chase labor from any foreign country where it is no better than American labor? Major GALLAGHER. Well, Senator, I do not think they have done that. Senator MORGAN. They have not done it? Major GALLAGHER. No, sir. I think that, as I say, they have placed orders for foreign material when it was the lowest, even though it were foreign material. Senator MORGAN. But you have no agency in any foreign country to buy raw material of any kind for the canal. You have agencies to get labor. Major GALLAGHER. Foreign firms have agencies here, and they submit their bids. Senator MORGAN. And you go and get the labor in Jamaica and Martinique, not because it is any better, I suppose, but because it is cheaper? Major GALLAGHER. Yes, sir. Senator MORGAN. It is cheaper than it is here? Major GALLAGHER. Yes, sir. Senator MORGAN. Do you know of any reason why the same rule is not applied to labor that is applied to materials? Major GALLAGHER. As I said, Senator, I think the rule is about the same. That is, we buy foreign material, and have done it, and I pre-. sume will do it again. Senator MORGAN. Foreign material? Major GALLAGHER. Yes, sir; when they get bids for some foreign material. Senator MORGAN. Will you please state, now, what foreign materials they have bought? Major GALLAGHER. They have bought, in the cases that I have already mentioned, some cement, and they have bought some pig lead that I know of. Senator MORGAN. Yes. Major GALLAGHER. There may be others. Senator MORGAN. Where was the cement bought? Major GALLAGHER. I think that came from Germany. Senator MORGAN. Germany? Major GALLAGHER. I think they got some German cement. Senator MORGAN. Was it bought there because there was no Amer ican supply, or because the German cement was cheaper? Major GALLAGHER. Because it was cheaper; the bid was lower. Major GALLAGHER. It was for foreign cement. Senator MORGAN. It could not be better if it was Portland cement, could it? Major GALLAGHER. It was Portland cement. Senator MORGAN. The term "Portland cement" stands for a certain grade of cement, no matter where it is produced, does it not? Major GALLAGHER. Yes, sir. Senator MORGAN. There is not any difference in Portland cement produced in one place over that produced in another? Major GALLAGHER. It is a high grade of Portland cement—a standard, recognized grade; and they offered to deliver it at Colon from abroad cheaper than they could do it in this country, and the order was placed. Senator MORGAN. Portland cement is made from a strict chemical formula? Major GALLAGHER. Yes, sir. Senator MORGAN. And when it fulfills the requirements of that formula it is Portland cement, and one is as good as another? Major GALLAGHER. Yes, sir. Senator MORGAN. So that when you buy Portland cement in Germany you do not get any better cement than if you had bought it in the United States? Major GALLAGHER. I think that the American Portland cement is about as good as the foreign,' but we do not make it as cheap. Senator MORGAN. That is my point exactly. You buy it from Germany because it is cheaper? Major GALLAGHER. That is why we placed the order. Senator MORGAN. Then why do you not buy railroad iron there for the same reason? Major GALLAGHER. We have never had any bids for it that I know of. Senator MORGAN. But you have no offices there; you do not make any advertisements over there. Major GALLAGHER. No; they have not done that. I do not suppose they have thought of that. That would be a question of general policy that I would not be very well able to pass upon. Senator MORGAN. In the case of Portland cement you give the advantage to the foreign producer because it is cheaper? Major GALLAGHER. Yes, sir. Senator MORGAN. In the case of other things that have been mentioned here, such as railroad iron and various other materials, you will not give the advantage to the foreigner, even if it is cheaper? Major GALLAGHER. Oh, I would not say that, Senator. Major GALLAGHER. I do not think so. I do not think that has occurred. In cases where bids have been received for material, even though it was foreign material, and they were lower than the home bid, I think they have placed the order for the foreign material. That has been done, and I think they will do it again. I do not believe there is any question about that. There have not been a great many bids on foreign material, because I do not know that the foreigners could compete in a great