Senator KITTREDGE. That is what you had in mind? Mr. SHONTS. That is it. Now, I thought that the prices quoted to me were so high that they were not reasonable, as intended by that interpretation of that clause of the treaty; and I therefore said that we would open our commissaries. Senator KITTREDGE. Then instead of the clause of the treaty you mean the construction which Secretary Taft placed upon that section of the treaty? Mr. SHONTS. The construction, I say, would be based upon that clause of the treaty; yes, sir. Senator GORMAN. In that connection, Mr. Shonts, I think it is proper that you should have an opportunity to explain this. I think your statement would bear the interpretation that the old Commission, of which General Davis was president in the Zone, and Wallace the engineer, had failed to make provision for the laborers, and that that was the condition which you found there, and that it was because of their action. Is that what you meant to say? Mr. SHONTS. Possibly when they were there there had not been enough men brought to the Isthmus to cause this scarcity of food and these higher prices, so as to require them to take the action that we thought we had to take when we got there. Senator GORMAN. Yes. Mr. SHONTS. I do not mean it as a reflection; I am simply trying to state the conditions that confronted us when we reached the Isthmus, on July 26. Senator GORMAN. I see. Now, is it not a fact Mr. SHONTS. Will you permit me to say one thing right there, Senator? Senator GORMAN. Certainly. Mr. SHONTS. I wanted to say it in response to the question that Senator Kittredge brought out, before we leave that subject: Governor Magoon immediately brought up the question with President Amador of our opening our commissaries to the laboring people because of that clause in this interpretation which provides that the prices must be reasonable; and Governor Magoon said that President Amador told him he knew of his own knowledge that the prices were high, that the Panamanians themselves had to pay these high prices, and that therefore he was very glad to enter into an agreement which permitted us to open our commissaries and keep them open until such a time as the prices should again be reasonable. Senator KITTREDGE. Right there let me ask whether such an agreement as that was made at the time you speak of. Mr. SHONTS. Immediately. Senator KITTREDGE. And in what form was it put? Mr. SHONTS. That was in the form of an exchange of letters between. Governor Magoon and President Amador. Senator KITTREDGE. Have you copies of those letters? Mr. SHONTS. I can get them for you; yes, sir. Senator KITTREDGE. Are they here in Washington? Mr. SHONTS. Copies of everything are in Washington; yes, sir. Senator KITTREDGE. I wish you would arrange to bring those copies here. Mr. SHONTS. I will be very glad to. (The papers referred to were subsequently furnished by Mr. Shonts, and are as follows:) My Dear Mr. PRESIDENT: The question of supplying food to the employees and laborers engaged in the work of constructing the Isthmian Canal has heretofore been difficult and has now reached a critical stage. During the past year the population of the Isthmus has been increased from 15,000 to 20,000, and practically all are employees of the Commission and their families. The food products of the Isthmus have never been greatly in excess of the immediate demands of the inhabitants, and these products have been reduced by partial failure of crops and the fact that many agriculturists have abandoned tilling the soil and engaged in the work on the canal and public works undertaken by the Republic of Panama. The short hours of labor and the wages paid make it much easier for the common laborer to provide for his necessities by working a few days in the week on these public works than by attempting to raise a crop requiring him to work every day and all day. The importation of food supplies from Peru and other South American countries has been largely reduced by reason of quarantine regulations rendered necessary by the presence of bubonic plague in the ports to the south of Panama. The facilities of transportation between the ports of the United States and those of the Republic are limited and overtaxed, and none of the ships plying between these ports are fitted out with cold-storage facilities; therefore it has been difficult to secure prompt delivery of nonperishable goods and impossible to secure perishable goods and food stuffs from the States. Both the Republic and the Commission have endeavored to induce the raising of food crops and have offered free use of land to people who would engage in gardening or other agricultural pursuits, and also transportation on the railroad into Panama and Colon at a mere nominal rate for market supplies. No one has taken advantage of the offer. The attraction of good wages for working eight hours per day were greater than the continuous toil of market gardening. The inevitable result of this condition is that the price of food products has arisen steadily until it is well-nigh impossible for the bulk of the laborers on the canal to supply themselves with the necessities of life. The high price of