Second. That after the first day of July, 1905 (changed from the first day of January, 1906), there shall be coined and issued by the Republic such additional amount of silver coin, to the limit in the aggregate to the value of 1,500,000 pesos-equivalent to three million half-dollar pesos as may be deemed by the President of the United States necessary or advisable in the construction or operation of the Isthmian Canal, and as may be requested by him of the executive power of the Republic.

Third. To guarantee the parity of such silver coin with the gold coin the Republic shall create a reserve fund by the deposit with a responsible banking institution in the United States of a sum equal in gold to fifteen per cent of the amount of the silver coin by it issued and as the same is issued, together with an amount equal to the seigniorage on the silver coins issued under the preceding provision 2. Arrangements shall be made between the Government of Panama and the Isthmian Canal Commission for selling at reasonable rates and on such terms as will tend to maintain the parity of the silver coins of Panama, drafts upon the reserve fund set aside under the previous paragraph, and upon the funds of the Isthmian Canal Commission.

The coin of the Republic shall be legal tender in the Canal Zone. The United States shall employ such silver coins in its disbursements in the Canal Zone and in the Republic so far as the United States may find it practicable and convenient.

The silver coinage herein referred to shall be executed by the Government of Panama at the mints of the United States, at the usual and legal rates.

Nothing in the convention shall be construed to restrict the rights of the Republic to reduce its silver currency after the opening of the Isthmian Canal to commerce, to such amount as it may deem advisable, and thereupon reduce and withdraw pro rata the reserve fund corresponding to such reduction of the silver coinage issue.

Mr. CROMWELL. There should be some memorandum embodying this and an exchange between the two Governments.

Secretary TAFT. The only authority I have is to act for the Commission. The authority which the Secretary of State would have is an authority which necessarily involves the treaty-making power and goes to the Senate. Now, we do not want to do that. The Post-Office Department makes a lot of arrangements which never go to the Senate at all, and this, I think, might properly be made by me as Secretary of War, representing the Isthmian Canal Commission with your Government. They have the disbursement of $150,000,000 for this very purpose, and I do not see why it is not sufficient security for you, if you adopt that law, to say that we will subscribe to its terms.

Mr. CROMWELL. I think there is another view. Under the Spooner law all authority is vested in the Government. The President thereafter delegates, so to speak, some of his powers to yourself as Secretary of War, and charges you with certain broad duties in a letter of instructions, and I consider that you really act as the representative of the President under his letter of instructions given to you, and which he in turn derives from the Spooner law.

Secretary TAFT. Well, if you are satisfied, I will simply say-directed to these gentlemen-that if this is enacted into law by the Republic of Panama, in behalf of the Panama Canal, and exercising the authority imposed upon me by the President, I will, in behalf of the Canal Commission, see that the terms binding upon me shall be carried out. What do you say to that, Admiral?

Admiral WALKER. Yes, sir.

Secretary TAFT. Suppose, now. I just address a letter to these gentlemen, or to the minister-I don't care which-saying that after a conference and an examination of the terms which we have agreed upon, and representing the Canal Commission by virtue of the power imposed upon me by the Pesident of the United States, I consent and agree on behalf of the Isthmian Canal Commission and the Government, so far as I have the power, that the terms therein imposed upon the Canal Commission in the United States and the Government of the United States shall be complied with upon the enactment of the law by the Republic of Panama.

Mr. CROMWELL. That is correct. Mr. Secretary, although we may perhaps want to put it in a little more precise form.

(At the suggestion of Mr. Cromwell, the members of the conference party signed their initials on the margin of the proposed agreement opposite the sev eral amendments inserted. Mr. Cromwell then stated that the party would call Monday morning and give the Secretary of War a clean copy of the agreement.)

APPENDIX E.

AGREEMENT BETWEEN THE SECRETARY OF WAR, ACTING FOR THE CANAL COMMISSION, AND THE COMMISSION OF PANAMA.

Messrs. RICARDO ARIAS AND EUSEBIO A. MORALES,

JUNE 20, 1904.

Special Fiscal Commissioners of the Republic of Panama. GENTLEMEN: I understand that there is now pending in the Convention of the Republic of Panama, exercising legislative power for the Republic, a bill to establish a monetary standard and to provide for the coinage necessary in the Republic. The Isthmian Canal Commission, whose action, by direction of the President of the United States. I am authorized to supervise and direct, is vitally interested in the maintenance in the Canal Zone of a stable currency, based upon the gold standard.

I conceive it to be of common benefit to the Republic and to the Isthmian Canal Commission that the currency used in the Republic and in the Canal Zone should be the same. I am informed that the Convention of the Republic has under consideration a measure which in substance provides:

I. That the monetary unit of the Republic shall be a gold peso of the weight of 1 gram, 672 milligrams, and of nine hundred one-thousandths fineness, divis'ible into 100 cents, to be issued as and when considered by the Republic necessary or convenient for its requirements.

