canal projects and provided support for the idea that

Nicaragua possessed the best canal route. The canal

company was unable to construct Childs' canal because .it

could not raise the necessary capital. Failure of the

project ended all efforts to complete a Nicaragua canal 58 during the 1850's.

The strategic importance of the transit for the

United States led the Fillmore and succeeding administra­

tions into a policy of supporting an open transit. Early

manifestation of the policy came in 1851 when the Fillmore

administration supported the charter modifications obtained

by White against the attacks of the Nicaraguan opposition.

- With this action the United States became involved in the

relations between the transit company and Nicaragua. When .

the company and Nicaragua quarrelled, America tried to

settle the dispute in order to keep the transit functioning.

However, the United States usually supported the company

against Nicaragua. As a result the quarrels between

58 Du Val, Cadiz, pp. 67-68; Keasbey, Nicaragua Canal, pp. 217-219; Bancroft, Central America~ Vol. Ill, p . 729; United States ,, Senate , Report of the" Isthmian Canal Commission, 1899-1901,.Doc. No."1)4, 57™ Congress, 1st : Session, 1901,.pp. 48-49, hereafter cited as Canal Report 1901.- ' ■ % . Nicaragua and the Accessory Transit Company worsened United 59 States-Nicaragua relations.

In June, 1852, the transit company declared a

dividend for its stockholders. However, the company did

not, as provided by its contract, deduct ten per cent of

its net profits for the Nicaraguan government« This clear

violation of the contract upset Nicaragua greatly and she

appealed to the company for satisfaction. The owners of

the Accessory Transit Company ignored, Nicaragua's appeals 60 and a long-running dispute began.

The United States government became involved in the

dispute due to its concern for the continued functioning of

the transit. Secretary of State Daniel Webster proposed a

basis for the settlement of the quarrel just at the moment

when Nicaragua seriously considered forfeiting the company's

charter. Nicaragua learned, in Webster's proposal, that

the United States would not allow the transit to be closed

and would protect the company's rights. The transit

company and Nicaragua were still unable to reach an agree­ ment. Nicaragua grew increasingly dissatisfied, but the

influence of the United States finally led both parties to

“^Manning, Inter-American Affairs, Vol. IV, pp. 11- 12, Note of Daniel Webster to'John Bozman Kerr, November 20, 1851, and pp. 44-45, Note of William L. Marcy to Solon Borland, United States Minister to Nicaragua, June 17, 1853. 60 Ibid., p. 398, Note of Mateo Mayorga, Minister of Foreign Affair's of Nicaragua, to William L. Marcy, . April 24,■1854., - the negotiating table in 1853. The company offered

Nicaragua $35,000 in lieu of the ten per cent due for the previous years and the fee of two dollars per person using the transit. Nicaragua was pleased by the offer, but she demanded $45,000 plus three dollars per passenger. The transit company rejected Nicaragua’s proposal as extrava­ gant. A stalemate resulted and all succeeding attempts at a settlement ended in failure.

The unwholesome situation was a catalyst to poor relations between Nicaragua and the United States. The

Pierce administration came to the conclusion that Nicaragua was disturbing the company's operations. America believed the company was in the right and Nicaragua in the wrong.^

Such a sentiment could only lead to poor relations between the two nations. Nicaragua recognized the feeling in

Washington and blamed it on the company's complaints to the

United States. Nicaragua's Foreign Minister denied his country was hostile to the company and said that Nicaragua only wanted good relations with the United States as well

61 Ibid., pp. 399-402, 326-328, Note of John Bozman Kerr to Edward Everett, United States Secretary of State, January 13, 1853. 62 Ibid., pp. 54-55, Note of William L. Marcy to Solon Borland,.February 3, 1854; Richardson, Messages, Vol.. 5, p. 280. , 41 63 as fulfillment of the contract. The strain on Nicaragua-

United States relations was further increased in 1854 by

the American attack on Greytown.

The shelling of Greytown occurred because of

hostility between that town and the Accessory Transit

Company. The focal point of the dispute was the company's

station at Punta Arenas, a point across the river from

Greytown. The point, to be used as a coal depot, had been

granted to the company by the officials of the town. But

the transit company soon exceeded the grant and erected

hotels, shops, and other facilities. It used the facilities

as a port, passenger transfer point, and repair area. This

hurt Greytown economically and a feud began. In 1853, the

authorities of the port revoked the company’s concession,

but the latter refused to leave Punta Arenas. Greytown

decided to use force, and an armed assault on the point was

, only prevented by the timely intervention of a United

States naval vessel. Thwarted in their efforts to evict

the interloppers by force, the citizens of Greytown turned

to theft. The Accessory Transit Company began losing a

considerable amount of goods from its warehouses at Punta

Arenas. Company officials demanded return of the stolen

items, but Greytown authorities refused to act. While all

' ...... Manning, Inter-American Affairs, Vol. IV, pp. 395-397, Note of Mateo Mayorga to William L.Marcy, April 24, 1854. 42

the foregoing occurred the company made continuous appeals

to the United States government for aid.

Although the American government provided a vessel

of war to protect the company's rights in Greytown, the

situation continued to fester. United States patience

finally evaporated when the American minister to Nicaragua

. was attacked by a mob because he was shielding one of the

Accessory Transit Company's captains. The rabble wanted

the unfortunate man because he killed a Mosquito negro.

The incident caused the United States to send the American

war sloop Cyane to Greytown under the command of Captain

Hollins.65

The United States representative in Greytown

received instructions to cooperate with Captain Hollins and

to demand a full apology for the insult to the American

minister. Reparations also had to be paid for damage to 66 the transit company's property.- Captain Hollins demanded

an apology from the authorities of Greytown. When none was

forthcoming he issued an ultimatum. Greytown ignored it.

Therefore, on July 9, 1854, he shelled the town and after- ' 67 wards burned the remains.

64 Williams, Isthmian Diplomacy, pp. 172-174.

Ibid.; Keasbey, Nicaragua Canal, pp. 236-237 6

■ ' 66 Williams, Isthmian Diplomacy, p. 176. . - 67 , : ;. V I ■ v v : :v. Keasbey, Nicaragua Canal, pp. 236-237. Hollins' act produced an instant reaction in

Nicaragua. Managua protested to the United States that the

shelling had completely ruined some assets belonging to

Nicaraguan citizens. Nicaragua demanded reparations. - The

United States upheld Captain Hollins' deed and refused the

reparations demand because Greytown was not under Nicaraguan'

authority. America's reply ended the incident, but

Nicaragua's feelings could not be soothed.^

Nicaragua-United States relations reached a new low with the arrival of William Walker in Central America. The ubiquitous adventurer from Tennessee came to Nicaragua in

1855 at the invitation of the Liberal party which was losing

in its struggle against the Conservatives of Granada. The

Liberals called in American filibusters led by William

Walker to supplement their army. By October, 1855, the

Conservatives sued for peace and the Liberal-Walker forces were supreme in Nicaragua. However, Walker realized that he needed.to augment his forces if the situation were to " 69 remain the same.

The need for recruits brought the Accessory Transit

Company into the Walker venture. William Walker made a

^Manning, Inter-American Affairs, Vol. IV, pp. 413-414, Note of Jos£ de Marcoleta to William L. Marcy, Jul^ 28, 1854, and pp. 59-60, Note of William L. Marcy to Jose de Marcoleta, August 2, 1854. 69 Bancroft, Central America, Vol. Ill, p. 328; Dana G. Munro, The Five Republics of Central America (New Yorks Oxford University Press, 1918) , pp^ 81-82. 44'

deal with Vanderbilt whereby the company transported

emigrants, i.e., recruits, to Nicaragua without charge to .

Walker on the condition that they not be formed into military units. The amount of twenty dollars per person was due for each emigrant, but the fee was charged against

Nicaragua and deducted from the sum the Accessory Transit

Company owed the state. The arrangement assured Walker of a steady supply of recruits and the company transported about one thousand men to Nicaragua from December, 1855, to

February, 1856. With the additional men Walker proceeded 70 to subjugate Nicaragua in 1856.

The United States government did not approve of

Walker*s activities in Nicaragua. The fact that he and most of his men were American citizens was embarrassing to

Washington. Their presence gave credence to the Central

American belief that the United States wanted to conquer the isthmus. President Pierce issued a proclamation warning all United States citizens not to participate in 71 Walker's enterprise. The Accessory Transit Company ignored the proclamation and continued to transport recruits to Nicaragua under the guise of colonists« The loose neutrality laws of the United States and the outright

■^William Oscar Scroggs, "William Walker and the Steamship Corporation in Nicaragua," American Historical Review, X (July, 1905), pp. 798-799.

7i \ ' --V.'- Ri chard son, Me ssages, Vo 1«■ 5 , pp. .388*389 . 45

support for Walker in many parts of the nation made 79 attempts to stop the illegal traffic all but impossible.

William Walker brought the vital flow of men to a

halt in 1856 by antagonizing Cornelius Vanderbilt. He did

this because he wanted a bigger share of the transit

profits. In 1855, Walker made an arrangement with a

dissident faction of the Accessory Transit Company. The

faction, led by Charles Morgan and Cornelius K. Garrison,

agreed to supply Walker with free recruits from California.

In return, Walker agreed to revoke the charter of the r-' - Accessory Transit Company and then grant a new charter to

the conspirators. The plan went into effect as soon as

Walker secured his control of Nicaragua. On February 18,

1856, President Patricio Rivas, at Walker's instigation, happily signed a decree annulling the charter of the

transit company. The grounds given for the act were valid

for the company had failed to live up to the terms of its 73 , contract in several respects. After this coup, Walker's

government granted the company's rights to Morgan and

Garrison. These two also received all the old company's

property in Nicaragua. William Walker received a large,sum

77 Scroggs, "William Walker," pp. 802-804; Munro, Five Republics, pp. 82-83. 73 ' Manning, Inter-American Affairs, Vol. IV, pp. 506-508, Note of John H. Wheeler, United States Minister Resident, to Nicaragua, to William L. Marty, February 26, 1856, see footnote No. 5 ^for Nicaraguan decree. of money and assured himself of continued reinforcements. ■

Of course, Vanderbilt was enraged when he learned of the 74 proceedings.

Cornelius Vanderbilt would not allow such an act to stand» He protested to the State Department and demanded intervention to stop the violation of an American citizen's rights. Secretary of State William Marcy did not act with great speed for he remembered the company's past transgres™ 7 S - sions. Yet American concern for an open transit led the

United States government to inquire into the revocation of

Vanderbilt's charter and the seizure of his property.

Walker's government defended its action and remained fixed in its determination to uphold the February.decree.^

Vanderbilt decided to pursue a more direct course after failing to reach his ends through the United States government. He decided to close the transit. This would, cut off supplies and men to Walker and at the same .time defeat Morgan and Garrison, The Old Commodore sent one of his agents to the area and encouraged Costa Rica to attack the transit route. Led by Vanderbilt's agent, Costa Rica did just that in December, 1856. Within a few weeks the

^Scroggs,."William Walker," pp. 802-804. ■

75Ibid.

*7 r Manning, Inter-American Affairs, Vol. IV, pp. 545-549, Note of John L. Richmond, Undersecretary of State of Nicaragua, to John H, Wheeler, July 22,.1856. 47

entire transit from Lake Nicaragua to the Caribbean was in

their hands. Morgan and Garrison realized the futility of

further combat with Vanderbilt and abandoned Walker to his

fate in February, 1857. Without supplies Walker was

doomed. He surrendered on May 1, 1857. Vanderbilt had his 77 revenge, but the transit route was now closed.

The confusion created by the defeat of the fili­ buster government and the repeal of its acts left the

transit concession free of ownership. The transit did not

function in this condition. Several American groups were

eager to acquire the concession. A spirited bidding for

the route started among the three associations s Stebbins and White of the American Atlantic and Pacific Ship Canal

Company, Cornelius Vanderbilt's Accessory Transit Company, and the Walker supporters Morgan and Garrison. Stebbins and White received the transit concession in June, 1857.

However, financial problems and the opposition of Vanderbilt hindered the company and the transit remained closed.

Nicaragua grew weary of the company's problems and annulled C the Stebbins contract on March 24, 1859. Following its policy of keeping the transit open, the United States pro- . tested vigorously against the high handed act. Nicaragua

77 Scroggs, "William Walker," pp. 805-807; Munro, Five Republics, pp. 84-85. did not change its position, however, and the transit 78 remained closed.

Nicaragua changed her transit policy in the late

1850's. Her memory of the Filibuster War did not die easily and received support in 1857 when William Walker tried to conquer Central America again. The new attack convinced Nicaragua that the transit was a source of danger to her rather than an economic asset. Accordingly, \

Nicaragua followed a policy of hindering American efforts , to open the transit route. If the route were to be opened at all, she wanted to control it herself or have some

European power protect it. Therefore, the transit remained IQ closed during the rest of the 1850's-.

Aside from the above difficulties concerning the transit, the United States also had to face a conflict between Nicaragua and Costa Rica which arose immediately after the end of the Filibuster War. Costa Rica's.success­ ful campaign to eliminate filibuster control from the transit route left the route in her possession. Instead of withdrawing, Costa Rica announced the intention to

70 , Mack, Land Divided, pp. 200-201; Manning, Inter- American Affairs, Vol. IV, pp. 146-149, Note of Lewis Cass to Alexander Dimitry, United States Minister Resident to Nicaragua and Costa Rica, August 31, 1859. 79 Manning, Inter-American Affairs, Vol. IV, pp. 819-822, Note of Alexander Dimitry to Lewis Cass, December 7, 1859, and pp. 894-906, Note of Alexander Dimitry to Lewis Cass,.April 30, 1860. maintain her claim to the transit. She strengthened her 80 forces along the San Juan River in June, 1857. Nicaragua, weakened by the war, could only protest to the United

States.

The Buchanan government reacted to the crisis with a policy statement that favored Nicaragua. The United

States could not accept Costa Rica's attempt to conquer the transit route because the transit would be interrupted.

Furthermore, Buchanan's administration believed that the whole line of the transit should be under one governmental jurisdiction--namely Nicaragua. If the route were con­ trolled by two nations, quarrels would arise and thus place the communication in jeopardy. Therefore, the United

States took a stand against Costa Rica's acquistion of the transit route. The American government informed Costa Rica that it would not allow the transit to pass from Nicaraguan control. The United States realized that Costa Rica, had some just claims and recommended a peaceful boundary 81 settlement to both nations.

The boundary dispute continued into the fall of

1857. President Buchanan became impatient and issued a. new policy statement in his annual message of December 8,

^ Ibid., pp. 586-587, Note of William Carey Jones, Special Agent of the United States to Central America, to Lewis Cass, June 7, 1857. 81 Ibid., pp. 95-98, Note.of Lewis Cass to William Carey Jones, July 30, 1857. 1857. He called upon Congress to give him the authority to employ the land and naval forces of the United States to guarantee the security of alL isthmian communications routes from Panama to Tehuantepec. Buchanan said it was the duty of the United States to make sure that the routes were not interrupted "either by invasions from our own country or by wars between the independent states of Central 82 America,"

This idea was new to American canal policy. Before

Buchanan's statement the United States had been very - interested in keeping the transit route open, but no ’ • • previous administration had called for special authority to use the armed forces any time the transit routes were threatened. That kind of power could have involved the

United States in numerous wars and revolutions in Central

America and Panama, Nevertheless, President James Buchanan argued that because of America's deep interest in the functioning of these routes such a commitment was necessary and was America's duty. He believed, like Theodore

Roosevelt, that no Central American nation could be allowed to thwart American interests in the interoceanic communica­ tion. Buchanan's ideas were the precursors of the United

States canal policy followed after 1880, However, in the

82 Richardson, Messages, Vol, 5» p. 447, . 51

1850's Congress refused to grant the authority Buchanan

requested.

Meanwhile, American insistence on a settlement of

the Costa Rica-Nicaragua dispute did not produce favorable

results. The quarrel became heated in the fall of 1857 and

Costa Rica declared war on Nicaragua. With Costa Rica's

blockade of the transit it appeared that she had the 83 advantage. However, a second invasion by William Walker

in December, 1857, brought both parties to a peace agree­ ment. Once the filibuster threat was removed the quarrel . 84 reopened.

At this point Felix Belly., a canal promoter from

France, arrived in Central America. Belly was a clever man

and saw that he could use the anti-American sentiment

existing in Central America to foster his canal plans in 85 Nicaragua.

His first concern was to get the Costa Rica-

Nicaragua transit dispute settled because if it continued

83 Manning, Inter-American Affairs, Vol. IV, pp. 617-620, Note of Gregorio Juarez, Nicaraguan Minister of Foreign Affairs, to William Carey Jones, October 21, 1857; Bancroft, Central America, Vol. Ill, p. 362. 84 Manning, Inter-American Affairs, Vol. IV, pp. 640-641, Note of William Carey Jones to Lewis Cass, January 1, 1858. OC Ibid., pp. 659-661, Note of Mirabeau B. Lamar, United States Minister Resident to Nicaragua and Costa Rica, to Lewis Cass, February 26, 1858; Cyril Allen "Felix Belly: Nicaraguan Canal Promoter," Hispanic American Historical Review, XXXVII (February, 193771 pi 591 - 52 he could not build a canal. Therefore, Belly offered his

good offices to the two nations and helped arrange a meeting between President Martinez of Nicaragua and

President Mora of Costa Rica. Discussions between the two

parties proved fruitful and on April 15, 1858, the boundary between the nations was defined in the Canas-Jerez treaty.

