suppose it is about the best exposition of what has occured in regard to this whole matter, and I will therefore ask that this paper be incorporated in the record.

The CHAIRMAN. I think it is in the record somewhere, Senator; but if not, it will go in the record.

Senator KITTREDGE. Senator, if you will take this large book, Document 127, and turn to page 401, you will find it in the record. It begins earlier than that; it begins at page 387.

Senator SIMMONS. But it has not been put in the record of our hearings, has it?

Senator MORGAN. I do not care about the record of our hearings if it is in that book.

Senator KITTREDGE. Yes; it begins at page 387, Senator. I think it is the same thing that you refer to there.

Senator SIMMONS. It is the same thing, I think you will find.
Senator ANKENY. It is in the annual report, is it not?

Senator KITTREDGE. Yes.

Senator MORGAN. I find here a letter from you, Mr. Shonts, in regard to this matter, dated December 19, 1905, addressed to the Secretary of War. That was after this examination had taken place? Mr. SHONTS. I presume so. What was the date of that? I do not remember.

31.

Senator MORGAN. The date is not given here. Yes, it is-December It was not after that examination, then?

Mr. SHONTS. No.

Senator MORGAN. This is the letter, then, that you wrote to the Secretary of War that called forth this examination?

Mr. SHONTS. I presume so. [After examining letter.] I presume

that this letter had to do with the Secretary's sending for Mr. Markel. Senator MORGAN. And you suppose, although you do not know, that the Secretary, acting upon your letter, had Mr. Markel come before him and took his statement and presented the papers which are referred to in this document?

Mr. SHONTS. That is what I suppose.

Senator MORGAN. Yes; and that was printed, you say, Senator Kittredge?

Senator HOPKINS. It is printed in the annual report of the Secretary of War.

Senator KITTREDGE. It is in Document 127..

Senator MORGAN. On what page is it, if you please? Kindly give the pages, so that the stenographer can take them.

Senator KITTREDGE. It begins at page 389. I assume that the correspondence which is set forth in these pages is the same as that in the paper Senator Simmons has.

Senator SIMMONS. These pages have simply been taken out of that report, as I understood from the gentleman who handed them to me. Senator MORGAN. Are the original minutes kept by the Commission on the Isthmus or are they here?

Mr. SHONTS. They are kept here, with a copy there; or, where we have the meetings there, they are kept there and a copy is sent here. Senator MORGAN. The original minutes are here?

Mr. SHONTS. Yes.

Senator MORGAN. As they are written up and signed?
Mr. SHONTS. Yes.

Senator MORGAN. Mr. Chairman, I want to see the original minutes, particularly in reference to this statement of Mr. Shonts's, which I will read:

"WASHINGTON, December 19, 1905.

"MY DEAR MR. SECRETARY: In view of your letter of to-day, calling attention to the language of the minutes of the board of directors authorizing a payment to Mr. J. E. Markel, to whom a concession was granted and subsequently abrogated for the feeding of employees on the Isthmus, I wish to make a further statement of the facts in this case, in addition to those contained in my letter to you of December 8, which has a particular bearing on the point mentioned in your letter of to-day.

"Mr. Markel was not present at the conference held on the Isthmus when it was decided to abrogate the concession which had been granted to him. At this conference between Governor Magoon, Chief Engineer Stevens, and myself (Mr. Jackson Smith, manager of labor and quarters, being present), Chief Engineer Stevens said he thought that inasmuch as Mr. Markel had entered into the contract in good faith and incurred certain expenses we should compensate him not only for his expenses; but pay him for his services as an expert, to which Governor Magoon and I agreed.

"In notifying Mr. Markel of the determination to cancel the contract, I told him that he might leave to the sense of justice of the railroad as to what would be a fair recompense to him, including services and expenses.

"The minutes of the meeting of the board of directors of the railroad dealing with this matter were subsequently prepared by the general counsel, Mr. William Nelson Cromwell, and possibly because he did not have in mind all of the facts and conditions leading up to the granting and cancellation of this concession the minutes of the railroad in their present form do not fairly and accurately pre sen the facts. A motion for their amendment in accordance with the real facts, as set forth in this communication, will therefore be moved and undoubtedly adopted at the next meeting of the board.

"Very respectfully,

"The SECRETARY OF WAR."

