was very little accomplished. The present local accounting organization on the Isthmus, headed by Mr. W. B. Starke, local auditor, was made effective on July 1 last. Mr. Starke is building up an efficient organization, which is fully cooperating with other divisions and departments in carrying out the accounting system which has been adopted by the Commission.

On the 16th day of August, 1905, I had the honor to recommend to you that effort be made to secure from the Congress at its next session certain legislation for the economical and satisfactory handling of accounting methods. I now have the honor to renew the recommendation, and trust that this much needed authority may be granted. All of which is respectfully submitted.

The CHAIRMAN, ISTHMIAN CANAL COMMISSION.

E. S. BENSON,
General Auditor.

That was in connection with allowing us to make deductions on our pay rolls for the board of our employees, and the value of commissary books furnished our employees that are honored by the Panama Railroad commissaries, and also to credit back to our appropriation such sums as we might collect from outside sources, like rentals of lands; or in case we performed work for the Panama Railroad, which we do, and collect from them for the value of it, to have that revert to our appropriation instead of turning it in to the United States Treasury as miscellaneous receipts, as we are now doing under the law.

The CHAIRMAN. Proceed, and state to the committee what you can in regard to the matters there and here. We would like to have you finish your statement, and then each member of the committee, as he feels inclined, will ask you questions in connection with this subject.

Mr. BENSON. We put in effect the system of accounting which we had devised in practical working order on July 1. The first matter of importance which had our attention, and one of the matters of the greates importance, was an effective time-keeping system. We devised blanks and a system for that purpose, and it was put into effect, the idea being that we wanted to feel that the moneys that we were paying out for labor were, as far as possible under any system, properly earned.

Our system provides for the keeping of time by the foremen and the turning in of his time books daily to a central office for each division, where the time is transcribed onto time rolls, and on alternate days a different book is issued to the foreman. At the end of the pay period, which with our silver rolls is twice a month, on the 15th and last day of the month, the roll is completed by the division office and forwarded to the local auditor at Panama where the account is audited by him, and pay certificates are issued showing the amount of indebtedness due each employee and turned over to the disbursing officer for payment. The gold rolls are handled in the same manner, except that they run for a month instead of semimonthly. There has been a good deal of complaint, or had been, and there may be some yet about the delay in paying our men. We are to-day, howevery, paying our men on the Isthmus more promptly at the close of the pay period than any railroad in the United States that I have any knowledge of. We find that those black laborers are very im

provident, and would like to have a system whereby they could receive their money daily.

Senator GORMAN. Do you have charge of the pay? Do you pay y? Mr. BENSON. It is done by the disbursing officer.

Senator GORMAN. Is that in your department?

Mr. BENSON. I prescribe the system for keeping the time and preparing the pay rolls, and getting them in shape to turn over to the disbursing officer for payment.

Senator GORMAN. You have nothing to do with the payment?

Mr. BENSON. No, sir. Of course, the promptness of the payment depends largely on the prompt turning over to the disbursing officer of the certified pay rolls ready for his use.

The CHAIRMAN. About how long is it after he receives these rolls that the people are paid on either the silver or the gold rolls?

Mr. BENSON. I should say after he receives the rolls he begins paying almost immediately-within a day or two, or three days at the outside; and he is required, or allowed to verify the correctness of the accounts as far as he is able.

The situation on the Isthmus in respect to the material and supplies division has not been satisfactory. It is getting more so, now, very rapidly. There has been a congestion of the receipt of material on the Isthmus which prevented the prompt receipt for the material by the chief of that division, and the transmittal of the invoices to the Washington office for payment. We got very much behind in the payment of our accounts, for the reason that we had no acceptance from the Isthmus of the receipt of the material. That condition is very largely relieved now, and it is only a matter of a very short time before the receipt of the material will be acknowledged, I think, with sufficient promptness to enable us to pay all our bills at least within sixty days, and in some instances within thirty days after the shipment of the material from the United States.

