mine. He works two shifts of men instead of three. Besides, he has no expensive delivery system as we have. I pay $51,000 a year for wagon transportation alone. Mr. DRISCOLL. But goods could be sold more cheaply to persons who carry them away. Col. WILSON. That is the usual custom of business here. Mr. HAMILTON. Could a ship bound for a port, say, in China, sailing from Liverpool, take enough coal on here to carry it across the Pacific? Col. WILSON. It would not be profitable to do it. Mr. HAMILTON. Suppose it was not to its interest to sail as far north as San Francisco. Suppose it was bound for an Australian port, where would it coal west of Panama? Col. WILSON. At Tahiti. Mr. HAMILTON. What would be the cost of the same grade of coal that you would sell here at approximately $4 per ton at Tahiti? Col. WILSON. They would get New Zealand or Wellington coal. I can put these figures in the record. Mr. HAMILTON. The price of coal at Tahiti is high, is it not? Mr. HAMILTON. Some estimates were made some three or four years ago. I saw a series of articles in one of the magazines in which a comparison was made of the price of coal at Panama and Tahiti. My recollection is that the price of coal at Tahiti is a good deal more than double the price at Panama. Perhaps some of the gentlemen present may remember those articles. Col. WILSON. I remember the article, but I do not remember the figures about coal. I know what Wellington coal costs around Singapore, and my recollection is it is around $5 per ton. Mr. HAMILTON. I think the author of those articles estimated the price to be something like $11 per ton. Col. WILSON. Then it is scandalous, because my recollection is that it is 20 shillings around Singapore. Mr. HAMILTON. I think he figured out that the Suez route would have a great advantage over the Panama route to English ships sailing to Australian ports in the mere matter of coal. Col. WILSON. I do not think so, because English ships going to Australia go by way of the Cape of Good Hope, where the cost of coal would be not less than $10 per ton for Cardiff coal. The fastmail boats go through the canal. On that route they coal at Colombo and at Aden. The cargo route is frequently by the way of Good Hope for the Straits Settlements and points east. Mr. HAMLIN. Do you require the employees on the Canal Zone to trade with you? Col. WILSON. No, sir. Mr. HAMLIN. I understood you to say awhile ago that you handled no money in the trade with the employees on the zone? Col. WILSON. No, sir; with the exceptions I described. . Mr. HAMLIN. How do they pay you for the goods they buy from you? Col. WILSON. The employee goes to the timekeeper, and the timekeeper knows how much pay is coming to him. The employee says, "I want a $15 commissary book." The timekeeper takes up the roll and looks over it, and sees that the employee has $15 pay coming to him. Then he issues the book, and charges the employee accordingly on the pay roll. This pay roll goes to the examiner of accounts and the disbursing officer, who deduct that much from the employee's account, and when they come to settle with the employee that deduction is made when the settlement is made. The employee gets a coupon book, which is printed in coupons of convenient denominations. These coupons are taken up at the commissaries and stamped and sent to the auditor, who checks them up. Mr. HAMLIN. If he does not want to do that, he can draw his money at the end of the month, or whenever you pay him, and go and buy his goods at any place? Col. WILSON. Yes, sir. Mr. HAMLIN. Do you permit anyone but employees to buy from you? Col. WILSON. No, sir; with such few exceptions as are authorized by the Panaman Government. Mr. HAMLIN. You spoke of selling goods to tourists awhile ago. Col. WILSON. Well, these tourists are employed by the United States in some capacity or other. Mr. HAMLIN. Well, if these people who come here wanted books, would you sell them? Col. WILSON. No, sir. Mr. HAMLIN. And the natives living outside of the Canal Zone and not employed by the Canal Commission would not be sold anything at all? Col. WILSON. No, sir. Mr. HAMLIN. What is the reason for the issuance of these coupon books? Why do you do that if they are not required to trade with you? Col. WILSON. The principal reason was to identify the employee as an employee in order to fulfill our treaty obligations with the Republic of Panama. In the next place, our commissary employees would not have to handle cash, with a probable loss by defalcation and petty larceny. Mr. HAMLIN. Suppose some of your employees should not want to take the coupon books and preferred to take the money. Would you accept money from them? Col. WILSON. No, sir. Mr. HAMLIN. You would not accept the money that you paid