foodstuffs is likewise oppressive to the inhabitants of the Republic of Panama, who naturally object to the increased cost of living, and, I regret to observe, attribute it to the presence of the Americans on the Isthmus. The Government of the Republic and the Isthmian Canal Commission had recourse to numerous expedients that seemed calculated to increase the food supply and to reduce the cost. The Republic reduced import duties from 15 and 20 per cent ad valorem to 10 per cent ad valorem; the Panama Railroad and steamship lines reduced freight rates from New York to Panama not less than 50 per cent; the Government of the Republic, the Isthmian Canal Commission, the government of the Zone, the Panama Railroad, and all of the banks of the Republic entered into an agreement reducing the rate of exchange, which had in times past been frequently as high as 50 per cent, to 2 per cent and less; and the Government of the Republic adopted a plan PC-06-23 which has secured a stable currency; but all of these measures have proved insufficient to secure the maintenance of reasonable prices for food supplies. It may be that no individual or class of individuals is to blame for this condition of things. Possibly it is the result of the working of the laws of supply and demand. Whatever the cause, the effect is that the prices of food products are excessive to a degree that borders on the prohibitive to the citizens of the Republic and the employees of the Commission. * * * "The convention between the United States and the Republic of Panama for the construction of the ship canal to connect the waters of the Atlantic and Pacific," signed November 18, 1903, provides (art. 13) that "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 restriction 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." The United States is anxious to promote the trade and commerce of the Republic of Panama in all possible and legitimate ways. Pursuant to this desire, Secretary Taft, in the agreements set forth in the Executive order dated January 7, 1905, made provision that the exercise of this right should be confined temporarily to making provisions for supplying necessities to the employees brought from the Temperate Zone, being the employees on what is known as the "gold roll," and that the experiment should be tried of requiring employees secured in the Tropics to purchase their necessities from local dealers. The provision of said Executive order is as follows: "This order contemplates the exclusion from benefits of the commissaries established and maintained by the Commission of all employees and workmen who are natives of tropical countries wherein prevail climatic conditions similar to those prevailing on the Isthmus of Panama, and who, therefore, may be presumed to be able to secure the articles of food, clothing, household goods, and furnishings of the kind and character to which they are accustomed, from the merchants of Panama, Colon, and the towns of the Canal Zone, and whose ordidary needs may be supplied without recourse to the Government commissaries. Should it develop hereafter that said merchants charge prices in excess of legitimate profit, or practice other extortions, the United States, for the protection and assistance of all its employees, whether from the Tropical or Temperate Zone, will supply its commissaries with such staple articles as are required and desired by the inhabitants of tropical countries, and permit all its employees and workmen, and those of its contractors to avail themselves of the benefits and privileges afforded by said Government commissaries." This course has been adhered to for the past seven months, with results that are far from satisfactory. The native employees and those coming to the Isthmus from Jamaica, the Barbados, and elsewhere in the Tropics have been required to secure their supplies from the local dealers. This was difficult, because at many places along the line of the canal there were no stores, and as the camps were constantly being shifted no private individual desired to establish stores. The employees sought to establish a credit with such local dealers as they could reach and were given a credit of one week. It has heretofore been impos sible for the Commission to comply with the requirements of the United States Treasury in the matter of preparing pay rolls so as to make payments to the men within a period of one week after the work was performed, and it has frequently occurred that our employees were without money or credit with which to supply themselves with food. This has resulted in much dissatisfaction and frequent refusals to work. The price of food has been so high that many of the common laborers were unable to earn enough to properly feed themselves, and large numbers are now returning to Jamaica and elsewhere for that reason. Others who are unable pay their passage have gone into the brush for the purpose of raising enough food to sustain themselves. It is apparent that an emergency exists, and immediate steps must be taken to meet it. To do this it will be necessary to equip the ships of the Panama Railroad and Steamship Line with cold-storage facilities, and also, if