John A. Logan to To the executive power. Saloon of sessions of the Senate chamber. Managua , March 4, 1882 . A. H. RIVAS, P. JOSÉ MARIA ROJAS, S. J. M. GASTEAZORO, V. S, April 3, 1882

No. 27. Mr. Logan to Mr. Frelinghuysen.

Sir: Under cover of this dispatch, I inclose a copy of the Gaceta Oficial of Nicaragua, of March 11 ultimo, which contains the contract of that government with Monsieur A. P. Blanchet. I also inclose, marked No. 2, a translation of the same, which, having been hastily made to catch the mail, may contain some unimportant errors.

My dispatch No. 280 informs you of the execution of this contract. A careful reading of Articles 25 and 27 will show you that the rights of the American Company have been expressly guarded. For your fuller understanding of the matter, I make a brief résumé as follows: Article 14th of the American concession stipulates that the company shall construct a canal of certain dimensions between the lake of Managua and the navigable part of the Tipitapa River, within the term of three years from the beginning of the interoceanic canal work. Upon the completion of this short canal, the government is to take possession of the work, and thenceforward pay all expenses of maintenance, operation, &c., while the American Company is to have the unrestricted right of free use during the life of their concession.

When the American Company failed to begin the work within the specified time, and it became apparent that the concession was about to lapse, the Government of Nicaragua began to cast about for means to canalize the Tipitapa River, which connects the lakes of Nicaragua and Managua. The deepening and widening of this river, now too shallow for navigation, would insure interoceanic communication through Nicaragua. Small vessels could ascend, it is claimed, the San Juan River from San Juan del Norte on the Atlantic, and passing through the above-named lakes by the canalized river would reach the small port of Leon Viejo, on the western shore of Lake Managua. From thence there is soon to be completed railroad communication to the port of Corinto on the Pacific.

The government could hardly be blamed for wishing to accomplish an end of such importance, and preliminary negotiations had been had with Monsieur Blanchet for the construction of the canal before the late visit of Captain Lull to Nicaragua. When the latter arrived, he found no difficulty in getting an extension of the original concession, modified, however, as stated to you in my No 280. The sum of $200,000 stipulated by the government is ostensibly for the purpose of meeting the expense of a repurchase from Blanchet.

However, as you will perceive, the American concession is carefully protected in the Blanchet contract, so that no prejudice to American interests can result therefrom.

I have, &c.,