ISTHMIAN CANAL COMMISSION, DEPARTMENT OF CONSTRUCTION AND ENGINEERING.

[Memorial for contract by percentage.]

It is proposed to form a construction company to be composed of from ten to fifteen first-class railroad and general contractors, to be taken from as many points in the United States as practicable, each having abundant financial resources, experience in their special lines of work, and to have as large a following as possible of experienced foremen and subcontractors.

The amount of capital stock of said company-$25,000,000-to be subscribed to in such proportions as the individual members of the company may settle, to be fully paid up or provided.

The company to give a bond for the successful prosecution and completion of the work to the amount of $10,000,000.

Call this construction company thus formed, in the succeeding memoranda, "The Contractor." Call the Isthmian Canal Commission "The Commission." Form a joint committee of five, consisting of two representatives, engineers or otherwise as the Contractor may elect, to represent the Contractor, and three members to be chosen by the Commission, one of whom shall be its chief engineer, who shall be the chairman of the said committee, to fully investigate all engineering data which has been accumulated as regards quantities, classification, character of work, etc., and this committee to agree upon an approximate total estimate of the cost and time needed to complete the so-called 85-foot level lock canal between the waters of the Caribbean Sea at Colon and the waters of the Pacific Ocean at La Boca, on the Isthmus of Panama, all as authorized and approved by Congress.

The work to be embraced under this contract to be only that of canal construction proper, and will consist of the following items:

All dredging, clearing, and excavation from the locks to the ocean at each end of the canal.

The construction of the Gatun dam.

The construction of the Gatun locks and regulating works.

The clearing and excavation from the Gatun dam to Bas Obispo.

The excavation and complete execution of taking out the Culebra cut, socalled, from Bas Obispo to the dam and locks at the southern end of the canal. The construction of the dams at the southern end of the canal.

The construction of the locks and regulating works at the southern end of the canal.

The reconstruction of the Panama Railroad on new line or lines as required by the location and construction of the canal.

And in case it is decided that breakwaters are to be constructed at either the north or the south end of the canal for the proper protection of entrances to the canal, then a supplementary contract, based on the same rate of percentage, to be agreed upon between the Contractor and the Commission for the execution of the work of completing the breakwaters on the same terms as are proposed for the items enumerated above.

To make a contract as between the Commission and the Contractor, whereby the latter undertakes to carry out the work enumerated in the items given above, being the construction of the canal proper, on the following terms: The Commission to pay the Contractor, as total remuneration for his carrying out the work as undertaken, the percentage to be based on the above total estimate as agreed to by the committee, and said payment to be made only on the conditions as given below, viz:

The Contractor to receive no percentage at all until the entire completion of the work embraced in the contract is accomplished. For every $10,000,000 that the final cost overruns the agreed estimate, the rate of percentage proposed to be paid to the Contractor to be lessened by 1; so that, for example, if the Contractor's percentage is fixed at 6 per cent, and the final cost should overrun the estimated cost $60,000,000, then the Contractor would receive no compensation at all.

If the final cost should be less than the amount agreed upon by the committee, then the difference, or profit, is to be divided, one-third of the same to go to the Contractor and two-thirds to the Commission.

For every year of time taken by the Contractor to complete the work beyond the estimate of time as agreed upon by the committee, the rate of per cent proposed to be paid to the Contractor to be lessened by 1. For every month that

the Contractor saves by completing the canal before the time agreed upon by the committee the Contractor to receive a bonus of $100,000.

The Commission, through its own organization and forces, separate and distinct from the Contractor, will carry out the following work :

Government and sanitation.

The handling of material and supplies.

Municipal engineering, covering the construction of waterworks, sewers, roads, and streets in towns and camps.

Building construction, covering the building of new and repairs to all structures needed for quarters of all classes of employees, both for the Commission and the Contractor and for Government uses, including the sanitary department. Branch of labor and quarters.-The Commission, through its branch of labor and quarters, shall furnish all quarters for all needed employees of the Contractor at such points and of such character as may be approved by the chief engineer and the sanitary department, with reasonable promptitude, and will maintain and police same in every respect the same as it does quarters for its own employees.