II. That the present gold dollar of the United States of America and its multiples shall also be legal tender in the Republic of Panama for its nominal value as equivalent to one gold peso of the Republic.

III. That fractional silver coins shall be issued by the Republic, of various denominations, all to be of an alloy composed of nine hundred one-thousandths of pure silver and one hundred one-thousandths of copper, the declared value of the same bearing a ratio to the same weight of gold of approximately one to thirty-two, and that such fractional silver currency shall be legal tender in all transactions.

IV. That the silver to be coined shall be in fractional denominations of the gold peso or dollar and, except as hereinafter specifically provided, shall be coined only in exchange or conversion of the Colombian silver peso and fractional currency now legally in circulation in the Republic, and that the amount thus converted shall not exceed $3,000,000 of such Colombian silver pesos.

V. That after July 1, 1905, there shall be coined and issued by the Republic such additional amount of fractional silver currency to the limit in the aggregate in value of 1,500,000 pesos or gold dollars, equivalent to 3,000,000 halfdollar pieces, as may be deemed by the Secretary of War of the United States necessary or advisable in the construction of the Isthmian Canal and as may be requested by him of the executive power of the Republic.

VI. The Republic of Panama, in order to secure the legal parity and equivalence with the gold standard of such fractional silver coins, shall create a reserve fund by deposit with a responsible banking institution in the United States of a sum in lawful currency of the United States equivalent to 15 per cent. of the nominal value of the silver fractional currency issued by the Republic, and as the same is issued, together with an amount equal to the seigniorage on the silver coins issued at the request of the Secretary of War as aforesaid, less all necessary costs of coinage and transportation.

VII. That after conference with the Isthmian Canal Commission or its representatives or fiscal agents, the Republic of Panama will take such steps with respect to exchange by drafts upon its reserve fund as will tend to prevent the disturbance of the legal parity of the silver fractional currency of the Republic of Panama with the gold standard.

VIII. That the Republic of Panama shall cause its coinage to be executed at the mints of the United States.

Assuming that legislation will be enacted substantially to the foregoing effect, I agree on behalf of the Isthmian Canal Commission and by direction of the President of the United States-

First. That the Isthmian Canal Commission will make the gold and silver coin of the Republic of Panama legal tender within the Canal Zone by appropriate legislation.

Second. That it will employ such gold and silver coin of the Republic in its disbursements in the Canal Zone and in the Republic as the Canal Commission shall find practicable and convenient.

Third. The Isthmian Canal Commission shall cooperate with the Republic of Panama to maintain the parity of the fractional silver coinage of the Republic of Panama with the gold standard by sale of drafts upon its funds at reasonable rates and on terms which will tend to prevent the disturbance of such parity.

Fourth. It is mutually agreed that nothing herein contained shall be construed to restrict the right of the Republic to reduce its silver currency after the opening of the canal to commerce to such an amount as it may deem advisable, and thereupon to reduce and withdraw, pro rata, the reserve fund corresponding to the reduction of the amount of silver coinage outstanding. Will you please confirm your accord with the foregoing?

Very respectfully,

WM. H. TAFT, Secretary of War.

APPENDIX F.

SPECIAL FISCAL COMMISSION OF THE REPUBLIC OF PANAMA,
New York, June 20, 1904.

Hon. Wм. H. TAFT,
Secretary of War, Washington, D. C.

SIR: Pursuant to the powers conferred upon us by the general directions of the Government of the Republic of Panama, and subject to the enactment by the Republic of the necessary legislation, we hereby declare our complete accord with the convention embodied in your communication of this date, and agree to the same as therein set forth.

We are, dear sir, very truly, yours,

RICARDO ARIAS,
EUSOBIO A. MORALES,
Special Fiscal Commissioners of the Republic of Panama.

The SECRETARY OF WAR.

APPENDIX G.

DEPARTMENT OF STATE,

Washington, July 25, 1904.

SIR: I have the honor to inclose herewith a translation of the new Panaman currency law, No. 84, June 28, 1904, forwarded hither by the legation at Panama. I have the honor to be, sir, your obedient servant,

ALVEY A. ADEE,

Acting Secretary.

WAR DEPARTMENT, Washington, July 26, 1904.

SIR: I have the honor to acknowledge the receipt of your letter of the 25th instant, transmitting a translation of the new Panaman currency law, No. 84, June 23, 1904.

The monetary unit of the Republic shall be the balboa, or a gold coin of one gramme six hundred and seventy-two milligrammes (1.672) weight and nine hundred thousandths (0.300) fineness-divisible into 100 cents (100/100).

The actual gold dollar of the United States of America and its multiples shall be legal tender in the Republic for its nominal value, equivalent to the balboa.

ARTICLE II.

