All the States or Departments constituting the nation have always had equal rights. It is true that political struggles have occurred in Colombia which resulted in civil strife, even as in all other nations with whose history Colombia is acquainted; but never has Panama or any other State or Department of Colombia endeavored to sever its relations with the rest of Colombia, or even protested against any act of the Government as being against its welfare and designed for the special interest of other parts of the national body. Such civil wars as have occurred in Colombia came from struggles between parties having representatives in all parts of the nation. The sacrifices imposed upon the nation by these struggles and the efforts made to work our way through them have been undergone and shared alike by all parts of the nation.

The citizens of Colombia in Panama took part in the struggles on both sides, and in the outcome Panama shared equally in the benefits with all the other parts of the nation, but, in several particulars of an economical, polítical, and vital character, was burdened less with the evil consequences than were the others. For instance, Colombia generally had to suffer the evils of a paper currency whereas the people of Panama, throughout the whole crisis and afterwards, continued by the act of Colombia, to enjoy the benefit of specie currency, though paper currency was made, by the act of the Colombian Congress, the only lawful currency in all other parts of the Republic.

Taking the most unfavorable view possible of the refusal of the Colombian Congress to sanction the Herran-Hay treaty, it was only a repetition of the act done in 1869 by the United States Senate. During almost every session of every double-chambered national legislature measures most necessary to the national welfare fail for want of agreement by the two bodies whose assent must be secured, and consequently go over until unity of action can be obtained. The thing which so imperiled the vital interests of the people of Panama was not the refusal of the Colombian Congress to ratify the Herran-Hay treaty without amendment, but the existence of the Spooner Act of the United States, which operated to prevent free and full discussion of and final agreement upon a treaty for the construction of the canal, after the exercise of their constitutional rights by all parties charged by law with a responsibility in regard thereto. But for this act the people of Panama could have counted upon the conclusion of a treaty during subsequent sessions of the Congresses of the two countries. Otherwise, republican government must be admitted to be a failure. Moreover, what was there to prevent the United States from amending or repealing this act if actual conditions called for this, in the interest of the United States, of Panama, of Colombia, and of other nations?

I can not escape, however, from the feeling that consideration of the internal government of Colombia and of the relation of Panama to Colombia prior to the 2d of November, 1903, can only serve to confuse the issue, for the arbitrators in the case which Colombia proposes to submit could not inquire into the internal government or the foreign policy of either Colombia or the United States, but only into the questions submitted, questions which are purely of law, upon acts all of which are admitted. The accuracy or the inaccuracy of the statements made by us, in this discussion of the history of Colom

bia, could not be passed upon in the arbitration which I propose and does not have to be decided by us in making a direct settlement, for the sole question is: Did the United States act contrary to the treaty of 1846 or to principles of international law assented to by the United States!

I beg of you, therefore, to assure the President and his constitutional advisers that I have not intended to propose that the United States submit its public policy to the decision of any arbitrator, and that you will put out of mind all matters which do not affect the claim which is made by my country or the method proposed for its honorable settlement, either by compensation of Colombia or the arbitration of her claim.

Having endeavored to confine myself in this communication to facts about which there is no dispute and which must be considered first by ourselves in arriving at a direct settlement of Colombia's claim, and then by any court of arbitration to which this claim may be referred, if a direct settlement is not made, I trust that you will assist me to clear away all other questions and to bring to the attention of the President and his constitutional advisers only such questions as will promote an honorable settlement of this unhappy contention at the earliest possible moment.

In former communications received from the Department of State of the United States, it was stated that the actions of the United States sprang from motives of the friendliest kind toward Colombia, and were taken in order faithfully to perform the duties imposed upon the United States by the treaty of 1846.

I note the fact that in your communication it is stated for the first time, on behalf of your Government, that the United States espoused the cause of Panama, the language being:

Nor are we willing to permit any arbitrator to determine the political policy of the United States in following its sense of right and justice by espousing the cause of this weak people against the stronger Government of Colombia, which had so long held them in unlawful subjection?

As my country must suffer a continuous injury until the United States determines either to compensate Colombia or to arbitrate this claim, and as a considerable time has already elapsed since the events complained of, I take the liberty of expressing the hope that the President and his constitutional advisers will give the earliest possible reconsideration to my country's claim, in the light of the facts and arguments thereon set forth in this communication, and will submit the same to the Senate and to the House of Representatives of the United States in order that the members of these two honorable bodies may determine the course which it is proper for them to take under existing conditions.

After the most painstaking review of the situation I find myself convinced that considerations not only of absolute but of practical justice, as well as of honor and of the general welfare of our two countries, our two continents, and, indeed, of the whole world, call for the compensation of Colombia for her loss or the arbitration of her claim, and I feel confident that the Government of the United States will be glad to accede to one or the other of these honorable proposals, now that all question of casting aspersions upon the honor of the United States has been removed from this correspondence.

If the United States does not feel called upon to compensate Colombia without recourse to arbitration, I propose that the questions herein stated be referred to an impartial court of arbitration constituted in accordance with the provisions of the treaty of The Hague, adopted by the United States and by 25 other nations after most careful consideration. But if for any reason the United States would prefer a court of arbitration constituted in any other way, Colombia will consent to any method suggested by the United States which will assure the selection of competent and impartial arbi-· trators to determine this unhappy contention.

