being considered that might obviate the necessity of handling the money twice, hence this Government's expressed willingness to retain possession of the balance until the minister's arrival.

Upon the whole, it is deemed best by this Government to adhere to the original arrangement, and it has accordingly paid over the nine millions to J. P. Morgan & Co. for account of the Republic of Panama, being balance in full of amount due under the treaty.

The representation to this Government by Panama, made prior to the ratification of the treaty, that at least eight millions of this fund should be safely invested to secure the stability of Panama's finances, this Government will expect to be carried out in good faith.)

Mr. Russell to Mr. Hay.

[Telegram.—l'araphrase.]

AMERICAN LEGATION,

Panama, May 21, 1904.

(Mr: Russell reports that he has received written reply from the Government of Panama accopting terms of the United States relating to the payment of the canal indemnity to J. P. Morgan.)

lishment of Government in the Canal Zone, April-May 1904*

THE LAW ESTABLISHING 4 GOVERNMENT FOR THE CANAL ZONE.

Provision for the government of the Canal Zone on the Isthmus.of Panama was made by the act of Congress approved April 28, 1904, which act is as follows:

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the President is hereby authorized, upon the acquisition of the property of the New Panama Canal Company and the payment to the Republic of Panama of the ten millions of dollars provided by article fourteen of the treaty between the United States and the Republic of Panama, the ratifications of which were exchanged on the twenty-sixth day of February, nineteen hundred and four, to be paid to the latter Government, to take possession of and occupy on behalf of the United States the zone of land and land under water of the width of ten miles, extending to the distance of five miles on each side of the center line of the route of the canal to be constructed thereon, which said zone begins in the Caribbean Sea three marine miles from mean low-water mark and extends to and across the Isthmus of Panama into the Pacific Ocean to the distance of three marine miles from mean. low-water mark, and also of all islands within said zone, and in addition thereto the group of islands in the Bay of Panama named Perico, Naos, Culebra, and Flamenco, and, from time to time, of any lands and waters outside of said zone which may be necessary and convenient for the construction, maintenance, operation, sanitation, and protection of the said canal, or of any auxiliary canals or other works necessary and convenient for the construction, maintenance, operation, sanitation, and protection of said enterprise, the use, occupation, and control whereof were granted to the United States by article two of said treaty. The said zone is hereinafter referred to as "the Canal Zone." The payment of the ten millions of dollars provided by article fourteen of said treaty shall be made in lieu of the indefinite appropriation made! in the third section of the act of June twenty-eighth, nineteen hundred and two, and is hereby appropriated for said purpose.

SEC. 2. That until the expiration of the Fifty-eighth Congress, unless provision for the temporary government of the Canal Zone be sooner made by Congress, all the military, civil, and judicial powers as well as the power to make all rules and regulations necessary for the government of the Canal Zone and all the rights, powers, and authority granted by the terms of said treaty to the United States shall be vested in such person or persons and shall be exercised in such manner as the President aball direct for the government of said zone and maintaining and protecting the inhabitants thereof in the free enjoyment of their liberty, property, and religion.

INSTRUCTIONS FROM THE PRESIDENT,

On May 9, 1904, the President issued instructions to the Commission, through the Secretary of War, as authorized by the act above quoted, placing the Commission in charge of the government of the Canal Zone, giving it the power to legislate, and appointing Maj. Gen. George W. Davis, a member of the Commission, governor of the Canal Zone. The President's letter of instructions to the Secretary of War is as follows:

WHITE HOUSE, Washington, D. C., May 9, 1904.

SIB: By the act of Congress approved June 28, 1902, the President of the United States is authorized to acquire for, and on behalf of, the United States all the rights, privileges, franchises, concessions, grants of lands, rights of way, unfinished work, plaats, shares of the capital stock of the Panama Railway, owned by or held for the of the New Panama Canal Company, and any other property, real, personal, and mized of any name or nature owned by the said New Panama Canal Company stated on the Isthmus of Panama. The President is by the same act also author

Letter of the Secretary of War Transmitting the First Annual Report of the Isthmian Canal Commission, December 1, 1904. Washington, Govt. Print. Off., 1905. 58th Congress, 3rd Session. House Document No. 226, pp. 31-36. TC774.U5 1905a; and Foreign Relations of the United States, 1904, pp. 581-584.

ized to acquire for, and on behalf of, the United States perpetual control of a strip of land on the Isthmus of Panama, not less than 6 miles in width, extending from the Caribbean Sea to the Pacific Ocean, and the right to excavate, construct, and maintain perpetually, operate and protect thereon, a ship canal of certain specified capacity and also the right to perpetually operate the Panama Railroad. Having acquired such rights, franchises, property, and control, the President is by the same act required to excavate, construct, and complete a ship canal from the Caribbean Sea to the Pacific Ocean, and to enable him to carry forward and complete this work, he is authorized to appoint, by and with the consent of the Senate, an Isthmian Canal Commission of seven members, who are to be in all matters subject to his direction and control.