"T. P. SHONTS, President.

Mr. SHONTS. Those are the minutes of the railroad company, you know.

Senator MORGAN. Was this transaction between Mr. Markel and the Commissioners kept on the minutes of the railroad?

Mr. SHONTS. This was a contract between the railroad and Mr. Markel.

Senator MORGAN. Between the railroad and Mr. Markel, and not between the Commissioners and Mr. Markel?

Mr. SHONTS. And not between the Commissioners and Mr. Markel. Senator MORGAN. And Mr. Cromwell, as the general counsel, I suppose, and as one of the directors of the railroad, wrote up the minutes, according to your statement here, after the transaction had been completed?

Mr. SHONTS. Yes, sir. All of our records and minutes are written up, if they refer to an accomplished fact, after it is an accomplished fact.

Senator SIMMONS. Senator, if you will permit me, I have here an extract from the minutes as originally made. [Reading:]

"Extract from the minutes of the meeting of the board of directors of the Panama Railroad Company held in New York on November 8, 1905."

Here is the clause that the trouble arose about. In the minutes of that date this appears:

"That after considering all the aspects of the case with Mr. Markel, the latter had agreed to the cancellation of the contract previous to it becoming effective and without any obligation on the part of the company to reimburse him either for his services or his actual expenses, which latter amounted to $5,745.97.”

The amendment was made so as to leave that out. Here are the amended minutes leaving that out.

Senator MORGAN. Was the amendment made by him?

Senator SIMMONS. It was made by the board of directors, I take it, of the railroad company. The original minutes had that clause in them, and they said those were just a rough draft, and they were amended so as to leave that out.

Mr. SHONTS. That is my understanding as to what occurred. What was sent down here was the draft of the stenographer, and had not been gone over, and was not the minutes; and the misunderstanding occurred because that language (which was transmitted to the Secretary of War, as I remember the circumstance, as the minutes) was only the draft of the secretary of the meeting, the stenographer who took down the notes, and was not the prepared minutes. We usually have the minutes prepared before they are sent out; but because of come call for information this draft was sent down, and we supposed they were the minutes as prepared, and transmitted them without careful investigation, which, when our attention was called to them, we did give them; and then the subsequent proceeding was had. The railroad company had not had its meeting at that time; and at its next board meeting the final minutes as prepared by Mr. Cromwell were adopted.

Senator MORGAN. Are those the final minutes right there? Are those the final minutes as prepared by Mr. Cromwell?

Senator SIMMONS. No; those are not the final minutes. The final minutes are just two pages.

Mr. SHONTS. I can get the record from New York, Mr. Senator, and I will be very glad to do so.

Senator TALIAFERRO. Did not the draft of those minutes, which you say was prepared by the secretary, represent accurately what occurred at the directors' meeting?

Mr. SHONTS. Well, not having read them recently, I do not remember the distinguishing features between the first draft and the final draft. There was a misunderstanding, or else there would not have. been any correction.

Senator TALIAFERRO. I understood you to say that the original draft was prepared by the secretary, and I presume when the directors were in session?

Mr. SHONTS. If you will permit me, we meet, and the stenographer takes down notes from what is done, and then he puts his understanding of the action into shape. Those are usually reviewed by Mr. Cromwell, because he has been with the road a great many years, and

knows all the facts having a bearing on these cases, and in very many cases those of us that are new do not know; and he goes over them to see that they correctly state what we have done, etc. Then, at the next full meeting, those are all read over, and finally approved, if no one objects. That is the mode of proceeding.

Senator TALIAFERRO. That is the usual mode of proceeding?

Mr. SHONTS. Yes; that is the usual mode of proceeding. Now, as I understand the situation, some one called for some information that we wrote over to New York for, and we got the secretary's notes, which were transmitted to the Secretary of War, but which did not accurately set forth the proceedings or the intention of the board at that meeting.

Senator TALIAFERRO. The point is, do you mean that they did not accurately set forth what occurred, or do you mean that they did not fully set forth the views of the directors?

Mr. SHONTS. If you will give me time to read over the two, I can tell you. I do not remember what the differences were. I do not remember whether it was a fuller statement or whether it was an inaccurate statement.