The treaty gave Costa Rica the right bank of the San Juan

River from three miles below Castillo Viejo, as well as the district of Guanacaste. Nicaragua retained all of the San

Juan.River waters thereby assuring domination of the

transit. With the conclusion of the treaty, the boundary 86 dispute between the two nations was settled. - *

Belly's presence at the negotiations also influ­

enced the Presidents of Nicaragua and Costa Rica to make a

rash statement. Reportedly, . Felix Belly spoke out against

the American people and their desires of conquest in 87 Central America. The Nicaraguans and Costa Ricans were already hostile to the United States and they produced an

Manning, Inter-American Affairs, Vol. IV, pp. 676-678, Note of Mirabeau B . Lamar to Lewis Cass, May 28, 1858; Cyril Allen, "Felix Belly," p. 50; United States, Senate, Message of the United States President transmitting in response to Senate resolution of December 21, 1886, a report of the Secretary of Stated Ex. Doc. No. d U~, 49^ Congress, 2nd Session, 1887, pp. 31-33, Note of Manuel M. Peralta, Costa Rican Minister to the United States, to Thomas F. Bayard, United States Secretary of State, June 26, 1885, see enclosures for the treaty.

Q "7 Manning, Inter-American Affairs, Vol. IV, pp. 676-678, Note of Mirabeau B , Lamar to Lewis Cass, May 28, 1858. . , ;-.vV:..- -v.: ; 53 anti-United States declaration on May 1, 1858. The declaration reviewed the filibustering activities of

American citizens and the inability of the American govern­ ment to stop the raids. Because of this intolerable state of affairs Costa Rica and Nicaragua decided to place them­ selves under the protection of England,.France, and

Sardinia. The declaration called upon the three powers to protect Central America from further invasions. The Mora-

Martinez declaration evidences the fear that existed in

' ' 88 Central America as a result of filibustering.

Nicaragua and Costa Rica's desire for European intervention in Central American affairs led the two nations to grant a canal concession to Felix Belly. The canal, the contract provided, would run through the San Juan River and

Lake Nicaragua to the Pacific. It had to be started within two years and, once opened, the concession would run for ninety-nine years. The one unusual feature of the contract was the privilege given to France of keeping warships on station in Lake Nicaragua and the surrounding watery during > , canal construction. Since Belly was from France, the canal

^ Ibid. , pp. 692-693, Note of Mirabeau B.. Lamar to LewiCass, July 26, 1858, see footnote No. .2 for the MartInez-Mora Declaration. ■ 1 = . would be managed by a French company. The United States OQ would find the latter two provisions hard to accept.

As soon as President Buchanan’s administration

■ learned of the contract, it took immediate steps to guaran­

tee American rights. A strongly worded protest was sent to

Nicaragua and Costa Rica. The American minister to these

states received instructions to present the United States

view of Belly’s project. Felix Belly’s contract was

objectionable to the United States because it violated

previous engagements with American citizens. The contract

of the American Atlantic and Pacific Ship Canal Company was

still in effect. The United States also objected to the

canal concession because it allowed French warships to be

stationed in Lake Nicaragua. In the American opinion this

was a violation of the principle that the canal should be

open to all nations on equal terms and not dominated by one

country. Although the American government believed France

would not favor such a privilege, it still announced its

intention to oppose the Belly contract.^

The United States also had a word to say about

Nicaragua and Costa Rica’s appeal for European protection.

^ Ibid., pp. 681-682, Note of Antonio Jose de Irisarri, Nicaraguan Minister to the United States, to Lewis Cass, June 16, 1858; Cyril Allen, ’’Felix Belly," p. 50. 90 Manning, Inter-American Affairs, Vol. IV, ppV 124-125, Note of Lewis Cass to Mirabeau B. Lamar, July 25, 1858. . The American government reaffirmed its faith in the Monroe

Doctrine. Secretary of State Lewis Cass said that the

United States would never allow the establishment of a

European protectorate bn the continent. In addition to

this positive assertion, Cass countered all the charges

made by the two presidents concerning the filibusters.

Washington's strong stand on both the Belly contract and

the Martinez-Mora declaration gave Costa Rica and Nicaragua 91 second thoughts about their actions.

Nicaragua soon felt the weight of United States

pressure against the Belly contract. United States Minis­

ter , Mirabeau B. Lamar, vigorously argued against Belly's

enterprise. The most telling blow came when the United

States discovered that Felix Belly did not have authority

from the French government. Nicaragua had assumed that

Belly represented the French government in some form.

.Belly may have had the informal backing of Louis Napolean,

but he did not represent the Paris government in any offi­

cial capacity. This revelation weakened Nicaragua's 92 confidence in the man.

The first indication of this turn of events came in iSeptember, 1858, when President Tomas Martinez of Nicaragua

91Ibid., pp. 116-121.

9^Cyril Allen, "Felix Belly," pp. 48-49, 54; Manning, Inter-American Affairs, Vol. IV, p. 115, Note of Lewis Cass to Mirabeau B. Lamar, June 16, 1858<» 93 disavowed the declaration of May 1, 1858. Thereafter,

Nicaragua increasingly accepted the United States view of

Belly's project. She ratified the Belly contract in April,

1859, with important modifications. In the Nicaragua

version the canal was no longer the boundary between Costa

Rica and herself. Nicaragua also removed the provision

that allowed France to station warships in Lake Nicaragua.

These changes nullified Costa Rica's ratification.^

Felix Belly refused to let the modification of the

contract delay his project. He had already employed

engineers and surveyors before Nicaragua ratified the 95 contract. The men started laying out the canal route.

However, the enterprise came to an end in 1859 when Belly's

financial backers failed and he could not raise money to

continue. The final blow fell in December, 1859, when 96 Nicaragua declared his charter forfeit. By the year

1860, all American fears of the French in Nicaragua, had

93 Manning, ^Inter-American Affairs, Vol. IV, p. 712, Note of Tomas Martinez, President of Nicaragua, to Mirabeau B. Lamar, September 25, 1858.

^ I b i d ., p. 744, Note of Mirabeau B , Lamar to Lewis Cass, April 28, 1859; Cyril Allen, "Felix Belly," p. 54. 95 Manning, Inter-American Affairs, Vol. IV, pp. 742-743, Note of Mirabeau B . Lamar to Lewis Cass, March 31, 1859. 96 Ibid., pp. 843-853, Note of Alexander Dimitry, United States Minister Resident to Nicaragua and Costa ^ Rica, to Lewis Cass, December 29, 1859; Cyril Allen"Felix Belly," pp. 55-58 * • , dissolved and the grant of the transit concession to an

American company in 1861 provided new hope for a working

transit. The United States had kept the transit out of

foreign hands. United States attempts to sign a treaty

with Nicaragua guaranteeing the neutrality and protection

of the canal were not so successful.

. Ever since the United States-Nicaragua treaty of

1825 lapsed the American government had tried to secure

another treaty of commerce and navigation. Such an agree­

ment was necessary to the smooth functioning of commercial

relations between the two nations. Ephraim George Squier

made a commercial and navigation treaty with Nicaragua in

1849 which also provided for a United States guarantee of

the transit. His treaty was not ratified because it con- 97 flicted with the Clayton-Bulwer treaty. After that

failure, the United States sought a similar treaty with

.Nicaragua, but all attempts were unsuccessful during.the

early 1850's. Not until the year 1857 did a treaty between

the United States and Nicaragua seem destined for comple- 98 tion.

97 Manning, Inter-American Affairs, Vol.-Ill, pp. 61-63, Note of John M. Clayton to Jose Guerrero, . Supreme Director of Nicaragua, June 17, 1850. 98 Manning,.Inter-American Affairs, Vol. IV, pp. 385-386, Note of Solon Borland to William L. Marcy, February 22, 1854, and p.. 63 * Note of William L. Marcy to John H. Wheeler,October 23, 1854, The Initiative for the treaty came from Nicaragua's representative to the United States, Antonio Jose' de

Irisarri. • He wanted to secure a treaty with the United

States which would protect and guarantee the freedom of the

Nicaraguan transit. The,imminent danger of Costa Rica appropriating the route for herself undoubtedly prompted

Irisarri"s offer. Irisarri told Secretary of State Lewis

Cass that a treaty of this type would protect the interests of the American canal company. Cass was at first reluctant to enter into negotiations because of the disturbed state ^ of Nicaraguan politics. Nevertheless, Irisarri won him 99 over and they formed a treaty on November 16, 1857. ;•

The terms of the Cass-Irisarri treaty were very similar to those of the perfected United States-Nicaragua treaty of 1867. With minor changes the two treaties were identical. That of 1857 was primarily a treaty of commerce and navigation. The important part of the, treaty covered the Nicaragua canal. The United States and its citizens received the right of transit through Nicaragua by any means in existence then or thereafter. In exchange for this privilege, the United States agreed to protect and

^ Ibid., pp. 594-596, Note of Antonio Jose de Irisarri, Nicaraguan Minister to the United States, to Lewis Cass, September 2, 1857.

^^Ibid., pp. 629-630, Note of Antonio Jose de Irisarri to"Lewis Cass, November 17, 1857, see footnote No. 2 for a comparison of the treaties of 1857 and 1867. 59 guarantee the neutrality of all interoceanic communications routes through Nicaragua. The protection would be exer­ cised at the request of Nicaragua. Additional provisions of the treaty specified that the United States could with- . draw the above protection if the transit were managed in a way contrary to the spirit and intent of the treaty. The treaty also protected the rights of. the.United States and its citizens in the interoceanic routes from any violation in future contracts made by Nicaragua. If these rights were violated, the guarantee of protection and neutrality would be withdrawn. The treaty concluded with a clause providing for ratification within nine months. Once 101 ratified, the treaty would be effective for twenty years.

The Cass-Irisarri treaty achieved a goal of the

Buchanan administration by providing for the protection of • the Nicaragua transit route. Although the United States gained no exclusive privileges in the transit, it did get the right to use force, on Nicaragua's approval, to protect the route. On the other hand, Nicaragua achieved her desire of having a strong nation guarantee the safety of the transit. The treaty seemed satisfactory to both

^ ^ Ibid., pp. 629-630; William M. M a l l o y , compiler, Treaties, Conventions, International Acts, Protocols, and Agreements between the United States of America and Other "Powers, 1776-1909 (Washington: Government Printing Office, 1910), Vol. 2, pp. 1279-1287, hereafter cited as Treaties. nations, but getting it ratified proved to be an impossible task.

When the Cass-Irisarri treaty reached Nicaragua it was placed before the National Assembly. Here it encoun­ tered harsh criticism. Nicaragua had just recovered from the second invasion of William Walker and there was a great deal of hostility toward anything American. Some assembly­ men looked upon the treaty as a source of danger to

Nicaragua's independence. Others feared that under the provisions of the treaty the transit^would be used to send 102 filibusters to Nicaragua. Yet, in spite of these fears 103 the Nicaraguan Assembly approved the treaty. President & Martinez had to approve the agreement, but was opposed to the treaty as it stood. He would not ratify it with his signature. Instead, he deceived the American minister into, believing he had ratified the treaty. The minister told

Washington that the treaty was ratified. The truth soon emerged and the United States government was displeased.

Washington wanted the treaty ratified without further delay and wanted an explanation for the deception.

102 Manning, Inter-American Affairs, Vol. IV, pp. 682-685, Note of Mirabeau B . Lamar to Lewis Cass, June 24, 1858.

^^Ibid. , pp. 633-664, Note of Mirabeau B . ■ Lamar to Lewis Cass, March 27, 1858.

^^Ibid. ,. pp. 671-674, Note of Mirabeau B . Lamar to Lewis Gass, April 28, 1858, and pp. 112-114, Note of Lewis Cass to Mirabeau B. Lamar, June 3, 1858# America's attitude forced Nicaragua to act upon the treaty. On June 29, 1858, President Martinez signed the

Cass-Irisarri treaty, but the Nicaraguan version contained 105 many modifications. The intent of the modifications was to limit the privileges given to the United States. The most important change in the treaty was an additional article which called upon the American government to pre­ vent the preparation of expeditions in the United States against Nicaragua. Another noteworthy change provided that

American troops could not use the transit if they were destined for nations friendly to Nicaragua or for the

Hispano-American Republics.

The United States could not accept the Nicaraguan changes. That change requiring the United States govem- ' V meht to enforce its own laws to stop filibustering expedi­ tions against Nicaragua was particularly obnoxious.

However, the Buchanan administration still wanted a treaty that provided for the safety of the Nicaragua transit.

During the remainder of 1858 and into 1859 talks went on, but only resulted in bad feelings. The United States was extremely provoked when Nicaragua negotiated a treaty with

"*"^Ibid. , pp. 688-689, Note of Mirabeau B . Lamar to Lewis Cass, July 3, 1858.

^^^Ibid_. , pp. 702-703, Memorandum for the private use of Lewis Cass, presented by Maximo Jerez, Special Representative appointed by Nicaragua, August 16, 1858, see enclosure for Nicaraguan modifications of the Cass- Irisarri Treaty. 62

Great Britain in early 1859. Almost identical to the Cass-

Irisarri treaty, it took precedence over the American

agreement and seemed likely of ratification.' Secretary of

State Lewis Cass exploded upon.receipt of this newsi He

instructed the American Minister, Mirabeau B. Lamar, to

urge Nicaragua to ratify the Cass-Irisarri treaty in a form

acceptable to the United States or the State Department

would consider breaking diplomatic relations. United

.States relations with Nicaragua had reached the crisis

point because of the treaty and the Belly canal project.

Mirabeau B „- Lamar was not willing to let the situa­

tion deteriorate further. He continued to talk with the

Nicaraguan government and found it inclined to sign a new

treaty.. Therefore, he exceeded his instructions and formed

the Lamar-Zeledon Treaty on March 16, 1859. The treaty was

an exact copy of the Cass-Irisarri treaty with the modifi-

\cations proposed by Nicaragua. Although the United. States had already rejected these changes, Lamar thought it best

to accept them rather than have no treaty. The new treaty was necessary, he argued, because the ratification time for 108 the previous one had expired. Nicaragua ratified the

^^^Ibid., p. 731, Note of Pedro Zeledon, Nicaraguan .Foreign Minister, to Mirabeau B. Lamar, February 25,. 1859, and pp. 135-136, Note of Lewis Cass to Mirabeau B.-Lamar, March 4, 1859.

^ ^ Ibid., pp. 740-741, Note of Mirabeau B. Lamar to Lewis Cass, March 20, 1859» 63 treaty on March nineteenth and Lamar sent the completed document to the United States.

The well intended measure arrived too late to prevent the State Department from disciplining Nicaragua.

Mirabeau B. Lamar received instructions on April 1, 1859, to derriand his passports and return home if the Gass- 110 Irisarri treaty was not yet ratified. Lamar complied with the instructions. He believed that friendly relations with Nicaragua were impossible because she did not like the

United States and wanted to involve America in a war with 111 European powers. Mirabeau B. Lamar demanded his pass- 112 ports and, on May 12, 1859, received them.

Meanwhile, the United States received the Lamar-

Zeledon treaty. President Buchanan found it acceptable for the most part. His only serious objection was to the last clause of Article XVI. This clause called upon the United

States to use all means to prevent the formation, within its territory, of filibustering expeditions against

Nicaragua. The clause offended the honor of the United

^ ^ Ibid. , p. 740, Note of .Pedro Zeledon to Mirabeau B. Lamar, MarcK 19, 1859. Ilf) Ibid., pp. 136-139, Note of Lewis Cass to Mirabeau B. Lamar, April 1, 1859.

^ ^ Ibid. , pp. 743-744,. Note of Mirabeau B. Lamar to Lewis Cass, April 25, 1859.

^^Ibid. , p. 750, Note of Pedro Zeledon to Mirabeau B. Lamar, May 12, 1859. States and amounted to foreign intervention in.American

■internal affairs. Buchanan was willing to submit the 113 treaty to the Senate if the clause was removed.

Nicaragua complied with the United States demand.

On July 25,.1859, she again ratified the Lamar-Zeledon

treaty and omitted the objectionable clause at the end of

Article XVI. After this action the treaty returned to the

United States for ratification.

The United States Senate examined the treaty and

voted to reject it on March 20, 1860. However, the Senate

quickly reconsidered its decision and asked President

Buchanan to return their resolution of the twentieth. The 115 President gladly complied. Finally, in June, the Senate

gave its consent to the Lamar-Zeledon treaty, but amended

it in three places. In Article XVI, the Senate struck out

all remaining words referring to the duty of the United

States to stop filibustering activities from within its

boundaries. The Senate added a clause which stipulated

that no duty imposed upon the United States by the treaty

could be performed except by authority of Congress. Last,

I 1 Q Ibid., p. 141, Note of Lewis Cass to Mirabeau B . Lamar, May 3^ 1859, and p. 143, Note of Lewis Cass to General Maximo Jerez, Nicaraguan Minister to the United States, May 26, 1859.

H 4ibid., pp. 761-762, Note of Luis Molina, Nicaraguan Charge* d'Affaires at Washington, to Lewis Cass, August 30* 1859.

ITS Richardson, Messages, Vol.5, pp. 761-762. 65

the Senate extended the time of "ratification six months

from June 27, 1860. These changes were relatively minor and did not involve any point which Nicaragua could not . 116 . accept.

Alexander Dimitry, the new American Minister resi­ dent to Nicaragua, believed that Nicaragua would find no objection to the Senate's changes. The only problem he

foresaw was the six month time limit set for ratification.

The regular biennial session of the Nicaraguan legislature was not scheduled to meet until January 1, 1861. The time

specified for ratification expired on December 27, 1860.

