Commission done by virtue of powers vested in me by the act of Congress approved June 28, 1902, in the digging, construction, and completion of the canal, and all the governmental power in and over said Canal Zone and its appurtenant territory, which by virtue of the act of Congress approved April 28, 1904, and these instructions, shall be vested in said Isthmian Canal Commission, shall be carried on or exercised under your supervision and direction as Secretary of War.

Subject to the limitations of law and the conditions herein contained, the Isthmian Canal Commission are authorized and directed:

(1.) To make all needful rules and regulations for the government of the Zone and for the correct administration of the military, civil, and judicial affairs of its possessions until the close of the Fifty-eighth Congress.

(2.) To establish a civil service for the government of the strip and construction of the canal, appointments to which shall be secured as nearly as practicable by a merit system.

(3.) To make or cause to be made all needful surveys, borings, designs, plans, and specifications of the engineering, hydraulic, and sanitary works required and to supervise the execution of the same.

(4.) To make and cause to be executed after due advertisement all necessary contracts for any and all kinds of engineering and construction works.

(5.) To acquire by purchase or through proper and uniform expropriation proceedings, to be prescribed by the Commission, any private lands or other real property whose ownership by the United States is essential to the excavation and completion of the canal.

(6.) To make all needful rules and regulations respecting an economical and correct disbursement and an accounting for all funds that may be appropriated by Congress for the construction of the canal, its auxiliary works, and the government of the Canal Zone; and also to establish a proper and comprehensive system of bookkeeping, showing the state of the work, the expenditures by classes, and the amounts still available.

(7.) To make requisition on the Secretary of War for funds needed from time to time in the proper prosecution of the work and to designate the disbursing officers authorized to receipt for the same.

The inhabitants of the Isthmian Canal Zone are entitled to security in their persons, property, and religion, and in all their private rights and relations. They should be so informed by public announcement. The people should be disturbed as little as possible in their customs and avocations that are in harmony with principles of well ordered and decent living.

The municipal laws of the Canal Zone are to be administered by the ordinary tribunals substantially as they were before the change. Police magistrates and justices of the peace and other officers discharging duties usually devolving upon these officers of the law will be continued in office if they are suitable persons. The governor of the Zone, subject to approval of the Commission, is authorized to appoint temporarily a judge for the Canal Zone, who shall have the authority equivalent to that usually exercised in Latin countries by a judge of a court of first instance, but the Isthmian Canal Commission shall fix his salary and may legislate respecting his powers and authority, increasing or diminishing them in their discretion, and also making provision for additional or appellate judges, should the public interest require. The laws of the land, with which the inhabitants are familiar, and which were in force on February 26, 1904, will continue in force in the Canal Zone and in other places on the Isthmus over which the United States has jurisdiction until altered or annulled by the said Commission, but there are certain great principles of government which have been made the basis of an existence as a nation which we deem essential to the rule of law and the maintenance of order, and which shall have force in said Zone. The principles referred to may be generally stated as follows:

That no person shall be deprived of life, liberty, or property without due process of law; that private property shall not be taken for public use without just compensation; that in all criminal prosecutions the accused shall enjoy the right of a speedy and public trial, to be informed of the nature and cause of the accusation, to be confronted with the witnesses against him, to have compulsory process for obtaining witnesses in his favor, and to have the assistance of counsel for his defense; that excessive bail shall not be required nor excessive fines imposed, nor cruel or unusual punishment inflicted; that no person shall be put twice in jeopardy for the same offense, or be compelled in any criminal case to be a witness against himself; that the right to be secure against unreasonable searches and seizures shall not be violated; that neither slavery nor involuntary servitude shall exist except as a punishment for crime; that no bill of attainder or ex post facto law shall be passed; that no law shall be passed abridging the freedom of speech or of the press, or of the

rights of the people to peaceably assemble and petition the government for a redress of grievances; that no law shall be made respecting the establishment of religion or prohibiting the free exercise thereof: Provided, however, That the Commission shall have power to exclude from time to time from the Canal Zone and other places on the Isthmus, over which the United States has jurisdiction, persons of the following class who were not actually domiciled within the Zone on the 26th day of February, 1904, viz: idiots, the insane, epileptics, paupers, criminals, professional beggars, persons afflicted with loathsome or dangerous contagious diseases; those who have been convicted of felony, anarchists, those whose purpose it is to incite insurrection and othors whose presence it is believed by the Commission would tend to create public disorder, endanger the public health, or in any manner impede the prosecution of the work of opening the canal; and may cause any and all such newly arrived persons or those alien to the Zone to be expelled and deported from the territory controlled by the United States, and the Commission may defray from the canal appropriation the cost of such deportation as necessary expenses of the sanitation, the police protection of the canal route, and the preservation of good order among the inhabitants.

