Mr. LESLEY. Yes, sir. I did not know that. I am merely answering Senator Kittredge from the best knowledge that I had.

Coming down to the principal thing, and trying to make the issue very sharp, if it is possible to be done, I have laid this rather on a letter from the secretary of the Panama Commission, Mr. Bishop, who replied to a number of Senators as to the last purchase of Portland cement for the Panama Canal, where it is stated that if he had purchased American cement he would have paid $7,400 more. That letter is appended to the back of this statement of mine. You will

find that he says that "As the quantity of cement purchased at that time was 20,000 barrels, you will note that this lot of cement would have cost $7,400 more if the use of foreign cement had been prohibited."

That being the statement, the question comes up, first, as to whether there is any duty on materials entering into the Panama Zone. I think it is settled that there is not. Therefore, an American cement or a foreign cement going to the Panama Canal Zone, intended for construction on the canal work, are on a parity.

The next question is whether American Portland cement is equivalent to or fully as good as foreign Portland cement. I can answer that, probably, by saying that it is not only as good, but that it is recognized all the world over as better. I can answer it further by saying that the Government, in the very department which has control of the Isthmian Canal-that is to say, the War Department-in all of its specifications inserts the words "American Portland cement." So that there is no question as to the quality of American Portland cement. I can answer it further by saying that the first Panama Canal Commission, which was a commission of engineers-William Barclay Parsons and Mr. Burr and a number of engineers--not a board of consulting engineers, but a commission composed of engineers and they specified American Portland cement in their first specifications.

So that of those two questions, as you will see in the statement, we find that the cement is the equivalent of foreign cement, and that it has no preference, so far as duties are concerned, on the Panama Zone.

The only other question is, What makes it cost more than foreign cement, if it is as good and if it is made in this country? Why can it not be delivered there, half the distance, as cheap as foreign cement coming twice the distance, from Antwerp, Hamburg, or Bremen? If it can be shown by the letters that I have here, one of which is at the back of this statement

Senator KITTREDGE. You refer to the Bishop letter?

Mr. LESLEY. The other letter is the letter from the Panama Railroad Company, Panama Railroad Steamship Line, which follows the letter of Mr. Bishop. Mr. Bishop says that it would cost $7,400 more to buy this American cement that the foreign.

Senator MORGAN. In what quantity?

Mr. LESLEY. Twenty thousand barrels. What I am trying to direct your attention to is a letter signed by R. L. Walker, traffic manager of the Panama Railroad Company, Panama Railroad Steamship Line, under date of March 30, 1906, as to the freight rates on the Panama vessels, and to show you that at the existing freight rates on this Panama line, controlled by the Panama Railroad, in turn owned by the Isthmian Canal Commission (for which, as Senator

Morgan has said a few minutes ago, the Government is, at the back of the line, responsible)-that that line of steamships made so high a freight rate that it was impossible for the American manufacturers, over that single line of steamers going down to the Isthmus of Panama, to compete with the foreign steamers, making a profit on a haul of twice the distance.

In other words, to get back to the point, the original letting of the Panama Canal cement, the first letting, which was in 1904, under the first Commission, gave the bidder two means of delivery-one, to ship by way of New York, by the Panama Railroad steamers, with freight from New York to Colon paid by the Commission; second, to ship from any convenient port, freight and all other charges paid by the bidder.

That opened the supplying of materials to the Panama Canal to the coastwise commerce of the United States. It also gave you the privilege, if the rates were not too high, to ship via the line of steamers which was controlled by the Panama Railroad at that time.

Subsequently, however, after this change of organization and change in the control of the Panama Railroad and change in the constitution of the Commission, a new letting which is the letting referred to in the letter of Mr. Bishop where the 20,000 barrels were purchased and where this $7,400 would have been saved-a circular, No. 268, for those 20,000 barrels of cement, came out on August 23, 1905, and it abandoned the coastwise shipments entirely. It required deliveries only by steamship. At that time there was only this one line from the Atlantic coast to Panama. And it made the lots so small, namely, as the purchasing agent has just described, so small that they had to go by the steamship line. They were not cargo lots. Under that particular letting the words "American Portland cement" were changed to "Portland cement," leaving the word "American" out. The delivery was restricted only to steamships. The lots were made so small that no one could charter a steamship, and the American coastwise commerce was absolutely excluded, as well as the American manufacturer.