By the terms of the canal convention between the United States and the Republic of Panaina, entered into in pursuance of the said act of Congress approved June 28, 1902, the ratifications of which were exchanged on the 26th day of February, 1904, the Republic of Panama granted to the United States:

First. The perpetual use, occupation, and control of a certain zone of land, land under water including islands within said zone, at the Isthmus of Panama, all to be utilized in the construction, maintenance, and operation, sanitation and protection of the ship canal, of the width of 10 miles extending to the distance of 5 miles on each side of the central line of the route of the canal, and the use, occupation, and control of other lands and waters outside of the zone above described which may be necessary and convenient for the construction, maintenance, operation, sanitation, and protection of said canal or of any auxiliary canals or other works necessary and convenient for the same purpose; also the islands of Perico, Naos, Culebra, and Flemenco, situated in the Bay of Panama, and

Second. All the rights, powers, and authority within the zone, auxiliary lands and lands under water, which the United States would possess and exercise if it were the sovereign of the territory granted, to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power, and authority.

By the act of Congress approved April 28, 1904, the President is authorized, upon acquisition of the property of the New Panama Canal Company, and the payment to the Republic of Panama of the price for compensation agreed upon in the said Canal Convention, to take possession of, and occupy on behalf of the United States, the zone of land, and land under water, including islands within said zone at the Isthmus of Panama of the width of 10 miles extending to the distance of 5 miles on each side of the central line of the route of the canal to be constructed thereon, including the islands of Perico, Naos, Culebra, and Flamenco, and from time to time as may be necessary and convenient certain auxiliary lands and waters outside the said zone for the purpose of constructing, maintaining, operating, sanitating, and protecting the ship canal, the use, occupation, and control whereof were granted to the United States by the Republic of Panama in the said Canal Convention.

By the same act, the President is authorized, for the purpose of providing temporarily for the maintenance of order in the Canal Zone and for maintaining and protecting the inhabitants thereof in the free enjoyment of their liberty, property, and "religion, to delegate to such person or persons as he may designate and to control the manner of their exercise, all the military, civil and judicial powers as well as the power to make all needful rules and regulations for the government of the Canal Zone and all the rights, powers and authority granted by the said Canal Convention to the United States, until the close of the Fifty-eighth Congress.

Payments of the authorized purchase price of $40,000,000 to the New Panama Canal Company for the property of that corporation on the Isthmus, including the shares of railway stock, and for the records in Paris, and of the sum of $10,000,000, as stipulated in the Canal Convention, to the Republic of Panama for the rights, powers and privileges granted to the United States by the terms of the said conven tion, have been made and proper instruments of transfer have been executed by the Panama Canal Company. The members of the Isthmian Canal Commission have been appointed. They have organized the Commission and entered upon their duties. I have taken possession of and now occupy, on behalf of the United States, the Canal Zone and public land ceded by the Republic of Panama.

It becomes my duty, under the statutes above referred to, to secure the active prosecution of the work of construction of the canal and its auxiliary works, through the Isthmian Canal Commission, and in connection with such work and in aid thereof to organize and conduct a temporary government of the Zone, so as to maintain and protect the inhabitants thereof in the free enjoyment of their liberty, property, and religion.

Inasmuch as it is impracticable for the President, with his other public duties, to give to the work of supervising the Commission's construction of the canal and government of the Zone the personal attention which seems proper and necessary, and inasmuch as the War Department is the Department which has always super

vised the construction of the great civil works for improving the rivers and har bors of the country and the extended military works of public defense, and as the aid Department has from time to time been charged with the supervision of the government of all the island possessions of the United States, and continues to supervise the government of the Philippine Islands, I direct that all the work of the 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 othcers 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 vio

lated; 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 Isth mian 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 Isthinus 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 gover nor 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 disea-es, which in the past have been so prevalent and destructive in Panama.