factors entering into the problem, and I could not concede the right to the Secretary of War or anyone to dictate my decision. The only debatable questions were the details as to putting my decision into effect, and while I stated to the Secretary what my desires were, I told him that I was perfectly willing to conform to his wishes as far as possible as to the time and manner of my withdrawal.

"It was this suggestion to which he chose to refer as a dicker.' To that statement I naturally took exception, particularly as he stated that he did not care for any reports that I might make summarizing and analysing the results of a year's hard work on the Isthmus; also, that he did not value my counsel and advice, and that the only service he desired was that of a constructing engineer on the Isthmus.

"No intimation of friction between the Secretary of War and myself would have become public if it was not accidentally or otherwise given out by the persons in attendance at the conference on Sunday other than myself, and I desire to state emphatically, and the representatives of the press will bear me out, that I have refused absolutely, either directly or indirectly, to be interviewed, and have remained silent under the innuendos which have been daily published since the conference, and would not have made even this statement at this time if it had not been for the severe strictures contained in the published statement of the Secretary, which I consider unjust and uncalled for. and which could serve no useful purpose.

In regard to the situation at Panama, at no time during the progress of the work could my relations have been severed more opportunely than now, and with less damage to the work. A complete organization of departments and bureaus has been effected. Mr. W. E. Dauchy, a gentleman of high engineering attainments, who has been chief engineer of the Chicago, Rock Island and Pacific Railroad Company, and who had occupied the position of division engineer in charge of the Culebra division, was upon my leaving the Isthmus placed in charge of the work as acting chief engineer, he having occupied a similar position during my absence from the Isthmus at the call of the Secretary, during the month of April, and having satisfactorily conducted the work through the demoralization attendant upon the change in organization.

The only work which can be performed until after Congress at its next session shall take some decided action is the gradual increase in the organization and the addition of units of machinery along a welldefined plan which Mr. Dauchy thoroughly understood.

"The simple work of excavating at Culebra and preparing for further excavation are the only things which could be done pending a final decision from Congress. The only possible benefit that my personal service as chief engineer could have been to the work was such as might be due to the purely personal element, which would have been largely supplied by my continuance with the work in an advisory capacity. As far as the actual engineering and construction work was concerned Mr. Dauchy was fully as capable as I.

"Despite all of the discouragement and obstacles which have sur rounded this work (as the Secretary knows and has practically stated in his letter) I endeavored to faithfully and vigorously perform the duties of my office and have never complained or criticised my superiors or any one connected with the work, and, as stated in the Secretary's communication, I have never requested additional emoluments

or asked any favors of a personal nature, and any suggestions which I may have made (as his statement will bear me out) have been made because I considered them necessary for the increased efficiency of the work.

"The reorganization of the work in April was not considered ideal, but as it was such a decided improvement over the existing condition of affairs and seemed to be all that could be done under existing laws I gave it my hearty approval.

"I have made no criticism of personnel or individuals, but do believe that the obstacles due to the governmental methods required by existing laws are so serious that they will have to be eliminated if the American people are to see the Panama Canal constructed in a reasonable time and at a moderate cost.

"My only desire in this statement has been to protest against what I consider the unjust denunciations of the Secretary, and to fully inform my personal friends and professional brethren, who have been familiar with my career, of the essential facts relating to this matter. I emphatically disclaim all responsibility for the various statements recently published alleged to have been made by so-called friends."

In regard to the type of the canal I would prefer to be excused from presenting any opinion until I can have access to the reports of the advisory board and the Isthmian Canal Commission, which I understand, are divided in their views, and one of which favors one type of canal and the other the other. In other words, I think I can give you better service after having an opportunity to see those views than before.

Senator KITTREDGE. Until the President shall have submitted to Congress the reports of the board of consulting engineers, the Canal Commission, and such recommendations as he makes, the committee will not take any testimony upon the subject of the type of the canal, and, I assume, will not ask any questions upon that subject. So that, Mr. Wallace, if you in your testimony will refrain from referring to that subject, we will be very happy to hear you on all other matters connected with the construction of the canal, the government of the Canal Zone, and the management and operation of the Panama Railway Company and the steamship company, and to have your views and advice upon all those questions.