With assurances of high personal regard and of liveliest hopes for the success of our mutual efforts for a settlement of this controversy which will be honorable to all parties, I beg to remain,

Your Excellency's obedient servant,

DIEGO MENDOZA.

mittee on Interoceanic Canals Regarding the Government of tl Canal Zone, the "Taft Agreement" with Panama, and the Pr posal to Build a Lock Canal, April 18, 1906 (Excerpts)*

Secretary TAFT. Gentlemen of the committee, the transactions the Government in respect to the Panama Canal, with which, eithe by reason of personal participation or by reason of examination reports made to me, I am familiar, and with respect to which I infe that the committee desires my evidence, cover a period beginnin May 9, 1904, and continuing down to the present date. In orde that I may make my evidence with respect to them intelligible, it i necessary for me to refer to a great many documents, laws, orders and correspondence. The different transactions to be touched upo are numerous. I shall have to test your patience by detail, and fear that my statement will be quite long. I have written out my statement, and it is being printed, with exhibits.

I crave the indulgence of the committee, that I be not interrupted by questions until my statement is concluded; then I shall be glad to submit to the cross-examination of the committee upon every subject touched upon in the statement, or any other connected with the Panama Canal, or the Panama Railroad, in respect to which I can furnish the committee any information. I am quite sure that if the committee will postpone its questions, it will be found that the range of crossexamination will be much more limited than if questions are put in advance of my completed statement. This method will certainly, therefore, shorten the valuable time of the committee, of which I shall, in any event, have to consume more than I would wish.

TYPE OF CANAL AND NECESSITY FOR PROMPT DECISION.

In the first place, I shall not attempt to discuss at all the engineering and technical questions with reference to the type of the canal. I have expressed my opinion in a letter to the President in favor of a lock canal and strongly adhere to it. This committee has had before it able engineers on both sides of the question, and has had full expla nations made to it thereon.

With respect to the type of the canal I can only urge with great deference that it is of the highest importance that the question be decided with as much promptness as the subject will permit. Senator MORGAN. May I venture to ask you, just there, whether that ought not to be settled in a separate bill, disconnected from every other consideration?

Secretary TAFT. Yes, sir; I think so.

The present law -the Spooner Act, so called-certainly intended to provide for the construction of a lock canal. The extent of the financial provision made in the act, when compared with the recommendations of the first Walker Commission, leave no doubt that the intention of Congress was to appropriate money for a canal at a 90-foot level, with the necessary locks. If Congress decides to reverse this policy and votes

*U.S. Senate, Committee on Interoceanic Canals, Hearings in the Matter of the Senate Resolution Adopted January 9, 1906, Providing for an Investigation of Matters Relating to the Panama Canal, Etc. Washington, Govt. Print. Off.. 1906. 59th Congress, 2nd Session, Senate Document No. 401. Vol. III, pp. 2516-2529, 2588-2591. TC774.U6 19601.

in favor of a sea-level canal, then the President is anxious to know it as soon as possible and to begin the work at once.

If Congress decides in favor of a lock canal, or if it chooses not to make any decision at all and is willing to leave the situation as it is upon the law as it is, the President will not hesitate to adopt the plan recommended by the minority, with some possible modifications, and proceed to the speedy construction of the great waterway at an 85-foot level. I am advised from the Isthmus that Mr. Stevens's work has so far progressed that he will soon be in a position where he must delay all work, or substantially all, until the decision is reached. I have been advised by Mr. Tawney that the time is near at hand when we must be ready with our estimates for the money needed in the construction of the canal for the year ending June 30, 1907. They must be included in the sundry civil bill. Mr. Shonts and Mr. Stevens think that the character of the estimates will materially differ as the type of canal fixed upon is lock or sea-level.

I am quite aware of the gravity of the question and of the serious character of a mistake, if mistake it be, in the recommendation of the minority of the consulting board as to the Gatun dam, and while I do not share, I sympathize with the anxiety which must affect any member of this committee if he has real doubt in regard to the stability of the structure which is the distinguishing and indispensable feature of that plan. But however great the responsibility it must be met, and I submit with great respect that it must be promptly met, in order that there shall be no unnecessary delay in pushing the work.

SUBJECTS TO BE DISCUSSED.

The subjects which I shall discuss are:

First. The government of the Zone; its judicial system, and what is needed in the way of additional legislation by Congress.

Second. The Hay-Varilla treaty and the political relations between the United States and the Republic of Panama, and the necessity and reasons for the issuing of the Executive order of December 3, with its modifications, as a modus vivendi.

Third. The Executive order or modus vivendi of December 3, 1904; the reasons for its necessity and adoption.

Fourth. The currency agreement of June 20, 1904, and the bankers' agreement of April 9, 1905; the necessity for them; their effect, and the proper course to be taken with respect to the future financial operations of the Government on the Isthmus.

Fifth. Authority of the President, acting through the Commission or other agent, to make temporary arrangements with the Republic of

Panama.

Sixth. The old Commission; its work, and the reasons for its retirement; the reorganization; the new Commission and its work.

Seventh. The Panama Railroad; its condition at the time of the transfer; the acquisition of the outstanding shares of stock by the Government in the spring of 1905; the question of the continuance of the steamship line; the question of rates; the congestion of traffic, and the Pacific Mail.

Eighth. The relations of William Nelson Cromwell to the Government's construction of the canal and the assistance which he has rendered.