APPENDIX H.

[Circular No. 4, Isthmian Canal Commission.]

OFFICE OF THE ISTHMIAN CANAL COMMISSION,
Washington, D. C., December 30, 1904.

The following order of the Secretary of War is published for the information and guidance of all concerned:

"PANAMA, December 3, 1904.

“By direction of the President, it was ordered that, subject to the action of the 58th Congress as contemplated by the act of Congress approved April 28, 1904

SECTION 1. No importation of goods, wares, and merchandise shall be entered at Ancon or Cristobal, the terminal ports of the canal, except such goods, wares, and mechandise as are described in Article XIII of the treaty between the Republic of Panama and the United States, the ratifications of which were exchanged on the 26th day of February, 1904, and except goods, wares, and merchandise in transit across the Isthmus for a destination without the limits of said Isthmus, and except coal and crude mineral oil for fuel purposes to be sold at Ancon or Cristobal to seagoing vessels; said coal and oil to be admitted to those ports free of duties for said purposes:

"Provided, however, That this order shall be inoperative, first, unless the Republic of Panama shall reduce the ad valorem duty on imported articles described in class 2 of the act of the national convention of Panama passed July 5, 1904, and taking effect October 12, 1904, from fifteen per centum to ten per centum and shall not increase the rate of duty on the imported articles described in the other schedules of said act, except on all forms of imported wines, liquors, alcohol, and opium, on which the Republic may fix higher rates; second, unless article 38 of the constitution of the Republic of Panama, as modified by article 146 thereof, shall remain in full force and unchanged so far as the importation and sale of all kinds of merchandise are concerned; third, unless the consular fees and charges of the Republic of Panama in respect to entry of all vessels and importations in said ports of Panama and Colon shall be reduced to sixty per cent of the rates now in force; and, fourth, unless goods imported into the ports of Panama and Colon consigned to or destined for any part of the Canal Zone shall not be subjected in the Republic of Panama to any other direct or indirect impost or tax whatever.

SEC. 2. In view of the proximity of the port of Ancon to the port of Panama and the port of Cristobal to the port of Colon, the proper customs or port official of the Canal Zone shall, when not inconsistent with the interests of the United States, at the instance of the proper authority of the Republic of Panama, permit any vessel entered at or cleared from the ports of Panama and Colon, together with its cargo and passengers, under suitable regulations for the transit of the imported merchandise and passengers to and from the territory of the Republic of Panama, to use and enjoy the dockage and other facilities of the ports of Ancon and Cristobal, respectively, upon payment of proper dockage dues to the owners of said docks:

“Provided, however, That reciprocal privileges as to dockage and other facilities at Panama and Colon, together with suitable arrangement for transit of imported merchandise and passengers to and from the territory of the Canal Zone, shall be granted by the authorities of the Republic of Panama, when not inconsistent with its interests, to any vessel, together with its cargo and passengers, entered at or cleared from the ports of Ancon and Cristobal: Provided, however, That nothing herein contained shall affect the complete administrative, police, and judicial jurisdiction of the two Governments over their respective ports and harbors, except as hereinafter provided in section 6.

• Provided also, That vessels entering or clearing at the port of Panama shall have the absolute right freely to anchor and lade and discharge their cargoes by lighterage from and to Panama at the usual anchorage in the neighborhood of the islands of Perico, Flamenco, Naos, and Culebra, though included in the harbor of Ancon under the provisional delimitation as amended under section 5 hereafter, and to use the said waters of said harbor for all lawful commercial purposes.

"SEC. 3. All manifests and invoices and other documents in respect to vessels or cargoes cleared or consigned for or from the ports of Panama and Colon shall,

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as heretofore, be made by the officials of the Republic of Panama. All manifests, invoices, and other documents in respect to the vessels and cargoes cleared or consigned for or from the ports of Ancon or Cristobal shall be made by officials of the United States.

