Senator MORGAN. Mr. Shonts has never been? He was president of the road?

General HAINS. Mr. Shonts is president of the road.

Senator MORGAN. They have a president and a general superintendent?

General HAINS. I believe that is his position-general superintendent.

Senator MORGAN. What body of men was it-the Canal Commissioners or the railroad directors-that prescribed the freight rates, for instance, for that railroad?

General HAINS. Oh, that was some officer of the company. I did not have anything to do with that.

Senator MORGAN. If you ever prescribed any freight rates as a Commissioner, you did not know it?

General HAINS. No, sir.

Senator MORGAN. Who had the direction of the purchase of the ships or the acquiring of ships in addition to those that belonged to the railroad under charter parties?

General HAINS. That matter was considered by the board of directors. Senator MORGAN. Of the railroad?

General HAINS. Yes, sir.

Senator MORGAN. What part or function does that railroad perform in the actual work of carrying this canal into successful operation? General HAINS. The railroad?

Senator MORGAN. The railroad.

General HAINS. Oh, it is an absolute necessity. It is like any tool for doing a piece of work; you could not do it without it.

Senator MORGAN. Therefore, during the time since the thing has been in operation it was the prime factor in the work?

General HAINS. Yes, sir.

Senator MORGAN. And the direction of the railroad, therefore, was quite as important a matter as the direction of the work on the canal? General HAINS. Yes; to some extent.

Senator MORGAN. You got all your material from the railroad from abroad-all that was imported?

General HAINS. I had nothing to do with the procuring of material. Senator MORGAN. No; you had not anything to do with it, but you have a general knowledge of the fact that all the material was imported there through the assistance of the railroad and its ships?

General HAINS. Oh, you mean carried down there?

Senator MORGAN. Carried down there to the place.
General HAINS. Oh, yes; yes.

Senator MORGAN. And of course the transportation

General HAINS. But, Senator, allow me: I think perhaps that is so as to a large amount of it; but there was quite a good amount also which was taken down there on other vessels, outside of the vessels in the employ of the Government.

Senator MORGAN. A great amount of it, of course; but the railroad was still an indispensable factor in supplying material and men and provisions and everything else to that canal work?

General HAINS. Yes, sir.

Senator MORGAN. Did you ever sit as a Commissioner upon the investigation of a claim brought by the New Panama Canal Company against the United States for a sum somewhat above two millions of dollars?

General HAINS. Did I ever do what about it?

Senator MORGAN. Did you ever, as a Commissioner, sit in judgment or in inquiry upon the examination of such a claim as that? General HAINS. No, sir.

Senator MORGAN. You have seen the examination on the minutes of your Commission, have you not?

General HAINS. Yes, sir.

Senator MORGAN. You have seen that?

General HAINS. Yes, sir.

Senator MORGAN. Did all that occur before you became a Commissioner?

General HAINS. Yes, sir.

Senator MORGAN. Is it still pending, undecided?

General HAINS. I so understand; I do not know. I suppose it is still pending. Yes, I am quite sure that it is still pending.

Senator MORGAN. That claim is still pending and undecided?
General HAINS. Undecided.

Senator MORGAN. It covers, if I understand it right, work done on the canal between the time that the first offer was made by Monsieur Bo in behalf of that canal company to sell the property and the time of the turning over of the property under the Hay-Varilla treaty. That is the period of time that was covered by this claim, in my understanding. Do you understand it that way-that it is for the work done between those two periods of time upon the canal?

General HAINS. I think the idea is to go back further than that with that claim, Senator.

Senator MORGAN. How far back?

General HAINS. Oh, I think they claim away back until some time when they believed we made our first estimate. That would be some time in 1899.

Senator MORGAN. Yes; I think you are right about that-when they supposed or believed that you had made your first estimate?

General HAINS. Yes, sir.

Senator MORGAN. Which, when summed up, amounted to forty millions of dollars?

