Senator DRYDEN. Yes.

General DAVIS. I do not think that the price would go up to any such figure; I think it will be a large figure, though I do not think it would go up to that amount. I can not see the basis for a figure so high as that.

Senator ANKENY. Approximately, in your opinion, what would it be?

General DAVIS. Oh, well, I am afraid to approximate it; but I think it will be some millions of dollars. I feel confident of that. I think the minority of the Commission stated some figures, and based some of their calculations on what the Panama Railroad paid per acre for similar land fifty-odd years ago. I do not think that that precedent has any value at all.

Senator KNOX. What is the character of these submerged areasthat is, the ones that it is proposed to submerge?

General DAVIS. Oh, they are low. Of course, all of the lands that will be submerged are necessarily lowlands.

Senator KNOX. Are they occupied?

General DAVIS. Only on the margins of the streams. Ninety-nine per cent of all the cultivated land in the Canal Zone is devoted to one crop, and that is bananas.

Senator KNOx. Then your fear that it will cost us a very large sum of money is not based upon the intrinsic value of the lands, but on the probability that we will be overreached in the proceedings to acquire it?

General DAVIS. Yes, sir; I think so. I do not think that the banana lands by themselves have an actual value, at the very outside, of $100 an acre; and I think $50 would be a high price.

Senator KNOx. Then, in its last analysis, it comes to this-that we will pay more than they are worth; that we are not able to take care of ourselves in the transaction.

General DAVIS. Precisely.

Senator TALIAFERRO. Is it not a fact, General, that all those lands have increased very largely in value since this Government bought that property?

General DAVIS. Oh, yes, sir; oh, yes, sir. There is no doubt that they have.

Senator TALIAFERRO. Because they feel that the canal is assured? General DAVIS. Yes, sir.

Senator MORGAN. The treaty, though, positively forbids any addition to the price in consequence of the building of the canal, or the prospect of building it.

Senator DRYDEN. But that increase is largely speculative-almost wholly speculative; is it not, General ?

General DAVIS. Oh, yes.

Senator DRYDEN. There has been no valid increase by reason of the owners being better able to get their crops into market that would justify the prices they are asking? There is nothing of that kind, is there?

General DAVIS. There are plenty of Americans down there now getting options on this land for the very purpose of finally unloading it on the Government.

Senator SIMMONS. General, are the Americans to whom you refer paying very high prices for those options?

General DAVIS. No; not a very high price. I do not think that it has gone on to any very large extent, but I know it was going on while I was there.

Senator SIMMONS. What are the exact provisions of this treaty with reference to this condemnation proceeding? You say the Government has two representatives. The Republic of Panama has two, I assume?

General DAVIS. Yes, sir.

Senator SIMMONS. And then how does the treaty provide for the umpire?

General DAVIS. The Hay-Buneau-Varilla treaty is as you state it with respect to that matter-that if the Government wishes to acquire any private lands they shall be appraised by a board consisting of two of its own delegates, the Panama Government shall be represented on the board by two other delegates of its own selection, and if these four can agree, well and good. If they can not agree, then a fifth man is to be called in and appointed by the two Governments. These four men are not to select him, but the two governments are to be informed that the four commissioners have failed to agree, and then the two governments are to enter into diplomatic negotiations or correspondence and finally decide who this fifth man shall be, and he then pronounces his decision.

Senator SIMMONS. While in the case that you recited a few minutes ago the Government seems to have been overreached in this arbitration under that system of appraisement, is there any reason why it should, as a general proposition, suffer? There is an equal chance for the other Government?

General DAVIS. Oh, certainly.

Senator SIMMONS. It participates in the selection of the umpire? General DAVIS. Yes, sir; but one government is to pay the money and the other one has not any money to pay.

Senator SIMMONS. Your idea is that the sympathy would be with the Panamans?

General DAVIS. The one government, which has only a vicarious interest in it, would hardly feel as keenly the result as the one that had to respond.

Senator KNOx. General, leaving out the cities of Panama and Colon, is it likely that the whole Republic is worth $18,000,000? General DAVIS. Oh, I

Senator KNox. As a real-estate transaction, I mean?