This necessitated a special session of the Nicaraguan,

legislature, but the treasury of that beleagured country was exhausted. Dimitry doubted that a special session 117 could be arranged. His analysis proved to be correct when the Nicaraguan government would not call a special session in spite of United States insistence. Nicaragua wanted the time for ratification extended. It could not be arranged. At this impasse the Buchanan administration ended 118 and the Civil War fully occupied the American government.

^Manning, Inter-American Affairs, Vol. IV, p. 172, Note of William Henry Trescot, Acting Secretary of State of the United States, to Alexander Dimitry, June 30, 1860. 117 Ibid., pp. 915-916, Note of Alexander Dimitry to William H . Trescot, August' 28, 1860. r 1 I Q Ibid., pp. 916-918, Note of Alexander Dimitry to Lewis Cass, September 11, 1860, and pp. 945-947, Note of Alexander Dimitry to Lewis Cass* October 26, 1860. During the decade of the 1850's the United States,

in pursuing its objectives of a neutral and protected

transit or canal, had success and failures. In dealing

with Great Britain, America managed to get its interpreta­

tion of the Clayton-Bulwer treaty accepted thereby removing,

the Mosquito Protectorate as a threat to the transit.

During the same period American foreign policy tried to

keep the transit open and protect the interests of American

citizens therein, but did not completely succeed. After

the Filibuster War, all efforts to reopen the transit

failed. The war also caused Nicaragua to suspect the

intentions of the United States thus making relations

between the two difficult. However, the transit was in the

hands of an American company in 1861. Finally, the United

States failed in its attempt to conclude a treaty with

Nicaragua guaranteeing the neutrality and safety of the

interoceanic communications route. The failure was not

complete because an acceptable treaty embodying these

these provisions was formed but not perfected. CHAPTER 3

PERIOD OF TRANSITION, 1860-1877

Even during the Civil War the subject of a

Nicaraguan canal received some attention. The American

government continued to advocate the completion of the

.waterway. A canal through Nicaragua would have been a

great benefit to the Union. William H. Seward, Lincoln's

Secretary of State, was a warm supporter of the Nicaragua

canal, and instructed the new United States Minister to

Nicaragua, Andrew B . Dickinson, to encourage the project

whenever possible. With this in mind, Seward took up the

matter of the Lamar-Zeledon treaty."*"

When Seward examined the treaty in 1862, he found J that Nicaragua had ratified the treaty on March 25, 1861.

However, the ratification took place three months after the

time fixed by the United States Senate had elapsed.

Nicaragua, in ratifying the treaty, added amendments and

provided a period of twelve months for perfection of the

agreement, but the United States was so involved with its

1 ' Diplomatic Instructions of the Department of State 1801-1906, Microfilm No. 77, Vols. 15-22 The Central American States 1833-1906 (Washingtons The National Archives, 1946), Vol. 16, pp. 155-161, Note of William H. Seward, United States Secretary of State, to Andrew B . Dickinson, United States Minister to Nicaragua, June 5, 1861, hereafter cited as Instructions.

: • : . ■. ■ 67 - internal affairs that the time expired without any action

being taken. In spite of these delays, Seward still con­

sidered the treaty worthy of completion. President Abraham

Lincoln submitted the Lamar-Zeledon treaty to the Senate in

.April, 1862.2

The Republican.Senate approved Nicaragua's amend­

ments on May 9, 1862. The Nicaraguan modifications accepted

the changes made by the United States Senate in 1860 but

not in the same words. Both parties were satisfied with

the Senate's approval and Nicaragua's Minister to the

United States, Luis Molina, said Nicaragua would ratify 3 the treaty within the twelve months provided.

After this promising beginning the treaty went to

Nicaragua. -There it received the approval of President

Martinez's government. Then, for unexplained reasons, the

treaty floundered. Both governments had ratified it, but

neglected to exchange the ratifications within the time

specified. Because of the error the treaty rested in limbo

for several years. Secretary of State Seward resurrected

2Ibid. , Vol. 16, pp. 198-199, Note of William H . - Seward to Andrew B. Dickinson, April 5, 1862; Richardson, . Messages, Vol. 6, p. 72. • 3 Notes from the Nicaraguan Legation in the United States to the Department of State, 1862-1906, Microfilm No". T-797, 4 Vols. (Washington: The National Archives, ■ . 1962), Vol. 1, Note of Luis Molina, Nicaraguan Minister to the United States, to William H. Seward, July 2, 1862* hereafter cited as Nicaraguan Legation; Richardson, Messages, Vol. 6, p. 72. it in 1867 while Dickinson was negotiating with Nicaragua

for a new agreement. Seward wanted an amendment attached

to the Lamar-Zeledon treaty extending the time for ratifi-

cation. This course was adopted because the Johnson - administration did not approve of the proposed new treaty.

However, Dickinson pursued his negotiations to a successful

conclusion and the 1859 treaty was relegated to the / unperfected file.

While the United States tried to perfect a canal

treaty with Nicaragua, it also attempted to get the

Nicaragua transit route reopened. The Central American

Transit Company held the transit concession, but had not

succeeded in opening the route. Nicaragua exhausted its

patience with the company and revoked the organization's

franchise in 1862. In March, 1863, Nicaragua seized the

company's property. The transit company protested to the

United States government and America entered the dispute.^

Secretary of State William Seward ordered Andrew

Dickinson to protest Nicaragua's action against the Central

American Transit Company. He also instructed the American

minister to use his good offices to settle the dispute.

^Instructions, Vol. 17, pp. 24-25, Note of William H . Seward to Andrew B. Dickinson, June 15, 1867.

5Ibid., Vol. 16, pp. 304-310, Note of William H. Seward to Andrew B . Dickinson, April 18, 1863; Nicaraguan • Legation, Vol. 1, Two notes of Luis Molina to William H« Seward, both dated October 7, 1863. 70

The.United States did not take the side of the company, but wanted to make sure the firm's rights were not violated.

This neutrality was prompted by the support given

Nicaragua's deed by Thomas H. Clay, an American diplomat

6 ' : on the scene.

The dispute continued through the summer of 1863 with neither side willing to compromise. Nicaragua wanted the company to live up to its contract by opening the transit. She gave Luis Molina authority to settle the 7 dispute at Washington, D. C. On November 10, 1863,

Nicaragua and the Central American Transit Company formed a new contract in order to settle their dispute. The company asked the United States to guarantee the contract, but received a negative reply. Although America was interested in the transit, she would not become a party to : the agreement. Now Nicaragua and the transit company 8 turned to the problem of opening the transit route.

The task of opening the Nicaraguan transit route proved to be insuperable. Due to the action of the San

Juan River and the Caribbean Sea, the harbor of San Juan

^Instructions, Vol. 16, pp. 304-310, Note of William H. Seward to Andrew B . Dickinson, April 18, 1863. 7 Nicaraguan Legation, Vol. 1, Note of Luis Molina to William H. Seward, September 8, 1863.

^Instructions, Vol. 16, pp. 389-390, Note of William Hi Seward to Andrew B. Dickinson, November 25, 1863, and pp. 464-465, Note of William H.Seward to Andrew . B. Dickinson, September 22, 1864. del Norte, the eastern terminus of the transit, had become

obstructed. The moving sand bars made operation of the

transit difficult if not impossible. Before committing

themselves to a program of correction, the company and

Nicaragua appealed to the United States for assistance.

They wanted an American engineer to survey the harbor and

determine how it could be permanently improved. The

Central American Transit Company would pay the engineer’s , 9 salary.

Lincoln's administration complied with the request.

■Mr. Preston C. J . West of the United States Coast Survey

was chosen to perform the survey of San Juan harbor and he ib went to Nicaragua in 1865. After finishing his survey;

the American engineer returned home and made a report to

the United States government. The report concluded that it

was not advisable to try and improve the port of San Juan

del Norte or the lower San Juan River. - West suggested that

Nicaragua improve the Colorado River, a branch of the San

Juan, and build a harbor at its mouth. He proposed that

Nicaragua build a railroad from the Caribbean to Lake

Nicaragua in order to completely bypass the mud choked San

^NLearaguan Legation, Vol. 1, Note of Luis Molina to William H . SewardOctober 21, 1864. 10 • Ibid., Note of Luis Molina to William H . Seward, November iTTj T864; Instructions, Vol. 16, pp. 487-488., Note. of William H. Seward to Charles Riotte, United States Minister Resident to Costa Rica, January 14* 1865. Juan River. The report was very damaging to the interests of the Central American Transit Company and to Nicaragua’s 11 future.

Neither the transit company nor Nicaragua would accept West's report. Both had too much interest in the

San Juan route to see it destroyed. Luis Molina,

Nicaraguan Minister to the United States, argued against

West's report by citing other authorities who believed that the San Juan River and harbor could be improved. Nicaragua did not like the suggestion of using the Colorado River because, according to the T858 boundary treaty, the river was in Costa Rican territory. Nicaragua wanted to retain ' control of the transit and did not want to share its profits. The West report stood, however, and the 12 Nicaraguan transit route suffered a setback.

As if the situation were not bad enough, Nicaragua and the Central American Transit Company began to quarrel over the company's non-compliance with the contract. The dispute started in 1864 and continued off and on past the end of the Civil War. Finally, in 1869, Nicaragua declared the company in forfeit of the charter and seized its property. This act brought to a close the problems of the

Nicaraguan transit route. By 1869 the United.States had

— — — — 11 Nicaraguan Legation, Vol. 1, Note of Luis Molina to William H . Seward,.June 9, 1866. 73 become so weary of the issue that Secretary of State Seward was reluctant to support the company's complaints against

Nicaragua. The imminent completion of a transcontinental railroad contributed to United States indifference towards the transit route. Nicaragua's transit was an unused and unwanted commodity by 1869. Henceforth, the United States 13 was only interested in a canal through Nicaragua.

With the exceptions of the two topics noted above

United States canal interest lay dormant during the Civil

War. President Lincoln's government continued the canal policies established by those who came before. His administration promoted the opening of the Nicaraguan transit, but was not successful. In treaty relations,

Lincoln's government tried to perfect.the old Lamar-

Zeledon treaty. These policies were designed to carry

American canal interests safely through the war. When peace came, United States canal interest increased..

The first important indication of revived interest in the Nicaragua canal was a Senate resolution passed on

March 19, 1866, which called upon the Secretary of the Navy to supply the Senate with a study of the practicability of isthmian ship canals. Under this impetus Rear Admiral G.

H. Davis made a quick study of the various routes, and

^ Instructions, Vol. 16, p. 487, Note of William H. Seward to Andrew B. Dickinson, December 31, 1864, and Vol. 17, p. 48, Note of William H . Seward to Andrew B. Dickinson, March 10, 1869; Du Val, Cadiz, p . 76. recommended the Isthmus of Darien for an interoceanic

canal, but stated that more information was needed. He did

not recommend the Nicaraguan route because it was too

difficult and costly. The Davis and West reports were

severe blows to the Nicaragua route. However, the demands

of Reconstruction and the lack of private initiative pre- 14 vented any action being taken on Davis' report.

With this evidence of Congressional interest and

possible support, Secretary of State William H. Seward was

ready to pursue a policy of expansion. He realized that

the country was in a mood for expansion immediately after

the Civil War and he wanted to enlarge its boundary as soon

as possible. Seward negotiated with several nations over

various West Indian Islands with the intention of using 15 them as naval bases. Seward also wanted an isthmian

canal and encouraged Andrew B . Dickinson in his struggle 16 for a canal treaty with Nicaragua. In 1867, Dickinson

successfully completed his mission.

,Andrew B. Dickinson received his power to make a

treaty in 1864 and had been working to accomplish the .

1 4 D u Val, Cadiz, pp. 71-73. '] q . Theodore Clarke Smith, "Expansion after the Civil War, 1865-1871," Political Science Quarterly, XVI . (September, 1901)" pp. 412-4131 Donald Marquand Dozer, "Anti-Expansionism during the Johnson Administration," Pacific Historical Review, XII (September,,1943), pp. 254- 235, 262-264. “ "^Instructions, Vol. 17, pp. 24-25, Note of William H. Seward to Andrew a . Dickinson, June 15, 1867. object since that time. He used the United States-

Nicaragua treaty of 1859 as a model. Because of political 17 conditions, Nicaragua did not sign the treaty until 1867.

Basically, the Dickinson-Ayon treaty was an agreement of commerce and navigation with several articles referring to the Nicaragua canal. The articles on the canal granted the

United States the right of transit Across Nicaragua from ocean to ocean by all existing or future means of communica­ tion. The United States could transport its troops across the transit upon notifying the Nicaraguan authorities.

Nicaragua retained sovereignty over the route. In return for the above privileges, the United States extended its protection to the routes of communication and guaranteed their neutrality. The. protection would be exercised on request of Nicaragua except in an unusual case of imminent danger when the United States could use its forces without prior consent. United States protection was to be condi­ tional in that it would be withdrawn in six months if the persons managing the transit passed discriminatory regula­ tions. The guarantee of neutrality and protection would also be withdrawn if Nicaragua violated, in new conces­ sions , any rights granted to the United States by. this treaty. Other provisions relating to the Nicaragua

17Ibid. , Vol. 16, pp. 453-454, Note of William H. Seward to Andrew B. Dickinson, August 15, 1864, and Vol. 17, p. 4, Note of William H.. Seward to Andrew B .. Dickinson, February 11, 1865.; 76 communications route stipulated that if the profits of a company operating the route exceeded fifteen per cent, the tolls would be reduced to make sure thgb no more than fifteen per cent was earned. The treaty would be effective for fifteen years and continuously after that period until one party gave a years notice of termination. Ratifica­ tions were exchanged on June 20, 1868, and the Dickinson- ✓ 18 Ayon treaty became law.

This treaty fulfilled the desire of the United

States for a neutral canal open to all the nations of the world on the basis of \equality. Dickinson's treaty guaranteed American rights to the canal and gave the United

States the right to protect it. America's treaty of April

19, 1850 with Great Britain made certain that England did not exercise special privileges in an isthmian waterway.

Nicaragua further guaranteed the neutrality of her com­ munications route by treaties with Great Britain and 19 France. Thus the major maritime nations of the world guaranteed the neutrality of Nicaragua's canal route. The

United States had achieved its goal of an international canal open to all and dominated by no single state; The

Dickinson-Ayon treaty was also important because it was the only canal treaty the United States completed with

19. Malloy, Treaties} pp. 1279-1287. 19 Canal Report 1901, p. 178. Nicaragua during the nineteenth century. The treaty gave

Washington the canal rights it had sought since the 1850's._

But the United States began to show signs of changing its canal policy almost as soon as the ink was dry on the 1867 treaty.

Indication of a possible change in policy came from negotiations with Colombia for a canal treaty. That South

American cbuntry wanted to sell the fights to its canal route because of economic difficulties. William H. Seward learned of the situation and instructed United States

Minister to Colombia, Peter J. Sullivan to negotiate a 20 canal treaty. During the negotiations Seward expressed his feelings on the isthmian canal when he said that no one other than the citizens or government of the Uijited States should ever undertake to build a canal across the Isthmus of Darien. He also stated that the United States would not enter into entangling alliances with other nations for the construction or maintenance of the canal. ,Furthermore, the only protection the canal needed to guarantee its neutrality would be that given to it by the power of the United States 21 and Colombia.

^ D u Val, Cadiz, pp. 74-75. 21 John Bassett Moore, A Digest of International Law (Washington: Government Printing Office , 1906) , "Vol., 3, ’"""™ p. 21, hereafter cited as Digest. I

78

With these remarks Seward definitely broke away from the traditional policy of the United States. No

longer would America allow European nations to guarantee the neutrality of a canal or participate in its management.

Any canal through the isthmus of Middle America would be protected by the United States and the nation through whose soil it passed. Seward's ideas were in direct conflict with those principles of cooperation embodied in the

Clayton-Bulwer treaty. His ideas were novel and received encouragement in the next administration.

Ulysses Simpson Grant became President of the

United States of America in 1869 and served two terms in" that high office. During this time he followed a more aggressive canal polity than any previous administration.

Grant had a great, interest in the completion of an isthmian canal and the subject absorbed a good deal of his time as

President. He believed that the canal should be controlled by the United States. This idea was evident in his nego­ tiations with Colombia for a canal treaty. Grant's administration actively sought the culmination of an 22 American interoceanic canal.

President Grant's administration demonstrated its keen interest in an isthmian waterway by sending expedi­ tions to investigate the various canal routes. The

22 Ibid., pp. 185-186; Keasbey, Nicaragua Cgnal, p . 314; Williams, Isthmian.Diplomacy, ppl 273-274. 79

administration wanted to determine which route was best.

- The investigations occupied the years 1870-1876. -The long

study was one reason why the Grant administration's treaty

negotiations were unsuccessful. - The American government

did not want to commit itself to one route or another • 23 without adequate information.

President Grant urged Congress to pass a resolution

providing for canal route surveys. Congress eventually

took action on the issue when several private citizens,

interested in canal construction companies, presented

petitions calling for a survey of the Nicaraguan route.

On June 30, 1870, the Senate passed a resolution authorizing ,

surveys of the Tehuantepec and Nicaragua routes. Congress

also requested exploration of other routes such as that

across the Isthmus of Darien. The resolutions gave the

executive branch the authority it needed and Admiral Daniel

Ammen was put in charge of the whole project.^

While the expeditions proceeded, Congress continued

to manifest its interest in an isthmian canal. On March

15, 1872, the Senate passed a resolution calling upon the

President to establish a commission to evaluate the reports

of the surveying expeditions. President Grant complied and

^ K e a s b e y , Nicaragua C a nal, pp. 318-319. 24 United States, Senate, Journal of the Senate of the United States of America, 41st Congress, 2nd Session, 1870, pp. 672, 916. : 80

the Interoceanic Canal Commission was created. The three

man commission studied the reports of the surveying parties

and any other available information. The commission met 25 for the next four years before completing its work.