"SEC. 4. No import duties, tolls, or charges of any kind whatsoever shall be imposed by the authorities of the Canal Zone upon goods, wares, and merchandise imported, or upon persons passing from the territory of the Republic of Panama into the Canal Zone, and section 5 of the Executive order of June 24, 1904. providing that duties on importations into the Canal Zone are to be levied in conformity with such duties as Congress has imposed upon foreign merchandise imported into ports of the United States, is hereby revoked; but this order shall be inoperative unless the authorities of the Republic of Panama shall grant by proper order reciprocal free importations of goods, wares, and merchandise and free passage of persons from the territory of the Canal Zone into that of the Republic of Panama.

"SFC. 5. The provisions of this order also shall not be operative except upon the condition that the delimitation of the cities and harbors of Colon and Panama, signed on the 15th day of June, 1904, by the proper representatives of the governments of the Republic of Panama and of the Canal Zone, shall be provisionally enforced, and while the same shall remain in force with the consent of both parties thereto the provisional delimitation shall include not only the terms set forth in the writing thereof, but also the following, viz: That the harbor of Panama shall include the maritime waters in front of said city to the south and east thereof, extending three marine miles from mean low-water mark, except the maritime waters lying westerly of a line drawn from a stake or post set on Punta Mala through the middle island of the three islands known as Las Tres Hermanas, and extending three marine miles from mean low-water mark on Punta Mala, which waters shall be considered in the harbor of Ancon.

"SEC. 6. This order also shall be inoperative unless the proper governmental authorities of the Republic of Panama shall grant power to the authorities of the Canal Zone to exercise immediate and complete jurisdiction in matters of sanitation and quarantine in the maritime waters of the ports of Panama and Colon.

"SEC. 7. The Executive order of June 24, 1904, concerning the establishment of post-offices and postal service in the Canal Zone is modified and supplemented by the following provisions:

"All mail matter carried in the territory of the Canal Zone to or through the Republic of Panama to the United States and to foreign countries shall bear the stamps of the Republic of Panama, properly crossed by a printed mark of the Canal Zone government, and at rates the same as those imposed by the Government of the United States upon its domestic and foreign mail matter, exactly as if the United States and the Republic of Panama for this purpose were common territory. The authorities of the Canal Zone shall purchase from the Republic of Panama such stamps as the authorities of the Canal Zone desire to use in the Canal Zone, at forty per centum of their face value; but this order shall be inoperative unless the proper authorities of the Republic of Panama shall, by suitable arrangements with the postal authorities of the United States, provide for the transportation of mail matter between post-offices on the Isthmus of Panama and post-offices in the United States at the same rates as are now charged for domestic postage in the United States, except all mail matter lawfully franked and inclosed in the so-called penalty envelopes of the United States Government, concerning the public business of the United States, which shall be carried free, both by the governments of Panama and of the Canal Zone: Provided, however, That the Zone authorities may, for the purpose of facilitating the transportation of through mail, between the Zone and the United States in either direction, inclose such through mail properly stamped or lawfully franked, in sealed mail pouches, which shall not be opened by the authorities of the Republic of Panama in transit, on condition that the cost of transportation of such mail pouches shall be paid by the Zone government.

"SEC. 8. This order also shall not be operative unless the currency agreement made at Washington June 20, 1904, by the representatives of the Republic of Panama and the Secretary of War of the United States, acting with the approval of the President of the United States, for the establishment of a gold standard of value in the Republic of Panama and proper coinage, shall be approved and put into execution by the President of the Republic of Panama, pursuant to the authority conferred upon him by law of the Republic of

Panama, No. 84, approved June 20, 1904, and unless the President of the Republic of Panama, in order that the operation of the said currency agreement in securing and maintaining a gold standard of value in the Republic of Panama may not be obstructed thereby, shall, by virtue of his authority conferred by law No. 65, enacted by the National Assembly of Panama on June 6, 1904, abolish the tax of one per cent on gold coin exported from the Republic of Panama.

"SEC. 9. Citizens of the Republic of Panama at any time residing in the Canal Zone shall have, so far as concerns the United States, entire freedom of voting at elections held in the Republic of Panama and its provinces or municipalities at such places outside of the Canal Zone as may be fixed by the Republic and under such conditions as the Republic may determine; but nothing herein is to be construed as intending to limit the power of the Republic to exclude or restrict the right of such citizens to vote as it may be deemed judicious.