the employee yourself? Col. WILSON. No, sir. Mr. HAMLIN. Why? Col. WILSON. Because the commission gives a coupon book, and it is provided for purposes of identification for reasons before explained. Mr. HAMLIN. Who requires that? Col. WILSON. The Isthmian Canal Commission. Mr. HAMLIN. Do you know the reason for that requirement? Mr. HAMLIN. Yes. You stated if an employee who worked out his month and drew his money offered you the money that the commission paid him for services you would not sell him goods and take his money for the goods. Col. WILSON. No, sir; I would not. Mr. HAMLIN. Why would you not do that? Col. WILSON. In the first place, if the money was handed over to the negroes in the stores who have no financial standing and who can not be bonded it might be stolen. Mr. HAMLIN. What might be stolen? Col. WILSON. The money. Mr. HAMLIN. From whom? Col. WILSON. The clerks in the commissary might steal it. A very large number of our clerks are ordinary Jamaica negroes, who get about $30 per month. Mr. HAMLIN. Then the real reason for it is to prevent the clerks in your department from handling any money? Čol. WILSON. That is one of the reasons; and the other is that, in order to carry out our treaty obligations with Panama, we have a set of regulations which we are required to follow. The CHAIRMAN. The coupon book is merely an order, anyhow? Col. WILSON. Yes, sir. For instance, the coupon is good for 50 cents in merchandise. Mr. HAMLIN. Is not the real reason to require the employee to spend whatever money he makes with you? Col. WILSON. No, sir. Mr. HAMLIN. These coupons would not be recognized by other stores? Col. WILSON. No, sir; there is no desire to exploit the employee in any way whatever, and 90 per cent of the men buy coupon books every month. Mr. HAMLIN. Well, they know that they can not buy goods at your department without these coupon books. Is not that the reason? Col. WILSON. Yes, sir. Mr. HAMLIN. Have you ever figured out what percentage of the wages of these employees is represented in these coupon books which are finally turned back to you? Col. WILSON. About one-sixth of it, on an average. Mr. HAMLIN. In order to get the information on the record, what do you mean by your silver employees and your gold employees? Col. WILSON. The gold employees are usually the people who were put on the gold roll at the beginning, and they are usually white Americans. Some of them are foreigners, and there are some American and West Indian negroes on that roll. The silver employees embrace the large class of common laborers-Spaniards, Italians, Greeks, and the ordinary negro laborers. I understand that there are few white people on the silver roll at the present time. Mr. HAMLIN. I was in the commissary at Colon to-day and noticed over one door the sign "Gold employees" and over another door the sign "Silver employees." Have you a different kind of goods that you sell gold employees from those you sell to the silver employees? Col. WILSON. We do and do not. The silver employees are people who have been brought up in an entirely different way; they have different tastes in many things; and we carry many articles down there on the silver side that we do not carry on the gold side, and some things on the gold side that we do not carry on the silver side. Some three or four years ago there was a good deal of complaint because we did not sell fresh provisions and cold-storage goods to the silver employees, but for the last two years we have been providing the silver people with a chance to purchase cold-storage goods, so at the present time there is not much difference between the goods sold. Mr. HAMLIN. Then the reason for these entrance labels is merely a matter of convenience in designating the kind of goods in the store? Col. WILSON. It works out pretty much that way; each one has his own particular kind of goods. Mr. HAMLIN. And there is no discrimination as to price? Col. GOETHALS. The real discrimination is as to color. Mr. HAMLIN. And that is the real reason-separating the races? Col. GOETHALS. Yes, sir; we have been obliged to separate them. The CHAIRMAN. In any event, there must be a difference in the kind of food demanded by the different people? Col. GOETHALS. Yes, sir. Mr. HAMLIN. But there is no discrimination in the matter of prices? Col. WILSON. None whatever; every article has the price printed in letters 1 inch high just below the article and tacked to the shelf on which it stands. Mr. HAMLIN. If this department should be discontinued-and in answering this question I confess you will be answering again the same question you answered for Mr. Hamilton--if your department should be discontinued there would be a great loss to the Government on account of the plant you have already