The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1891-01-12
TIE NICARAGUA CANAL.

The second step in the work of construct
ing The Nicaragua Canal was taken on Sat
urday last, when Senator Sherman pre-
scented to the Senate unanimous report in
favor of aiding the enterprise. The first
step was taken nearly two years ago, when
President Cleveland, after long and eXhaus-
tive consultations with committees of both
houses of Congress, signed the Federal
charter of the company in February, 1889.
AT that time the cost OF the enterprise was
eS timated at S65,000,000, no part of which
was TO be furnished. directly or indirectly,
by the United States. Now the full cost of
the work is estimated by the Senate Com
mittee on Foreign Relations at S160,000,000.
and the committee recommends that the
United States should indorse the company's
bonds for 10000 of this sum.
The recommendation is based on the fact,
which will not be disputed, that without a
Government guarantee the bonds would
have TO be sold at large discount, and to
meet the interest and sinking fund for their
redemption, the company would have to
charge higher rates of toll than would be
necessary if the bonds were marketed at
par. The details CT the proposed plan are
simple. On the passage of the bill, the COM
pany is to deposit in the Treasury at Wash
ington the whole issue Of bonds, to wit.
$780, 600, which are to be issued to the
company as the work progresses. Inc
bonds are to bear per cent interest, and In
case the company defaults OIL the Interest,
the United States is TO pay it. 10 secure
the Government against loss, the company Is
to give a first mortgage on all its property,
and to deposit in the Treasury as additional
security 100000 Of tile authorized $780,,
000,O 600 stock Of the corporation. This
stock the Government is to be at liberty to
buy at par, in the event of the company be-
coming indebted to it Tor interest moneys
advanced, and the contemplation of the
plan is that under this arrangement the
Government may, and probably will, even
tually become the chief owner OF the canal,
as the British Government is the chief
owner of the Suez Canal.
1t win be seen that this is 4 repetition of
the arrangement by which the Pacific rail-
roads were built, with a modification which
the subsidy bond complication has sug-
gested. In the case of the Pacific railroads
the Congressional Committee reports that,
owing 10 circumstances which were unfOre-
seen when the acts Of 1862 and 1864 were
passed. it is beyond the power Of the COM
paaieS to repay to the Government the
moneys advanced for interest at the time set
for the repayment; and yet there is no pro-
vision of law by which the Government can
substitute Itself Tor the corporations Il
owner Of the roads. Proceedings in the ma
ture Of foreclosure would probably be in
etiectual, and would certainly fail TO COM
mand the aSse Of Congress. Had the
Government reserved the right to take the
stock Of the companies at q given price no
difficulty would have presented itself. In
the case OF the Nicaragua Canal that reser-
walton has been made If the company gets
into the position now occupied by the Pa
cife roads the Government may, if il
pleases, purchase the 0,OOO,OC0 Of stock de-
posted in the Treasury at par and take the
place of the company as owner OF the prop
erty.
1t is hardly likely that measure of this
importance will become a law at this ses-
sion. Members will like to think over it.
Still, a report in which all the members Of
a leading committee of the Senate ac-
guessed unanimously can hardly encounter
serious opposition.
On this side Of the continent people may
object TO this or that detail, but the view
generally taken Will probably be that minor
defects in the plan should be overlooked in
view OF the vita. Importance of the main en-
terprise. A Nicaragua Canal would be of
untold value to this port. Il would enable
US to place cur wheat in European ware
houses IN one-third Of the time it now takes,
or even less. 1t would give us communica-
ton with New York in something like
twenty-five days without breaking bulk
For such gain California can afford to ac-
cept any plan, however open to criticism in
details, and to acquiesce cheerfully in any
financial arrangement.