Meanwhile, the surveying parties were busy.

Expeditions went to the Isthmus of Darien and to the

Isthmus of Tehuantepec to survey sites for possible ■ i -■ 26 canals. Nicaragua was impatient for the surveys to

begin. The United States minister to that republic said,

in 1872,that if the United States did not act the canal 27 would go to England or Germany. His fears were eased

that year when Commander A. F. Crossman arrived with.a

surveying expedition. Grossman, unfortunately, drowned and

Commander Chester Hatfield carried on in his stead.

Hatfield concentrated on exploring the Pacific side of the

Nicaraguan canal route. His studies revealed the two best

routes from Lake Nicaragua to the Pacific. Hatfield left

when the rainy season came and his expedition was reorgan­

ized under Commander E. P. Lull in December,.1872. Lull

25 Du Val, Cadiz, pp. 78-79; Keasbey, Nicaragua Canal, pp. 318-319.

^ D u Val, Cadiz, pp. 76-77.

^United States, House of Representatives, Papers 1 Relatihg to the Foreign Relations of the United States, Ex. DocT No. jH Part 1^ 42nd Congress, 3rd Session, 378/3, pp. 462-463, Note of Charles Riotte to Hamilton Fish, United States Secretary of State, January 21, 1872. spent six months surveying the entire route. He then 28 returned home to make his report in 1873.

Commander Lull's report proved that a canal could be built along the Nicaraguan route. Lull recommended a forty-one mile canal from Greytown to the first dam on the

San Juan River at the mouth of the San Carlos River. ■ The upper San Juan would be improved by three dams which in turn allowed slack water navigation to and through.Lake

Nicaragua. At the west end of Lake Nicaragua, the waterway entered a sixteen mile canal beginning at the mouth of the

Rio Medio and terminating at Brito on the Pacific Ocean.

This route was essentially that recommended by Colonel

Childs in 1852.29

Commander Lull's report along with those of the other expeditions went to the Interoceanic Canal Commission for study. After a careful analysis, the Commission issued its report on February 7, 1876. The report concluded that

"the route known as the Nicaragua route, . . . possesses both for the construction and maintenance of a canal, greater advantages and offers fewer difficulties from engineering, commercial, and economic points of view, than

2 ®Keasbey, Nicaragua^Canal, pp. 325-328; United States, House of Representatives, Report of the Secretary of the Navy, Ex. Doc. No. 1, Part 3 , 43rd Congress, 1st Session, 1874, pp. 10-12. 29 United States, House of Representatives, Report : of the Secretary of the Navy, Ex. Doc. No. 1,.Part 3, 43rd Congress,,1st Session,.1874, pp. 10-12. 82 any one of the other routes shown to be practicable by the 30 surveys . . . ." Now there was no doubt that the

Nicaragua canal route was the best. The commission made its decision on the best available evidence and did so impartially. Because of the high standing of the commis­ sion the decision was accepted throughout America. The

United States government committed itself to the Nicaragua 31 canal at this point.

During the same period in which the canal surveys were made, the United States pursued the isthmian canal through direct negotiations with the nations involved. The activities centered on Colombia and Nicaragua; the two nations possessing the most feasible canal routes. Secre­ tary of State Hamilton Fish negotiated with Colombia for a treaty giving exclusive canal rights to the United States.

The negotiations failed but illustrated Grant's determina-? 32 tion to have a United States controlled canal. In negotiating with Nicaragua, Fish was also unsuccessful.

Negotiations for a canal treaty began in 1872 when

Hamilton Fish authorized Charles Riotte, United States

30 United States, Senate, Report of the Inberoceanic Canal Commission, 1876, Ex. Doc. N o . T5~, 46tn Congress, 1st Session, 1879, pp. 1-2.

31 D u V a l , Cadiz, pp. 78-79. 3 9 Allan Nevins, Hamilton Fish The Inner History of the Grant Administration (New Yorks Dodd, Head and Company, 1936>, PP« 913-914* 83

Minister to Nicaragua, to sound out Nicaragua's position.

Fish wanted to know what terms Nicaragua would accept, but 33 he was not yet ready to make a treaty. Riotte, on the

other hand, argued for permission to make a treaty with

Nicaragua. He was concerned about England or Germany

securing the canal concession before the United States.

Hamilton Fish did not accede to Riotte1s protestation. The

Secretary of State believed that the United States could

not sign a canal treaty with Nicaragua at that time because

of inadequate information about the canal route. For this

reason he decided to withhold action until the practicality

and cost of the work were determined.■ Because of this

’wait-and-see attitude, a canal treaty with Nicaragua was

put off until 1876 when the Interoceanic Canal Commission 3 A* reached its decision.

During the last year of the Grant administration,

Secretary of State Hamilton Fish began negotiations with

Nicaragua's Minister to the United States, Dr.Cardenas.

In order to speed matters along, Fish prepared a draft

treaty. The treaty provided for the construction of the

Nicaraguan canal by an American company. At the time, the

United States government did not want to undertake the

O Q Instructions, Vol. 17, p. 114, Note of Hamilton Fish to Charles N . Riotte, July 17, 1872.

^^Tbid. , p. 120, Note of Hamilton - Fish to Charles N. Riotte, November 25,.1872. 84 project with its own resources. The rest of the treaty provided for management of the canal and other sundry details. The draft treaty also provided that the neutrality of Nicaragua's canal would be guaranteed by the principal maritime nations of the world. These nations would sign the treaty and thereby receive the right to transit the canal at all times in peace and war. The canal and its termini would be neutral as would the water within a 150 mile radius. Under these conditions the canal would be truly neutral. This proposal was a return to the United

States neutral canal policy. The policy represented in the

1876 draft treaty was the antithesis of the policy repre- ' 35 sented by the earlier negotiations with Colombia.

The canal policy represented in the draft treaty was a change for the Grant administration. The reasons for the change are obscure, but a note of Secretary of State

Hamilton Fish to the United States minister in France suggests a motive. In the despatch, Fish referred to a movementiin France to construct a canal through the Isthmus of Darien. The French wanted to survey the best route and then form a company to do the work. Fish expressed inter­ est in the subject and stressed the point that a completed waterway must be permanently neutral and open to all nations on equal terms. Apparently, the possibility of a foreign

35 Moore, Digest, Vol..3, p. 1875 Nevins $ Hamilton Fish, pp. 914-915. _ _ company or nation completing an isthmian canal caused Fish

to adopt the policy of a neutral canal in negotiating with

Nicaragua. If the United States were to have equal rights

in a Darien canal, it could not have exclusive rights in i a • 3 6 Nicaragua.

The treaty for a neutralized canal did not succeed, however. Minister Cardenas refused to accept it because

the treaty contained provisions that impaired Nicaragua's

sovereignty. Furthermore, Nicaragua wanted the United

States government to supply assistance for the canal's

construction. She had had enough problems with private

companies to be wary of their ability to fulfill a contract.

Cardenas' counter proposals were unacceptable to the United

States. Fish lost all hope and terminated the negotiations. 37 as the Grant administration came to an end.

In spite of the failure to secure a canal treaty with Nicaragua, the Grant administration did an important

service for United1 States canal interests. The significant

achievement was the collection, through the surveying

expeditions, of accurate information on the various canal

routes. Henceforth, United States canal negotiations would be based on solid information as to the nature of the

^^Moore ,. Mg e s t , Vol. 3, pp. 185-186 , Note of Hamilton Fish to Mr% Washbume, United States Minister to France, November 13, 1876.

. ^Nevins, Hamilton Fish, pp.-914-915. several routes. This body of information also led to the canal commission's decision in favor of the Nicaragua route. That choice influenced future United States canal relations. After 1876, America almost exclusively concen­ trated on Nicaragua in its efforts to build an interoceanic waterway. Not until the Panama advocates started cam­ paigning for their route in 1896 did the United States even consider another route. ' ' CHAPTER 4

AN AMERICAN CANAL

The canal route investigations conducted during

U. S. Grant's Presidency focused American attention upon

the subject of an interoceanic canal. From the early

18701s until the completion of the Panama acquisition in

.1903 this topic occupied American interest = The need for

a canal connecting the Atlantic and Pacific oceans was

obvious, and during the above period American relations

with Nicaragua almost exclusively dwelled on the canal.

Rutherford B . Hayes succeeded Grant as President

of the United States and his administration pursued a

similar canal policy. It did not conduct any more canal

investigations inasmuch as the Nicaraguan route had already

been selected as the best. But Hayes' administration did

attempt negotiations with Nicaragua for the conclusion of

a canal treaty.

George Williamson, United States Minister to

Nicaragua, was- in charge of the negotiations. His object

was to get a new canal treaty to supersede that of 1867.

The United States wanted additional guarantees which would

make the canal enterprise more attractive to capitalists.

Williamson approached A. H. Rivas, Nicaragua's Foreign 88 1 Minister, in 1878. Unfortunately for the United States,

Nicaragua was not anxious to make the enterprise more

attractive to capitalists. In his reply to Williamson,

Rivas said he was willing to negotiate a new treaty, but he

did not want to yield any of Nicaragua's sovereignty.

Furthermore, Nicaragua did not think Costa Rica's consent

in the matter was necessary. Williamson had proposed a joint negotiation with Costa Rica in order to avoid

embroiling the treaty in the Costa Rica-Nicaragua boundary dispute. Nicaragua's attitude doomed the negotiations from 2 the start.

Williamson's failure ended efforts by the Hayes administration to negotiate a canal treaty with Nicaragua.

The failure also produced a feeling of resentment towards

Nicaragua. The American government believed Nicaragua did

1 Nicaraguan Legation, Vol. 2, Note of George Williamson^ United States Minister Resident to Central America, to A. H. Rivas, Nicaraguan•Foreign Minister, September 14, 1878; Instructions, Vol. 17, p. 379, Costa Rican Section, Note of William N . Evarts, United States Secretary of State, to George Williamson, November 13, 1878. 2 Nicaraguan Legation, Vol. 2, Note of A. H. Rivas to George Williamson, September 30, 1878; Instructions, Vol. 17, p. 379, Costa Rican Section, Note of William N . Evarts to George Williamson, November 13,,1878. 89 not want a canal. This opinion would have been accurate in

1857. but not in 1878.^ ®

In the meantime a significant event took place in

France. In October, 1878, La Gompagnie Universelle du

Canal Interoceanique de Panama was organized to construct a canal across the Isthmus of Panama. The enterprise was

led by Ferdinand de Lesseps of Suez Canal fame. His agents already held the canal concession from the Republic of

Colombia and de Lesseps was ready to start excavating as soon as the financial arrangements were completed

The formation of the French canal company and particularly the association of Ferdinand de Lesseps with the venture produced an unfavorable reaction in the United

States. Citizens of the United States wondered if the canal would remain neutral in a war and if the United States would always have freedom of transit. With the canal in

French hands how could American rights be guaranteed?

Others brought up the Monroe Doctrine and used it to justify claims that no nation other than the United States

■ ■ Instructions, Vol. 17, pp. 383-384, Costa Rican Section, Note of T. W. Seward, Acting Secretary of State, to George Williamson, November 27, 1878; Nicaraguan Lega­ tion , Vol. 2, Note of E. Bernard, .Acting Nicaraguan^ Foreign Minister, to William N.Evarts, July 31,1879.

^Du Val, Cadiz, p, 106. should control the canal. These remarks reflected the

anti-foreign controlled canal attitude of the United 5 States.

The views of the American people and press found

ample backing in Congress. Several resolutions were formed

and passed. A House resolution of 1880 stated that the

construction of the de Lesseps canal would, in effect,

plant a French colony on the isthmus. The resolution

called upon the United States to control the canal and

stated that foreign domination-of it was a violation of the

Monroe Doctrine.^ The Senate approved similar resolutions

such as the one of February 16,.1881, which stated that the

consent' of the United States was necessary before the 7 construction of an interoceanic canal could start. The

Congressional alarm was shared by the executive department.

President Hayes' administration realized that a

French controlled canal at Panama was a threat to the

security of the United States. The President ordered naval vessels to go to the Central American isthmus to be on hand

^Ibid. , p. 107; "The Monroe Doctrine and the Isthmian Canal," North American Review, 130 (May, 1880), pp. 510-511; Perkins, Monroe Doctrine, pp. 162-163. 6 United States, House of Representatives, Report on the Monroe Doctrine from the Select Committee on the Inter­ oceanic Ship-Canal, Report No. 390, 46™ Congress, 3rd • ” Session, 1881, pp. 4-9. 7 Alice Felt Tyler, The Foreign Policy of James G . Blaine (Minneapolis % ■University of Minnesota Press, 192/) , p. 28. 91

in case Congress decided to establish coaling stations near the canal. Hayes noted that such stations would give the

United States a foothold in Central America and would help

it control the canal.^

N e x t , the President decided to make a general

\ policy statement on the canal issue so that everyone would know where the United States stood. Hayes developed his position on the canal during the winter of 1879-1880 and presented it to the cabinet on February 10, 1881. His main point, on this occasion, was that the United States, for its own safety, must control the interoceanic canal. The

United States had greater interest in the canal than any /

European power and would not allow it to pass into the hands of a foreign nation. Hayes 8 cabinet supported him unanimously.and on March 8 , 1880, the President sent his message to the Senate, where he set forth the canal policy 9 of the United States in no uncertain terms. Rutherford B .

Hayes stated:

The policy of this country is a canal under American control. The United States cannot consent to the surrender of this control to any European power or to any combination of European powers.10

®Charles Richard Williams, ed. Diary and Letters of Rutherford Birchard Hayes (Columbus, Ohio s The Ohio State Archaeological and Historical Society, 1924), Vol. Ill, p. 583.

^T b i d ., pp. 586-588.

10 , -/■1 Richardson, Messages,. Vol. 7 , pp. 585-586. ' 92

The President did not rule out the participation of foreign

capital in the enterprise, but only allowed this to occur under the protection of the. United States with the controls 11 necessary to protect American interests.

The idea of an American controlled canal was not originated by President Hayes. It emerged as the United

States became a powerful nation. Hayes' speech merely expressed the American sentiment of 1880. After 1880 every

United States government, except Cleveland's, sought an

American controlled canal.

After President Hayes made his policy statement the administration proceeded to take action on the de Lesseps project. Secretary of State William N.. Evarts contacted the French government in order to determine its position on the Panama canal. France assured the United States that it 12 did not support the de Lesseps canal enterprise. This relieved some American apprehensions. Nevertheless, Evarts warned Colombia that its treaty of 1846 with the United

States would mean nothing if the canal fell into foreign hands. The United States would not guarantee the safety of a canal controlled by a foreign power. . Evarts also said the United States would not be excluded from a direct interest in the canal. No agreement, treaty, or

1 1 Ibid. 1 2 . Chester L. Barrows,. William N . Evarts (Chapel Hills University of North Carolina Press, 1941), p. 365. international association could be allowed to jeopardize 13 American interests. These strong words were designed to make Colombia think twice before going ahead with de

Lesseps’ project. Colombia ignored the United States and

Ferdinand de Lesseps started excavating in 1881.^

When the United States found that warnings and declarations of American supremacy in the Western Hemi­ sphere did not deter the French in Panama, it decided to follow another course. The United States began to think of constructing its own canal. Such thoughts soon’encountered the hard reality of the Clayton-Bulwer treaty. The treaty prohibited the United States from holding exclusive rights in an interoceanic canal. In 1850 this was acceptable and even desirable, but in 1880 the United States firmly believed that it should unilaterally control the canal.

Under these circumstances an attempt to abrogate the treaty 15 was almost inevitable.

On April 16, 1880, a joint resolution of the Senate and House advised the President to abrogate the Clayton-

Bulwer treaty. However, the Hayes administration termi­ nated without acting upon the resolution. - Definite steps

13 Ibid., pp. 365-366; Moore, Digest, Vol. 3 , p. 15.

14Du Val, Cadiz, p. 107.

■^Williams, Isthmian Piplomacy, pp. 285-286; Keasbey, Nicaragua Canal, p. 3^1. 16 Keasbey , N1caragua Canal * p . 391. 94

to eradicate the unwanted treaty began when James G. Blaine

became Secretary of State in 1881.

Blaine also believed in the efficacy of an American

controlled canal. He knew that the United States could not

permit enemy ships to use the interoceanic canal during a V

war. The United States had to control any isthmian canal &

In order to make that possible he began a campaign to 17 abrogate the Clayton-Bulwer treaty.

James G. Blaine wrote a note to Lord Granville,

Great Britain’s Foreign Secretary, asking for significant

alterations in the 1850 treaty. Because the treaty was

over thirty years old, Blaine argued, it needed to be

changed to bring it into line with current conditions. He

wanted the agreement modified to permit United States

protection and control of the interoceanic canal in con-

junction with the nation through whose territory it ran.

Blaine also stated that the United States considered

Article VIII of the treaty inoperative. The article

extended the terms of the treaty to all other practicable

lines of communication. . These modifications would allow

America to guarantee its safety by controlling the isthmian 18 * waterway. ■

17 ' Tyler, James G. Blaine, p. 33. 18 Williams, Isthmian Diplomacy, pp. 277=279. 95

Great Britain did not agree with Secretary Blaine1s arguments. Lord Granville found them to be based upon j principles novel in international law and did not believe any changes were necessary in the treaty. He said that the principles embodied in the treaty were still sound and pertinent to the present situation. Great Britain was not willing to give up her rights in an isthmian canal as guaranteed by the Clayton-Bulwer treaty. Blaine's pro­ posals fell on deaf ears and he left office with President 19 Garfield's death.

