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divided, or whether the contract ought to be let as a whole. The Government would of course rent its plant to the successful bidder, and probably would have to turn over the railroad to him to run, complying with the charter as to commercial business. The necessity for the use of the railroad in the construction of the canal and doing the work which will have to be done by contract may lead to a unit contract, for it is difficult to see how different contractors spread along the axis of the canal route could all control and make use of the railroad without confusion and conflict.


I have now covered the subjects which I noted for discussion and merely wish to close my statement as I began it, with urging the committee to as speedy action as possible consistent with the discharge of its responsible duty in selecting the type of the canal. The law now fixes what that type is. If the committee abides by the law as to what that type shall be, well and good, but if it desires to see the Congress reverse its past action in this regard, then, on behalf of the President and the Administration and the Canal Commission, I earnestly ask for an early decision.

In this very long paper I have attempted to review the important questions which seem to have occupied the attention of the committee in its very patient and thorough examination. Had our foresight been as clear and wise as our retrospect may now be comprehensive and detailed, we might have avoided a number of mistakes. We have taken about two years to make the preparations necessary to begin the work of excavation. Those preparations have involved a great deal of preliminary construction and a great deal of persistent effort to make the Isthmus a healthy place in which our officers, employees, and laborers may live and work. There have been a great many difficulties to overcome in effecting a proper organization. As this is a governmental work and as every member of the public is entitled to know how it progresses, it has been subjected to a great deal of criticism, both just and unjust. It is impossible to compare the number of mistakes made in such preparation and organization with the number of mistakes that would have been made under private organization, for the reason that private corporate organization is not subjected to the fierce light that beats on a Government enterprise. The agents of a corporation are not held up to public obloquy by writers in the public press who can make but partial investigation into the facts and are consciously or unconsciously anxious to exaggerate and make sensational the faults of public servants. This one circumstance of the injustice and unfairness of public criticism through the press creates reluctance on the part of competent men to accept positions of responsibility in such an enterprise. In spite, however, of all the difficulties, I feel confident, from the reports which come to me, that everything on the Isthmus under the most efficient administration of Mr. Shonts, Governor Magoon, and, most of all, Mr. Stevens, is in a condition that ought to commend itself to your committee. The enterprise is now organized on business principles and it is about time for the work of construction to begin. He would be a rash man who would assert positively and unequivocally that there had not been any waste of money or any corruption of any kind in the expenditure of some seven

teen or eighteen millions under the conditions of distance and the sometimes necessary freedom from the closest supervision that have obtained in this work, but it can be affirmed that in spite of all the investigations, in spite of all the publicity given in various papers, as yet there has been no proof of corruption of any sort in the enterprise since the beginning, and I certainly hope that there is and will be nothing to justify such proof.

I am now subject to the questions of the committee.

Senator MORGAN. I wish to ask you, before we separate, if your attention has been called to the fact that in the passage of the Spooner law the Congress had no report before it except the first Walker report?

Secretary TAFT. I so understood; which put the level of the canal at 90 feet, as I recollect it.

Senator MORGAN. Yes. That report condemned the sea-level project, as I understand it. It was clear that it did.

Secretary TAFT. Yes, sir. At least, it did not favor it. It did favor the other.

Senator MORGAN. It really condemned it as an impracticable scheme considering all the surrounding circumstances. To the like effect, and in stronger words, it condemned the Gatun location. Now, the President, through the present Commission, a minority of whom have reported in favor of the Gatun dam--I mean the Consulting BoardSecretary TAFT. Yes.

Senator MORGAN (continuing). Asserts the right, as I understand you to assert it, to claim that the law authorizes him to build the dam at Gatun, if we do nothing else?

Secretary TAFT. Yes, sir.

Senator MORGAN. I wanted to call your attention to that because I take issue with you upon that legal proposition.