Senator TALIAFERRO. So that these specifications that you have referred to operated as a distinct discrimination against the American producer?

Mr. LESLEY. Absolutely; and against the American coastwise commerce. Absolutely. I propose to go a step further

Senator MORGAN. I want to call attention to what I consider the fact here, though perhaps I may be mistaken about it: Mr. Drake, in his testimony, gave an account of an arrangement between the Panama Railroad and certain established lines of steamers that had connections through with the Pacific-from the Atlantic. to the Pacificby which the railroad company agreed to take 25 per cent of their freights for the transmission of goods across the railroad. As I remember it now, that combination of ship lines included seven or eight great lines.

Mr. LESLEY. Yes, sir.

Senator MORGAN. Are those the lines that you speak of as being under the control of the railroad?

Mr. LESLEY. No, sir. I say that the one line that is under the control of the railroad is this one American line. They may have relations with the foreign lines, whose freight rates I have here, but

I am not aware of that.__ The quotations which I secured from Europe for this cement to Panama, in order to compare our American rates with foreign rates, I took merely from steamships all over the world. I did not know whether there was any relation between the foreign steamships and our Panama line, and of course I could not speak on that.

Senator MORGAN. Perhaps I had better explain, because you do not seem to have considered that view of the situation. The testimony taken two years ago sets out one of these contracts with one of these lines, as a sample contract.

Mr. LESLEY. Yes, sir.

Senator MORGAN. And it gives to the steamers who enter into these contracts and make bills of lading for transmission across into the Pacific Ocean or from the Pacific to the Atlantic the advantage of a rate of 25 per cent upon their freight charges for the voyage, I believe, out and in, which other and disconnected steamers can not avail themselves of what we call tramp steamers, or visiting steamers, that visit different ports at their will and pleasure, without having particular schedules or sailing dates. So I suppose that the reference that you make there is or may be to those lines of steamers which in this way have privileges granted to them by the railroad company that the others have not.

Mr. LESLEY. I dare say that that is the case, sir. The delivery is especially stipulated only by steamship. In the first lot, Senator, the shipment was by American schooners. We supplied cement there by American schooners, and it went down, and our coastwise commerce got the advantage of it. But in this later letting it was absolutely confined to steamers, and schooners were excluded; and the lots were too small to warrant anyone hiring a steamer.

Senator TALIAFERRO. Did you call to the attention of the canal authorities these circumstances that you are relating to the committee?

Mr. LESLEY. My recollection is that at the time our representative came down to Washington here and called their attention to them verbally. We saw that there was no possible opportunity for doing any business.

Senator TALIAFERRO. Did you call to the attention of the canal authorities the fact that if you were left free to ship your cement to the Isthmus by our coastwise shipping that you could compete with the foreign markets?

Mr. LESLEY. I do not know that myself; no, sir. I am not aware of that. There was a large correspondence at the time, but I did not take any active part in it.

Senator MORGAN. That was a fact, was it not?

Mr. LESLEY. I should say so; but they made the second specifications identical, within the last three weeks.

Senator TALIAFERRO. Has their attention been called to it since? Mr. LESLEY. By correspondence. A number of manufacturers said that they would write on this subject to the Commission.

Senator MORGAN. Whether their attention has been called to it or not, I understand that the fact is that the exclusion of schooners from this trade was, in effect, an exclusion of vessels that had the privileges of the coast line.

Mr. LESLEY. That is right.

Senator TALIAFERRO. And a discrimination against American products?

Mr. LESLEY. Yes, sir; a double discrimination.

The ACTING CHAIRMAN. Did the purchase of the cement mentioned in Mr. Bishop's letter call for delivery at New York or Colon? Mr. LESLEY. At Colon, sir.

The ACTING CHAIRMAN. And in the specifications asking for bids, what was the exact language employed in that feature of the proposal?

Mr. LESLEY. I will give you the exact language. Here is the language of the specification, sir: "All cement to be delivered c. i. f. by steamer at either Colon (Atlantic port) or La Boca (Pacific port), Isthmus of Panama; and it is to be understood that the prices bid cover delivery of goods on dock, without any additional cost to the Government beyond the prices named. Inspection will be made at the place of manufacture or purchase, to determine whether material meets the requirements set forth in the specifications, and on the Isthmus as to condition on arrival there."

Those are the identical words of the specifications.

Senator TALIAFERRO. You are quite satisfied that the authorities of the Canal Commission had their attention brought to the fact, some time ago, that that language was discriminatory against our coastwise shipping and against your product?

