Major GALLAGHER. He is stationed there to look after the shipments of lumber that may be purchased right in that vicinity.

Senator HOPKINS. You get some of your lumber in that locality, then, do you?

Major GALLAGHER. There has been some redwood purchased around through there. The duties of that agent have not been very arduous. Senator HOPKINS. Have they been sufficiently important to warrant the Commission in maintaining an agency there?

Major GALLAGHER. Yes, sir; though not exactly on account of the purchases. In the first place, the officer who is acting there is a regular army officer. He is Major Duvall, the depot quartermaster; and the principal duty that he has there is to distribute circulars. When we get out one of these poster circulars we send them to these different purchasing agents; and our advertisement contains an announcement that these posters may be obtained from the assistant purchasing agents in New York, New Orleans, San Francisco, and Tacoma; so that the people in those localities who wish to bid may obtain them from the agents without writing to Washington for them.

That has really been the principal work that the agent at San Fran cisco has been doing, and it was quite important that he should do it. I found that to be the case because we had difficulty in getting the circular posters to the people out there. There seemed to be some delay in some way or other, and some complaints were made about it. Since that agency has been established there has been very smooth sailing. Senator HOPKINS. I beg pardon for interrupting.

The CHAIRMAN. I think probably we had better let the Major go on and make his statement, and then we will ask him questions as we go along. If there is anything additional, Major, will you please state it, in regard to the offices you have held in connection with the Panama Canal?

Major GALLAGHER. I have given a general outline of the duties of the office. Of course, the details are multitudinous.

The CHAIRMAN. Then the Senators may proceed to ask the Major any questions that may suggest themselves.

Senator HOPKINS. You have also stated that you had an agency at New Orleans?

Major GALLAGHER. Yes, sir.

Senator HOPKINS. What are the duties of the subagent there?

Major GALLAGHER. He makes a number of purchases. He has pur chased considerable material there. He also distributes the circulars to prospective bidders in that locality who apply for them. He also looks after the shipment of materials. There is a great deal of mate rial being shipped via New Orleans, and he looks after that part of

the work.

Senator HOPKINS. What class of material do you secure at New Orleans?

Major GALLAGHER. There has been a great deal of lumber and piling purchased down in that vicinity, and some furniture; and some of the firms down there have sold us all kinds of material-hardware, paints, etc.

Senator HOPKINS. That is secured through your agency there, is it? Major GALLAGHER. Some of it is secured through the agency there, but most of it through the agent here.

Senator HOPKINS. And does he act as inspector there after the contract is given out here, in Washington?

Major GALLAGHER. Yes; he acts as inspector in some cases, where we feel that he is qualified to do so. In other cases we have regular inspectors.

Senator HOPKINS. What is the name of your agent in New Orleans? Major GALLAGHER. Mr. S. E. Redfern. He was chief clerk of the Walker Commission.

Senator HOPKINS. Is he a salaried man?

Major GALLAGHER. Yes, sir.

Senator HOPKINS. What salary is he paid?

Major GALLAGHER. I think his salary is $2,000 a year.

Senator HOPKINS. And how long has he been located at New Orleans? Major GALLAGHER. He has been there now about six month, I think, Senator.

Senator HOPKINS. Has the work that he has done, in your judgment, justified the establishing of an agency there at that salary?

Major GALLAGHER. Yes, sir; it was very well justified in every way. because without having such a man there we could not know what was going on; we could not make any purchases there of material right on the spot, and in every way his services have been necessary, in my opinion. I recommended the establishment of purchasing agencies at New York and New Orleans very shortly after I took charge of the office. The necessity for them was apparent.

Senator HOPKINS. How was the selection of this man at New Orleans brought by reason of his qualifications or by reason of political "pull?"

Senator TALIAFERRO. You might ask him who recommended him.
Senator HOPKINS. Yes; I could do that.

Major GALLAGHER. He was appointed to this position by the chairman of the present Commission. He had been chief clerk under the old Commission. He was a capable, conscientious, good man. He had had experience in purchasing. He occupied the place that I fell heir to that is, he was acting as purchasing agent of the Commission, although he was chief clerk.

Senator HOPKINS. Before you were appointed?