The Commission may legislate on all rightful subjects of legislation not inconsistent with the laws and treaties of the United States so far as they apply to said Zone and other places, and the said power shall include the enactment of the sanitary ordinances of a preventive or curative character to be enforced in the cities of Colon and Panama and which are contemplated and authorized by article 7 of said canal convention. Such legislative power shall also include the power to raise and appropriate revenues in said Zone; and all taxes, judicial fines, customs duties and other revenues levied and collected in said Zone by or under the authority of said Commission shall be retained, accounted for, and disbursed by said Commission for its proper purposes. The members of said Commission to the number of four or more shall constitute a legislative quorum, and all rules and regulations passed and enacted by said Commission shall have set forth as a captain that they are enacted by the Isthmian Canal Commission "by authority of the President of the United States."

The Commission shall hold its regular quarterly meetings at the office of the Commission either in Panama or at a branch office in Washington, and special meetings may be held at the pleasure of the Commission.

All laws, rules, and regulations of a governmental character enacted by the Commission hereunder shall be submitted to you for your approval, and should your approval be withheld from any such law, rule, or regulation, then from that time the law, rule, or regulation shall thereafter have no force or effect.

Maj. Gen. George W. Davis, U. S. Army (retired), a member of the Canal Commission, is herely appointed governor of the Isthmian Canal Zone. He will proceed at once to the Isthmus of Panama. He will in my name, as the chief executive in the Canal Zone, for and on behalf of the United States, see that the laws are faithfully executed and will maintain possession of said territory, including the public lands therein and the property real and movable on the Isthmus of Panama, except that of the Panama Railroad, that has recently been acquired from the Republic of Panama. He is hereby vested with the power to grant reprieves and pardons for offenses against the rules, regulations, and laws in force by virtue of action of the Commission or by virtue of the clause hereof continuing in force the laws of Panama. In case of his disability or absence from the Canal Zone at any time, the Isthmian Canal Commission is empowered to designate the person or persons to act as governor during such absence or disability. Except as herein prescribed the duties of the governor shall be fixed by legislation of the Canal Commission.

For the preservation of order and protecting the property of the United States, within or without said Zone as provided by article 7 of the canal convention, an adequate police force shall be maintained. If at any time there shall arise necessity for military or naval assistance the governor shall, if possible, promptly notify you, and in the event of a sudden exigency the governor may call upon any available military or naval force of the United States to render assistance, and the same shall be immediately furnished.

It is a matter of first importance that the most approved and effective methods and measures known to sanitary science be adopted in order that the health conditions on the Isthmus may be improved. It is the belief of those who have noted the successful results secured by our army in Cuba in the obliteration of yellow fever in that island that it is entirely feasible to banish the diseases that have heretofore caused most mortality on the Isthmus, or at least to improve as greatly the health conditions there as in Cuba and Porto Rico. I desire that every possible effort be made to protect our officers and workmen from the dangers of tropical and other diseases, which in the past have been so prevalent and destructive in Panama.

Rear-Admiral John G. Walker, U. S. Navy (retired), and Col. Frank J. Hecker, members of the Isthmian Canal Commission, are hereby designated as members of the joint commission provided for by articles 6 and 15 of the canal convention. The moiety of the necessary expenses of the Commission to be created in pursuance of articles 6 and 15 of the above-cited canal convention will be defrayed from the appropriation applicable to the ship canal to connect the waters of the Atlantic and Pacific

oceans.

The Isthmian Canal Commission will prepare for Congress and place in your hands on or before December 1 of each year a full and complete report of all their acts and of the operations conducted by them in respect to the canal construction and the government of the Canal Zone. These reports will contain a detailed account of all moneys received and disbursed in the performance of their duties and of the progress made in the construction of the canal.

