Senator MORGAN. You say the Panamanian Government has been very nice about it. Did not the Panamanian Government demand that the Government of the United States, either through the railroad company or through the Commission, should not sell commissaries to their laborers at cost?

Mr. SHONTS. Not after I was there. I do not know what had pre ceded, or what caused this interpretation of that clause by Secretary Taft. I do not know what brought that out.

Senator MORGAN. You do not know what brought it out?

Mr. SHONTS. No, sir.

Senator MORGAN. Have you any doubt about it?

Mr. SHONTS. I have not thought about it, Senator. I was interested more particularly in what occurred after we got there and found the situation; and at that time Governor Magoon did present the situation, as I explained it here the other day, to President Amador, and they made an arrangement by which we were given the privilege of opening our commissaries, with the consent of the Panamanian Government, to our negro labor; and the only thing in that correspondence, the saving clause, was that if prices became reasonable again they would hope or expect us to withdraw.

Senator MORGAN. Did Governor Magoon present that demand on the Panamanian Government in his representative capacity as minister or in his capacity as governor of the Zone?

Mr. SHONTS. I do not remember.

His letter

Senator MORGAN. I do not care about the letters.

Mr. SHONTS. Well, I do not remember; I do not know.

(The chairman submitted the following letter from Mr. Stevens, which was directed to be made a part of the record.)

ISTHMIAN CANAL AFFAIRS.

Hon. J. H. MILLARD,

OFFICE OF ADMINISTRATION, Washington, D. C., January 27, 1906.

Chairman Senate Committee on Interoceanic Canals,

Washington, D. C.

SIR: In compliance with request of your committee that I give them the number and pay of the civil engineers on the staff of the Panama Canal, please find as below:

Annual salary

$15,000

9,000

7,500

6,000

5,000

4,800

3,600

3,600

3, 300

3,000

2,700

2,400

1 resident engineer

1 resident engineer 1 division engineer

4 resident engineers 10 assistant engineers 6 assistant engineers.

7 assistant engineers

Very respectfully,

The committee thereupon took a recess until 2.30 o'clock p. m.

AFTER RECESS.

STATEMENT OF THEODORE P. SHONTS, ESQ. Continued.

The CHAIRMAN. If you are ready, Senator Simmons, proceed with Mr. Shonts.

Senator SIMMONS. Mr. Shonts, before I get to the particular matter that I want specially to inquire about, I wish to ask you a few questions about this Markel contract. I was not in the room when Senator Morgan was examining you this morning, and he may have gone over the same ground. First, I wish to ask you who Mr. W. E. Dauchey is? Mr. SHONTS. Mr. Dauchey was Mr. Wallace's assistant, and he made him acting chief engineer when he came home. He is now division engineer in charge of the Culebra division.

Senator SIMMONS. Was a letter, written by Mr. Wallace, to Mr. Dauchey, June 23, 1905, about Mr. Markel, called to your attention? Mr. SHONTS. No.

Senator SIMMONS (continuing). In which this language was used: "This will introduce to you Mr. J. E. Markel, who has been negotiating with me to take charge of all hotels connected with the department of construction and engineering."

Mr. SHONTS. I never heard of it before.

Senator SIMMONS (continuing). "He is accompanied by P. L. Markel and J. L. McLaughlin, his assistants."

Mr. SHONTS. No, sir.

Senator SIMMONS. Then, you did not know that Mr. Markel had been negotiating with Mr. Wallace, before he went on the Isthmus at all, for the purpose of having him take charge of all hotels?

Mr. SHONTS. I did not know anything about Mr. Markel until I got on the Isthmus and met him there.

Senator SIMMONS. When he came there did he say anything to you from which you could have inferred that he had had these negotiations with Mr. Wallace before going to the Isthmus at all?

Mr. SHONTS. When I reached the Isthmus Mr. Markel was there on the Isthmus.

Senator SIMMONS. Yes.

Mr. SHONTS. He told me, when Governor Magoon introduced him to me, and during that conversation, that he had gone down there at the suggestion of Mr. Wallace, Mr. Wallace having known him on the Illinois Central when he was on that road.

Senator SIMMONS. Did he say anything which led you to believe that there had been negotiations with Mr. Wallace before he went there, in pursuance of which he was to take charge of the hotels?