erected? Col. WILSON. Yes, sir. Mr. HAMLIN. But if they should be continued, and you think it necessary to continue them in order to facilitate the operation of the canal, there would be no loss so far as the plants are concerned? Col. WILSON. I do not think there would be. Mr. HAMLIN. And, as a matter of fact, your department has been self-sustaining up to date? Col. WILSON. Yes, sir. Mr. HAMLIN. Is it your judgment that the department would continue to be self-sustaining? Col. WILSON. Yes, sir. Mr. HAMLIN. Taking your estimate as to the number of employees you would have to supply and the ships and troops you would have to supply, you could adjust your department and continue it as self-sustaining? Col. WILSON. Yes, sir. Mr. HAMLIN. When you make this classification of gold and silver employees, is there any difference in the character of money in which they are paid? Col. WILSON. All are paid in cash. Col. GOETHALS. Yes, sir; the silver employees, with the exception of the Spaniards, are paid in Panaman silver, while the gold employees are paid in gold. Mr. HAMLIN. Why do you pay some in Panaman silver? Col. GOETHALS. In 1907 the men were paid semimonthly, so we had two pay days in each month. Each pay day meant the loss of two days work. We had no agreement with Jamaicans or the West Indian Islanders that we would pay twice a month, but were under obligations to pay the Spaniards twice a month. With a view of securing the two extra days of labor per month by paying off once a month we took up the matter with the Spaniards. The banks in Panama charged a discount to change their money into gold, and then another discount was charged to change it into Spanish drafts. Eighty per cent of the Spaniards on the zone very promptly stated that if we would pay them in gold they would take the payments once a month, and on that account we carry the Spaniards on the silver roll but pay them in gold, except that we pay them once a month instead of twice a month. Mr. STEVENS. Col. Wilson, you and Col. Goethals have alluded to an agreement with the Panaman Government, by treaty or Executive order, with reference to two situations, as I understand it: First, to limit the purchases by employees in some way so that the Panaman merchant may have as much benefit as possible from the trade of the employees; and, secondly, to some sort of tariff or tax arrangement by which the Panaman Government receives some of the revenue. derived from taxes on imports into the zone. Will you make a statement as to these two situations? In making that statement, please state the effect this would have on the future continuance of this business in the operation of the canal. Col. GOETHALS. In December, 1904, the Secretary of War visited the Isthmus and entered into an agreement with the Panaman authorities covering certain specific features concerning customs and the operation of the commissary. At that time the question of the Panama Railroad commissary, which had always existed for the employees of the railroad, was brought up in response to a complaint by the Panama merchants, and an agreement was entered into that the privilege of purchasing from the commissary would not be extended to those accustomed to tropical climates; that the labor employed on the canal and the Panama Railroad should not be allowed to purchase from the commissary. In undertaking to carry out this provision it was found that the merchants of Panama and Colon were not in a position to supply the things required by the common laborers, and, on representations by Mr. Stevens, the question was taken up with the Secretary of War, and it was then decided that the benefits of the commissary should be extended to laborers until the merchants of Panama were in a position to handle the trade. In 1907 the Panama merchants objected again to the commissary, and demanded that the provisions of this agreement be enforced. An investigation into the matter by Mr. Jackson Smith led to a report showing that the Panama merchants were not in a position to handle the laborers' trade, and that it would be a detriment to the labor on the canal to enforce it. That limited the laborer to the purchase of ordinary necessities, but deprived him of the right to purchase cold-storage supplies. That agreement, originally entered into between the Secretary of War and the Panaman authorities, and approved by the President, contemplated import duties to the extent of 10 per cent on the necessaries of life, and that no greater taxes should be imposed without the consent of the United States. A year ago the Panaman authorities found that they did not get sufficient revenue to run their Government and that additional revenue would be required, so they secured authority from the United |