Blaine's removal did not signal the end of American efforts to abolish the 1850 treaty. His successor at the post of Secretary"of State,Frederick T. Frelinghuysen, also believed that the treaty had to be abrogated and tried to convince the British of this necessity. Frelinghuysen argued that the treaty was voidable at the pleasure of the i - - .' . United States because Great Britain had persistently violated it. The violations he referred to were Great

Britain's extensions of. the boundaries of Belize and the elevation of the settlement, into a possession. - Freling- . huysen also contended that the Clayton-Bulwer treaty was

Ibid., pp, 279-280. 96

invalid because its object,'the completion of a canal, had U never been realized.^

Lord Granville was no more willing to accept the

above arguments than those of Mr. Blaine. He replied to

Frelinghuysen that the treaty of 1850 had not been violated by Great Britain because it did not apply to British

Honduras (Belize) . He also denied the validity of

Frelinghuysen1s other argument and ended the correspondence on the subject. Frelinghuysen gave up his attempts to abrogate the treaty. Nevertheless, he conducted himself,

in dealing with Nicaragua, as if the Clayton-Bulwer treaty 21 were abrogated.

While the United States government pursued policies designed to assert American influence in any canal project, a group of private citizens followed an independent course towards building a Nicaragua canal. The citizens, among whom were A. G. Menocal, George B . McClellan, Ulysses S.

Grant, Levi P. Morton, formed the Provisional Interoceanic

Canal Society in New York City. The purpose of the society was to secure a canal concession from the Republic of

20 Ibid. , pp. 280-282; Instructions, Vol. 18, pp. 443-452, Note of Secretary of State Frederick T. Freling­ huysen to Henry C. Hall, United States Minister to Central America, July 19, 1884.

Q -I Williams» Isthmian Diplomacy, pp. 282-284. Nicaragua. A . G. Menocal went to that country and obtained 2? the concession on April 24, 1880.

Adan Cardenas of the Nicaraguan government nego­ tiated the canal contract with A. G . Menocal. .The conces­ sion granted the society the exclusive privilege to excavate the canal. From the day the canal was to be opened to traffic the concession would run ninety-nine years with an option for an additional period of the same length. . The canal would be neutral and the concession could not be transferred to any foreign government. The company formed by the society to build and operate the canal, the Maritime Canal Company of Nicaragua, had two years to complete surveys of the route and had to start construction by the third year. In that year it had to spend two million dollars. The canal would be completed in ten years. At the end of the last lease the canal reverted to Nicaragua in perpetuity. With the concession secured, the Maritime Canal Company began to search for financial backing,^ .

To facilitate the process the company sought the aid of the United States Congress. Its Senate supporters introduced a bill in December, 1881, which provided for the

^ D u Val, Cadiz, p. 82. 23 Nicaraguan Legation, Vol. 2, Enclosure of Conces­ sion Granted by the Republic of Nicaragua to the Provisional Interoceanic Canal Society for a Ship-Canal across that Country (Washington: Gibson Brothers^ 1880), 20 pages. incorporation of the company and for a United States government guarantee of the company's stock. The bill encountered opposition in the House where members criti­ cized it as being too expensive, contrary to the Clayton-

Bulwer treaty, and ill-advised in the face of de Lesseps effort. The bill got nowhere and company hopes for Con- ‘ 0 A gressional aid died in 1882.

Meanwhile, the Maritime Canal Company's charter was in danger. The charter provisions calling for certain tasks to be performed within two years fell due in 1882.

The company had not even started surveys. In order to save its project the Maritime Canal Company sent E. P. Lull to

Nicaragua for an extension of the concession. He succeeded in obtaining a decree extending the time limit to September

30, 1884. Nicaragua charged $200,000 for the extension,.

Taking advantage of the reprive from disaster, the canal company arranged financing. Grant and Ward, the banking house, gathered a group of capitalists to finance . the canal construction work. It seemed that the canal

^Keasbey, Nicaragua Canal, pp. 386-387; United States, House of Representatives, Report to accompany House Bill 5799, Report No. 1698, 47th Congress, 1st Session, 1882, Part 1, pp. 1-6, and Part 2, 1-5. 25 .United States, House of Representatives,.Papers Relating to the Foreign Relations of the United States, Ex. D o c . N o . r, Part 1, 47 th Congress, 2nd Session, r8"S3, pp. 34-35, Note of C . A..Logan, United States Minister to Guatemala-,; to Frederick T . Fre 1 inghuysen, March 21, 1882. 99

project was finally on its way. However, Grant and Ward

collapsed. Total failure of the enterprise was imminent.^

Nicaragua feared another in a long string of

failures and decided to aid the floundering company. She

endeavored to get the other Central American states to

guarantee a loan for canal construction. The plan did not

succeed because of financial problems in the area. How­

ever, all the states save Costa Rica supported the comple­

tion of the canal. They even went so far as to appeal to

Washington for aid in the enterprise. Nicaragua joined

this appeal. She also sent several unilateral messages to

Washington in early 1884 calling upon the Arthur adminis­

tration to join her in guaranteeing the bonds of the

Maritime Canal Company. The appeals achieved their purpose 27 for the United States began to consider the canal problem. /

The State Department studied the problem of the . . faltering canal company and then formed two plans for its solution. Both solutions demonstrated the desire of

26 i Keasbey, Nicaragua Canal, pp. 422-423. 27 J. Fred Rippy,,"Justo Rufino Barrios and the Nicaragua Canal," Hispanic American Historical Review, XX (May, 1940), p. 19%; United States, House of Representa- tives, Papers Relating to the Foreign Relations of the United States transmitted to Congress with the Annual Message of the President December 4, 1883, Ex. Doc. No. 1, Part 1, 48™ Congress, 1st Session, 1884, pp. 58-61, Note of Henry C. Hall, United States Minister to Central America, to Frederick T. Frelinghuysen, July 6 , 1883; Nicaraguan LegationVol. 2, Note of Antonio Batres, Nicaraguan Minister to the. United States , to Frederick T., Freling­ huysen, March 19, 1884. Secretary of State Frelinghuysen for an American owned

canal. The first plan proposed that the United States

advance the Maritime Canal Company whatever money was

necessary to construct the canal. This action would make

the United States co-owner of the canal with Nicaragua

therefore achieving, if only in part, an American owned

canal. In conjunction with this approach the United States

and Nicaragua would enter into a defensive alliance for the-

protection of the canal. America would loan Nicaragua ,

money to construct fortifications at both ends of the canal

and the United States would receive the exclusive right to

rendezvous and repair its naval forces in Lake Nicaragua.

These conditions guaranteed American control of the canal 28 and would deny its use to any enemy nation. c

The second plan was more involved, but also

guaranteed a United States controlled canal. Judging by

the numerous documents and by the detailed procedures

involved, it was the favored plan. -The first part of the

plan provided for the completion of canal route surveys by

March 1, 1885 under the 1880 Menocal canal concessions. In

order to achieve this Nicaragua had to grant another exten­

sion. Seth L. Phelps of the Maritime Canal Company would

28 Nicaraguan Legation, Vol. 2, Several State Department Documents all dated 1884 included in this film. These papers are titled as follows % Basis of Protocol, A Private Canal Concession Embraces these Advantages, Pro­ posed Procedures,% Set of Resolutions, and Proposed Canal Grant. be instructed to get the extension. Then, with

Nicaragua's approval, Phelps would cede the 1880 concession

to the United States. After that exchange, Phelps and >

United States Minister to Nicaragua, Henry C. Hall would

negotiate a new grant which was more favorable to the

United States. They would also negotiate a canal treaty

with Nicaragua. • The old concession was unsatisfactory to

the United States because it provided for a neutral water­

way and because it put the control of the canal into the

hands of private individuals. But it did have some value

because while it was in effect no other nation could secure

a Nicaragua canal concession. If the new concession were

made to Phelps, he would transfer it to Minister Hall, and I • thus to the United States. Again the American government

would get control of the canal as Frelinghuysen desired.

. American control would be in direct violation of the

Clayton-Bulwer treaty, but Frelinghuysen did not care. The

•State Department was ready to initiate the second plan. It

prepared a draft canal grant and a draft agreement whereby

the Maritime Canal Company gave Seth L.- Phelps full power

to sell its rights to the United States. However, these

ambitious proposals ran afoul of Nicaragua's government.^

OQ Ibid.; Instructions, Vol. 18, pp. 443-452, Note of Frederick T. Frelinghuysen to Henry C. Hall, July 19, ' 1884. : : / ■ . 102

The above arrangements hinged on Nicaragua granting another extension of the 1880 Menocal concession. . Nicaragua refused to do so. That government was impatient with the > company because it had not even completed surveys in almost four years. Nicaragua also resented remarks made by the company and Secretary of State Frelinghuysen to the effect that the Maritime Canal Company was acting as an agent of the United States government. Nicaragua rejected this contention. She urged the company to start work. The canal company was unable to proceed. Consequently,

Nicaragua declared the 1880 concession forfeit on September

4, 1884. The act ended American attempts to control the canal by using the Menocal grant. InsteadFrelinghuysen 30 sought a canal treaty with Nicaragua.

Negotiations for a canal treaty with Nicaragua began in the Spring of 1884. The early negotiations con­ formed to the above stated plan in which the United States 31 would take over the Maritime Canal Company's concession.

The negotiations sought to form a treaty providing for

55--Nicaraguan Legation, Vol. 2, Note of A. Canton, Sub Secretary of Foreign Affairs in Nicaragua, to Daniel Ammen, Vice President of the Maritime Canal Company, April 23, 1884, and Note of F. J . Medina, Nicaraguan Foreign Minister, to Antonio Batres, April 23, 1884; Instructions, Vol. 18, p. 427, Note of John Davis, Acting United States Secretary of State, to Henry C. Hall, November 18, 1884. O'! N icaraguan Le gat ion, Vol. 2, Nicaraguan proposi­ tions on ;canal contract. May 26, 1884. 103 construction of the canal by the United States. In August,

1884, the United States submitted a draft treaty providing the basis for the final agreement. The draft stipulated that the United States would construct the canal and the finished work would be owned by it and Nicaragua jointly.

The United States agreed to protect the territorial integrity of Nicaragua while the latter nation provided all the land and water necessary for the construction of the work. A strip of land two-and-a--ha If miles wide was to be set aside for the work and owned by both parties. The

United States received exclusive control of canal construc­ tion, but a Board of Managers would run the canal when completed. The Board contained five members; three of which would be appointed by the United States. Any profits the canal earned would be shared by the two nations with the United States receiving seventy-five per cent.

Nicaragua agreed to terminate treaties with third powers - that conflicted with this one. The United States had to build the canal within seven years. The last part of the draft treaty provided that any dispute between the signa- 32 tories would be arbitrated by a friendly power.

The draft favored the United States in several instances and Nicaragua refused to accept the treaty as it

30 Ibid., United States draft for a canal treaty with Nicaragua, dated August 2, 1884. 104 stood. To correct the situation Nicaragua proposed changes in the treaty that modified the composition of the Board of

Managers and provided for equal sharing of canal profits.

She also wanted the construction contract forfeited if the

United States did not finish the canal within seven years«

In case the Central American states united, Nicaragua • f wanted her rights to be transferred to the new government,

Nicaragua wanted these modifications included before she 33 accepted the treaty.

In the Fall of 1884, Nicaragua was under pressure to accept the treaty. She received pressure from the

United States and from President Barrios of Guatemala. He wanted to unite Central America under his authority and wanted American help for the scheme. Therefore, he urged

Nicaragua to sign the treaty without quibbling about terms.

Frelinghuysen welcomed this support, but Nicaragua was alarmed by Barrios' growing strength. In order to escape his influence, President Cardenas transferred the negotia­ tions to Washington. The threat of Barrios may have con­ vinced Nicaragua that she must sign a treaty with the

United States in order to get the latter*s protection.

33 Ibid., Nicaraguan objections to the United States draft, delivered to the Secretary of State of the United States by Antonio Batres, October 24, 1884.

^Rippy, "Justo Rufino Barrios," pp. 193-196; , Instructions, Vol. 18 * pp. 432-433, Note of Frederick Frelinghuysen to Henry C.- Hall, December 6 , 1884. On December 1, 1884, Secretary of State Frederick

T'v Frelinghuysen signed a canal treaty with Joaquin Zavala

of Nicaragua. The treaty was almost a duplicate of the

August draft, but embodied some of Nicaragua's modifica-

tions. The Board of Managers was now equally divided with

three members from each nation, but the United States had

effective control because it named the chairman of the

Board. The United States compromised on the profits issue by expanding Nicaragua's share from one-fourth to ond-

third. Other modifications provided that Washington had

to start work on the canal within two years after the

exchange of ratifications and complete it within ten years

therefrom. If the time stipulations were not met the

treaty lapsed. The last significant change stated that the

United States loan Nicaragua four million dollars for the

latter's public work ,projects* The treaty gave the United 35 States control of an interoceanic waterway..

President Arthur was not slow to take advantage of the new treaty. He instructed the Secretary of the Navy to begin surveys of Nicaragua's canal route. - On December 15,

1884, A. G. Menocal, engineer, received instructions to 36 make the preliminary survey. Menocal went to Nicaragua,

o c \ Isthmian Canal Report, pp. 359-363, The Frelinghuysen-Zavala treaty. 36 United States, Senate, Report of the United States Nicaragua Surveying Party, 1885, Ex. D o c . No. 99, 49t11 Congress, 1st Session^ 1886, pp. 3-4. 106

examined the whole, route, and made his report in 1885.

Menocal1s route started at the port of Brito on the

Pacific. From there a canal went up to the Lajas River and

along its valley to Lake Nicaragua. On the Caribbean side

of the lake a fifty-two foot high dam at Ochoa rapids

raised the San Juan River to permit sixty-four miles of

slack water navigation. Above the dam the canal branched

off towards the interior of Nicaragua and by a series of

locks entered the San Francisco River valley. The canal

followed the valley to Greytown harbor. Overall length of

the interoceanic route was 169 miles and Menocal estimated

its construction cost at $48,809,167. Menocal*s survey provided the United States with a plan for building a canal.^ '

The Arthur administration never got any further with its plans for an American canal because the 1884 treaty ran. into trouble in the Senate. President Arthur submitted the treaty to the Senate on December 10, 1884, 38 and recommended speedy approval. Senator John T. Morgan of Alabama, a persistent advocate of the Nicaraguan canal, supported the treaty. He and his followers encountered stiff opposition in the form of Senators John Sherman and

Thomas F . Bayard. The latter two argued that the 1884 : .

3 7 Ibid., pp. 25-2.8, 40-48. • 38 Richardson, Messages, Vol. 8 , pp. 256-260. 107 convention violated the terms of the Clayton-Bulwer treaty.

Morgan countered by claiming that the 1850 treaty was non­ existent . Bayard quickly defeated that argument. He and other Senators defended the Anglo-American treaty as an agreement which removed British control from Central

America and contended that it should not be ignored or weakened. These arguments won the debate. On January 29,

1885, the Frelinghuysen-Zavala treaty failed to receive - J the necessary two-thirds majority in a Senate vote. • The treaty would have died, but a motion to reconsider 39 momentarily kept it alive.

The period of reconsideration was short because ‘

Grover Cleveland became President in March, 1885. Imme­ diately upon taking office he withdrew the Frelinghuysen- . 40 Zavala treaty from the Senate for reexamination. In

December, 1885, Cleveland decided not to resubmit the treaty to the Senate. . The President did not approve of the treaty because it.involved the United States in an

— — ' Charles Callan Tansill, The Foreign Policy of Thomas F. Bayard, 1885-1897 (New Yorks Fordham University Press, 1940), p. 676; Allah Nevins, Grover Cleveland A Study in Courage (New Yorks Dodd, Mead and Company, 31733), pi 205; United States, Senate, Message of the United States President transmitting in response to Senate resolu­ tion of December 21, 1886, a report of the Secretary of State, ExI Doc. N o . 50, 49™ Congress;, 2nd Session, 18"87, , "pp. rl-12, Note of Frederick T. Frelinghuysen to Henry-C. Hall, February 7, 1885, hereafter cited as S.E.D, 50.

^Richardson, Messages , -Vol. 8 , p. 303 . 108 entangling alliance to defend Nicaragua's territorial integrity. He also did not believe that America should own any territory outside its present boundaries. Cleveland thought the treaty called for an American commitment that would be beyond our resources. Furthermore, he did not think the canal should be controlled by one nation.

President Cleveland believed that the canal ought to be an international highway open to all nations.

The policy enunciated by President Cleveland in the

December address was the one he followed during two terms as President. Therefore, the United States government did not seek to construct or control its own canal. However, '

Cleveland was not hostile to the canal in itself for he knew the value of such a waterway to American commerce.

During his terms as President the effort to build an inter- oceanic canal in Nicaragua was left to private enterprise.

Nevertheless, President Cleveland aided the prospects of a

Nicaraguan canal when he arbitrated the boundary dispute between Nicaragua and Costa Rica.

The boundary dispute between the two nations had its origin during Spanish rule of Central America. At that time no exact boundaries were determined for the provinces of Nicaragua and Costa Rica. -When fhe provinces became

41Ibid., pp. 327-328. nations the dispute over who owned what emerged.^ After

several unsuccessful attempts at a settlement, the two

countries signed the Cahas-Jerez treaty on April 15, 1858»

The 1858 boundary started at Punta de Castilla on the

Caribbean and ran along Costa Rica's bank of the San Juan

.River to a point three miles downstream from Castillo

Viejo. After skirting the fort, the boundary paralleled,

at a distance of two miles, the right banks of the San Juan,

River and Lake Nicaragua until it reached the Sapoa River.