Secretary TAFT. My proposition is this: That the Spooner Act gives the President the right to build any kind of a dam that he thinks wise.. The amount provided is commensurate with that recommended by the Walker Commission for the construction of a 90-foot canal. The President has recommended the 85-foot canal, and has said to Congress that if it does not choose now to take the responsibility of saying just what the type of the canal shall be, he shall go on and exercise the authority conferred upon him by Congress in the Spooner Act; that authority to be exercised, of course, in connection with Congress in making the appropriations under his recommendations and estimates. Senator MORGAN. My proposition in regard to the Gatun dam is that it was distinctly condemned in that report, and Congress, acting on the report, must be considered, I think, as having joined in the condemnation; and now that the Gatun dam is, through the President's adoption of the report, made the location for the Gatun dam, I can not make the connection between the Spooner Act and the establishment of a dam at Gatun, which that report condemns. I do not see the logical or legal connection between the two propositions. I merely wanted to call it to your attention, so that you might think it over before the examination is conducted any further.

(The committee thereupon adjourned until to-morrow, Friday, April 20, 1906, at 10.30 o'clock a. m.)


1. The Spooner Act.

2. The Hay-Varilla treaty.

3. Dispatch from General Davis, June 17, 1904, recommending form of customs law. 4. Letter of General Davis, October 18, 1904, to Admiral Walker, re postponement of orders of June 24, 1904.

5. Stenographic report of first conference between President Amador and Secretary Taft.

6. Cables to and from Secretary Hay regarding the order of December 3, 1904. 7. Stenographic report of conference with fiscal commissioners.

8. Law enacted by Panamanian Government re currency.

9. Statement of cost of exchange.

10. Letter of Mr. Shonts inclosing communications from the disbursing officer re bankers' agreement.

11. Statements of Commissioner Cooley and Mr. Pepperman re civil service. 12. List of requisitions unfilled February 1, 1905, and list of those on hand June 1. 13. Report of Major Mason.

14. Attempted legislation in Fifty-eighth Congress with reference to the canal. 15. Suggestions of Mr. Wallace, Mr. Parsons, and General Davis re reorganization. 16. Report of subcommittee of Committee on Interstate and Foreign Commerce on investigation of Panama Railroad.

17. Correspondence with Mr. Walker, traffic manager, re letter of criticism of rates. 18. Letters of Mr. Dauchy and General Davis.

19. Letter of Mr. Wallace to Secretary of War, of June 8, 1905, re conditions on Isthmus.

20. Statistics re gold and silver employees on the Isthmus and number of returning employees.

21. Clippings from newspapers re conditions.

22. Statements (1) given out for publication and (2) as dictated by Secretary.

23. Statement of organization department of construction and engineering, June 1, 1905.

24. Order of June 13, 1905, of Mr. Wallace re Dauchy and Prescott.

25. Report of Governor Magoon as to conditions, dated March 30, 1906.

26. Measures taken to make up for Mr. Wallace's retirement.

27. Correspondence on pipe-line subject.

EXHIBIT 1.-The Spooner Act.

AN ACT to provide for the construction of a canal connecting the waters of the Atlantic and Pacific


Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the President of the United States is hereby authorized to acquire, for and on behalf of the United States, at a cost not exceeding forty millions of dollars, the rights, privileges, franchises, concessions, grants of land, right of way, unfinished work, plants, and other property, real, personal and mixed, of every name and nature, owned by the New Panama Canal Company, of France, on the Isthmus of Panama, and all its maps, plans, drawings, records on the Isthmus of Panama and in Paris, including all the capital stock, not less, however, than sixtyeight thousand eight hundred and sixty-three shares of the Panama Railroad Company, owned by or held for the use of said canal company, provided a satisfactory title to all of said property can be obtained.

