ipated. Therefore, when you arrived upon the Isthmus and found this condition, you thought yourself justified in correcting the evil which has grown out of that situation?

Mr. SHONTS. I felt, from what the governor told me, that the prices. had reached such a point that they would be called unreasonable within the meaning of this paper that he referred to, and that there could be no proper objection made to our opening our commissaries and offering these colored men the benefit of our supplies at our cost prices, plus the per cent that we add for handling and freight, etc.

Senator MORGAN. Did the prices of supplies there reach this point that you speak of in consequence of the conduct of the merchants at Panama who furnished provisions?

Mr. SHONTS. Well, Senator, I do not see how they could have helped but know that when we dumped ten or twelve thousand new population in that territory, with the class of people that they have there that do not create a surplus, it would necessarily result in a scarcity of food supplies. I was told, for instance, with regard to the fellows that used to fish every day out in Panama Bay in order to get enough money to live on, that the price of fish went up so high that they would fish only about once a week; they could get enough for their daily catch to keep them. So that they did not take advantage of the high price of these food supplies to make money; they would only fish enough to get the same amount of money that they had been getting, and would rest the balance of the time.

I had the same experience in Baldwin County, Ala., when I first went down there. My wife had been building up our place, and she had been paying the help (which was all colored) half a dollar a day. I said: "Why, I am ashamed to pay people half a dollar a day. I do not think anybody else is spending any money right around here, so what is the matter with my paying them a dollar a day? That is little enough to pay anybody." So I raised the wages on our place to a dollar a day, with the result that whereas Mrs. Shonts had been getting six days' work a week out of her colored help there in Alabama, I only got three. All they wanted was the $3. [Laughter.] The same principle governs down on the Isthmus. There was no surplus of food supplies.

Senator MORGAN. Is it not your observation, in reference to the class of people who are digging this canal and who are relied upon to dig it, that that is the universal rule--they will work long enough during the week, for instance, to get enough to live upon and enjoy themselves in their own way, and then, instead of going on and attempting to add to their earnings, they will stop work and go to frolicking and resting?

Mr. SHONTS. Senator, that seems to be the vital weakness in the class of labor that we are now using.

Senator MORGAN. I will add to that, that it is the vital weakness of the class of labor that we have to deal with in the South.

Senator DRYDEN. And that practically necessitates your dealing with these people by day labor rather than by week labor? You can not hire them by the week, in other words, and calculate or depend upon their doing a week's work? They will work three days, for instance. if they get the necessary amount of money to live upon?

Mr. SHONTS. They only seem to have an ambition to get a certain amount of money, and when they get that they rest.

The CHAIRMAN. You pay all of your men there by the hour, do you not?

Mr. SHONTS. We pay all labor by the hour. And it seems rather a hard thing to say, but I believe it is true-I believe that one of our troubles there to-day is that we are paying the common labor too much money. I believe that if we paid them less we would get more work out of them; and I believe that if we could work them ten hours a day they would be better physically and better morally, and we would get more work per hour out of them.

The CHAIRMAN. Do you not think that would apply to the white as well as to the colored labor?

Mr. SHONTS. Well, the whites do want to work, to a large extent, ten hours a day.

The CHAIRMAN. But they only get paid for eight hours if they work ten, do they not?

Mr. SHONTS. No; under the present rule if they work ten they get time and a half for the extra two hours.

Senator SIMMONS. You allow them to work ten hours if you want to, do you not?

Mr. SHONTS. No; not under the law. We are subject to penalties if we do.

Senator SIMMONS. Is there a provision in terms in that treaty or contract which you spoke of which requires the Panamanian merchants to furnish provisions at a reasonable price as a condition to this Government not establishing a commissary out there?

Mr. SHONTS. That was not set forth in terms; no, sir. The infer

ence was

Senator SIMMONS. You just interpreted it in that way?

Mr. SHONTS. Yes; the inference was that if the prices became unreasonable-the word "unreasonable" was in that clause-we could open our commissaries.

Senator SIMMONS. Yes.

Mr. SHONTS. And I made the interpretation that the prices that the governor quoted to us were so unreasonable as to justify us in ordering our commissaries to be opened. So the next morning, I think it was, or at least the second day, we started our men out to locate places for commissary buildings along the line of the canal.