From the Sapoa the line proceeded directly to the center

of Salinas Bay on the Pacific Ocean. The treaty settled

the long standing boundary question,. but only temporarily/1^

In 1870, Nicaragua reopened the boundary dispute by

claiming that the 1858 treaty was invalid. ■ The government

at Managua charged that the treaty had not received proper

Ratification and that the ratifications were not exchanged before the specified time for doing so elapsed. Nicaragua

did not want the Canas-Jerez treaty to remain in force because its provisions gave Costa Rica the right bank of

the San Juan and thus a share in any canal project that

- I T — John Bassett Moore, History and Digest of the. International Arbitrations to which the United States has . been a Party (Washington; Government Printing Office, " . 1898), Vol. 2, p. 1952, hereafter cited as Arbitrations.

^ S.E.D. 5 0 , p. 31, Note of Manuel M. Peralta, Costa Rican Minister to the United States, to Thomas F. Bayard, United States Secretary of State, June 26, 1885, see enclosures for the Canas-Jerez treaty. 110

used the Nicaraguan route. Denying the validity of the

. 1858 treaty would allow Nicaragua to claim the whole course

of the San Juan. Costa Rica did not support this conten- 44 tion and the two nations began, quarreling again.

The dispute simmered until the 1880's. During that

decade both countries decided to settle the question. The

first effort towards an agreement came in 1883 and was

prompted by the Maritime Canal Company's project. The

boundary had to be determined before canal construction

could begin. Consequently, Nicaragua and Costa Rica started

negotiations for a new treaty and the talks culminated in •

the signing of a convention on January 19, .1884. The

boundary line now became the Colorado River, a southern

branch of the San Juan. Nicaragua received exclusive

ownership of the San Juan River. Costa Rica obtained the

right of free navigation of that river and Lake Nicaragua.

In reference to canal concessions, the treaty stipulated

that the rights of Costa Rica acquired through this agree­

ment might in no way embarrass Nicaragua's ability to make

contracts for. the completion of an interoceanic canal. The

treaty favored Nicaragua, but neither government was

^Moore, Arbitrations, Vol. 2, pp. 1956-1957; .S.E.D. 50, p. 36, Enclosure of article by Manuel M. de Peralta on Costa.Rica's and Nicaragua's rights in the San Juan. River in note of Manuel M. •Peralta to Thomas.F. Bayard, June 26, 1885. Ill

entirely satisfied with the convention and both rejected it

in 1885.45 -

The Foreign Minister of Guatemala tendered the good

. offices of his government in order to end the quarrel.

Nicaragua and Costa Rica accepted. Negotiations took place 46 in Guatemala City. They resulted in an agreement to

arbitrate the boundary1 question and the President of the

United States was chosen as the arbitrator. The President

had to decide if the 1858 Ganas-Jerez treaty was valid.

Nicaragua and Costa Rica ratified the convention in 1887.4^

Both nations then concluded another boundary treaty, but it 48 failed and the arbitration agreement remained in effect.

S.E.D. 5 0 pp. 33-35, Enclosure of the 1884 Nicaragua-Costa Rica boundary treaty in Note of Manuel M. Peralta to Thomas F. Bayard, June 26, 1885, and p. 43, Note of Gonzales Viques of the Costa Rican Mission to the United States to Thomas F. Bayard, October 28, 1885.

4 ^Ibid., p. 47, Note of Henry C. Hall to Thomas F. Bayard, November 3, 1886. ' 47 Ibid., pp. 50-51, Enclosure of the Costa Rica- Nicaragua arbitration agreement of December 24, 1886, in note of Henry C. Hall to Thomas F. Bayard, December 27, 1886; Foreign Relations of the United States. 1887 (Washington; Government Printing Office, 1888J, p . 115, Note of Henry C. Hall to Thomas F. Bayard, April 27, 1887, and p. 124, Note of Henry C. Hall to Thomas F. Bayard, May 21, 1887.

4^Foreign Relations of the United States, 1887, p. 136, Note of Henry C. Hall to Thomas F. Bayard, July 29, 1887, and pp. 140-141, Note of Henry C„ Hall to Thomas F. Bayard, August 24, 1887; Nicaraguan Legation, Vol. 2, Note of H. Guzman, Nicaraguan Minister to the United States, to Thomas F, Bayard, October 1, 1887. 112

President Cleveland accepted the role of arbitrator on July 30, 1887. Then, in accordance with the arbitration convention, Nicaragua and Costa Rica presented their cases . to him in October, 1887. Each party was informed of the . other's arguments and they presented their counter claims.

Grover Cleveland could not find time for the task and, on

January 16, 1888, appointed George L„- Rives to examine the 49 two. positions and make a report.

In his report to President Cleveland, George Rives stated that all Nicaragua's arguments against the treaty were unsound. He discounted the argument that the treaty did not receive proper ratification. Nicaragua contended that the treaty was not ratified in accordance with the terms of her 1838 Constitution. Rives pointed out that, this constitution was not in force at the time because a

Constituent Assembly was forming a new basic law. That

Assembly was the law and it approved the treaty. The argument that San Salvador needed to ratify the treaty before it could go into effect was also disproved by Rives.

The treaty was between Nicaragua.' and Costa Rica, he said;

San Salvador only helped bring the agreement about and its ratification was not necessary for the treaty to go into effect. Anyway, both nations knew San Salvador had not ratified the treaty when they exchanged ratifications

^ M o o r e , - Arbitrations , V o l . , 2, p p . 1945-1947 . ■ . 113 thereby accepting the treaty as perfected. Rives took up .

Nicaragua's third contention that the ratifications were exchanged improperly and after the date set for this event expired. Rives explained that Nicaragua's legislature did approve the treaty» Costa Rica was the party that should complain if ratification exceeded the determined time limits. She accepted the treaty and thus made it a valid agreement. Rives concluded that the Cahas-Jerez treaty was v alid .50

President Cleveland accepted the conclusions of

Rives' report and made his arbital. award on March 22, 1888.

He declared the Cahas-Jerez treaty to be valid. The

President interpreted the sixth article of that treaty to mean that Costa Rica had no right to navigate the San Juan

River with war vessels. However, Costa Rica could navigate the river with revenue ships in connection with her com­ merce . The rest of the arbital decision involved specific problems of boundary delineation and uses of the San Juan

River. Cleveland's decisions on these points completed his task as arbitrator. He had settled the troublesome

Nicaragua-Costa Rica boundary dispute and thus helped 51 future canal projects.

5 0 Ibid., pp. 1956-1964j.Text of Rives 1 report.

5 ^Ibid., pp. 1965-1967, Text of Cleveland's award. Implementation of Cleveland's award proved diffi­ cult . Costa Rica and Nicaragua appointed commissioners to determine their mutual boundary. Cleveland's award stipu­ lated that the boundary between the.two republics started at Punta de Castilla at the mouth of the San Juan River as they existed on April 15, 1858. Because of shifting sands on the Caribbean coasts of both nations the commissioners could not agree on where Punta de Castilla or the mouth Of 5 the San Juan River had been in 1858. A stalemate resulted.

The award could not be implemented. In December,,1890,

Nicaragua and Costa Rica signed a treaty in an effort to reach agreement. The treaty stipulated that the boundary line starting point was 200 feet south of the breakwater built by the Maritime Canal Company at Greytown. This treaty would have ended the impasse, but Costa Rica refused to ratify it."^

The United States and the nations of Central ;

-i ' ■ . America wanted the boundary question settled. Salvador offered its mediation to Nicaragua and Costa Rica. They

5 2 Ibid. , pp. 1965-1968. 53 Despatches from United States Consuls in Managua, 1884-1906, Microfilm No. T-634 (Washington: The National Archives, 1961), Roll 2, Note of William Newell, United States Consul to Nicaragua, to William R. Wharton, United States Assistant Secretary of State, January 27, 1891, hereafter cited as Despatches Managua; Instructions, Vol. 19, pp. 633-636, Note of Secretary of State James G. Blaine to R.-C. Shannon, United States Minister to Nicaragua, Costa Rica, and Salvador, April 12, 1892. accepted. The negotiations resulted in a treaty on March

27, 1896, which provided that both nations name two man boundary commissions to delineate the boundary. The treaty also provided for a fifth commissioner who had the final authority to settle any disputes that arose between the

Nicaraguan and Costa Rican commissions. The fifth commis­ sioner would be named by the President of the United 54 States.

President Cleveland, finishing his second term, was pleased to help implement his arbital award. He named

E. P. Alexander as the American engineer necessary to 55 complete the boundary commissions. Mr. Alexander handed down his first decision on .September 30, 1897, when he fixed the point on the Caribbean where the boundary line commenced. With his help, determination of the Nicaragua

Costa Rica boundary continued until it was completed

54 ' Foreign Relations of the United States, 1896 (Washington! Government Printing Office, 1897), pp. IU0-103 Note of J . B . Calvo, Costa Rican Minister to the United States, to Richard Olney, United States Secretary of State, May 1, 1896; Instructions, Vol. 21, pp. 43-44, Note of Richard Olney to John T. Baker,.Secretary of United States Mission to. Nicaragua, Costa Rica, and Salvador, October 16, 1896; Moore, Arbitrations, Vol. 2, pp. 1967-1968. 55 , Nicaraguan Legation, Vol. 3, Note of J . D. Rodriguez, Minister of the Greater Republic of Central America, to Richard Olney, February 22, 1897.

United States, House of Representatives, Papers on Foreign Relations transmitted to Congress on December 6 , 1897, Doc. N o . 1, 55th Congress, 2nd Session, 1898, pp. 113- 116, Note of J . B . .Calvo to John Sherman, United States Secretary of State, October 29, 1897. according to the 1858 treaty and Cleveland's award.

Nicaragua and Costa Rica were pleased with the result. On

July 24, 1901, they signed the final act which put an end

to their boundary dispute..At last the boundary was determined and the United States could go ahead with its

plans to build a canal without fear of being hindered by a

local quarrel.

•While the arbitration proceeded, Nicaragua made another effort to build the canal. In 1887, she made a

canal contract with the Provisional Canal Association.

This American organization was formed in 1886 and its

object was to build a Nicaragua canal. Mr..A. G . Menocal negotiated the concession which was similar to that of

1880. In this instance Menocal had to pay $100,000 to obtain the grant and had only eighteen months to start work. Nicaragua was jaded by past failures and wanted to get some return from the grant. The Nicaragua Canal Con­

struction Company was organized and it sent Menocal to

Nicaragua in November, 1887, in order to initiate surveys.

^ Instructions, Vol. 22, pp. 31-32, Note of Alvee A. Adee, Acting Secretary of State, to William L. Merry, United States Minister to Nicaragua, Costa Rica, and Salvador, August 6 , 1900; Nicaraguan Legation, Vol. 4, Telegram from Nicaragua's Minister of Foreign Relations to the United States Secretary of State, July. 25, 1901. However, the enterprise encountered Costa Rican opposi­

tion.58

Costa Rica, jealous of her rights, protested the

Menocal contract with Nicaragua. She contended that the

contract violated the 1858 boundary treaty which stipulated

that Nicaragua had to consult her before forming any canal

contract involving the San Juan River. Nicaragua had not

consulted Costa Rica. Costa Rica also charged that the

Menocal grant impaired her rights to navigate the San Juan

and that the canal would injure her territory and commerce.

Nicaragua brushed off these protests and reminded. Costa

Rica that the 1887 concession was essentially the same as

that of 188.0 to which Costa Rica had not objected.

The canal company could not start surveys or

construction as long as the dispute continued. A. G.

Menocal removed Costa Rican objections to the project by .

negotiating a canal concession with that government in

— TZ --- Keasbey, Nicaragua Canal, pp. 438-439; Despatches .Managua, Roll 2, Note of Charles H. Wills, United States " Consul to Nicaragua, to James D . Porter, United States Assistant Secretary of State, May 9, 1887. 59 United States, House of Representatives,.Foreign Relations of the United States, 1888, Ex. Doc. No. 1 , .Part 1, 50tn Congress, 2nd Session,.1889, pp.'101-103, Note of Henry C. Hall to Thomas F . Bayard,•December 21, 1887. 118

1888. Costa Rica became a part of the enterprise and as a result work could begin.^

While the Nicaragua Canal Construction Company negotiated with Costa Rica, its representatives were busy in the United States urging Congress to charter the company. .A bill to this effect passed and the President signed it on February 2 0 , 1889, thereby incorporating the

Maritime Canal Company of Nicaragua. The company, with a capitalization of 150 million dollars, received the canal concessions negotiated by the Nicaragua Canal Construction

Company. The latter organization received a contract from ' the Maritime Canal Company to construct the canal. On June 61 3, 1899, work began on the canal. .

Again the company encountered political diffi­ culties . Nicaragua did,not approve of the company's concession from Costa Rica. She had protested the conces­ sion when it was signed on the grounds that it was contrary to the one she made with the company and because it con­ flicted with President Cleveland's award. Nicaragua even

60 ^ Nicaraguan Legation, Vol. 2, Note of H . .Guzman to Thomas F. Bayard, September 15, 1888, enclosed is the Costa Rican concession.

^ K e a s b e y , Nicaragua Canal, pp. 448-449; United States, Senate, Statement, made on Examination, by Hiram Hitchcock, President of the Maritime Canal Company, as to the Existing Relations Between that Company and the Govern­ ments of Nicaragua and Costa Rica, January 28, 1897, Doc. N o . HJ21 54cn Congress, 2nd Session, 1897, pp. 1-2, here- after cited as Statement of Hiram Hitchcock. 119

protested to the United States about the matter, but the 62 Cleveland administration refused to get involved. In

July, 1889, Nicaragua ordered all work on the canal stopped

until she was assured that the work was being done only

under her contract with the company. The canal company did

not obey the order. Nicaragua then.stated that she did not

consider the work being done an official commencement of

construction. This meant that the contract would lapse - . . . . because the work had to start officially within eighteen

months. The Maritime Canal Company appealed to the United

States government for help. ..The Harrison administration

favored the enterprise and instructed its representative in

Nicaragua to help settle the problem. Lansing B. Mizner,.

United States Minister to Nicaragua, came to the company's

rescue and helped produce an agreement on October 8 , 1889.

- In the agreement the company promised to build the canal

under the terms of its contract with Nicaragua. Nicaragua

agreed to revoke its stop work order and to declare that 63 construction had officially begun. ■

Despatches Managua, Roll 2, Note of Charles H. Wills to George L. Rives, Assistant Secretary of State of the United States, September 7, 1888; Instructions, Vol. 19, pp. 166-168, Note of Thomas F. Bayard to Henry C. Hall, October 6 , 1888. 63 Statement of Hiram Hitchcock, pp. 1-2; Despatches Managua, Roll 2, Note of Charles H. Wills to William F. Wharton, United States Assistant Secretary of State, October 10, 1889; Nicaraguan Legation, Vol. 2, Note of H. Guzman to James G . Blaine, January 22, 1891, enclosed is the Nicaragua-Maritime Canal Company agreement. 120

The canal company selected the route, with some 64 changes, recommended by A. G. Menocal in 1885, In the

first year of work, the company established warehouses, machine shops, employee housing, and wharfs near the port

of San Juan del Norte. Canal excavation started and a

railroad was begun along the route to help remove the , Y

excavated material. Nicaragua watched the progress with

great anticipation. On November 8 , 1890, the Managua

government pronounced its satisfaction by declaring that

the company had lived up to the contract by spending more

than $2 ,000,000 during the first year of construction.^

The canal company spent a great amount of its capital during the first year and in 1890 began to search for more. The company sought financial backing from any source. Some Senators heard of this and were alarmed by

the possibility of foreigners controlling a majority of the company's stock. They proposed the United States govern­ ment enter the enterprise. Warner Miller, President of the

Nicaragua Canal Construction Company, found his^ stock­ holders willing as long as they got their money plus a

^United States, House of Representatives, Report of the Nicaragua Canal Board, 1895, Doc. No. 279, 54th Congress, 1st Session, 1896, pp. 22-23, hereafter cited as ..Canal Board Report.

^United States,:Senate, Report of the Maritime Canal Company of Nicaragua for 1889, Ex. Doc. No. 49, Fist Congress, 1st Session, 1890, pp. 1-3; Despatches Managua, Roll 2, Note of William Newell to William F.Wharton, November 14, 1890; Keasbey, Nicaragua Canal, pp. 449-453. 121

reasonable profit back. The Senate Foreign Relations

Committee formed a bill on the subject and introduced it

to the whole body on January 10, 1891. The bill provided

for a government guarantee of the principal and interest of

the canal company's one-hundred million dollar bond issue.

-The United States would hold $70 million of the company's

common stock as security for the guaranty and the President

could name a majority of the company's Board of Directors.

Unfortunately, the bill failed to win the approval of

Congress and died during that year. Meanwhile, the company

tried to raise money on its own but found investors reluc­

tant to participate in an enterprise that might be taken

66 " ' over by the government.

President Benjamin Harrison pursued an expansionist

policy during his term in office. He wanted to expand

American influence in the Pacific and Caribbean. One of , . ' ' ' ■ J the goals of his administration was the completion of an ■ r "7 interoceanic canal through the Central American isthmus.