The necessary expenses incurred by the Commission in carrying on the government of the Canal Zone will be defrayed from the local revenues so far as the said revenues may be sufficient and the remainder will be met from the appropriation made by the fifth section of the act of Congress approved June 28, 1902. An estimate of the proposed expenditures and revenues for each year in carrying on the government of the Zone will be submitted to Congress at the beginning of each

annual session.

By virtue of the ownership by the United States of about sixty-nine seventieths of the shares of the capital stock of the Panama Railroad the general policy of the managers of said road will be controlled by the United States. As soon as practicable I desire that all the members of the Isthmian Canal Commission be elected to the board of directors of the road, and that the policy of the road be completely harmonized with the policy of the Government of making it an adjunct to the construction of the canal, at the same time fulfilling the purpose for which it was constructed as a route of commercial movement across the Isthmus of Panama. If any contracts or other obligations now subsist between the railway company and other transportation companies that are not in accord with sound public policy, then such contracts must be terminated as soon as it is possible to effect that object.

No salary or per diem allowance of compensation in addition to the stated salary and per diem allowance of the members of the Isthmian Canal Commission will be allowed to any member of the Commission by reason of his services in connection with the civil government of the Canal Zone, or his membership of any board or commission concerned in or connected with the construction of the canal or by reason of his services as an officer or director of the Panama Railroad.

If there now be in force within the Canal Zone any franchise granting to any person or persons a privilege to maintain lotteries or hold lottery drawings or other gambling methods and devices of a character forbidden by the laws of the United States, or if the grantee of any such privilege has now the right to sell lottery tickets or similar devices to facilitate the business of the concessionaire, the Commission shall enact laws annulling the privileges or concessions and punishing future exercise of the same by imprisonment or fine, or both.

These instructions may be modified and supplemented as occasion shall arise.
Very respectfully,

Hon. WILLIAM H. TAFT,

THEODORE ROOSEVELT.

Secretary of War.

THE TRANSFER OF THE CANAL PROPERTIES TO THE UNITED STATES.

The purchase of the canal properties was completed by the payment to the French Canal Company of $40,000,000, this sale having been finally authorized by the stockholders of that company on April 23, 1904. The instrument of conveyancy, as ratified at this meeting on April 23, 1904, contains the following:

Now, therefore, we, the New Panama Canal Company, represented by Messrs. Marius Bo and Albert Rischmann, in consideration of the payment of the sum of forty million dollars in gold coin of the United States of America to said company on its order or demand. contemporaneously with the delivery of this present conveyance to the two representatives of the United States of America first above mentioned, and the delivery to them of its property in Paris, and the certificates of said Panama Railroad shares (the property of the company not being understood to include the PC-VOL 3-06-31

treasury assets of the company, including deposits of money, outstanding credits and investments in bonds) and the delivery upon the Isthmus of Panama, to an agent of the United States of America, designated by them, or by the Attorney-General of the United States of America, of the remainder of its rights and properties, do hereby acknowledge and confirm the said sale, and do grant, sell and assign, transfer and set over to the United States of America absolutely, in full ownership, the totality, without exception, of the company's property and rights on the Isthmus of Panama and its maps and archives at Paris.

The full document is herewith submitted.

Meanwhile, the United States paid to the Republic of Panama, in accordance with the stipulations of the treaty between the two countries which had been signed on November 18, 1903, the sum of $10,000,000. Having thus completed the purchase of the property and being entitled to enter into possession thereof, Lieut. Mark Brooke, Corps of Engineers, U. S. Army, representing the United States on the Isthmus of Panama, was instructed by the Attorney-General of the United States to take possession of all of the canal properties. This transfer of properties was made on the morning of May 4, 1904, and instructions were at once given to Lieutenant Brooke by the Isthmian Canal Commission to continue operations with the same force of employees and laborers as were engaged upon the work under the French Canal Company at that time. Lieutenant Brooke remained in charge of the work until the arrival on the Isthmus of Governor Davis. Pending the arrival of the Chief Engineer, Governor Davis was placed by the Commission in charge of the canal construction work, and it was carried on with but slight modification of French methods, with Maj. W. M. Black, Corps of Engineers, U. S. Army, at the head of the engineering staff, until Mr. John F. Wallace, the Commission's chief engineer, arrived upon the ground.