The distribution of the material on the Isthmus to the departments that use it is done on requisitions. I have here a circular, which was referred to in my letter to the President, Circular No. 17, which covers the purchase and handling of and the accounting for material. It is a very complete and exhaustive exhibit of what our methods are. Senator MORGAN. What class of material is to a large extent concerned in this congestion that you spoke of?

Mr. BENSON. I do not think it was any special class. It was almost everything that was shipped from New York. All classes of material would accumulate, and not be promptly moved or gotten down to the work that was being done.

Senator MORGAN. Was there any such congestion as to material that came down the Pacific coast.

Mr. BENSON. It is mostly lumber that comes down there.
Senator MORGAN. That is what I want to get at.

Mr. BENSON. I know when I was on the Isthmus last summer there were, I think, two vessels there unloading, or one was unloading and another was waiting to get a berth; and they were loaded with lumber. There has been a great deal of lumber received from the Pacific northwest.

Senator MORGAN. That was in August?
Mr. BENSON. Yes, sir.

Senator MORGAN. Two vessels were unloading. Were there any other vessels that came in before they got unloaded?

Mr. BENSON. I could not say. I do not know as to that.

Senator MORGAN. You do not know whether there were any other vessels under way at that time loaded with lumber?

Mr. BENSON. No, sir; I do not

Senator MORGAN. Did you see, personally, the evidences of the congestion you spoke of at the Pacific port?

Mr. BENSON. No; I did not.

Senator MORGAN. You did not examine that?

Mr. BENSON. Because there were no supplies received there outside of lumber.

Senator MORGAN. Outside of lumber?

Mr. BENSON. Outside of lumber.

Senator MORGAN. Then, this congestion which took place at that port was occasioned by the large shipments of lumber?

Mr. BENSON. That might have caused some congestion. I do not know that it interfered, however, with the movement of South American and Pacific mail

Senator MORGAN. I do not go into that. What I want to know is whether the congestion was produced in any part, and to what extent, by shipments of lumber down that coast.

Mr. BENSON. I could not say. I would not be able to tell you that. Senator MORGAN. You did not personally examine that?

Mr. BENSON. No, sir; I did not.

Senator MORGAN. That is all.

Senator HOPKINS. You were speaking about an order when you were questioned. That order relates to what, did you say?

Mr. BENSON. This is the order providing a method of purchasing and inspecting and accounting for material and supplies.

Senator DRYDEN. I suppose that will be made a part of the record? The CHAIRMAN. Yes; I think it had better be made a part of the record. It will be well to let it go into the record to-day.

[Circular No. 17, Chairman.]*

ISTHMIAN CANAL COMMISSION, Washington, D. C., August 1, 1905. The following rules will govern the purchase, delivery, and issuing of and the accounting for material and supplies:

PURCHASES.

The general purchasing officer will purchase goods in accordance with the rules laid down by the Commission, and so far as supplies for the Isthmus are concerned no purchase will be made except on properly approved requisitions made by the chief of the division of material and supplies. Requisitions for supplies for use by the Commission in the United States will emanate from the office needing such supplies and shall bear the signature of the proper official.

The general purchasing officer shall buy the quantities of articles as may be stipulated on the requisitions following as far as possible the specifications and description given; and if the occasion requires the exercise of discretionary measures will confer with proper official in relation thereto.

The general purchasing officer shall be charged with the issuing of necessary instructions to insure delivery in accordance with specifications and time requisitions, and shall keep a careful record of all requisitions and their disposition, of all contracts made and quantities supplied under said contracts, and all other information necessary for or pertinent to the duties of his office.

On receipt of requisitions, the same shall at once be given a number by the general purchasing officer, and date of receipt marked on same. Records shall be kept which shall also show the various progressive steps taken in each and every case before final shipment is effected.

In ordering goods or awarding contracts for Isthmus requirements on a f. o. b. United States ports basis, the general purchasing officer shall prepare seven copies of such orders, and they shall be disposed of simultaneously, as follows:

First copy for sellers.