many cases. Senator MORGAN. Are the goods that you buy-materials and other kinds inspected before shipment? Major GALLAGHER. Yes, sir. Senator MORGAN. At the point where they are bought? Major GALLAGHER. Usually at the point of manufacture, or where they are shipped. Senator MORGAN. Have you any inspectors of these goods or of this material in all these great central cities of the Union? Major GALLAGHER. Yes, sir. Senator MORGAN. All of them? Major GALLAGHER. We have inspection bureaus. We employ inspection bureaus to do the work. Senator MORGAN. Yes, sir. P C-06-10 Major GALLAGHER. And they have inspectors right at the spot to look after them. Senator MORGAN. You do not publish any advertisements for bids. in any of these great cities? Major GALLAGHER. Yes, sir; we do. Senator MORGAN. In the interior? Major GALLAGHER. Yes, sir. Senator MORGAN. What cities, now, do you advertise in-Chicago? Major GALLAGHER. Yes, sir. Senator MORGAN. And Cleveland? Major GALLAGHER. Yes, sir; we have advertised in Cleveland. Major GALLAGHER. I think so. Major GALLAGHER. Yes, sir. Senator MORGAN. These men, therefore, would have an opportunity under that advertisement to sell you goods through purchasing agents, providing you had the agents there to buy? Major GALLAGHER. They have that opportunity anyhow. Senator HOPKINS. They send their bids on to Washington, he says. Major GALLAGHER. They send their bids on to Washington. Senator MORGAN. Yes; they must come here for you to buy goods that they sell in Chicago? Major GALLAGHER. No, Senator. Senator MORGAN. They must come here to make the contract? Major GALLAGHER. Not necessarily. They make the bids out in their offices in Chicago, or Cleveland, or wherever they are, and send them here, mail them to us. Then on a certain day they are all opened, and we place the order then, without their coming. Senator MORGAN. What is the necessity for having subagents in the coast towns and not having subagents in the interior towns? Major GALLAGHER. Mainly to look after the shipping of material, Senator. Senator MORGAN. To look after the shipping? Major GALLAGHER. Yes, sir; that is, I think, the principal part of the work of the agent in, say, New Orleans-to look after the shipping of material that is being purchased for the Commission. Senator MORGAN. That brings up the point I want to get at. Do your advertisements of bidding require the material to be delivered in some coast town of the United States, or at Colon? Major GALLAGHER. At Colon, or at La Boca on the Pacific side. Senator MORGAN. If it is to be at Colon, why is there any necessity for subagents to look after the shipping? Major GALLAGHER. We want to keep always in touch with this material, to see that it is going along. Senator MORGAN. But they have nothing to do with it except to just stand and look at it and see that it is going along all right, have they? Major GALLAGHER. Yes, sir; to keep track of it; to see that it is being handled properly and goes through all right, and also to report on its progress. Senator MORGAN. But these subpurchasing agents in the coast cities do not handle these products in any way, do they? They do not handle them? You buy a shipload of material in Chicago, for example? Major GALLAGHER. Yes, sir. Senator MORGAN. And you make your contract call for the delivery of that at Colon? Major GALLAGHER. Yes, sir. Senator MORGAN. And the seller is responsible for the goods until they are delivered at Colon? Major GALLAGHER. Yes, sir. Senator MORGAN. Now, whether they go through New York or New Orleans, your subagent in either of those cities does not take the goods and direct how they shall be shipped or have anything to do with them? Major GALLAGHER. No, sir; but he keeps us informed about them; he keeps us posted as to their going forward. Senator MORGAN. Is that all he has to do? Major GALLAGHER. No, sir; he buys material at those particular points, too, and he looks after the inspection of material in his neighborhood. Senator MORGAN. Yes. Major GALLAGHER. For instance, we have the case of a shipment of a lot of brick through New York. The delivery is at Colon. Senator MORGAN. I do not doubt that these agents of yours at these seaports are very valuable officers, but I can not understand why others are not located at these other great cities. Major GALLAGHER. They might be advantageously located in the other great cities, Senator, but it would