Senator HOPKINS. Before you go into those subjects, Mr. Wallace, have you anything further to say upon the point just suggested by you in your written statement?

Mr. WALLACE. Only this: At the time of the appointment of the first Commission there was a letter addressed by the President to that Commission that outlined in a way their tenure of office, and that letter is a public document in the files of the Isthmian Canal Commission. Senator KITTREDGE. Was the letter to which you refer written by the President?

Mr. WALLACE. Yes, sir; that was a letter that was given to me a short time after I was appointed, to explain my tenure of office; it is dated March 8, 1904. It is quite long, and I will only read an extract; but I would like to read the extract on account of its bearing on my own matters.

Senator KITTREDGE. You may do so. I think that all the members of the committee are familiar with that letter, however.

Senator MORGAN. Who is the letter from?

Mr. WALLACE. From the President.

Senator MORGAN. We ought to have it all.

Senator HOPKINS (to Senator Kittredge). Yes; but if there is any of it that has a bearing on his case, I think he is entitled to put it in the record.

Senator KITTREDGE. Oh, yes; undoubtedly.

Senator HOPKINS. And if it had any influence upon his mind, I think he has a right to put it in for that reason.

Mr. WALLACE. It had this influence on my mind-that I thought that it was the desire to impress upon us all that we had no tenure of office there, and had the right of withdrawal at any time--that is, I mean, with proper notice, etc.

Senator MORGAN. Suppose you read the extract that you refer to which produced that impression upon your mind.

Mr. WALLACE (reading): “I believe that each one of you will serve not merely with entire fidelity, but with the utmost efficiency. If at any time I feel that any one of you is not rendering the best service which it is possible to secure"

Now, what struck me about it was that it did not mean ordinary duty, but the best that could be procured [reading]-

"I shall feel called upon to disregard alike my feelings for the man and the man's own feelings, and forthwith to substitute for him on the Commission some other man whom I deem capable of rendering better service."

That condition was carried out absolutely at the time the old Commission was removed and the new Commission was appointed.

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Moreover, I shall expect if at any time any one of you feel that the work is too exhausting and engrossing for him to do in the best possible manner that he will of his own accord inform me in order that may replace him by some man who to the requisite ability joins the will and the strength to give all the effort needed. But so long as you render efficient service of the highest type in the work you are appointed to perform you may rest assured of my hearty support and backing in every way.

"These are the conditions under which you have been appointed and under which I shall expect you to proceed. I shall furthermore expect you to apply precisely the same principles in the choice and retention of the subordinates who do the work under you as I have applied to your choice and shall apply in your retention."

That is only an extract from it. The letter is quite long and full. Senator DRYDEN. Mr. Wallace, before you accepted this position you laid down to the Commission some pretty clearly defined conditions? Mr. WALLACE. Yes, sir.

Senator DRYDEN. Among which was that you were not to accept orders or be interfered with by any individual member of the Commission, but that you would carry out the policy which the Commission as a body agreed upon. I would like to ask you whether that condition laid down by you was violated; and if so, whether it had any influence in determining you to resign from your position?

Mr. WALLACE. Those conditions were practically-well, I do not say that they were willfully violated, but it seemed impossible for the first Commission to conduct its work and regard them.

When I received that letter from Admiral Walker I raised the point with him whether my reporting to General Davis, who was stationed

there as a Commissioner and as governor, meant that I was to report to him in the way of receiving orders from him. He told me explicitly "No." He said he understood what the arrangement was between us, and that I was simply to report my arrival there. He said: "General Davis has a commission from the Commission putting him in charge of the engineering and construction work on the Isthmus until the chief engineer arrives."

When I went there and reported to General Davis he called my attention to this order, and the issue was immediately raised between us as to the expiration of that commission. He said, as I recollect his statement, This is my commission as managing representative. Now," he said, "you are here, and I am going to turn over the engineering construction work to you, but the powers that are granted to me under this commission I still retain, which practically leaves me in charge of the work, as I hold the purse strings." That is all set forth in the proceedings of the Commission-the controversy between General Davis and myself and he, of course, desired me to report to him. I told him that the arrangement was, as he understood, that I was to report to the chairman of the Commission at Washington-that is, to the Commission through its chairman at Washington and that I could not very well report to him; that I would be serving two masters.

