Hall to George D. Bayard, July 22, 1885

Mr. Hall to Mr. Bayard.

Sir: With my dispatch No. 156 of the 10th of August, 1883, I transmitted a copy of a decree, dated the 4th of the same month, relative to the construction of a railroad from the Atlantic coast to the capital of Guatemala. The decree established a capitation tax of $40, the nominal value of one share of the stock on all persons, foreigners excepted, whose incomes or earnings were estimated at not less than $8 a month, the tax to be paid in quarterly installments of $1 each.

The management of the work was intrusted to a board of three directors 5 they organized and commenced their labors early in 1884, the board received the quarterly tax payment, employed a corps of engineers to make the survey, and entered into contracts for construction.

The enterprise progressed satisfactorily to all appearance for about a year; the taxes were collected from the poorer classes; the wealthy were called upon to subscribe for stock proportionate with their means; a respectable sum was thus accumulated in the International Bank of Guatemala to the credit of the board, * * * to be applied upon the first emergency to any pressing requirement. Very soon after the death of Barrios, the balance remaining in bank was appropriated for other purposes. The decree of the 4th of August, 1883, was revoked, the tax was abolished, the board of directors dissolved, and the liquidation of affairs of the railroad was turned over to the department of public works.

Soon after the organization of the board of directors proposals to build the road were presented by different parties, but the only contractors who have attempted to carry out their engagements are Shea, Cornick & Co., who are represented in this city by Dr. D. P. Fenner. They undertook the construction of the first 60 miles of the road from the Atlantic coast—westward. They have completed and have received payment for 12 miles. In addition, there are 4 miles finished and ready to be received, and a large amount of disconnected work which would be ready for reception in the course of a few months. According to their contract they are to be paid upon the completion of each one mile of the road.

Since the Government assumed the obligation of the late board of directors matters have gone badly with the contractors; they appear to be absolutely dependent upon prompt payment for finished work to enable them to pay their workmen; a month’s, and upwards, wages are now due to 300 men, most of whom are said to be American citizens, and the contractors have not even the means of supplying them with food. The agent, Dr. Fenner, has appealed ineffectually to the Government for payment of the money due; and at his instance, as set forth in his letter to me, I have made known to the President the situation of the contractors as regards their laborers, and have urged upon him the necessity of his giving the matter his attention. * * *

Upon receipt of a letter from the consular agent at Livingston, informing me that unless relief by the payment of their wages were promptly afforded, the laborers would be left destitute and without food, I called upon the President again and insisted that of the sums due to the contractors an amount sufficient to pay the wages due to the men and their passages to New Orleans be supplied at once. The result was a promise of the payment of $25,000 the next day. The promise was fulfilled two days later, and yesterday the amount was forwarded to its destination.

At the interview referred to, I stated to the President that as regards the terms of the contract with Shea, Cornick & Co. I had nothing to do; that my mediation was solely in behalf of the laborers, who, it had been represented to me, were exposed to destitution and sickness in the swamps of the coast through the failure of the Government to fulfill its obligations with the contractors, and that unless relief were furnished immediately, I should be compelled to apply to my Government for a naval vessel to transport the men to the United States.

The Government now proposes to rescind the contract upon equitable terms; with that object they have appointed William Nanne, an expert in railroad matters, to enter into negotiations with the agent of the contractors. It is to be hoped that these negotiations will result in a satisfactory settlement, and an absolute winding up of the affair. The Government is not in a situation to fulfill its part of the contract, much less to build the road with its own resources.

I have, &c.,