Mr. SHONTS. No, sir. After we got there he led me to believe--at least that was my impression from the conversation-that he was sent down by Mr. Wallace to examine the ground and report and make recommendations as to the best method of handling the feeding of the

men.

Senator SIMMONS. When you first saw him there, that was before you had drawn up these specifications?

Mr. SHONTS. Oh, yes, sir.

Senator SIMMONS. After he had been there some little time. And you returned to New York leaving him there?

Mr. SHONTS. No: he returned before I did.

Senator SIMMONS. Did he go back again while you remained here? Mr. SHONTS. He went back with me when I went down with the consulting board.

Senator SIMMONS. That was before the contracts or specifications were prepared?

Mr. SHONTS. No, sir. it to you briefly again.

I went over it this morning, but I can give When I arrived on the Isthmus I found Mr.

Markel there and was introduced to him.

Senator SIMMONS. Yes.

Mr. SHONTS. I understood that he was sent down by Mr. Wallace to study the situation and make recommendations as to the best method

of feeding the men.

Senator SIMMONS. That was about what time?

Mr. SHONTS. This was in July.

trip.

Senator SIMMONS. Yes.

He returned before I did on that

Mr. SHONTS. Then I came back and prepared these specifications and awarded this contract.

Senator SIMMONS. So Mr. Markel was in this country when prepared the specifications?

Mr. SHONTS. Yes, sir; he was in this country.

Senator SIMMONS. When you prepared these specifications you did that with the advice of Mr. Markel, did you?

Mr. SHONTS. Partly with his advice. We availed ourselves of any information in regard to that business that we could get. It was new business to us. We did not know anything about the hotel business. We consulted him, and we consulted these other men that made bids, to a greater or less extent.

Senator SIMMONS. Tell me, if you can recollect, when those bids. were to be received and when the time for receiving them expired. Mr. SHONTS. I do not remember the dates.

Senator SIMMONS. I will ask you if it was not the 4th of September? Mr. SHONTS. I do not remember. The correspondence will show. I do not know whether it is in evidence or not.

Senator SIMMONS. Do you recall writing a letter to Hudgins & Dumas, telling them that they must have their bid in by the 4th of September or the 5th of September?

Mr. SHONTS. I remember this. That there was a holiday in there, and I notified the people that I would be in New York on a certain day, and that I would like to have the bids in on that day.

Senator SIMMONS. Yes.

Mr. SHONTS. And it happened to be a holiday. I do not remember what day it was. I think it was on Monday and I arrived in New York on Saturday, as I recollect, and after reaching New York I found out that it was a holiday.

Senator SIMMONS. And you extended the time to the next day?

Mr. SHONTS. I then telephoned the office to get hold of all of the bidders, if they could, and notify them that the next day would do just as well. That is as I recollect it.

Senator SIMMONS. On the next day, I want to ask you, the day after the holiday, did not Hudgins & Dumas put in their bid?

Mr. SHONTS. I do not remember exactly about that, whether it was that day or the next day.

Senator SIMMONS. That was the day the time was to expire, the next day after the holiday?

Mr. SHONTS. As I recollect it, that was true.

Senator SIMMONS. I ask if they did not put their bid in the day after this holiday?

Mr. SHONTS. That is my recollection.

Senator SIMMONS. Was it not understood that that was to be the expiration of the time in which bids might be put in?

Mr. SHONTS. I think it was.

Senator SIMMONS. I will ask you whether you did not, twenty-four hours after that, receive that bid from Mr. Markel?

Mr. SHONTS. I think, as I recollect it now, that Mr. Balfe came to me and said that he had come into it late, and had not sufficient time to get his bid ready by this day, whatever day it was-the next day after the holiday—and asked for another day. I think he asked for several days, but I thought it was so pressing that I asked if he could not get it in the next day, and he said that he could. Then I told our people to notify both Markel and Hudgins & Dumas that they need not bring in their bids until the next day.

Senator SIMMONS. Had not Hudgins's bid already come in?

Mr. SHONTS. If it had, it had not been opened, or had not been disposed of. I do not remember distinctly about that.