SEC. 2. That the President is hereby authorized to acquire from the Republic of Colombia, for and on behalf of the United States, upon such terms as he may deem reasonable, perpetual control of a strip of land, the territory of the Republic of Colombia, not less than six miles in width, extending from the Caribbean Sea to the Pacific Ocean, and the right to use and dispose of the waters thereon, and to excavate, construct, and to perpetually maintain, operate, and protect thereon a canal of such depth and capacity as will afford convenient passage of ships of the greatest tonnage and draft now in use, from the Caribbean Sea to the Pacific Ocean, which control shall include the right to perpetually maintain and operate the Panama Railroad, if the ownership thereof, or a controlling interest therein, shall have been acquired by the United States, and also jurisdiction over said strip, and the ports at the ends thereof to make such police and sanitary rules and regulations as shall be necessary to preserve order and preserve the public health thereon, and to establish such judicial tribunals as may be agreed upon thereon as may be necessary to enforce such rules and regulations.

The President may acquire such additional territory and rights from Colombia as in his judgment will facilitate the general purpose hereof.

SEC. 3. That when the President shall have arranged to secure a satisfactory title to the property of the New Panama Canal Company, as provided in section one hereof, and shall have obtained by treaty control of the necessary territory from the Republic of Colombia, as provided in section two hereof, he is authorized to pay for the property of the New Panama Canal Company forty millions of dollars, and to the Republic of Colombia such sum as shall have been agreed upon, and a sum sufficient for both said purposes is hereby appropriated, out of any money in the Treasury not otherwise appropriated, to be paid on warrant or warrants drawn by the President. The President shall then, through the Isthmian Canal Commission hereinafter authorized, cause to be excavated, constructed, and completed, utilizing to that end, as far as practicable, the work heretofore done by the New Panama Canal Company, of France, and its predecessor company, a ship canal from the Caribbean Sea to the Pacific Ocean. Such canal shall be of sufficient capacity and depth as shall afford convenient passage for vessels of the largest tonnage and greatest draft now in use, and such as may be reasonably anticipated, and shall be supplied with all necessary locks and other appliances to meet the necessities of vessels passing through the same from ocean to ocean; and he shall also cause to be constructed such safe and commodious harbors at the termini of said canal, and make such provisions for defense as may be necessary for the safety and protection of said canal and harbors. That the President is authorized for the purposes aforesaid to employ such persons as he may deem necessary, and to fix their compensation.

SEC. 4. That should the President be unable to obtain for the United States a satisfactory title to the property of the New Panama Canal Company and the control of the necessary territory of the Republic of Colombia and the rights mentioned in sections one and two of this act, within a reasonable time and upon reasonable terms, then the President, having first obtained for the United States perpetual control by treaty of the necessary territory from Costa Rica and Nicaragua upon terms which he may consider reasonable, for the construction, perpetual maintenance, operation, and protection of a canal connecting the Caribbean Sea with the Pacific Ocean by what is commonly known as the Nicaragua route, shall through the said Isthmian Canal Commission, cause to be excavated and constructed a ship canal and waterway from a point on the shore of the Carribean Sea near Greytown, by way of Lake Nicaragua, to a point near Brito on the Pacific Ocean. Said canal shall be of sufficient capacity and depth to afford convenient passage for vessels of the largest tonnage and greatest draft now in use, and such as may be reasonably anticipated, and shall be supplied with all necessary locks and other appliances to meet the necessities of vessels passing through the same from ocean to ocean; and he shall also construct such safe and commodius harbors at the termini of said canal as shall be necessary for the safe and convenient use thereof, and shall make such provisions for defense as may be necessary for the safety and protection of said harbors and canal; and such sum or sums of money as may be agreed upon by such treaty as compensation to be paid to Nicaragua and Costa Rica for the concessions and rights hereunder provided to be acquired by the United States are hereby appropriated, out of any money in the Treasury not otherwise appropriated, to be paid on warrant or warrants drawn by the President.

The President shall cause the said Isthmian Canal Commission to make such surveys as may be necessary for said canal and harbors to be made, and in making such surveys and in the construction of said canal may employ such persons as he may deem necessary, and may fix their compensation.

In the excavation and construction of said canal the San Juan River and Lake Nicaragua, or such parts of each as may be made available, shall be used.