Senator SIMMONS. You said that these high prices which you named a little while ago of eggs and chickens and things of that sort—were payable in gold. Are you not mistaken about that? If chickens cost $1.50 each and eggs $1.50 a dozen in gold, that would be $3 in silver.

Mr. SHONTS. Well, I got these prices from Governor Magoon, and Governor Magoon does all his houskeeping transactions there in gold, and I inferred that that was on the gold basis.

Senator SIMMONS. But you said at that time that you were supplying the gold men from the Government commissaries. Therefore they did not have to buy from these merchants.

Mr. SHONTS. They did not have to buy from them, but commissaries did not keep chickens and fresh meats.

Senator SIMMONS. The laborers had to buy from them, and they were paid in silver?

Mr. SHONTS. Yes.

Senator SIMMONS. And it would seem to me that the reasonable

inference is that these prices which you have mentioned were silver prices rather than gold prices.

Mr. Ross. I think they were.

Mr. SHONTS. Well, possibly they were silver. It is only an inference of mine.

Mr. Ross. They were high, even at that.

Senator SIMMONS. Oh, of course, they were enormous, but if those were gold prices they would be simply out of reason.

Mr. SHONTS. The result of it all was that the governor said to me that in many instances these poor fellows could not earn enough to buy food to live on. That was the upshot of it all, and I was trying to get at the results more than to remember the exact prices of the commodities.

Senator SIMMONS. At $3 a dozen it would take over three days' work to buy a dozen eggs.

Mr. SHONTS. They would not buy eggs on that basis, Senator, and were not buying them.

Senator SIMMONS. Everything else was in proportion, I presume? Mr. SHONTS. Yes; everything was in proportion, so he said. The result of that was that we at once ordered the location of commissary stores all along the Isthmus, and we ordered our men in charge of the commissary to commence getting requisitions to feed these laborers and take care of them.

Senator SIMMONS. I have seen a statement to the effect that these men had to go out in the swamps and get cane and wild bananas because they could not afford to buy these other things. I thought that was one of these exaggerations that we have had about the conditions down there, but it appears to have been absolutely true.

Mr. SHONTS. But since that time there seems to have been no complaint, and I will say that to-day they are not patronizing our commissaries to any large extent. They are certainly getting their subsistence at some place, and they must be getting it very much cheaper than they could from us.

Senator SIMMONS. Have not the merchants reduced their prices? Mr. SHONTS. I think that is the result.

Senator CARMACK. Are there any American merchants established there?

Mr. SHONTS. Not that I know of.

Senator DRYDEN. These high prices, then, you think, were the result of a monopoly there?

Senator MORGAN. Are there many Chinese merchants there?
Mr. SHONTS. Yes, sir; there are a great many.

Senator MORGAN. A great many?

Mr. SHONTS. Yes.

Senator MORGAN. They are great fellows for maintaining a monopoly. Mr. Ross. The American Trading Company (Limited) has a store down there.

Mr. SHONTS. Where; at Panama?

Mr. Ross. At Colon, and I think at Panama, too.

Mr. SHONTS. Mr. Ross advises me that there is one American firm down there.

Senator SIMMONS. Do you mean to say that there is only one American firm doing business in the whole Isthmus?

Mr. SHONTS. That is all that I know of.

Senator MORGAN. Now, Mr. Shonts, that brings up the proposition, if the committee will permit me a moment, about which I want to get your opinion. It is my judgment-of course, a very poor one-that that Canal Zone will never be properly governed with reference to the digging of this canal until the Government of the United States has absolute charge of every foot of it in every respect; and that no person ought to be permitted, for instance, to conduct a mercantile business in that Zone except under the express license, carefully considered, of the Commission.

I might extend this remark to various other occupations that I suppose are being followed there, and say that the Government of the United States ought to be able to locate there proper conveniences for the housing and accommodation and health and pleasure of all persons who are employed in that service, from the highest to the lowest. I believe that no outside man of any sort from any country should be permitted to come in there and locate in that Zone in competition with the men that we put there, and that the Government should regulate and control all of the men who are employed there in any sort of business, catering to the people who are there, supplying them with food and clothing, and the like of that, so that their charges should not be exorbitant, and so that their licenses will be revoked and they will be dismissed from that place and driven out in the event of their attempting to impose upon the laborers or any other class of people who may be there.