General DAVIS. I should say that the answer to that would be "yes."

The CHAIRMAN. Do you not think that you might throw in Colon in that deal, General?

General DAVIS. Well, nearly all of Colon belongs to the Govern

ment now.

The CHAIRMAN. I understand that. I think it is a very poor asset, however.

Senator KITTREDGE. General, last evening you read a little memorandum of topics that you had in mind to speak about.

General DAVIS. I simply thought it possible that you might wish to question me on two or three of these other subjects. One was the Panama Railroad, which you have already alluded to; the military question as affecting the canal; earthquakes

Senator KITTREDGE. I would like to hear you, very briefly, about the military features of the situation.

General DAVIS. I have read what those who have preceded me have said on that subject. I must say that what General Ernst said here a few days ago impressed me as having considerable force.

It seems to me that there are but two bases on which we can proceed with respect to the military aspects of the Panama Canal. One is to neutralize it, just exactly as the Suez Canal was neutralized in the Constantinople conference of 1888, and make it a neutral channel of communication entirely, as that was declared to be. I know that in 1882 the English Government closed it for a day or two, but in 1888 the Constantinople conference agreed that that canal should be neutralized forever.

Now, under that neutrality condition, which had been in effect before, this incident occurred: In 1870, when the Franco-Prussian war was going on, a French vessel and a German vessel both chanced to be in Lake Timsah at the same moment of time, and a state of war existed between the two nations. The date on which this occurred was the birthday of the Emperor of the French. The Frenchmen dressed ship, manned the yards, and fired a national salute, and the Germans did the same thing, in honor of the same event; and that was exactly while the Franco-German war was proceeding. So that in that canal there was entire friendship, entire harmony, entire peace. That is what is meant by neutralization.

The other basis of procedure, it seems to me, is that the United States, as proprietor, as owner, as possessor of all that sovereignty, can give in the territory-shall say to all the world, "This canal is open to you, except in time of war, and in time of war we will shut it in your face if we please. We will close it if we want to."

We must take one of those two positions, it seems to me, with respect to the canal. Now, in the treaty by which the ClaytonBulwer treaty was abrogated-I refer now to the Hay-Pauncefote treaty, the date of which I can not just now remember; of course it is the second one that was negotiated, the first having failed, but the second was ratified by both Governments

Senator KITTREDGE. That was ratified four years ago last December, General.

General DAVIS. I had forgotten the date. Now, in that treaty there is a section that copies almost verbatim out of the Constantinople conference the whole provision about neutralization. That is all brought into this Hay-Pauncefote treaty; and these two Governments, the Government of Great Britain and that of the United States, have solemnly agreed upon neutralization of that canal by that treaty. Other powers are not a party to it, so far as I know; I presume they are not; but we must proceed on one of those bases, it seems to me either shut the door in the face of anybody we please at any time we please, or else say, " It is open to you always."

What that may lead to I know-many dilemmas, many difficulties— but the situation is a difficult one.

Senator MORGAN. Now, General, is not this the proper interpretation of all of that doctrine: That the United States Government, being the owner of the canal, not in partnership with anybody else in its ownership or in its management, reserves to itself the right to re

fuse to permit its enemy to use it in hostilities directed against the United States?

General DAVIS. That is rational; that is quite rational.

Senator MORGAN. And that is as far as we go in that proposition. But as between other belligerents the canal is neutral, and all the nations subscribe to the doctrine that it shall be kept neutral. Now, that would not apply to a war between Panama, for instance, and Cuba. They can get into war; they are small. Panama would have the right, as I understand the Hay-Varilla treaty and all the surrounding situation, to insist that Cuba should not be permitted to use that canal in belligerent operations against her; and if Cuba wanted to attack the city of Panama her vessels could not be permitted to go through the canal and get out into the bay and then make an attack upon Panama.

General DAVIS. No; that is forbidden by the Constantinople conference at Suez, which provides that the canal shall not be made the base of any military operations.

Senator MORGAN. Any at all?