SCOPE OF THE COMMISSION'S REPORT.

The full report of the examinations and studies of routes for a canal to connect the Atlantic and Pacific oceans, together with historical facts and a discussion of the merits of the several routes, have been published in the reports of Commissions which have preceded the present Canal Commission. No attempt will be made at this time to review these earlier studies nor even to attempt a full description and discussion of the Panama Canal project, the execution of which has been intrusted to this Commission. This report, being made at a time when the several departments which the Commission has created for a convenient subdivision of its work are still in a formative state, will be restricted to a statement of what has been done since the first meeting of the Commission on March 22, 1904. The studies that must precede the adoption of plans for controlling the Chagres River, and which will serve as a basis for determining the level of the canal, are being vigorously pushed, but they have not been advanced far enough to enable the Commission to reach final conclusions.

ORGANIZATION.

The Commission holds a relation to the canal construction work similar to that of a board of directors to a great railway enterprise, except that the Commissioners are in closer touch with their work and the majority being civil engineers, stand in the relation of consult

ing and designing engineers to the canal work. The affairs of the Commission are conducted by the Commissioners acting as a body in frequent meetings. These meetings are generally held either upon the Isthmus or at Washington. There have been 30 meetings held on the Isthmus, 27 at Washington, and 2 at New York.

At its Washington office are stationed the Commission secretary, the general counsel, the chief disbursing officer or treasurer, and the auditor.

On the Isthmus are the engineering department, the material and supplies department, and the government of the Canal Zone. The Commission also maintains there a disbursing office and will maintain a branch of the auditor's office.

The health department, which has the importance of an independent department, has, for convenience for administration, and because its duties relate largely to the sanitation of the Canal Zone, been made a subdepartment of the Canal Zone government.

The affairs of the Panama Railroad Comany are managed by a board of directors as a separate and distinct enterprise. It does not enter into consideration as a subdepartment of the Commission organization. The Commission has recently subdivided its work among committees, which, as originally appointed, were as follows:

Committee on engineering plans.-The engineer members of the Commission-Mr. Harrod, chairman, Mr. Burr, Mr. Grunsky, and Mr. Parsons.

Executive committee.-Mr. Parsons, Mr. Grunsky, Admiral Walker.
Committee on engineering.-Mr. Burr and Mr. Parsons.
Committee on finance.-Mr. Hecker and Mr. Harrod.
Committee on legislature.-Mr. Harrod and Mr. Hecker.
Committee on sanitation.- Mr. Grunsky and Mr. Burr.

The chairman of the Commission is ex officio a member of these committees, and General Davis is a member thereof when meetings are held on the Isthmus.

There is at present one vacancy on the Commission and on some of the above-named committees, Col. Frank J. Hecker having resigned on November 16.

The governor of the Canal Zone represents the Commission in all matters relating to Canal Zone affairs and land matters, and supervises the operations of the health department. Maj. Gen. George W. Davis, U. S. Army, a member of the Commission, was appointed governor on June 8, 1904. His executive secretary is Mr. Harry D. Reed.

Hon. Osceola Kyle is judge of the Canal Zone, Mr. J. M. Keedy, prosecuting attorney, and Mr. Tom M. Cooke, collector of revenue. On May 6, 1904, Mr. John Findlay Wallace was elected chief engineer of the Commission, and assumed his duties on June 1, 1904. The chief engineer has been placed in charge of the Commission's engineering work, of canal construction work, of the construction of waterworks and sewerage systems for Panama and Colon, and, under the direction of the governor, he has charge of the construction and repair of buildings and of Canal Zone public works.

The engineering staff includes the following: Mr. John Seager, secretary to the chief engineer; Mr. W. J. Karner, office engineer; Mr. Carleton E. Davis, engineer in charge of waterworks and sewerage; Mr. Walter E. Dauchy, division engineer; Mr. H. F. Dosé, resident engineer; Mr. Boyd Ehle, resident engineer; Mr. Charles List,