Los Angeles herald., 1891-01-11
UNCLE SAM FOR SECURITY.
The United States Asked to Back the
Nicaragua Canal for &1OO,OOO,OOO.


Nicaragua Canal for S1OO,OOO,OOO.
WASHINGTON, Jan. 10.-The report of
the committee on foreign relations on
the Nicaragua canal bill, presented in
the senate by Sherman, this morning,
recites the importance of the project,
and treats in detail of the history of the
last negotiations on the subject. The
report says the work of private corpora
tions on the canal has advanced with
great rapidity that the total cost of the
project will be but one-third more than
the Welland canal, and that it will be
completed within six years. The full
cost of the work is set down at $780,
600, 900. The committee feels that to
secure this amount of money, the COM
pany will be obliged to sell it's bonds at
large discount; consequently it will
be necessary to impose heavy tolls on
shipping, and as the canal would really
constitute part of the coast line of the
United States, this burden would be
largely borne by the American people.
Therefore the committee believes it
to be the part of economy, aside from
considerations of national policy. for the
United States to guarantee the bonds of
the company to the amount of 500, ,000,-
600, so they may be sold at par, with
the result of reducing, first, the actual
expenditures Of the company, and sec
ond, the tolls, which would otherwise
amount to $500 900 annually.
In it's present form the bill meets the
objections raised by President Cleve-
land to the treaty negotiated in 1854, as
it does not commit the United States to
the defense of the territorial integrity
of the Central American states.
The conclusion OF the report, which is
unanimous, says:
'It is believed by your committee that
the United States will not be called
upon to pay any portion of the principal
or interest of the bonds, but that the
work itself will amply repay all its cost,
and yield its benefits not only to the
people of Nicaragua and Costa Rica, but
the civilized world. If it appears at any
time that the interests of the United
States are in jeopardy from any cause,
it can purchase majority of the stock
and become the controlling owner OF the
canal by paying its own bonds to an equal
amount, and the property, tolls, income
and profits of the canal will be ample
security against the obligations it as
sumes."
The bill reported provides that the
capital stock of the company be limited
to 500, 0,00O.O 900, and to complete the
canal the company is authorized to
issue bonds to an amount not
exceeding the capital stock, dated
January /, 1891, and payable
January 1, 1911, with interest at
3 per cent, payable quarterly. The
bonds are to be secured on first mort
gage ON all the property of the company.
The bonds are to be deposited in the
United States treasury and issued to the
company only as work on the canal pro-
crosses. The bonds are to bear the
guarantee of the United States for the
principal and interest, as it accrues, and
the company is to issue no other bonds.
The secretary is authorized to paw the
interest on the bonds a: it becomes due,
if not paid by the company, and an in
definite appropriation for that purpose
is embodied in the bill. If the company
fails to pay the interest as it falls due.
and payment thereof is made by the
United States, the company is required
to pay to the United States the amount
paid with interest annually at per
cent, until paid. The stock is to be is
sued as follows:
First-The amount of stock which.
with the amount of bonds at par value,
to be issued by the canal company for
expenditures prior to January, 1891,
shall aggregate $7,000,000, may be re-
tained by the stockholders, and be nom
assessable.
Second-The amount of shares stipu-
lated to be delivered to Nicaragua and
siOns.
Third-Seventy million dollars of
shares to be held in the treasury as a
pledge to the United States, as a guar
antee of the repayment on demand. of
any sum paid under it's guarantee, with
interest on sums so paid, at the rate of
4 per cent; and the secretary of the
treasury, on behalf of the United States.
may, at his discretion, vote such stock
in person or by proxy, at any stockhold-
ers' meeting, and the United States
shall. at any time before the ma
turity of the bonds, have
option, at the discretion of congress, to
purchase at par value all or any part of
the stock so hypothecated. The United
States may apply in payment for such
stock the sums paid under the guaran.
tee, and the remainder of the purchase
price of the stock shall be applied either
for the REDEMPTION OF bonds, or for
sinking fund.
Fourth-The residue of the stock
shall be issued by the canal company,
only after it shall have been subscribed
for, and it shall only oe offered for sub
scription, when, in the opinion OF the
president of the United States, the pro-
ceeds OF the installments of the mort
gage bonds shall be insufficient to meet
the current requirement of the COM
pany. The original act OF incorporation
is to be amended 80 that six of the
fifteen directors of the company shall be
appointed by the president by and with
the advice and consent of the senate.
These government directors are not to
be stockholders, and are to report direct
to the president.
Public Buildings.
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