Mechanical division.-The Commission will operate such machine and allied shops, furnishing same provided with proper tools and equipment, as may be necessary to properly care for and maintain all equipment, whether of the Commission or the Contractor; such maintenance of equipment being, however, understood to mean ordinary shop repairs, the Contractor being understood to make all outside yard or running repairs, excepting those necessitating so-called shopping;" and the Commission will furnish such material and tools as can economically be made in the shops for use of both the Commission and the Contractor. And all machine or shop work done as above by the Commission for the Contractor will be billed to the latter at actual cost plus 15 per cent.

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Bureau of material and supplies.-The Commission will maintain its local storehouses and storekeepers, and furnish on proper requisitions all needed material, tools, etc., for both the Commission and the Contractor, on the same and usual basis of cost plus store expense, etc., and will furnish these materials and supplies to the Contractor precisely the same as to itself, entering the value of same in book accounts to properly obtain the cost of the work. All quarters, offices, engines, shovels, drills, dredges, and other equipment needing water will be furnished with same by the Commission free, whenever the supply is ample, from the water mains of the Commission.

Fuel, either oil, coal, or wood, will be furnished the Contractor on the same terms as supplied to the Commission.

The Commission will furnish the Contractor with funds at monthly or semimonthly periods, as may be decided, sufficient in amount to cover the pay rolls for the current pay period for all employees of the Contractor, who shall disburse same according to legal and established methods, as required by the statutes and rulings of the Treasury Department of the United States, and make such returns of same to the auditor of the Commission as the latter may direct from time to time.

The Contractor will take over and put into use at the time of his assuming charge of the work embraced under his contract all new and modern plant that may be owned by the Commission at that time and all such old plant that the Commission may own and that the Contractor desires to use.

The Commission will buy and own all new plant used in the execution of the Contractor's work excepting when the Contractor sublets any part of the work, when in such case the Contractor or the subcontractor will furnish the necessary plant at his or their own cost.

All of the equipment owned or that may be acquired by the Commission under the conditions as expressed above will be furnished the Contractor free of rental or other charges, and will be returned by the Contractor to the Commission on the completion of the work embraced in the contract or at the termination of the contract for any cause whatever, in as good condition as received, ordinary wear and tear excepted.

The Contractor will take over in his employ all employees on the pay rolls of the Commission then on the Isthmus, at the date of his assuming the work he contracts to do, who may be employed on the work which is designated to be executed by the Contractor under this contract.

And no employee on the gold rolls, so called, who is taken over by the Contractor as above defined, will be reduced in salary or be discharged, excepting

for failure to give proper service to the Contractor, and then only on and with the approval of the chief engineer.

It is understood that all the rules established and put in force or that may be established and put in force from time to time by the sanitary department of the Commission during the life of the contract, said rules being necessary for the protection of the health of officers and employees, and therefore the fundamental requirement for the successful prosecution of the work, are to be strictly enforced and respected in every minute particular by the Contractor and through him by his employees.

The same commissary and mess-house privileges that are given the employees of the Commision shall be given the employees of the Contractor; but the Contractor may assume charge, if he desires, of the operation of all eating and lodging houses necessary for the proper accommodation of his or of the Commission's employees. He may conduct the operation of these houses directly or by a contract with a third party. But in any case, the terms of such contract and the operation of such eating or lodging houses shall in all details be subject to the approval of the chief engineer regarding prices, privileges, and general methods; and shall also be subject to the daily inspection by any party whom the chief engineer shall designate for such inspection duty, and any directions or modifications which the chief engineer may consider necessary for the proper housing and feeding of the employees shall at once be carried out by the Contractor.

The profit or loss to the Contractor arising from the operation of these houses shall be credited to or debited to the general account in fixing the total cost of the work under contract.

In order to successfully supply the work with the proper number of common laborers, it is necessary that the recruiting of all foreign common labor shall be done by and under the authority and protection of the United States. Therefore the Commission, through its agents, will arrange for the contracting and furnishing of all such necessary common labor, and just as far as possible the same is to be of the character and numbers as desired by the Contractor. All the expense of such recruiting, transporting, caring for, and repatriating such common labor shall be properly divided between the Commission and the Contractor in exact proportion to the number of such common laborers each party receives at the time of its arrival on the Isthmus.

Transportation of the Contractor's employees and employees' families from and to points in the United States and the Isthmus of Panama shall be on ships of the Panama Railroad Steamship Company as far as practicable in the decision of the Commission, and in no case shall the rates to be charged the Contractor for such transportation be to exceed one-third the regular published tariff rates for commercial passengers. In case the amount of such rates and such transportation as may be afforded by the Panama Railroad Steamship Line be not deemed ample and satisfactory by the Contractor, he may employ other lines in such business, or he may establish his own line, but only for the handling of his own employees and their families.