This is a matter I would not have gone into if you had not asked me the question.

Senator DRYDEN. I think it is very pertinent, as that was one of your conditions.

Mr. WALLACE. But he said, "You can very well see, Mr. Wallace, that you have got to come to me under this order, in fixing the wages of workmen or in promotions, or anything of that sort," and he said, "If you report to Admiral Walker and I report to Admiral Walker, and we disagree, it will only be a question of time when one or the other of us will have to leave the Isthmus." I said, "General, I see that situation perfectly clearly, and I recognize that you are an older man than I am and that you do not know how I shall conduct this work; but, of course, you were present at the meeting of the Commission when I was employed, and you naturally feel doubtful about how I am going to handle it." Then he said, "Have you any remedy to suggest?" "Well," I said, "the only thing that occurs to me is this, I would be willing to address my reports to the Commission through Admiral Walker and to send them through you, to give you an opportunity to read them.

"If you found anything in my recommendations that did not line up with what you thought was proper and right, I would expect you to call me in or come into my office; and if you could convince me that my recommendations are not proper, I should want the privilege of withdrawing them and discussing the matter with you and seeing if we could not agree, so as to avoid any controversy." I said, "I came down here to help to construct this canal. I did not come down to raise any question of authority or jurisdiction or to get into any squabble with anyone and if I can conduct the work in the way I think it should be conducted I will put up with almost anything. If I can not,

I do not care to remain in connection with it." And we made a sort of a tentative arrangement of that kind, which existed until the Commission came down in August, when we both of us laid the matter

before the Commission; and they decided that the letter on which he based his assumption of authority expired on my arrival, and sustained the position I took; and that closed that incident. But I desire to say that from that time forward there was no Commissioner connected with the work that gave me heartier, warmer support, or with whom I feel that a stronger mutual confidence existed than between General Davis and myself. We were absolutely in harmony.

Senator DRYDEN. That incident, then, had no bearing upon your determination to resign?

Mr. WALLACE. That had no bearing, except this that that incident and the others that followed of course had that wearing effect, you understand, that any unpleasant incident has in a position of that kind. Senator MORGAN. What was the decision of the Commission when they arrived and settled up this little misunderstanding between you and General Davis? What position did they take as to your right as chief engineer to act under the orders of the Commission and not under the orders of General Davis?

Mr. WALLACE. I understood that they sustained me in my contention that is, my understanding. Their record, of course, would speak for itself. It is all embodied in their printed report.

Senator MORGAN. General Davis was then the governor of the Canal Zone!

Mr. WALLACE. He was then the governor of the Canal Zone.
Senator MORGAN. And a Commissioner?

Mr. WALLACE. And a Commissioner; yes, sir.

Senator MORGAN. Anything else?

Mr. WALLACE. No, sir; that was all.

Senator MORGAN. Was he in charge of the engineering work by any resolution of the board?

Mr. WALLACE. Yes, sir; they put him in charge of the engineering work, with this provision, Senator, that he should have charge until the arrival of the chief engineer.

Senator MORGAN. No longer?

Mr. WALLACE. Well, that was my position, you understand; and he did not claim that he was to have charge of that work after my arrival, except this then the letter went on and defined what his powers were. Senator MORGAN. Yes.

Mr. WALLACE. He claimed that those powers continued, but those powers practically gave him absolute control over the chief engineer--that is, I mean, the chief engineer and the Commissioner could not both hold those powers, independent of each other.

Senator MORGAN. Until your arrivalt here he had a chief engineer at work upon the canal?

Mr. WALLACE. He had an acting engineer, Major Black.
Senator MORGAN. Yes; executing his orders?

Mr. WALLACE. Executing his orders; yes, sir.

Senator MORGAN. And who was the chief executive officer of the engineering department?

Mr. WALLACE. I do not know what the arrangement was as to that. But the way the letter to General Davis was written was plainly indicative of the fact that when the chief engineer arrived there he was to have more authority than the engineer that was in charge there under General Davis.