"SEC. 10. The highway extending from the eastern limits of the city of Panama, as fixed in the above-mentioned provisional delimitation agreement of June 10, 1904, to the point still farther to the eastward where the road to the 'Savannas' crosses the Zone line (which is 5 miles to eastward of the center axis of the canal) shall be repaired and maintained in a serviceable condition at the cost and expense of the authorities of the Canal Zone, and also in like manner the said road from the said eastern limits of the city of Panama to the railroad bridge in the city of Panama shall be repaired at the cost of the authorities of the Canal Zone; but this order shall not be operative unless the Republic of Panama shall waive its claim for compensation for the use in perpetuity of the municipal buildings located in the Canal Zone.

"SEC. 11. The United States will construct, maintain, and conduct a hospital or hospitals either in the Canal Zone or in the territory of the Republic, at its option, for the treatment of persons insane or afflicted with the disease of leprosy, and indigent sick, and the United States will accept for treatment therein such persons of said classes as the Republic may request; but this order shall not be operative unless, first, the Republic of Panama shall furnish without cost the requisite lands for said purposes if the United States shall locate such hospital or hospitals in the territory of the Republic, and, second, unless the Republic shall contribute and pay to the United States a reasonable daily per capita charge in respect of each patient entering, upon the request of the Republic, to be fixed by the Secretary of War of the United States.

"SEC. 12. The operation of this Executive order and its enforcement by officials of the United States on the one hand, or a compliance with and performance of the conditions of its operation by the Republic of Panama and its officials on the other, shall not be taken as a delimitation, definition, restriction, or restrictive construction of the rights of either party under the treaty between the United States and the Republic of Panama. "This order is to take effect on the 12th day of December, 1904.

This order will be duly published and enforced.

"WM. H. TAFT,

"Secretary of War."

J. G. WALKER, Chairman Isthmian Canal Commission.

[Circular No. 5. Isthmian Canal Commission.]

WASHINGTON, D. C., December 30, 1904.

The following order of the Secretary of War is published for the information and guidance of all concerned :

PANAMA, December 6, 1904.

"[Executive order of December 6, 1904, explanatory of Executive order of December 3, 1904.]

"SECTION 1. Consignments of goods, wares, and merchandise which by virtue of section one of the above-mentioned order of December 3, 1904, can not be entered for importation at the ports of Ancon or Cristobal may nevertheless, at the option of the consignor, if accompanied by the proper consular invoices of the consul of the Republic of Panama at the port of consignment, be landed at Ancon or Cristobal, respectively, in transit to any part of the Canal Zone or the Republic, upon payment of the proper duties to the Republic of Panama, under suitable arrangements similar to those provided for by section 2 of said order of December 3, 1904.

"But such goods, wares, and merchandise not accompanied by consular invoice of the consul of the Republic shall not be permitted to land at Ancon or Cristobal.

"SEC. 2. The order of December 3, 1904, shall be construed to permit free exportation and consignment of goods, wares, and merchandise and free transit of persons and vehicles from the Republic through the Canal Zone and from the terminal ports thereof.

ISTHMIAN CANAL AFFAIRS, OFFICE OF ADMINISTRATION,

Washington, D. C., December 22, 1905.

Responding to your verbal request that comparison be made of the rates of exchange between United States currency and Colombian silver on the one hand and between United States currency and Panamanian silver on the other, I have to state that the vouchers in the accounts of disbursing officers on the Isthmus show the following:

On May 13, 1904, $15,000 United States currency was given for an equivalent value in Colombian silver, for which we received 2.17 pesos for each $1 United States currency. Other transactions were as follows:

The new Panamanian currency was put into circulation on February 12, 1905, and no transactions in Colombian silver were conducted after that time, the disbursing officer closing out all on hand and converting it into United States currency and later into Panamanian silver.

Under the agreement entered into April 29, 1905, the Commission is enabled to purchase Panamanian silver at the uniform rate of 2 pesos for each $1 of United States currency. There is no premium paid nor discount received in this class of transactions.