Mr. LESLEY. I am very sure that there was so much indignation among the cement manufacturers that everybody said they would write a letter; but I do not mean that I have any personal knowledge at this time that it was done.

Senator TALIA FERRO. Were you not the president of one of the companies?

Mr. LESLEY. Yes, sir; and my representative did call on the purchasing agent in Washington and make a verbal statement at the time of this first bidding.

Senator TALIAFERRO. You know that he was instructed to do that? Mr. LESLEY. Yes, sir; but I did not want to give you anything that I did not know actually of my own knowledge.

Senator MORGAN. You know that schooners were dropped out and steamers put in?

Mr. LESLEY. Yes, sir; because we supplied schooners and the foreigners supplied the steamers.

Senator MORGAN. Is this steamship line that is owned by the railroad company a cargo line or a cargo and passenger line?

Mr. LESLEY. As I understand, it is a general line, controlled by the railroad, and taking mixed shipments of all kinds of things in small lots.

Senator MORGAN. And passengers?

Mr. LESLEY. Yes, sir; so far as I know. It is the only line from New York down.

Senator MORGAN. What you want, for the convenience of the cement trade, is to be able to command the services of sailing ships, or cargo ships if they are steamers?

Mr. LESLEY. Right. Yes, sir.

Senator TALIAFERRO. Our coastwise shipping?

Mr. LESLEY. Yes, sir.

That is what I think we ought to have.

The next point that I want to make here is in connection with a lot of freight rates that I had received at the time of the letting of this contract, to show what the foreign freight was at that time.

The foreign lines of steamers running from London, Hamburg, and Bremen, which I understand are coastwise steamers along the Atlantic and South American coast, do a general steaming business with return cargoes. I had rates from them from 67 cents, from 45 cents, from 55 cents, and various figures, which I have here in cables, which I would be glad to have translated if you so desire. They are all in the code, and I have had lead-pencil translations made. Therefore the fact was that, under those particular specifications, the American manufacturer was driven to a single line, which charged him $5 for a net ton of cement, per short ton-that is, 2,000 poundsor, as a barrel of cement is reckoned at 400 pounds including the package, at the rate of $1 a barrel, 5 barrels to the 2,000-pounds ton. And, against that, the foreign ships were transporting this same material at rates from 45 cents, in some large tramp vessels, to 10s. 6d. per long ton, or from 45 cents to 60 cents or 65 cents a barrel, a discrimination or a difference in favor of the foreign shipper as against the American shipper of more than the difference that Mr. Bishop shows is the reason that this cement was bought from a foreign shipper; or, in other words-while I am on this point I will just give you one little sum in arithmetic: In other words, if this Panama line, owned by our Government, through the Isthmian Canal Commission, could transport a barrel of cement 1,972 miles at the same price that the foreign steamship line could transport it 5,000 miles, each line making a reasonable profit, the fact would have been, taking the average of the foreign freights at 57 cents, that there is a difference of 43 cents against the American manufacturer; but if the Panama Railroad Line Steamship Company had made the same rate as the foreigner

The ACTING CHAIRMAN. From what point?

Mr. LESLEY. From New York; 1,900 miles.

Senator TALIAFERRO. From what foreign point?

Mr. LESLEY. From Antwerp or London. From London to Colon is 4,742 miles, and from Hamburg it is 5,049 miles.

Senator TALIAFERRO. Could you not just as well incorporate the rates as you go along, to make it clear in the record?

Mr. LESLEY. Yes; I will give it to you right away. The distance from London to Colon is 4,742 miles.

Senator TALIAFERRO. And the rate is what?

Mr. LESLEY. Ten shillings and 6 pence per long ton.

Senator TALIAFERRO. Which is how much a barrel, in dollars and cents?

Mr. LESLEY. I will give that in a few minutes. It is about 55 cents. Senator TALIAFERRO. I think it would be clearer to have it appear in the record together. I am very much interested in it, and I would like to have the record show it just as it is.

Mr. LESLEY. I can figure that out in a moment. I was dealing with averages in this thing before, but I think I have the figures on which I based them. I have my cable dispatches. Here is a cable dispatch from Hamburg, with a rate of 68 cents for the 5,048 miles from Hamburg. That is a short ton. Here is a London rate, 10 shillings and 6 pence per gross ton, per long ton. That is from London by the