make it very extensive and very expensive, and the work is now being done pretty satisfactorily. Senator MORGAN. As to the expense of it, would there not be an economy in having your agents located, for instance, in a great city like Chicago, which is half as big again as New York in its local trade? Do you not think there would be an economy in that? Would it not be an economy to have a subagent in Chicago to look after all these things there? Take the whole country over--St. Louis, Chicago, Cleveland, Cincinnati-would it not be a real economy to have these subagents there? Major GALLAGHER. Well, Senator, as I said before, I can not see any great advantage in that, because if we had one subagency in Chicago. St. Louis can equally claim it, Cincinnati can claim it, Cleveland can claim it, other cities can claim it. If you justify these numerous offices it might be all right; it might result in some economies in one direction, but you would be incurring great expense in the other. I will venture to say that if Chicago got an agency, St. Louis would want one the next day. Of course I am simply giving my opinion of the thing. There might get to be too many agencies; they would be too great an expense, such an expense as would offset the economy that might be effected by having one, say, in Chicago. Senator HOPKINS. You have experienced no inconvenience because you have not had these subagents? Major GALLAGHER. No, sir; we have not. Senator HOPKINS. And the Government has sustained no loss by reason of not having them? Major GALLAGHER. I think not, Senator, that I know of. As the Senator says, it might be an advantage to have our agents there, but the thing is working quite satisfactorily now. Senator MORGAN. I notice a provision here which I suppose is a part of the law of the situation. On page 162, I believe it is, of the regulations governing the purchase, delivery, etc., of materials and supplies, there is a provision that "not more than a six months' supply of material shall be carried." Who determines whether there is inore than a six months' supply of material being carried or not? Major GALLAGHER. That would be the duty of the chief of the division of material and supplies at the Isthmus. Senator MORGAN. Yes. Now, do you know anything about this proposition that there is at least eighteen months' or two years' or three years' supply of lumber in the Isthmus instead of six months' supply? Sajor GALLAGHER. No, Senator; I do not know that. I do not know anything about that. Senator MORGAN. You have not been connected with that subject in such a way as to know anything about it? Major GALLAGHER. No, sir. We have filled their requisitions; and of course they, being on the spot, are the judges of what is wanted. Senator MORGAN. Yes. You are regulated in the purchases you make by orders that emanate from somewhere. Where do those orders, or requisitions (if that is what they are), come from? Mr. GALLAGHER. Yes, sir; they come from the Isthmus. Senator MORGAN. They come from the Isthmus? Major GALLAGHER. Yes, sir. Senator MORGAN. So that the regulation for all of this material that is sent to you is that you make your advertisements for the bids? Major GALLAGHER. Yes, sir. Senator MORGAN. You state the length of time in which the property that you want to buy is to be delivered there? Major GALLAGHER. Yes, sir. Senator MORGAN. And that is all that you have to do with it? Major GALLAGHER. And we place the order for the materials after the bids are opened. Senator MORGAN. Yes; you place the order for the material? Major GALLAGHER. Yes; and look after the inspection of it, to see that it conforms to the specifications. Senator GORMAN. And you see that it is shipped? Major GALLAGHER. Yes, sir. Senator MORGAN. Now, if it is a fact, as stated here, that there is eighteen months' or two years' or three years' supply of lumber on the Isthmus, would you consider that that was in conformity with this law? Major GALLAGHER. Well, Senator, I do not know a thing about that. I never heard that statement before-that there was lumber to that extent down there. I do not know anything about it. Senator MORGAN. Oh, yes; it is there, rotting in great stacks, to-day. Major GALLAGHER. Great quantities of lumber have been ordered; but it was presumed, so far as we knew here, that it was all required for immediate use-that is, for building these quarters that they are putting up. |