When the Executive power arranges the national gold coinage this coinage shall be minted in pieces of one, two and a half, five, ten, and twenty balboas, choosing those coins which will have the greatest circulation.

ARTICLE III.

The silver money shall consist of an alloy of nine hundred thousandths of pure silver and one hundred thousandths of copper.

ARTICLE IV.

The names, weight, and diameters of the silver coins shall be as follows: The peso, weight 25 grammes, diameter 37 millimetres, value 50 cents (fo%) of the Balboa;

The half peso, weight 12 grammes, diameter 30 millimetres, value 25 cents; The fifth of a peso, weight 5 grammes, diameter 24 millimetres, value 10 cents;

The tenth of a peso, weight 2 grammes, diameter 18 millimetres, value 5 cents;

The twentieth of a peso, weight 11 grammes, diameter 10 millimetres, value 2 cents.

In consequence two pesos of silver will equal in value one Balboa, which is the monetary unit. The other fractions of a peso shall retain the same proportional fractional equivalent with respect to the Balboa as a unit.

ARTICLE V.

The national silver coinage shall be legal tender for its nominal value in all transactions.

ARTICLE VI.

The Colombian silver money not inferior to 835-thousandths fine and 666-thousandths of the same alloy, which is actually in circulation in the Republic, shall be exchanged for the new national currency at the rate of 212.50 for each 100 Balboas or their equivalent in Panama silver money. But the conversion of the Colombian silver of 666-thousandths shall alone be limited to the five-cent pieces and to the sum of 20.000 pesos, as stipulated in the first clause of Contract No. 36, entered into between the extinct department of Panama in the name of the Republic of Colombia and Messrs. Isaac Brandon and Brothers, of this city, for the coinage of Colombian silver money, which contract was approved by General Victor Manuel Salazor, civil and military chief of the department of Panama, dated October 10, 1902, and published in No. 1399 of the Panama Gazette of October 9th of the same year.

The obligations contracted before the present law became effective, payable tacitly or expressly in Colombian silver not inferior to 835 thousandths, shall be redeemable in the new national money at the rate indicated in this article.

ARTICLE VII.

The Colombian silver money referred to in this law shall continue to be legal tender until the day upon which begins the verification of the exchange.

The Executive power shall initiate the conversion of moneys, as referred to in article 6, on the first day of September next. For this purpose there shall be designated the public offices, where, in the capital and the provinces of the Republic, the verification of the exchange shall take place and due notification shall be published thirty days before the date of exchange.

This conversion shall be made within sixty days after September 1st next. After which date Colombian money shall cease to be legal tender in the Republic.

ARTICLE VIII.

For the purpose of exchanging the silver money actually in circulation in the Republic, the Executive power is authorized to coin and issue, as stated in this law, Panaman money to the amount of 3,000,000 pesos.

ARTICLE IX.

To guarantee the parity between the silver and the gold money, the Executive power shall deposit in a safe banking institution in the United States a sum in gold equivalent to 15 per cent of the value of coinage issued.

ARTICLE X.

The Executive power shall publish monthly statements in the Official Gazette of the amounts of Colombian silver presented for exchange, and when the conversion is completed the Executive power is authorized to sell the silver thus obtained in any foreign market and at the best rate obtainable. The product of such sale shall be deposited as part of the funds of the Republic.

ARTICLE XI.

The design of the Panaman coins referred to in this law shall be as follows: On the obverse, the bust of Vasco Nunez de Balboa, discoverer of the Panaman shores on the Pacific, in profile and facing the right with an ornament upon which are engraved the words "God, Law, Liberty." Above the bust at the edge of the coin the phrase "Republica de Panama;" on the base of the bust the word "Balboa" in capital letters but not so large as the other inscriptions. In the lower part of the coin, under the bust, the year of coinage in figures.

The reverse of the coin shall bear the coat of arms of the Republic of Panama in the center; around the upper edge, the value of the coin in letters; around the lower edge, toward the right, the weight of the coin in grammes: toward the left, the amount of alloy in thousandths of fineness.

ARTICLE XII.

It is absolutely prohibited to introduce into the territory of the Republic any other silver money except that which the Executive power may issue in completion of this law.

ARTICLE XIII.

The Executive power is authorized to celebrate with the Government of the United States of America a monetary convention based upon the present law and arranged for at the conference held at Washington on the 18th of the present month of June between the commissioners of that Government and those of the Republic of Panama.

ARTICLE XIV.

The expenses incurred in carrying out this law shall be considered included in the regular budget of expenses.

Given at Panama the 27th day of June, 1904.

The President,

The secretary,

JERARDO ORTEGA.

LADISLAO SOSA.

NATIONAL EXECUTIVE POWER, TREASURY DEPARTMENT, Panama, June 28, 1904.

Publish and execute,

The secretary of the treasury,

H. AMADOR GUERRERO.

F. V. DE LA ESPRIELLA.