Major GALLAGHER. Before I was appointed purchasing agent.
Senator HOPKINS. So that he had had the experience?

Major GALLAGHER. He had had the experience, yes, sir: and I, for one, recommended him. I always spoke highly of him to Mr. Shonts, and considered him a very good man, indeed.

Senator HOPKINS. Whom did you select for New York?
Major GALLAGHER. Mr. Alfred Anderson.

Senator HOPKINS. Who is Mr. Anderson?

Major GALLAGER. He was purchasing agent of the Panama Railroad Company, and when I took charge of the office here I found that he was making a considerable number of purchases for the Commission in New York City. That is, when materials were called for by cable, or anything of that kind, the matter would be sent over to him, and he would make the purchase on the spot and send the material down there. He was also at that time receiving extra compensation from the Commission for the extra work being done for the Commission, although he was an employee of the Panama Railroad Company.

1

Senator HOPKINS. Is he now connected in anyway with the Panama Railroad?

Major GALLAGHER. The general purchasing officer of the Commission at the present time is also the general purchasing officer of the Panama Railroad and Steamship Company, and he is a subordinate of his; and of course he is making great quantities of purchases for the Panama Railroad.

Senator HOPKINS. In your judgment, have the results justified the establishment of this agency in New York?

Major GALLAGHER. Yes, sir.

Senator HOPKINS. What class of goods do you get from the New York agency that you ship to Panama?

Major GALLAGHER. The principal purchases he is making at the present time are commissary supplies; but there have been a number of emergency calls for stores. They might be calls for something connected with sanitation. At the time of the yellow fever outbreak there were a number of such calls; and we simply sent them over to him to purchase and make shipment by the next steamer. In that way his services have been very valuable; but his present purchases are mainly commissary supplies for the Panama Railroad.

Senator HOPKINS. Who on the Isthmus makes requisitions upon you?

Major GALLAGHER. The requisitions are submitted by the chief of the bureau of materials and supplies, but are usually approved by the head of the Department. That is to say, if the material was wanted for the engineering department, the requisition would be approved by the chief engineer, Mr. Stevens. If it was wanted by the chief of the sanitary department, it would be approved by Colonel Gorgas. If it was wanted by the executive department, it would be approved by Governor Magoon; but the requisitions usually come from the office of the chief of the bureau of materials and supplies.

Senator HOPKINS. But they originate in the manner you have indicated, from the several departments?

Major GALLAGHER. Yes, sir.

Senator HOPKINS. That are on the Isthmus all the time?

Major GALLAGHER. They originate in those departments, yes, sir; but, I say, in order to keep everything straight, they go through this division of materials and supplies.

Senator HOPKINS. Yes. You speak about advertising. Do you make any purchases here without advertising? Major GALLAGHER. At the present time? Senator HOPKINS. I mean at any time.

Major GALLAGHER. There are some emergency purchases made, Senator, without advertising: yes, sir. They are very few in number, and are getting fewer all the time. In the case of those, however, there is always an opportunity for competition. There are two forms that are used. One is called the poster circular; that is used where you give a long-time notice, thirty days; there is an advertisement made extensively throughout the country. Then we have the little form that is called the circular proposal-that is considered, I believe, under a decision, an advertisement. It is posted in our office, and anyone has a right to bid under it.

Senator HOPKINS. So that in any of your purchases there is competition?

Major GALLAGHER. There is competition. There always was, and I think that is the case now. I am quite certain that the same system is followed--that is, there is public notice given, so that there can be competition.

Senator HOPKINS. Go on, now, and state to what extent these calls for material are circulated among the people, so that the public may know what demands are made by the Commission and what they can do to meet them.

Major GALLAGHER. In the case of these large purchases they are circulated throughout the country. That is, advertisements are made in all the larger cities, in prominent newspapers, so that everyone that asks for the circulars can get them. We do not make a habit of sending these poster circulars to anyone unless they are asked for. We have found it necessary to discontinue that, because that is what is called keeping a mailing list. There is such a great variety and such a quantity of material being purchased that to undertake to send out poster circulars to everyone that you knew to be a dealer would be an enormous task. There is probably nothing in the line of trade that is not being purchased; and if we should send the circulars to certain firms that are known and recognized to be big firms there is no reason why we should not send them to the smaller ones. That fact was realized, and it was determined to have no mailing list, and to send the circulars only to those who asked for them.