Harrison wanted the Maritime Canal Company's project

successfully completed in order to aid the trade and

defense of the United States. Consequently, he warmly

^United States, Senate, Hearings of House Bill 35 before the Committee on Interstate and Foreign Commerce of the House of Representatives, Senate Doc. NoV 315, 54cn " ■ Congress, 1st Session,' 1896, p. 6 , hereafter cited as Hearings of House Bill 35; Keasbey, Nicaragua Canal, pp. -4-55---4'5g— --- — ------

•^Julius W. Pratt, Expansionists of 1898 (Baltimore Johns Hopkins Press, 1936), pp.■ 25-Zb, 29-33> •— 122

supported Congressional efforts to aid the financially

weakened company.^

Backers of the Maritime Canal Company introduced

another guaranty bill in December, 1892. The bill was

slightly different from that of 1891, but its main feature

provided for a government guarantee of company bonds.

.Again■Congress failed to approve the bill. That body

thought the bill would disrupt Anglo-American relations 69 because it violated the Clayton-Bulwer treaty. This

argument caused the defeat of subsequent aid bills. Con­

gressional supporters of the canal project and the

Nicaraguan route produced bills to aid the enterprise in

1894, 1895, 1896, and 1899. They all failed, but the bill

of 1899 which provided for outright government ownership of

the canal company passed the Senate. In some instances,

particularly in regard to the several bills introduced in

1895-1897, Nicaragua opposed Congressional efforts to help

the company because the aid bills would have limited her 70 rights or violated the company's charter. Although the

aid bills were not successful, they did manage to keep the

canal issue before Congress and the American.public during

^Richardson , Messages, Vol. 9, pp. 188-190.

r q Keasbey, Nicaragua Canal,, pp. 460-461. 70 1 Du Val, Cadiz, p^. 84-85; Nicaraguan Legation, Vol. 3, Note of J.;D. Rodriguez, Minister to the United States of'the Greater Republic of Central America, to Richard Olney, January 15, 1897; Keasbey, Nicaragua Canal, pp. 470-472. the 1890'sc The mere presence of the issue helped convince

the United States that it had to build the canal.

Meanwhile, the construction company needed capital

to continue the work. Its attempts to secure financing

were ended by the Panic of 1893. The Nicaragua Canal

Construction Company went into receivership. All work on

the canal stopped and never resumed even when the construc­

tion company reorganized. However, the Maritime Canal

Company still held the concession from Nicaragua and

Congress might well pass an aid bill to revive the enter- . 71 prise.

Nicaragua did not put much faith in the company's '

hopes for Congressional aid. She insisted that the company

fulfill its contract. The Maritime Canal Company could not. Nicaragua informed the company that itp charter was

considered forfeit because it had not constructed the

Tipitapa canal within the specified time of three years. '

-This canal, when completed, would connect the navigable

part of the Tipitapa River with Lake Nicaragua thus

effectively joining the latter with Lake Managua. .The '

Maritime Canal Company protested Nicaragua's action. It

contended that non-completion of the Tipitapa canal was not

sufficient grounds for forfeiting the contract because

— Hearings of House Bill 35, p. 6 ; United States, Senate, Report or the Maritime Canal Company of Nicaragua December 1,■1900, Doc. No. 28, 56th Congress, 2nd Session, 1901, pp. 2-4j Keasbey,, Nicaragua Canal, pp. 461-462. 124

Article 53 contained five reasons for forfeiture none of which mentioned the Tipitapa canal. The company appealed to the United States and Cleveland's administration supported the company's rights. This was not done because

Cleveland wanted to involve the government in the canal project, but because the rights of American citizens were being violated. Nicaragua quickly shifted her position after receiving Minister Louis Baker's note of protest. In 72 June, 1894, Managua withdrew the forfeiture notice.

Nevertheless, she was still dissatisfied with the company's inability to complete its projecti

Nicaragua demonstrated her dissatisfaction in 1898 when she negotiated a new canal concession with another

American syndicate. President McKinley's administration did not support the syndicate. The American government wanted the Maritime Canal Company of Nicaragua to keep its concession at least until the 1897 canal commission made " its report. United States diplomatic representatives in

Nicaragua received instructions to advise Nicaragua against

79 Statement of Hiram Hitchcock, p. 9; Foreign Relations of the United States, 1894 (Washington: Govern­ ment Printing Office, 1895j, Vol. T7 pp. 462-465, Note of Lewis Baker, United States Minister to Nicaragua, to Walter . Q. Gresham, United.States Secretary of State, June 5, 1894; Instructions, Vol. 20, p. 311, .Note of Alvee A . ,Adee to Lewis Baker, July 3, 1894. 125 73 making a new concession. Nicaragua ignored the advice

and signed a Promise, of Contract with the Eyre-Cragin

syndicate on October 26, 1898. The agreement allowed the

syndicate to negotiate with the Maritime Canal Company for

the recession of the latter's 1887 contract which would

expire on October 9, 1899. If the Maritime Canal Company

refused to rescind its concession,Nicaragua guaranteed the

Eyre-Cragin syndicate's contract would take effect on

October 10, 1899. In the Promise of Contract, Nicaragua

granted the Interoceanic Canal Company, to be formed by the

syndicate, the exclusive right to construct an interoceanic

canal within ten years. The syndicate gave Nicaragua

$ 100,000 in gold for the contract.^

The new contract enriched President Zelaya's

administration and allowed him to end the Maritime Canal

Company's concession. Zelaya had considered the latter a

dead letter for some time and was glad to see it go. The

Maritime Canal Company did not want to lose its concession

and protested to the United States government as well as to

Managua. At Washington, the State Department considered

^^Instructions, Vol. 21, pp. 371-372, Note of John Hay, United States Secretary of State, to William L. Merry, • October 8 , 1898; Despatches Managua, Roll 4, Note of Chester Donaldson, United States Consul in Nicaragua at Managua, to John B . Moore, Assistant United States Secretary of State, November 2, 1898.

7 / Despatches Managua, Roll 4, Note of Chester > Donaldson to John B. Moore, November 2, 1898, and Note of Chester Donaldson to John B . Moore, November 21, 1898. 126 the company's protest, but there is no indication that it ever acted upon the matter. In Nicaragua, the government implemented the 1898 contract, but allowed the Maritime

Canal Company to arbitrate its dispute with the government.

Because of legal technicalities this procedure never went into operation and a Nicaraguan court declared the 1887 contract forfeit on February 26, 1900. The sad history of 75 the Maritime Canal Company ended on that date.

The Interoceanic Canal Company had no better luck - \ ' than its predecessor. It had promised to pay Nicaragua

$400,000 by August 9, 1900; four months after it organized.

The company failed to meet the payment and Nicaragua 76 declared the contract void.

By the end of 1900 Nicaragua had no canal contracts with private corporations or individuals and was free to negotiate with the United•States for a canal treaty. In the following year the obstacle of Nicaragua's boundary dispute with Costa Rica was also removed. Nicaragua was so

7 5 Ibid., Note of Chester Donaldson to David J . Hill, United States Assistant Secretary of State, September 22, 1899, and Note of Chester Donaldson to David J . Hill, February 27, 1900; A Compilation of the Messages and Papers of the Presidents, Prepared under the direction of the Joint Committee on Printing of the House and Senate (Published by the Bureau of National Literature, no date or place), Vol. 14, p. 6433,.This is a continuation of Richardson's work but he is no longer the compiler for volumes after 10 and no new compiler's name is given, hereafter cited as A Compilation. . :

^ Canal Report 1901,-p. 184. 127 anxious for a canal treaty that she even denounced the 1867

Dickinson-Ayon treaty thereby removing that possible hindrance to negotiations. The denouncement of October, 77 1901, would take effect on October 24, 1902. Thus all obstacles in the way of a new canal treaty with the United

States were eliminated.

Meanwhile, United States interest in a Nicaragua canal grew during the 1890’s. It was stimulated by the activities of the Maritime Canal Company. Further evidence of American interest in an isthmian canal came fro,m a series of canal investigations conducted by the government upon request of Congress. The latter body wanted to learn all it could about the Nicaragua canal route and whether or not that was the best transisthmian crossing.

The first investigation occurred in 1895. The survey resulted from the Senate's desire to aid the

Maritime Canal Company in 1894. When the guaranty bill of that year failed to pass the House, the Senate amended an appropriations bill to provide for an investigation of the

Nicaragua project. In accordance with that amendment, the

President appointed three engineers to the Nicaragua Canal

Board. The engineers, Lt. Colonel William Ludlow,,M..T.

Endicot, and Alfred Noble, went to Nicaragua in May, 1895,

77 Malloy, Treaties, p. 1279; Instructions, Vol. 22, p. 154, Note of John Hay to William L. Merry, October 24, 1901. ’ 128 to study the plans and accomplishments of the Maritime

Canal Company. The Board returned to the United States that summer in order to examine the financial posture of the company. - On November first, the Nicaragua Canal Board . 78 made its report.

The Canal Board concluded that the Menocal canal was feasible, but it criticized many aspects of the project.

The Board recommended that all locks be increased to eighty feet in width and called for exhaustive studies of the foundation for Ochoa dam on the San Juan River. It thought that the whole eastern section, from Lake Nicaragua to the

Caribbean, needed further examination in order to make sure that the best canal line had been chosen. The engineers of the Board believed the cost of the canal would be over $133 million while the company estimated a total cost of

$66,466,880. However, the engineers pointed out that they had insufficient data upon which to accurately determine - the cost of the project. They ended their report with a 79 recommendation for a further eighteen month study.

In accordance with the recommendation of the

Nicaragua Canal Board, Congress provided for a Nicaragua

Canal Commission in June, 1897. Congress wanted the group to study the Nicaraguan route, lay down a canal line, and

78 Canal Report 1901, pp. 58-59; Keasbey, Nicaragua Canal, pp. 470-47'27 4T8^79'.

^ Canal Board Report, pp. 85-88. 129 80 then form plans for.construction of the canal. , Rear-

Admiral John G, Walker headed the three man commission which conducted a thorough study of the various Nicaragua canal lines. The Commission reported to President McKinley on May 9, 1899, and recommended a canal route starting at the Pacific port of Brito and following the rivers Rio

Grande and Lajas to Lake Nicaragua. After crossing the lake, the canal entered the San Juan River and followed its course to a point near Boca San Carlos from which the canal cut across the low marshy delta to the port of San Juan del

Norte. The Nicaragua Canal Commission believed this canal. on could be constructed for the sum of $118,113,790. The

American government now possessed plans for a feasible canal route, but, for the moment, it was engrossed in the heady aftermath of the Spanish-American War.

The war with Spain dramatized, the canal issue in the United States. The difficulties encountered in waging a war in the Atlantic and Pacific demonstrated the.neces­ sity of an interoceanic waterway. The difficulties were exemplified by the 13,000 mile voyage of the.U.S.S. Oregon I around Cape Horn to the Caribbean. When the war ended the

United States received far-flung possessions in the Pacific

^ D u V a l , Cadiz, pp. 8 6 -8 8 . 81 United States, Senate, Report of the Nicaragua Canal Commission, May 9, 1899, Doc. No..357, 57^' Congress, 1st Session, 1902, pp. 3, 47-49. 130

in addition to Hawaii which became a territory during the

war. The distant lands had to be connected to the United

States by swift communications routes. America needed an

isthmian canal. Congress called upon the United States to

build and control a canal across the Central American on isthmus. From 1898, the United States was committed to

building and controlling its own canal.. - President McKinley

joined the voices calling for an American canal on December

5, .1898, when he stated that the United States must control

the interoceanic canal for its own safety. He urged 83 Congress to take action for the,construction of the canal.

Congress was unable to follow McKinley's instrue-

tions immediately. By that time Nicaragua's route was not

the only one. The Panama route had recently received

strong lobby support from William Nelson Cromwell and

Philippe Bunau-Varilla. Congress did not know which canal

route was superior. Therefore, it passed a bill on March

82 Dana G . Munro, Intervention and Dollar Diplomacy in the Caribbean 1900-1921 (.Princeton, New Jersey: Princeton University Press, 1964), p. 37; United States, Senate, 1 Report of Mr. Morgan, from the Select Committee on the Construction of the Nicaragua Canal, to accompany Senate Bill 4792, Report No. 1265, 55tn Congress, 2nd Session, 1898, pp. 4,8.

^ Richardson, Messages , Vol . 1 0 pV 180, 3, 1899, which provided for an Isthmian Canal Commission to 84 investigate all practicable canal routes.

The Isthmian Canal Commission was considerably

larger than any of its predecessors. Rear-Admiral John G.

Walker was President of the commission and the rest of its members were divided into committees. One committee investigated the Nicaraguan route while another covered

Panama. The other possible routes received the attentions of a third committee and two additional groups studied the industrial, commercial, and military value of the canal as well as the status of any franchises or privileges.

Organized in this manner, the Isthmian Canal Commission sent out a total of 850 men to investigate the above aspects of the canal issue. When all the information gathered by the committees was correlated the commission made its

■ 8 5 report on November 16, 1901. ‘

The report dealt with all aspects of the canal.

The commission's investigations proved that only Nicaragua and Panama had feasible canal routes. The Nicaraguan route's advantages were evenly distributed excavation work, a healthy climate, and a route unencumbered by concessions; but her route was very long, had no transisthmian railroad,

" Q / Munro, Intervention, p. 37; Du Val, Cadiz, pp. 137-138; Henry F. Pringle, Theodore Roosevelt %New York: Harcourt, Brace and Company, 1931), p . 304.

^Canal Report 1901, pp. 11-14; Du Val, Cadiz, pp. 144-145, 154.------and had poor terminal ports. The Panama route possessed

advantages of a good transisthmian railroad, good terminal

ports on both oceans, and a short fifty-mile crossing.

However, Panama's handicaps were her unhealthy climate,

huge amount of excavation, and the French canal conces­

sion. The last objection to the Panama route was the most

serious because the New Panama Canal Company wanted an

unreasonable price for its holdings. The Isthmian Canal •

commission valued the company's holdings at $40,000,000,

but the New Panama.Canal Company wanted $109,141,500.

According to the commission's findings the Nicaragua route

would cost $189,864,062 to build while Panama would cost

$144,233,358. If the United States accepted the French

company's offer, Panama's construction cost would skyrocket.

The commission called the company's offer unreasonable and

refused to recommend its acceptance. After this statement,

the Isthmian Canal Commission concluded that the Nicaragua

route was the "most practicable and feasible" for a United 86 States built canal.

At this point it appeared that Nicaragua would be

the site of the long-awaited United States canal. However,

the Panama route advocates did not give up the struggle.

. They concentrated their forces on Congress where the canal

authorization bill would originate. In the meantime, the

Canal Report 1901, pp. 257,. 263, 133

executive branch negotiated with Great Britain and

Nicaragua for new canal treaties.

Soon after President McKinley's December, 1898,

speech on the desirability of an American controlled inter-

oceanic canal, Secretary of State John Hay began treaty

negotiations with the British. He wanted to negotiate a

treaty which would allow the United States to build the 87 canal on its own. Hay found Great Britain willing to

make a new agreement to replace the Clayton-Bulwer treaty *

■ England, during the late 1890's faced increased European

challenges to her world position in the Boer War. She

could not keep up her efforts in all parts of the world at

the same time. Accordingly, she decided to abandon 88 supremacy in the Caribbean to the United States.

With both sides willing to deal, negotiations

started between John Hay and Lord Pauncefote, Great

Britain's Minister to the United States. Hay drafted a

treaty and gave it to Pauncefote in January, 1899. Great

Britain did not want to give up its share in the canal for

nothing and asked the United States to make concessions on

the Alaska-Canada boundary dispute. The United States did

------William Roscoe Thayer, The Life and Letters of John Hay (New York: Houghton Mifflin Company, 19157, Vol. 72, p. 217. / O O J. A. S. Grenville, "Great Britain and the Isthmian Canal, 1898-1901," American Historical Review 61 (October, 1955/, pp. 51-52. 134 not acquiesce to that,suggestion. Hay contended that the issues were separate and should be negotiated independently.

Great Britain eventually, because of her deep involvement in the Boer War, accepted Hay's view and the first Hay- 89 Pauncefote treaty was signed on February 5, 1900.

The 1900 treaty gave the United States the right to construct the interoceanic canal. However, the canal had to be neutral and governed by the neutrality rules adopted for the Suez Canal at Constantinople on October 29, 1888.

The last significant part of the treaty invited other 90 powers to adhere to it. The agreement reinstituted the neutral canal idea and that feature proved to be unaccept­ able to the United States Senate.

In the Senate the treaty ran into stiff opposition from those Senators, Henry Cabot Lodge for instance, who wanted an American controlled canal. Hay thought that the

United States would be foolish to fortify the canal. How­ ever, Senator Lodge and his close friend Theodore Roosevelt believed that the canal had to be fortified. Roosevelt pointed out that a neutral canal would be as much a threat as an aid to the defense of the United States. During a war, enemy ships could use the neutral canal to attack the

^^Ibidi; Williams, Isthmian Diplomacy^ pp. 301-302.

9 0 D u Val Cadiz, p. 114. 135

United States. Opponents of the treaty also objected to 91 foreign powers adhering,to it. Yet, the Senate, wanted the United States to build the canal and thus ratified the treaty with amendments. One amendment declared the Clayton-

Bulwer treaty ended while another prohibited other nations from signing the treaty. The third change allowed the

United States to use the canal for its defense without regard to the Suez neutralization rules. Great Britain 92 refused to accept these changes and the treaty died.