Senator MORGAN. You state here that "The minutes of the meeting of the board of directors of the railroad dealing with this matter were subsequently prepared by the general counsel, Mr. William Nelson Cromwell, and possibly because he did not have in mind all of the facts and conditions leading up to the granting and cancellation of this concession, the minutes of the railroad in their present form do not fairly and accurately present the facts."

Mr. SHONTS. Well, then, they did not, according to that letter. Senator MORGAN. Do you recall in what particular the minutes did not present the facts?

Mr. SHONTS. No, sir; I do not, offhand.

Senator MORGAN. But those minutes were taken by Mr. Cromwell and changed to meet his understanding of what had taken place? Mr. SHONTS. And then submitted to the full board at its next meeting; yes, sir.

Senator MORGAN. Have they been so submitted?

Mr. SHONTS. Oh, yes; we have had a board meeting since.
Senator MORGAN. And have they been approved?

Mr. SHONTS. Yes, sir.

Senator MORGAN. In the language that Mr. Cromwell put down? Mr. SHONTS. I presume so. I do not remember whether there were any variations in the language or not; but I will be very glad to have the minutes sent over from New York if you would like to have them. Senator MORGAN. We want all the knowledge we can get about this situation.

Mr. SHONTS. Yes, sir.

Senator MORGAN. You were the president of the railroad board?
Mr. SHONTS. Yes, sir.

Senator MORGAN. And you were present on these occasions?
Mr. SHONTS. Yes, sir.

Senator MORGAN. And the stenographer took down what occurred? Mr. SHONTS. I suppose he did. That is what he was there for. Senator MORGAN. Yes; and Mr. Cromwell subsequently discovered that it did not meet the situation, and changed it?

Mr. SHONTS. I do not remember whether Mr. Cromwell brought it to my attention first or not. I know I transmitted it as I got it to the secretary.

Senator MORGAN. Yes; and you informed him that the minutes were defective?

Mr. SHONTS. Yes; but I could not remember who called my attention to that, Senator-whether Mr. Cromwell or not. I do not think it was Mr. Cromwell, but I would not be sure about that.

Senator MORGAN. This minute related rather exclusively, perhaps, to the cancellation of the agreement with Mr. Markel-the cancellation of it?

Mr. SHONTS. If you will permit me, I can give you my understanding of the whole thing and probably clear it up quicker than in any other way, because I have not in mind the distinction between the two minutes, but I can tell you my understanding of the facts, if that would

answer.

Senator MORGAN. I would like to get it, because I think you are entitled to give it.

Mr. SHONTS. As I told you a little while ago, I never met Mr. Markel until I met him on the Isthmus, and I was told that he had been sent down there at the request of Mr. Wallace, and was kept there at the request of Governor Magoon until Mr. Stevens and I got there.

Senator KITTREDGE. When did he go to the Isthmus?

Mr. SHONTS. When did he go?

Senator KITTREDGE. Yes, sir.

Mr. SHONTS. Some time prior to my going. I got there on the 26th of July, and he was there then. I do not know exactly when he went down, but I understood that he had been there two or three weeks. I do not know exactly.

Senator KITTREDGE. That was after Mr. Wallace had left the service of the Government?

Mr. SHONTS. Yes.

In that connection it was explained to me afterwards that this letter that Mr. Wallace wrote Mr. Markel was not received by Mr. Markel, for some reason or other, until two or three months after it had been written; and that when he got as far as New York, on his way to the Isthmus, he met Mr. Wallace, who had come up from the Isthmus; and Mr. Wallace did not go back, but Mr. Wallace told him he had better go on down and study the situation. This is as I understand it. So he went on down, and was there when I got there, and had been studying the situation, and had been talking with Governor Magoon; and the governor said, as I remember, that he had asked Mr. Markel to stay until Mr. Stevens and I got there, so that we could get the benefit of his views on the subject.

As a result, Mr. Stevens gave Mr. Markel a train and he went out over the road, after we decided to open our commissaries, which I spoke about the other day, and he located the subcommissaries and some mess houses for labor, and things of that kind.

Then, as I have already testified, it was the consensus of opinion that the Commission would have to furnish the plant, and I took the position that inasmuch as we had to furnish the plant I thought we ought to operate the plant ourselves. But Mr. Stevens said that there was so much to do in his department that he did not want to undertake

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