Senator HOPKINS. But those circulars are kept in such a way that whenever a request is made you send them on to the party making the request?

Major GALLAGHER. Oh, yes, sir. As I explained before, they are sent around to these assistant purchasing agents in other places, and are also kept here for ready distribution to anyone that wants them. Senator HOPKINS. I will ask you if it is a fact that in making your purchases there has been pretty general competition?

Major GALLAGHER. Yes, sir; yes, sir-general competition. We try to follow the army rule.

Senator HOPKINS. So that you have received the benefit of whatever deductions would be made by means of competitive bids?

Major GALLAGHER. Yes, sir. I think there has been more general competition in this, Senator, than any other department of the Government; because they have purchasing agents in many places in other departments of the Government, and the circulars are sent out from those particular localities and bids are received in those localities, while ours go all over the country.

Senator HOPKINS. Suppose you want to make a purchase of five or ten thousand dollars' worth of materials to be sent there to the Isthmus, and you get twenty or thirty bids, what is the method by which you arrived at the successful bidder?

Major GALLAGHER. Those bids are all abstracted. In the first place, our poster circulars contain certain specifications. The bids are all carefully abstracted; then they are considered, and the lowest bid is taken. That is, if the party making the lowest bid offers to supply material that conforms to the specification, and is responsible, the award is made to him. That it the general rule.

Senator HOPKINS. What method have you of determining the responsibility of your bidders?

Major GALLAGHER. General knowledge of people's standing; they are known pretty well.

Senator HOPKINS. Do you require a bond from any of these parties to faithfully carry out their agreement where it takes the form of a contract for the construction of material, and several months are required to fill the order?

Major GALLAGHER. Yes, sir; when they submit their bids they are required to submit bonds to insure their acceptance of the award when made.

Senator HOPKINS. Yes.

Major GALLAGHER. And if the contract is entered into they are also required to give a bond.

Senator HOPKINS. Yes; then you follow in your purchases the same plan that is adopted in the Treasury Department and the other departments of the Government in dealing with the public?

Major GALLAGHER. Yes, sir. Our methods are Government methods, conforming to the law, excepting in some cases where, as I say, there may be a slight departure on account of emergency purchases, and I do not know that that is a departure. They make emergency purchases in the Army; I know that; and they are justified, I think, under the statute. My system-and Mr. Ross has been following the same plan-is to follow the law as strictly as possible.

Senator KITTREDGE. Who prepares the specifications?

Major GALLAGHER. The specifications are prepared at the Isthmus. Senator KITTREDGE. By whom?

Major GALLAGHER. By the party submitting the requisition. That is, if it originated with the engineering department, the specifications would be prepared under the supervision of the chief engineer. Then he would subinit them, as I say, to the chief of the division of material and supplies to be sent on; and it is the same in all cases. They are prepared in the department in which they originate.

Senator KITTREDGE. In what manner do you advertise?
Major GALLAGHER. In newspapers.

Senator KITTREDGE. Where?,

Major GALLAGHER. Do you mean in what cities, sir?

Senator KITTREDGE. Yes; not all the cities, but some of them? Major GALLAGHER. In New York, New Orleans, Chicago, St. Louis, Philadelphia, San Francisco-those are the principal cities. Adver tisements are put in newspapers in those cities.

Senator KITTREDGE. Can you state the amount of material that has been purchased in open market?

Major GALLAGHER. I can not give it to you offhand, Senator; but a statement which showed that was prepared and, I think, handed to the chairman of the Appropriations Committee.

Senator KITTREDGE. Do you remember about the amount?

Major GALLAGHER. I should guess that it was probably in the neighborhood of $250,000-something of that kind.

Senator KITTREDGE. For what period?

Major GALLAGHER. For the period from the beginning of purchases under the Commission (the old Commission as well) up to, perhaps, the 1st of October last.

Senator KITTREDGE. Covering a period of a year and a half?
Major GALLAGHER. About that; yes, sir.