SEC. 5. That the sum of ten million dollars is hereby appropriated, out of any money in the Treasury not otherwise appropriated, toward the project herein contemplated by either route so selected.

And the President is hereby authorized to cause to be entered into such contract or contracts as may be deemed necessary for the proper excavation, construction, completion, and defense of said canal, harbors, and defenses, by the route finally determined upon under the provisions of this act. Appropriations therefor shall from time to time be hereafter made, not to exceed in the aggregate the additional sum of one hundred and thirty-five millions of dollars, should the Panama route be adopted, or one hundred and eighty millions of dollars should the Nicaragua route be adopted.

SEC. 6. That in any agreement with the Republic of Colombia, or with the States of Nicaragua and Costa Rica, the President is authorized to guarantee to said Republic or to said States the use of said canal and harbors, upon such terms as may be agreed upon, for all vessels owned by said States or by citizens thereof.

SEC. 7. That to enable the President to construct the canal and works appurtenant thereto, as provided in this act, there is hereby created the Isthmian Canal Commission, the same to be composed of seven members, who shall be nominated and appointed by the President, by and with the advice and consent of the Senate, and who shall serve until the completion of said canal unless sooner removed by the President, and one of whom shall be named as the chairman of said Commission. Of the seven members of said Commission at least four of them shall be persons learned and skilled in the science of engineering, and of the four at least one shall be an officer of the United States Army, and at least one other shall be an officer of the United States Navy, the said officers, respectively, being either upon the active or retired list of the Army or of the Navy. Said Commissioners shall each receive such compensation as the President shall prescribe until the same shall have been otherwise fixed by the Congress. In addition to the members of said Isthmian Canal Commission the President is hereby authorized, through said Commission, to employ in said service any of the engineers of the United States Army at his discretion, and likewise to employ any engineers in civil life, at his discretion, and any other persons necessary for the proper and expeditious prosecution of said work. The compensation of all such engineers and other persons employed under this act shall be fixed by said Commission, subject to the approval of the President. The official salary of any officer appointed or employed under this act shall be deducted from the amount of salary or compensation provided by or which shall be fixed under the terms of this act. Said Commission shall in all matters be subject to the direction and control of the President, and shall make to the President annually and at such other periods as may be required, either by law or by the order of the President, full and complete reports of all their actings and doings and of all moneys received and expended in the construction of said work and in the performance of their duties in connection therewith, which said reports shall be by the President transmitted to Congress. And the said Commission shall furthermore give to Congress, or either House of Congress, such information as may at any time be required either by act of Congress or by the order of either House of Congress. The President shall cause to be provided and assigned for the use of the Commission such offices as may, with the suitable equipment of same, be necessary and proper, in his discretion, for the proper discharge of the duties thereof.

SEC. 8. That the Secretary of the Treasury is hereby authorized to borrow on the credit of the United States from time to time, as the proceeds may be required to defray expenditures authorized by this act (such proceeds when received to be used only for the purpose of meeting such expenditures), the sum of one hundred and thirty. million dollars, or so much thereof as may be necessary, and to prepare and issue therefor coupon or registered bonds of the United States in such form as he may prescribe, and in denominations of twenty dollars or some multiple of that sum, redeemable in gold coin at the pleasure of the United States after ten years from the date of their issue, and payable thirty years from such date, and bearing interest payable quarterly in gold coin at the rate of two per centum per annum; and the bonds herein authorized shall be exempt from all taxes or duties of the United States, as well as from taxation in any form by or under State, municipal, or local authority: Provided, That said bonds may be disposed of by the Secretary of the Treasury at not less than par, under such regulations as he may prescribe, giving to all citizens of the United States an equal opportunity to subscribe therefor, but no commissions shall be allowed or paid thereon; and a sum not exceeding one-tenth of one per centum of the amount of the bonds herein authorized is hereby appropriated, out of any money in the Treasury not otherwise appropriated, to pay the expense of preparing, advertising, and issuing the same.

Approved, June 28, 1902.

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