Senator SIMMONS. First I want to ask you if you know of an affidavit filed by Hudgins & Dumas with the President charging that they were unfairly dealt with?

Mr. SHONTS. Yes; they sent in some papers; probably in the shape of an affidavit.

Senator SIMMONS. It was an affidavit, was it not?

Mr. SHONTS. Yes; I suppose so. I do not remember.
Senator SIMMONS. Did you see that affidavit?

Mr. SHONTS. Yes; that was sent to me.

Senator SIMMONS. Did not that affidavit charge that the bidding was concluded as to them on this day after the holiday and kept open for this other man?

Mr. SHONTS. Balfe and the other man?

Senator SIMMONS. Not Balfe, but Markel-until the next day?

Mr. SHONTS. I do not remember the circumstances of all those things. But I do remember that the postponement was at the request of Mr. Balfe.

Senator SIMMONS. I want to ask you if Messrs. Hudgins & Dumas did not incorporate with their bid a menu both for the gold list and for the silver list?

Mr. SHONTS. Yes.

Senator SIMMONS. That was filed with you, you say, the day after the holiday!

Mr. SHONTS. That is my recollection.

Senator SIMMONS. And the other, Markel's bid, was filed the next day?

Mr. SHONTS. That is my recollection.

Senator SIMMONS. I want to ask you if it is not a fact that when Markel's bid was filed it had the menu, word for word, of Hudgins & Dumas's proposition?

Mr. SHONTS. I presume it did, for I told Mr. Ross that I wanted them to bid on the same specifications, and I thought that the sugges

tion of Hudgins & Dumas to have a menu for each day in the week was an improvement on our original idea of having a menu for only one day-one sample menu.

Senator SIMMONS. Did you know what Hudgins & Dumas's menu would be until they filed their bid?

Mr. SHONTS. I am not sure. It seems to me that they were in and we discussed that before; but I do not know whether they gave us a copy of it or not. I do not remember about that.

Senator SIMMONS. I will ask if you or anyone in the office, so far as you know, showed this menu, which accompanied Hudgins & Dumas's bid, to Mr. Markel before he put in his bid?

Mr. SHONTS. I suppose a copy of it was given to him. That is what I wanted done, so that he would bid on the same specifications.

Senator SIMMONS. Was not that showing him a part of the bid of Hudgins & Dumas, and was that proper?

Mr. SHONTS. Why, we always want on every bid the same specifications. We want each man to bid on the same thing, so far as possible. Senator SIMMONS. In your specifications did you incorporate a menu? Mr. SHONTS. We had a menu, yes.

Senator SIMMONS. Was not this menu that Hudgins & Dumas furnished one of their own getting up?

Mr. SHONTS. Yes.

Senator SIMMONS. It was not in the specifications?

Mr. SHONTS. Not as we prepared them; but in a conversation that we had with Hudgins & Dumas prior to the time that they brought their bid in, they suggested in place of a single sample menu a sample menu for each day of the week. I said I thought that was a good suggestion and an improvement on our original idea of having a single sample menu.

Senator SIMMONS. You did not show the bid of Hudgins & Dumas or authorize anybody to show it to Mr. Markel? Mr. SHONTS. Not the bid; no, no.

But I did want the menus shown,

so that all would bid on the same menus.

Senator SIMMONS. But you did not incorporate a menu in your specifications?

Mr. SHONTS. We had a menu, but not their menu for each day in the week.

Senator SIMMONS. It was not the menu upon which Hudgins bid, nor the menu upon which Markel ultimately bid?

Mr. SHONTS. No, sir; our menu was only one single menu.

Senator SIMMONS. That was the menu Hudgins & Dumas got up,

then?

Mr. SHONTS. As I recollect it. I am not sure. I never made a comparison to know whether they were exactly the same or not. Did you, Mr. Ross?

Mr. Ross. No; I never did. Senator Simmons refers to their bid being in the day before. He was not here this morning when you explained that later you wrote to both Markel and Hudgins & Dumas, and Hudgins & Dumas put in another bid on the same day that Markel put in the revised bid.

Mr. SHONTS. Did you know about that, Senator?

Senator SIMMONS. No; I did not hear that.

Mr. SHONTS. I will tell you, and will use the same illustration that I did this morning. I have some of the figures in my mind. I have