General HAINS. Yes; we summed up that it was worth $40,000,000. Senator MORGAN. I will just call one item to your attention. That estimate included the removal of the railroad line from one side of the country there to another, did it not? That estimate included compensation to the Panama Canal Company for having transferred the track and removed it from one side of the Chagres River, I will say, to the other?

General HAINS. Oh, I think there is included an item of $300,000 for a diversion of the railroad.

Senator MORGAN. Yes.

General HAINS. But that is only for a little piece of it-a small piece of it.

Senator MORGAN. I know it is a small piece of it; but it cost a great deal.

General HAINS. Yes; but it was not

Senator MORGAN. Well, that item was in it?

General HAINS. It was to get the road around Culebra hill.
Senator MORGAN. Yes. Why was that?

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· General HAINS. The road was located somewhat farther to the eastward before that, and it was removed so as to get around back of the hill and cross near the reservoir that has been built there for the water-supply of the city of Panama.

Senator MORGAN. The point I want to get at is this: That all of that diversion of the railroad had been made before you went down there to make your examination, had it not?

General HAINS. I can not say.

Senator MORGAN. You do not know whether it was before or since? General HAINS. No, sir; I do not know. No; I do not think it was, Senator. I do not think it was.

Senator MORGAN. It was before any agreement was made or accepted between the United States or any of its agents and the Panama Canal Company for the purchase of the property of the canal company? General HAINS. I can not say that positively, either.

Senator MORGAN. You do not know?

General HAINS. No: I do not know.

Senator MORGAN. That diversion was not made after the first Walker Commission of construction took possession? It was made before that time, was it not?

General HAINS. Yes, sir.

Senator MORGAN. Now, that was made necessary-I want to get your opinion about that by the work that was being done by the Frenchmen in building that canal through Culebra Heights?

General HAINS. Yes, sir.

Senator MORGAN. It was a part of the necessity of the work that they were conducting at Culebra Heights that made it necessary to make this diversion of a part of the track around that hill, to put it on the other side of the hill, if I understand it?

General HAINS. Yes; but it would have been the same thing if anybody else was doing the same work, Senator.

Senator MORGAN. But they were doing it for themselves?

General HAINS. At that time I think they were.

Senator MORGAN. They were not doing it under any obligation or promise or suggestion of the United States?

General HAINS. No, sir.

Senator MORGAN. I have always been curious to know why that $300,000 item was put into that $40,000,000.

General HAINS. That $300,000 item was put in there because that diversion we considered as necessary to be made.

Senator MORGAN. And if they had not made it, you would have had it to make?

General HAINS. If they had not made it, we would have had to make it.

Senator MORGAN. It is equally necessary to dig the canal out from Bobio to the seaboard, is it not?

General HAINS. Yes; but if they had done it, I think we ought to have paid them for it.

Senator MORGAN. You think the diversion being put in there to facilitate the work on the Culebra Heights was something that the United States ought to pay for, although it was done before we took possession or had any right to the property at all?

General HAINS. If they are entitled to pay for the work that they did after any specified date that might be agreed on, it seems to me

that they ought to be paid also for that diversion if that was done subsequent to that same date.

Senator MORGAN. Well, they had bought, after the others had built it, the entire railroad line through from shore to shore or the stock in it. Was it necessary, because they had done that work, that the United States should pay them for betterments put upon it?

General HAINS. I do not know about the betterments; but, Senator, we paid them for the. Panama Railroad itself.

Senator MORGAN. We paid them for the stock; we bought the stock. General HAINS. We bought the stock, but we did not care anything about the stock itself. What we wanted was the railroad.

Senator MORGAN. But you could not get the railroad without the stock.

General HAINS. That is very true.

Senator MORGAN. Yes. Now, in buying up the stock and paying them in full what they asked for it, whatever it was ($8,000,000 or $10,000,000 or $18,000,000, whatever it might have been), we paid for all that; we paid for all the betterments and all the improvements and everything else that had been done there when we bought the stock. That being so, after buying the stock and paying for it, can you exactly see light through the proposition that we ought also to pay for the betterments they put there in transferring this road from one place to another?