General DAVIS. Any at all by anybody. That is declared firmly. Senator MORGAN. Of course that means that it shall not be made the base of military operations amongst governments that did not own it. There was no government ownership of that canal at Suez? General DAVIS. No, sir.

Senator MORGAN. And here there is a distinct ownership by the United States.

General DAVIS. I would have no difficulty in reconciling this with the principles you state, Senator, if it had not been that we have negotiated the Hay-Pauncefote treaty, in which we have declared that the principles of the Constantinople conference shall apply as between the United States and Great Britain.

Senator MORGAN. That means in like cases, but not as against the owner of the canal?

General DAVIS. The exception is not stated in the language of the law.

Senator MORGAN. I know that; but there are a great many things that are not stated in diplomatic parlance or language that are clearly reserved. That is my view of it. I did not care about participating in the expression of any opinion, but as the subject was up I thought I would state these things.

General DAVIS. I realize, gentlemen, that this is a subject that it is perhaps improper that I should discuss at all, for it is a very broad one and a very large one, and it is

Senator MORGAN. The probability is that as long as this Government holds together it will never be discussed, because no nation would attempt to attack that canal while we held it, unless it was as a part of a general war against us.

Has any other gentleman any questions he wants to ask?

General DAVIS. There is just one other subject that I wanted to speak of, and that is the matter of earthquakes. There has been a good deal said here by various people about earthquakes. Now, I have read all that exists that I could get hold of respecting that phenomenon of nature which has been felt on the Isthmus of Panama; and that there is a danger from earthquakes there is as certain as

that we live. I presume the danger is difficult to appraise or to estimate; but that there is such a danger is unquestionable. I believe that danger exists everywhere. We did not think that it existed in 1884 at Charleston, S. C.; but we knew in 1886 that it did. And if an earthquake like the one that occurred at Charleston in 1886 (or was it 1887?) should occur at Panama, it would do harm. If such an earthquake as the Charleston earthquake occurred in Washington, it would perhaps demolish this building or injure it very much. It would unquestionably throw down the Washington Monument.

So this danger of earthquakes is one that you can not evade; it can not be foreseen; it can not be appraised. It exists, but I do not think that it has any particular signification. Its influence would be felt most seriously on structures and less on ditches, I think.

That is about all I can say about that subject.

Senator MORGAN. But, General, if you took a cube of basalt 8 or 10 miles long and 125 feet thick and 200 feet wide out of the backbone of that mountain, you might weaken it so that the earthquake would affect it very seriously, might you not?

General DAVIS. That is to say, that it would disturb the equilibrium of the mass?

Senator MORGAN. Yes.

General DAVIS. That is quite so; but here are hills and peaks rising up on the Isthmus of Panama all about you, with slopes quite as steep as are proposed for Culebra; and there they stand, and have stood for centuries. They are quite as steep, and they are all around. The Culebra Hill itself has precipitous slopes, and many, many of those hills have slopes that are well, I know that Ancon Hill has a slope of 60°; I have measured it. That is right overhanging the city of Panama; and yet it stands there, and it is grassed over. It is true that such slopes stand on the Isthmus. They are earth slopes,

too.

Senator MORGAN. Nevertheless, taking out such a cube of basalt as I have mentioned leading right through the backbone of the Isthmus would necessarily weaken it?

General DAVIS. But we would not have any slope, Senator, as abrupt as some of those that nature has left there.

Senator MORGAN. I am not speaking of the slope; I am talking about the weakening of the structure-the backbone.

General DAVIS. The strength of the slope, or the strength of an embankment, or of a declivity, or of a mass, is entirely proportionate to its slope or to its base. Now, if through natural causes

Senator MORGAN. I am not speaking of tumbling down the top earth into the ditch. I am speaking about the effect of taking out that cube of basalt rock that binds the Isthmus. When an earthquake comes there, its effect will be very much more felt-more sensibly than if the cube was there untouched?

General DAVIS. But how would that apply to the practicability of the canal, Senator?

Senator MORGAN. Why, if the canal was running through there I should think that there would be a great deal of dislocation.

General DAVIS. In other words, that the canal would be closed up? You are thinking about that?

Senator MORGAN. Yes.