The use of the Panama Railroad tracks by work trains of the Contractor will be arranged for as the necessities for same may require. The work trains of the Contractor, manned by his own crew and furnished with fuel and other supplies at his own cost, will be given free trackage rights from canal cuttings to the various dump grounds and return, the Commission assuming the cost of all such trackage rights.

The Commission will also assume the cost of construction of any additional trackage or other additions to the facilities of the Panama Railroad which may be needed by the Contractor in the execution of the work embraced under his contract, the amount and character of such work being subject to the approval of the chief engineer.

The Contractor's employees shall be allowed transportation on the trains of the Panama Railroad at exactly the same rates as are paid by the Commission for its own employees, such rate in no case to exceed one-half of the regular published tariff rates for commercial passengers.

The Commission, through its engineering staff, will furnish all plans, specifications, lines, levels, measurements, and directions necessary to enable the Contractor to properly conduct his work. It will also give monthly or other necessary estimates that the Contractor may require to enable him to make settlements with his subcontractors.

It will also, through its chief engineer, make final decision as to the completion of any and each part of the work from time to time, and also make decision

as to the final and complete execution of all the work embraced under this contract.

All of the engineering work as described above to be under the supervision of the chief engineer and such engineers as he may designate from time to time to represent him.

The Contractor shall at all times during the progress of the work under this contract, as called for by the auditing department of the Commission, furnish the Commission with any and all figures or data relative to the execution of the work, cost, and distribution of same, and such figures shall be full, accurate, and complete, and the Contractor shall, if the Commission so requests, allow the general auditor of the Commission access to his books, accounts, and pay rolls for the purpose of enabling the auditor to examine, verify, or otherwise audit such books, accounts, and pay rolls.

It is understood that gold, or the legal currency of the United States, is the standard of all the monetary considerations mentioned in this contract.

It is understood that wherever the words "chief engineer" are used in this contract that the chief engineer of the Isthmian Canal Commission is meant and none other, and that the work in all its phases and details is to be absolutely under the direction of the Commission, through its chief engineer, who shall approve or disapprove without the privilege of appeal on behalf of the Contractor excepting to the chairman of the Commission any and all acts of the Contractor regarding the amount and character of plant, material, methods of work, amount and character of laborers, wages and working hours of laborers, rates of salary and working hours of all gold, or white, employees.

1STHMIAN CANAL.

UNITED STATES SENATE,

COMMITTEE ON INTEROCEANIC CANALS,

Washington, D. C., Tuesday, February 12, 1907.

The committee met at 10.30 o'clock a. m.

Present: Senators Millard (chairman), Kittredge, Ankeny, Hopkins, Carmack, and Culberson.

In executive session the committee asked to have printed in the record of hearings before the committee any report on file with the Isthmian Canal Commission relative to the recent flood of the Chagres River.

In response to a request of Chairman Millard the following report was transmitted by the secretary of the Isthmian Canal Commission: ISTHMIAN CANAL AFFAIRS,

OFFICE OF ADMINISTRATION, Washington, D. C., February 13, 1907.

SIR: By direction of the chairman, and in accordance with his personal promise to you, I have the honor to inclose herewith a copy of a very complete report received from the Isthmus relative to the recent flood of the Chagres River, which, it is stated, is "without doubt second only to that of 1879."

In reference to your request for a record of water stages during the whole of the last season, this office has not regularly received detailed reports on this subject, but a cable request has been sent to the Isthmus to send by next mail hydrographic reports of the Chagres River for the past six months. As soon as these reports are received they will be promptly transmitted to your committee.

Very respectfully,

Hon. J. H. MILLARD,

JOSEPH BUCKLIN BISHOP, Secretary.

Chairman Committee on Interoceanic Canals,

[Inclosure.]

United States Senate.

ISTHMIAN CANAL COMMISSION,

DEPARTMENT OF CONSTRUCTION AND ENGINEERING,

Culebra, January 8, 1907.

SIR: I beg to forward report from Division Engineer Arango, dated December 18, relative to the recent flood on the Isthmus of Panama. Respectfully,

Mr. JOSEPH B. BISHOP,

E. P. SHANNON, Secretary to Chief Engineer.

Secretary Isthmian Canal Commission,

Washington, D. C.