Second and third copies for general auditor.

Fourth copy for files of general purchasing officer.

Fifth copy for chief of division of material and supplies.

Sixth copy for forwarding agent at point where shipment has to be effected.

Seventh copy for inspecting engineer.

On ordering goods or awarding contracts for Isthmus supplies on a c. i. f. basis, the general purchasing officer shall prepare seven copies of such orders, and they shall be simultaneously disposed of, as follows First copy for sellers.

Second and third copies for general auditor.

Fourth copy for files of general purchasing officer.

Fifth copy for chief of division of material and supplies.

Sixth copy for forwarding agent at point where shipment has to be effected.

Seventh copy for inspecting engineer.

On ordering goods or awarding contracts for supplies to be used in the United States office of the Commission, the general purchasing officer shall prepare five copies of such orders, and they shall be simultaneously disposed of, as follows:

First copy for sellers.

Second and third copies for general auditor.

Fourth copy for general purchasing officer.

Fifth copy for department where requisition originated. Accompanying all orders, careful instructions will be sent by general purchasing officer to sellers for proper rendering of invoices, marking of packages. shipment of goods, and the preparation of shipping lists; and, as far as practicable, special forms shall be supplied for the making of invoices and shipping lists.

DELIVERY OF SUPPLIES.

All goods shipped to the Isthmus shall be marked "I. C. C.," with the port of destination and a number corresponding to that given on the original requisition by the material and supplies division and that given by the general purchasing officer.

In the event of supplies being purchased f. o. b. at United States ports, shippers will be instructed to furnish six copies each of shipping lists and invoices to forwarding agent at point where shipment

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is to be effected, who, on shipment being effected, will O. K. shipping lists, secure necessary bill of lading, and distribute documents as follows:

Two copies of shipping lists, invoices, and bills of lading to division of material and supplies at Isthmus.

Three copies of shipping lists and invoices to general purchasing officer, who will make record of same and transmit them to general auditor.

One copy of invoice, shipping list, and bill of lading for files of forwarding agent.

Care will be taken that all documents accompany actual shipments. In the event of supplies being purchased c. i. f. (Isthmus ports), shippers will be instructed to prepare, for the purpose of the Isthmian Canal Commission, bills of lading, shipping lists, and invoices in quadruplicate, and to forward same to division of material and supplies on Isthmus.

Shippers shall be advised that required documents must in every case accompany or anticipate shipments.

For supplies purchased for use in the United States office of the Isthmian Canal Commission, sellers will be instructed to forward invoices in quadruplicate with the goods, and, on careful inspection by a party deputed for that purpose by the general purchasing officer, and on being found in order, the original, duplicate, and triplicate invoices will be, after proper certification, forwarded to the general auditor.

Immediately on a charter party being made, copy of same shall be forwarded to the chief of the division of material and supplies and to the general auditing division.

ASSISTANT PURCHASING AGENT ON ISTHMUS.

As the title indicates, this official shall be subordinate and subject to the orders of the general purchasing officer.

The same general rules that govern the general purchasing officer shall serve to guide the assistant purchasing agent on the Isthmus.

On purchasing supplies, he shall instruct sellers to put such marks and numbers on their goods as may be necessary for identification purposes, and, on receiving receipt from consignee, shall prepare proper voucher, to which the receipt in question and other proper papers shall be attached, and such voucher shall be forwarded to local auditor through the chief of the division of material and supplies.

He shall also keep records which shall show all the operations in his office.

ASSISTANT PURCHASING AND FORWARDING AGENTS IN THE UNITED

STATES.

As their titles indicate, these officials shall be subordinate and subject to the orders of the general purchasing officer.

They shall be charged with attending to the supervision of the filling of all orders sent them.

They shall compare marks and condition of all packages forwarded by them, and shall carefully report to shippers, as well as to the general purchasing officer, any exceptions thereto.