General HAINS. If the French company's proposition had been accepted before that diversion had taken place the whole cost of this would have fallen on the United States.

Senator MORGAN. But it was not. That is exactly what did not happen, and after that we bought the entire property by buying the stock.

General HAINS. I am of the opinion, although I can not state positively about it, that this diversion of the railroad was being made at this very time, Senator-at the time that we made this estimate. Senator MORGAN. It was being made at that time?

General HAINS. Yes; I think it was then being made.

Senator MORGAN. It was made for their own convenience, was it not?

General HAINS. Well, yes.

Senator MORGAN. It was made in their effort to work out the canal plan that they were bound to make good to Colombia?

General HAINS. Yes; it was being made for them.

Senator MORGAN. They had a contract with Colombia for the construction of that canal? That is to say, they had a concession? General HAINS. Yes.

Senator MORGAN. And Colombia had a very great interest in it. At the end of ninety-nine years it was all to go to Colombia, every bit of it, was it not?

General HAINS. Yes.

Senator MORGAN. And of course they were doing it in order to facilitate their own work in holding on to their concession. Now, General, was not the work that they were doing there at the time that you saw them at work during these thirty days that you spent on the Isthmus palpably work that was being done in a perfunctory way in order to hold on to their concessions from Colombia?

General HAINS. I could only express an opinion on that point.

Senator MORGAN. That is exactly what I want.

General HAINS. Well, it looked that way.

Senator MORGAN. Yes; it did not look any other way, did it? General HAINS. I think my answer is about all I can say about it. It looked as though it was being done in a perfunctory way for the purpose of keeping alive the concession.

Senator MORGAN. You had no doubt about what they were doing there and that that was exactly what they were doing they were working to keep the concession alive?

General HAINS. I guess that was it. I do not know positively, Senator; but it looked that way.

Senator MORGAN. At the rate of work that they were doing at the time you first saw that work there, when you went down with the Commission, how long would it have taken them to have completed a lock canal?

General HAINS. At that rate of work?

Senator MORGAN. Yes.

General HAINS. Oh, I think they could have finished it in the course of fifty or seventy-five years.

Senator MORGAN. Yes, I expect they would; but the concessions would have been dead forty-five or fifty years before they got through it, and Colombia would have had it all. That was the situation they were in.

Now, while they were doing this work on Culebra Heights they were permitting the prism of the canal that they had dredged out to fill up, without taking any care of it at all? Was not that the situation? General HAINS. I think that is correct.

Senator MORGAN. That was correct between Bohio and Colon, and it was also correct between Miraflores and Boca Rio Grande? General HAINS. Yes; yes.

Senator MORGAN. I do not think I have any more questions to ask the witness.

Senator TALIAFERRO. General Hains, you have spoken several times in your examination about an estimate. Do you understand that that property was bought on an estimate of its value, or for a round sum? General HAINS. Do you mean the Panama Canal?

Senator TALIAFERRO. Yes.

General HAINS. All I know is this, Senator: We undertook to determine the value of that property of the canal company, and we thought it was worth fully forty millions of dollars, based on the estimated quantities of work done that would be of value in the plan of the canal that we were going to recommend, and other things in connection with it; we thought it would be worth fully forty millions of dollars.

Senator TALIAFERRO. Was that estimate or not solely and entirely for the information of the Commission and of this Government?

General HAINS. It was entirely for the information of this Government.

Senator TALIAFERRO. So that our purchase of that property for forty millions of dollars was without any obligation whatever on our part to pay any more than $40,000,000 for it?

General HAINS. Yes, sir. Now, let me say one thing there, Senator. We estimated the value of the canal property at $40,000,000. The French company, when they made a proposition (it was a long time