It is found that we also are purchasing United States currency under section C of the agreement with the bankers, whereby they agreed to sell to the Commission at the uniform rate of three-fourths of 1 per cent United States currency, on the amount called for, in addition to the face amount thereof, such amounts of United States currency as shall be called for. Under this arrangement we have paid, on June 28, 1905, $225 premium on $30,000, on June 29, 1905, $450 premium on $60,000, and also on the latter date $375 premium on $50,000, United States currency.

A voucher paid on March 1, 1905, shows that the ratio between Colombian silver and United States currency was 2.125.

Respectfully,

HARRY C. LEWIS, Acting General Auditor.

APPENDIX K.

Memorandum of agreement made this 29th day of April, in the year one thousand nine hundred and five, by and between:

I. The United States Isthmian Canal Commission, hereinafter called the Commission," and the Panama Railroad Company, hereinafter called the · Railroad Company;"

II. The Republic of Panama, acting through William Nelson Cromwell, its fiscal commissioner in the United States, hereinafter called the "Republic;" and

III. Messrs. Ehrman & Co., a copartnership; Messrs. Isaac Brandon & Brothers, a copartnership; the International Banking Corporation, a corporation organized under the laws of Connecticut, and the American Trade Developing Company, a corporation organized under the laws of New Jersey; each of said firms and corporations being engaged, among other things, in the business of banking on the Isthmus of Panama and elsewhere and hereinafter called the "Bankers," witnesseth:

Whereas it is the desire of the Commission, the Railroad Company, and the Republic to secure a reliable supply of silver of the Panama currency as required for their respective wants upon the Isthmus of Panama, and also to maintain, substantially, the parity of the silver coinage of the Republic with the gold standard of the latter, as designed by the agreement entered into between the Secretary of War for the Isthmian Canal Commission and the Republic of Panama at Washington, on June 20, 1904, and confirmed and promulgated by them at Panama on December 3, 1904; and

Whereas to the end aforesaid. it is mutually desired by the parties hereto that this agreement be entered into between them:

Now, therefore, in consideration of the premises and of the mutual agreements herein contained, the parties hereto severally, but not jointly, agree to and with each other as follows:

FIRST.

A. The bankers severally agree with the Commission, the Railroad Company, the Republic, and with each other, to purchase and take in the proportion following, namely: Ehrman & Co., thirty (30) per centum; Isaac Brandon & Brothers, thirty (30) per centum; The International Banking Corporation. twenty-five (25) per centum, and The American Trade Developing Company, fifteen per centum from the Commission, the Railroad Company, and the Republic, all drafts or bills of exchange on New York which may be drawn by the Commission, the Railroad Company, or the Republic by the duly authorized officer or representative of either, and made payable at New York at sight in United States currency, at the uniform rate of two silver pesos Panama currency, for each one dollar of United States currency, which either of said last three named parties may offer for sale to, and request to be purchased by, the bankers, and to pay for the same in silver coin of Panama currency: Provided, That ten days written notice, specifying the amount of such drafts or bills of exchange so offered shall, in each instance, be previously given to the bankers by the party so requesting the same.

B. The Bankers also likewise severally agree to sell and deliver to the Commission, the Railroad Company and to the Republic in the proportions aforesaid, all drafts or bills of exchange on New York to be drawn by them, respectively, and to be payable at one day's sight in United States currency, at the uniform rate of two silver pesos and one cent Panama currency for each one dollar of United States currency which either of said last three named parties may request to be to them so sold upon payment for the same in silver currency of Panama: Provided, That ten days written notice, specifying the amount of such drafts or bills of exchange, shall, in each instance, be previously given to the Bankers by the parties so requesting the same.

C. The Bankers also severally agree to sell and deliver to the Commission, and the Railway Company, and the Republic, respectively, upon fifteen days' written notice in each instance previously given to the Bankers, and in the proportions aforesaid, such amount of United States currency as either or all of said named parties may so specify at the uniform rate of three-quarters of one per centum United States currency upon the amount so called for in addition to the face amount thereof.

D. The Bankers also severally agree to sell to the public-that is, to whomsoever may call for and request the same at their respective banking offices in