I state that as my general idea-that both for the success of the work and for the preservation of the machinery and of all the immensely costly material that we have there, it is necessary that there should be strong if not absolute power exercised there, summarily, in order to control the men with whom you have to deal. In my judgment, according to the accounts that I have they are about as uncontrollable and as mischievous a rabble as ever collected at any place in the world, collected in consequence of the inducements for such people to go there to speculate upon the laborers and others who are receiving large amounts of money, and are making progress in leeching them and enriching themselves. The Chinese merchants that you mention as being very numerous are, in my judgment, a dangerous class of men unless they are controlled by absolute authority.

I would not think of taking a Chinese merchant before a court in the Isthmus and indicting him for swindling a negro from Jamaica or anywhere else. I would not think of doing that. I would very much rather take a bamboo and run him out of that place, and put a sentry there to tell him that he must keep out.

In other words (or, rather, to sum up my conclusions about it), I think that the Isthmian Canal Zone ought to be placed under the same regimen with a military reservation in the United States, and that until we take that course we will have no security that we are going to do things right in the Zone. That is my judgment. Have you any criticism to make of it?

Mr. SHONTS. I have often thought that the establishment of military rule there would in many ways protect the men and enable us to control them more efficiently.

Senator KITTREDGE. Mr. Shonts, again referring to the question of the construction of a treaty concerning the commissary department, I

read from page 11 of the report of the Secretary of War under date of January 12, 1905, as follows:

"The Government and merchants of Panama regard with considerable anxiety the construction which is to be put upon Section XIII of the treaty referring to the treaty between this Government and the Republic of Panama, which was ratified in February, 1904-" which reads as follows:

"The United States may import at any time into the said Zone and auxiliary lands, free of custom duties, imposts, taxes, or other charges, and without any restrictions, any and all vessels, dredges, engines, cars, machinery, tools, explosives, materials, supplies, and other articles necessary and convenient in the construction, maintenance, operation, sanitation, and protection of the canal and auxiliary works, and all provisions, medicines, clothing, supplies, and other things necessary and convenient for the officers, employees, workmen, and laborers in the service and employ of the United States and for their families. If any such articles are disposed of for use outside of the Zone and auxiliary lands granted to the United States and within the territory of the Republic, they shall be subject to the same import or other duties as like articles imported under the laws of the Republic of Panama.""

Senator CARMACK. That is the clause he had reference to.

Senator KITTREDGE. That is section 13 of the treaty between this. Government and the Republic of Panama, ratified about the time I have stated. Is that the section to which you refer?

Mr. SHONTS. No. What I referred to was what I understood Governor Magoon to say was Secretary Taft's interpretation of probably that clause in the treaty.

Senator KITTREDGE. I will read further in just a minute. I was wondering whether this was the provision that you had in mind.

Mr. SHONTS. I presume that that is the clause in the treaty that Secretary Taft interpreted, and it was the interpretation that we had before us.

Senator KITTREDGE. Now I read further from his report:

"After conference with Admiral Walker, General Davis, and Mr. Wallace, the chief engineer, I became convinced that we should restrict the application of Section XIII, so far as it affects food supplies, articles of clothing, and merchandise for the use of officers and employees of the Government, of the Canal Commission, and of the contractors engaged in work on the canal, and in the Zone, to those who were brought from the Temperate Zone, who could not obtain from the ordinary stores in the Isthmus the food supplies, clothing, and other things to which they were accustomed and which they regarded as essential to their living. It did not seem wise for the Conimission itself or through its contractors to establish a commissary for the feeding of the ordinary day laborers on the canal. They must necessarily come from a climate like that of the Isthmus, and must be used to the food which the common people of the Isthmus use. The Commission should, bowever, hold in terrorem over the merchants of the Republic and the Zone the possibility that a commissary for the sale of food and other merchandise to the common laborers may be established if the merchants do not furnish food and clothing to such laborers at a reasonable rate."

Mr. SHONTS. That is it.