possible, to induce the United Fruit Company's line to put cold-storage facilities into their ships. This will take time, and meanwhile our native employees lack food. It is therefore necessary that the Commission shall afford the native employees the privilege of patronizing the commissary until the increase of food supplies on the Isthmus shall reduce the price to what is reasonable. I am confident this will not interfere with the business of the merchants of the Republic of Panama, for the demand is so much in excess of the supply that they will still find it difficult to secure sufficient food supplies for the residents of the Isthmus who are not employees of the Commission, and they will secure a profit as large as they are now receiving, for the decrease in the demand will enable them to decrease the exorbitant prices now exacted by the producers. The Commission proposes to open subcommissaries along the line of the canal, but will, of course, refrain from establishing branches in Panama, Colon, or elsewhere outside the Zone, and will not permit nonemployees to patronize these commissaries. This course affords relief not only to the employees of the Commission, but also to all of the inhabitants of the Isthmus, for all are suffering from high prices and inadequate supply. I hope Your Excellency appreciates the difficulty with which the Commission is contending, and I feel confident that the citizens of the Republic, of which you have the honor to be the head, will see the necessity for the Commission's course in this matter and cheerfully acquiesce and assist therein, as it is the only course calculated to relieve a distress in which all of us participate. Yours, sincerely, CHARLES E. MAGOON, His Excellency, MANUEL AMADOR GUERRERO, President of the Republic, Panama. Governor. Hon. CHARLES E. MAGOON, PANAMA, August 1, 1905. Governor of the Canal Zone, Ancon. SIR: His Excellency the President of the Republic has taken due notice of the contents of your esteemed note of the 28th last, referring to the intended extension of the privilege of purchasing provisions from the Canal commissariat to the native employees, and to all those who come from tropical countries with a climate similar to that of Panama. You observe that this measure has been decided upon in view of the exceptional circumstances that have caused the high price of provisions; that the measure is provisory until the increase in the production of articles of food shall bring about a reduction of prices to a reasonable standard; that the Commission merely proposes to establish branch commissariats along the line of the Canal; that none will be established in Panama or Colon or at any point outside the Canal Zone, and that none but employees will be permitted to benefit by the new arrangements. His Excellency the President, always disposed to facilitate whatever may advance the construction of the great work in which both Governments are so deeply interested, has no objection to the proposed measure, considering the circumstances that caused its adoption, being thankful that, in pursuance of Secretary Taft's executive order, the measure is but temporary and will be in force only until the merchants can supply provisions at a reasonable price. I take advantage of the occasion to subscribe myself, SANTIAGO DE LA GUARDIA. ISTHMIAN CANAL ZONE, Ancon, Isthmian Canal Zone, October 10, 1905. SIR: I have the honor to advise you that in the month of July, 1905, there had arisen the emergency provided for in your order of January 7, 1905, respecting the Government commissaries in the Canal Zone, to wit: That if necessary 66 * * the United States, for the protection and assistance of all its employees, whether from the tropical or temperate zone, will supply its commissaries with such staple articles as are required and desired by the inhabitants of tropical countries, and permit all its employees and workmen, and those of its contractors to avail themselves of the benefits and privileges afforded by said Government commissaries." A conference was had between the chairman, the chief engineer, and the governor of the Zone, at which it was determined to present the matter to the authorities of the Republic of Panama for the purpose of securing their acquiescence in the plan of opening the commissaries to all our employees on both the gold and silver rolls. I had a conference with President Amador and Secretary Guardia, and they cheerfully consented to the proposition and expressed the hope that it would result in reducing the price of foodstuffs to the inhabitants of the Republic as well as the employees of the Commission. I then addressed a letter to the President, discussing the matter and making formal presentation of our proposal. In response thereto Secretary Guardia advised me that his Government had "no objections to the proposed measure, considering the circumstances which caused its adoption." Upon the plan being made public several merchants of the city of Panama and one or two in Colon, who had heretofore enjoyed the monopoly of selling foodstuffs, protested against the order. Mr. Ricardo Arias, speaking for these merchants, addressed a letter to me |