Both nations still wanted to form a treaty, how­ ever. John Hay wrote another draft agreement in April,

1901. The draft embodied the Senate's amendments of the first agreement regarding the Clayton-Bulwer treaty and the adherence of other powers. It also provided for

United States military police along the canal and did not prohibit fortification of the canal. Great Britain accepted these changes, but added some of her own; one of which

,stated that the rules governing the canal would apply to all interoceanic communications on the Middle American

Isthmus. ■ Other changes provided for equal canal tolls to all users and stipulated that only those nations which accepted the rules could use the canal. The United States government objected to the first and last British changes,

^Thayer, John Hay, Vol. 2, pp. 259-261, 216-220. Q O Williams, Isthmian Diplomacy, pp. 304-306. 136

but included them in the treaty in a different form. Great

Britain accepted this compromise and the treaty was signed qq on November 18, 1901.

The 1901 Hay-Pauncefote treaty gave the United

States what it wanted. The Clayton-Bulwer treaty was

abolished and the United States received the rights to

construct and control the interoceanic canal . Furthermore«.

■Washington was allowed to use military police to protect

the canal and there was no prohibition against fortifica­

tion. Thus the United States, as Theodore Roosevelt saw

it, assumed sole responsibility for the safety of the

canal. This obligation could be interpreted in many ways.

: . ' : . •The United States eventually used it to fortify the canal.

America's policy of a unilaterally controlled canal reached

fruition in the 1901 treaty.

Negotiations for a canal treaty with Nicaragua

began while the United States treated with.Great Britain.

Secretary of State John Hay had discussions with Luis F.

•Corea, Nicaragua's Minister to the United States, in the

year 1900. The talks led to the formation of a protocol on

■ December 1,;1900, in which both countries agreed to enter

into negotiations for a canal agreement as soon as Congress

authorized the President to acquire that Nicaraguan

^ I b i d . , pp. 306-309.

■ ^Malloy, Treaties, Vol. 1, pp. 782-784; A Compilation, Vol. .T5", pp. 6661-6662. ■ 137 territory necessary for the project. Both nations agreed that the canal route would be identical with that defined

in the United States-Great Britain treaty of February 5,

1900. The British treaty of 1900.was never perfected and the final Hay-Pauncefote treaty did not define a canal route. This left the United States and Nicaragua free to choose their own route. Significantly, the protocol pledged both nations, to begin serious canal negotiations.

Hay now knew that he could quickly begin treaty talks with , ■

Nicaragua the moment his British treaty was perfected.

Incidently, the Secretary of State signed an identical protocol with Costa Rica. He did not want the canal embroiled in a dispute between the two countries and there- 96 fore prepared to negotiate with both.

Also in December, 1900, Hay's department prepared a draft canal construction convention. This represented the

American canal position and was to be the basis for. negotia-. tions with Nicaragua. The draft treaty gave the United

States the exclusive and perpetual right to construct, own, and operate a ship canal through Nicaragua. The latter received a perpetual American guarantee of its sovereignty, independence, and territorial integrity. Nevertheless, no

^ Instructions, Vol. 22, pp., 171-172, Note of John Hay to William L. Merry, Ndvember 5, 1901, see enclosure for the protocol.

• ^Vincente Saenz, El Canal de Nicaragua (Mexico, D.-F.s Talleres Graficos "Michoacan," 1929)* p. 45. 138

change in Nicaragua's government, laws, or treaties would

be allowed to affect the rights of the United States under

the canal treaty without the consent of Washington. The

United States would build the canal at its own expense and

could use, free of charge, construction materials present

on Nicaragua's public domain. Nicaragua agreed to the

establishment of a Canal District six miles wide along the

entire length of the canal. The United States leased the

District in perpetuity from Nicaragua. Within the Canal

District Nicaraguan laws not contrary to the treaty would be-in force, but the United States received authority to

establish courts and regulations therein. Washington was

also empowered to use civil police and even its military

forces for the protection of the canal. No Nicaraguan citizen could be tried in Canal District courts for an

offense above the misdemeanor category. Nicaraguan courts

in the District could not try an American citizen for any- C thing above the same grade. Other parts of the draft

treaty gave all vessels of both nations the right to freely

sail the waters of Lake Nicaragua, outside the Canal

District, for as long as three months. The Treaty of

Constantinople's provisions governing the neutrality of the Suez Canal were included in the draft, but were subject to the terms of the draft. In return for the territory the

United States received from Nicaragua, the former govern­ ment agreed to pay the latter the rent of $1 0 0 , 0 0 0 a year as well as one million five hundred thousand dollars in

gold coin ninety days after the exchange of ratifications.

.The United States also assumed all claims of American 97 citizens against Nicaragua. These were the principal

points of Hay's draft canal treaty. The draft showed what

the United States meant by an American controlled canal.

By the terms of the draft the United States would have

virtual sovereignty over the canal it built and could use

its army to protect the work.

Luis Corea sent the treaty to Nicaragua in March, 98 1901, and discussions about it began in Managua. Discus­

sions did not start until the fall of 1901 when John Hay

asked William L. Merry, United.States Minister to Nicaragua,

to go to Managua and determine Nicaragua's attitude towards

the draft. Merry was soon engrossed in serious talks with

the Nicaraguan government. Nicaragua wanted to sign a

formal canal treaty, but Hay prohibited Merry from doing so until Congress approved canal acquisition. However, the

Secretary of State told the American minister that he could

sign a protocol embodying terms upon which the two nations would be prepared to conclude a treaty. The protocol would

^ Instructions, Vol. 22, pp. 172-180, Note of John Hay to William L. Merry , November 5, .1901, see enclosure for Hay's draft canal treaty. ‘ Qg Nicaraguan Legation, Vol. 4, Note of Luis Corea to John.Hay, November 15, 1901. . 140 have to be approved by President Roosevelt, but if approved 9 9 would greatly aid treaty negotiations.

Williart Merry followed the Secretary's suggestion and signed a protocol with Nicaraguan Foreign Minister

Sanchez on December 9 , 1901. The protocol was based upon

Hay's 1900 draft treaty, but contained many Nicaraguan modifications. The changes made the protocol totally unacceptable to the United States. The very nature of the protocol disturbed Secretary of State John Hay. Merry's agreement was not the type of protocol the Secretary wanted because it required ratification instead of the preferred

Presidential approval. The wording of the Merry-Sanchez : protocol seemed to call for the payment of six million dollars within ninety days after the exchange of ratifica­ tions in spite of the fact that no treaty might be con­ cluded at that time. The United States refused to accept such an inexact document. Furthermore, the American government objected to the elimination from the protocol of that part of the 1900 draft treaty which released the

United States from its obligation to protect Nicaragua's sovereignty if that republic joined a union or confedera­ tion. If this paragraph were left out of the future treaty the United States might end up defending all of Central

99 Instructions, Vol. 22, pp. 164-165, Telegram of John Hay to William L. Merry, December 7, .1901, and p. 171, Note of John Hay to William L. Merry, November 5, 1901. America. A Nicaraguan amendment to Article X of the 1900 draft stipulated that the United States would contribute to the defense of Nicaragua when the latter government called upon Washington to do so. The United States, Hay said, could not give such a far-reaching guarantee.. Nicaragua also modified those articles in Hay's draft dealing with

American rights in the Canal District. Article VII of the draft, in part, stated: "The sovereignty of Nicaragua and the laws of the Republic not inconsistent with this conven­ tion shall be in full force in the Canal District."

Nicaragua eliminated the words, not inconsistent with this convention. In addition, the Merry-Sanchez protocol stipu­ lated that trials for offenses committed within the District, would be subject to the courts and laws of Nicaragua. Hay completely rejected these changes because they would inhibit the right of the United States to operate the canal as it desired. He succinctly summarized the American posi­ tion on the issue by stating that the "essence of the proposed compact is, the absolute ownership and control of 101 the canal by the United States." Since Merry's protocol did not conform to that statement, it was rejected.

IQOlbid^, pp. 172-180, Note of John Hay to William L. Merry, November 5,>1901, see enclosure for Hay's draft canal treaty.

^ ^ Ibid., pp. 205-214, Note of John Hay to William L. Merry, January 10, 1902. 142

Nicaragua had been very satisfied with the Merry-

Sanchez protocol. President Zelaya pronounced the terms of

the agreement fair to both parties. He thought the United .

States received all necessary privileges for the speedy

completion of the canal while Nicaragua maintained her

sovereignty and territorial integrity. Nicaragua ’was dis­

appointed by the United States rejection of the protocol.

Nevertheless, she accepted Hay's proposal to resume nego- 109 tiations at "Washington on the basis of the 1900 draft.

Secretary Hay and Luis Corea had discussed a canal

treaty prior to the failure of Merry's negotiations. The

talks were unfruitful, but both men became familiar with " 103 the other's position. In the 1902 negotiations, John

Hay took the initiative and produced a draft treaty on

February twelfth. This draft was essentially the same as

that of 1900. Hay and Corea negotiated on this basis, but

could not reach agreement. Hay modified his draft in

accordance with the Nicaraguan's suggestions in March and

April, but he and Corea could riot sign a protocol. The

Secretary of State wanted Nicaragua to make a firm offer

so that it could be submitted to Congress. The latter was

102 Despatches Managua, Roll 5, Notes of Chester Donaldson to David J. Hill, United States Assistant Secre­ tary of State, dated December 14, 1901, and January 2, 1902; Instructions, Vol. 22, pp. 180-181,• Telegram of John Hay to William L. Merry, January 4, 1902.> 103 Nicaraguan Legation, Vol. 4, Note of Luis F. Corea to John Hay, November 28, 1901. 143. considering a bill to authorize President Roosevelt to acquire the canal. Hay already had a proposal from

Colombia and did not want to submit it to Congress without one from Nicaragua. In May, he declared that;if Nicaragua did not present its canal propositions very soon he would tell Congress that it was impossible to get a definite proposal from that republic.

Stimulated by the ultimatum, Luis Corea promptly submitted Nicaragua's proposals for a canal treaty on May

14, 1902. They were in the form of a draft treaty which

Corea said was not to be understood as Nicaragua's final proposal. The draft treaty.was modeled on John Hay's 1900 . proposal and was more generous to the United States than the Merry-Sanchez protocol. For example, the Canal Dis­ trict was now ten miles wide,instead of six, and only those Nicaraguan laws which did not conflict with the treaty would be enforced therein., The United States could enact measures necessary for the protection of the canal and land its armed forces there at any time. In compensation for these concessions, Nicaragua asked the United States to pay six million dollars in gold within ninety days after the exchange of ratifications as well as an annual rent of

$25,000. ■ The Nicaraguan draft, came close to what Hay wanted in a canal treaty. It must be noted, however, that this

•^•P^Ibid. , Note of Luis F . Corea to John Hay, May 14, 1902; Thayer, John Hay,.Vol. 2, pp. 300-302. 144

treaty was not Nicaragua's final proposal - Luis Corea knew

that his draft treaty would go to Congress and he probably 105 designed it to appeal to that b o d y .

John Hay transmitted Nicaragua's proposal to the

Senate while that body was in the midst of the, debate on

the Spooner bill. However, Hay informed Corea -that this

action did not mean the administration approved the draft

treaty. Hay found several parts of the treaty unacceptable.,

, He sent it to the Senate for that body to use in its study

of the two canal r o u t e s . The 1902 Nicaraguan draft

treaty was the last act in United States-Nicaragua canal

negotiations. Both parties were still prepared to nego­

tiate, but Congress passed a canal authorization bill

which recommended the Panama route. This event signalled

the defeat of Nicaragua's canal route.

The canal matter had been before Congress through­

out the 18901s and in November, 1901,Congress received the

report of the Isthmian Canal Commission. Now there was no

need to postpone action. In the House,,Representative

Hepburn produced a bill authorizing acquisition of the

Nicaragua route. The Hepbum bill was passed by the House

of Representatives on January 9, 1902. Senator John T.

^ ^ Nicaraguan Legation, Vol.. .4, Note of Luis F. Corea to John Hay, May 14, 1902, see enclosure for Nicaragua's draft canal treaty.

^■^Instructions , V o l ., 22 , pp . 234-235 , Note of David J. Hill to William L. Merry, June 24, 1902. • Morgan pushed the bill in the Senate, but ran into stiff

opposition from Mark Hanna, a Panama advocate. Hanna 107 stopped the bill in the Senate.

Meanwhile, the New Panama Canal Company offered to

sell its holdings for $40 million,, The new offer

prompted President Theodore Roosevelt to call the Isthmian

;Canal Commission together. The commission studied the

French bid and announced its decision on January 18, 1902.

In its supplemental report the Isthmian Canal Commission

stated that the Panama company's proposal reduced the cost

of that route by $70,000,000 and therefore removed the main

objection to the Panama route. The commission.decided that

the Panama route was the most practicable and feasible, and

recommended it as the place to build the United States

canal.109

Congress acted upon the commission's recommenda­

tion. Senator Spooner introduced a bill that authorized

President Roosevelt to acquire the concession owned by the

New Panama Canal Company and the land necessary for the \

project. The bill also authorized the President to

"*"^Du Val, Cadiz, p. 157.

108Ibid., pp. 155-156. 109 United States, Senate, Report of the Isthmian Canal Commission upon the Proposition of the New Panama Canal Company to Sell and dispose of all its Rights, Property, and Unfinished Work to the United States, Doc. No. 123, 5Vtn Congress, 1st Session, 1902, pp. 9-10.,

147

dissatisfied with Bogota's rejection of the canal treaty.

.Roosevelt decided to wait before considering Nicaragua.

His patience and judgment were rewarded when Panama

declared its independence from Colombia in November, 1903.

Shortly thereafter, the United States and Panama formed^the

Hay-Bunau-Varilla treaty which allowed America to construct 115 the Panama canal. The Nicaragua canal project ended at

that point. After 1903, the United States was only inter­

ested in preventing a foreign nation, from controlling .

Nicaragua's route and thereby threatening Panama.

■ Conclusion

The United,States government became interested in

the Nicaraguan canal when Nicaragua brought the matter to

its attention in 1825. America supported the canal there­

after because the waterway would aid her commerce and speed

communications with the Pacific coast. During most of the

nineteenth century, the United States encouraged its

citizens to build the Nicaragua canal. -Washington believed

private enterprise should undertake the project. As a

result, many American companies tried to build the isthmian

canal. All failed. Most floundered because they could not

n a • Elting E. Morison and John M. Blum, eds. The Letters of Theodore Roosevelt 8 Vols. (Cambridge, Massachusetts: Harvard University Press, 1951-1954),Vol. 3, pp. 598-599, Two letters of Theodore Roosevelt to. William H. -Taft and John Hay both dated September 15, 1903.

'1I5Du Val,. Cadiz, p. 383. : raise sufficient capital. The 1887 Maritime Canal Company of Nicaragua failed because it did not appreciate the engineering and construction problems of the gigantic enterprise. After 1880, the American government tried to financially aid private canal companies because it wanted to have a share in the canal. -Congress refused to approve the aid bills. The failure of private enterprise to build the canal convinced Nicaragua and America that only the

United States could successfully undertake the work.

The United States tried to protect Nicaragua's transit route during the nineteenth century. In the 1850's,

Washington entered the quarrel between the Accessory Transit

Company and Nicaragua in order to keep the transit func­ tioning . The intervention only angered Nicaragua and did not prevent the transit from being permanently closed.

After this failure, Washington concentrated on opening a canal and on keeping the canal route free from the Costa

Rica-Nicaragua boundary dispute. The United States wanted the canal to be in Nicaragua's territory and resisted Costa

Rica's attempts to appropriate the route for herself. In

1857, America opposed Costa Rica's attempt to acquire the ; canal. In 1888, President Cleveland arbitrated the boundary dispute and produced a final settlement which assured

Nicaraguan control of the canal route.

American canal policy during the decades after 1825 tried to keep a foreign, i.e.,•European, government from controlling Nicaragua's transisthmian route. In the early

1800's, Washington had neither the desire nor the power to control the canal for itself. The United States supported a neutral canal open to all nations on equal terms. How­ ever, Great Britain dominated the Nicaraguan transit by means of the Mosquito Protectorate. Washington wanted the protectorate abolished and the canal made neutral. The

•Clayton-Bulwer treaty did neutralize the canal and America contended that it also prohibited the Mosquito Protectorate.

Great Britain did not accept the American interpretation of the treaty until 1860. The United States sustained the neutral canal policy for the next twenty years with few '' exceptions. Its only canal treaty with Nicaragua, the •

Dickinson-Ayon convention, was based on this policy. The treaty protected American interests in the canal, but allowed the United.States no special privileges.

As America became a powerful nation, the neutral canal policy began to fade. It vanished in .1880 when

:President Rutherford B . Hayes initiated the policy of a

United States controlled canal. .Every succeeding adminis­ tration, except Cleveland's, followed this policy. James

G. Blaine and Frederick T. Frelinghuysen attempted, to abolish the Clayton-Bulwer treaty in order to allow a

United States controlled canal. They failed but Freling­ huysen succeeded in negotiating a treaty with Nicaragua which provided for an American canal. President Grover 150

Cleveland reversed Frelinghuysen*s policies, but was only

in office for eight years. John Hay succeeded where his

predecessors failed when he got Great Britain to abolish

the Clayton-Bulwer treaty. He negotiated with Nicaragua ;

for an American dominated canal, but found that nation unwilling to relinquish all her sovereignty, in the Canal

District. Nicaragua's nationalism and American inflexi­ bility doomed the negotiations and the Nicaragua canal.

The negotiations with Nicaragua demonstrated that Washington wanted essentially the same conditions in a canal treaty as. ;

it got from Panama in 1903. United States canal policy during the years between 1850 and 1903 was successful in keeping the Nicaragua canal out of foreign hands and in

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