I have received from my government the following information respecting certain propositions made to Colombia by the government of the United States, which the government of Colombia has not accepted. The American propositions were as follows: 1. That Colombia should grant the United States an option for the construction of an interoceanic canal, starting from the Gulf of Uraba on the Atlantic to the Pacific Ocean, through the region of the Atrato River. 2. That Colombia should give to the American government the right to establish coaling stations in the islands of San Andres and Providencia, which are located in the Caribbean Sea. 3. In consideration of the above, the United States to pay to Colombia $10,000,000 and to use their good influence for the settlement of pending differences between Colombia and Panama. Also to grant Colombia preferential rights for the use of the canal and the settlement by arbitration of the claims of Colombia against the Panama Railroad Company. The government of Colombia declined to accept the above proposals, insisting, at the same time, that all questions pending between Colombia and the United States should be settled by arbitration. It is evident that the United States are not going to permit any competitive canal scheme in Central America if they can help it. What will be the effect of the opening of the canal on Panamanian prosperity? The local merchants fear that the system of state-supply, which has prevailed in the zone during the constructional period, will be continued after completion and extended to the shipping which will pass through the canal, and that coal and ship-chandlery will become American government monopolies. Much depends on whether the Panamanian merchant will be allowed to import freely through Colon and compete in the supplying of the ships in transit. No serious development can be expected in Panama until the country is better provided with railways. The only other line in contemplation is one from Empire, on the Culebra Cut, to David, a town close to the Pacific near the far western frontier, in the province of Chiriqui. This line would be 289 miles in length, and branches from it are proposed to Anton, 5 miles, and to Los Santos, about 67 miles.