Senator TALIAFERRO. After it had become the property of the United States?

Mr. CROMWELL. It had not become the property of the United States.

Senator TALIAFERRO. It had with the exception of that stock?

Mr. CROMWELL. That is just the point. It was with the exception of that stock. And those minority shareholders could have insisted that the Panama Railroad be conducted as an independent corporation for the benefit of its stockholders, of which those men were a part.

Senator MORGAN. How many of these were there at the time this action was taken by the two Houses of Congress, besides yourself? Mr. CROMWELL. About fifty.

Senator MORGAN. Besides yourself?

Mr. CROMWELL. Yes, sir; altogether the list is about forty or fifty. Senator MORGAN. Altogether; but how many besides yourself were there?

Mr. CROMWELL. The total number represented by the minority at the time I undertook this duty was between forty and fifty-the total list.

Senator MORGAN. You were one of that number?

Mr. CROMWELL. I was one of the number; certainly.

Senator MORGAN. I want to know how many others there were besides yourself.

Mr. CROMWELL. As many more as would be made up by the subtraction of one from that number.

Senator MORGAN. By the subtraction of one from the number? Mr. CROMWELL. By the subtraction of one from the forty or fifty. That would be the number that remained, outside of myself.

Senator MORGAN. There was one stockholder, then, besides you? Mr. CROMWELL. We do not seem to understand each other, Senator. Senator MORGAN. I do not think we do.

Mr. CROMWELL. I say the total number of people-not the number of shares.

Senator MORGAN. Well, the total number of people.

Mr. CROMWELL. The total number of persons owning the minority stock when I began this work of acquiring the shares was between 40 and 50 persons.

Senator MORGAN. And you were 49 of them?

Mr. CROMWELL. I was one of the 40 or 50 persons.

Senator MORGAN. Oh! I thought you were 49 of them.

Senator TALIAFERRO. Do you know any person living in this country who was a stockholder in the Panama Canal Company-the old or new French company?

Mr. CROMWELL. I never have had any knowledge, sir, as to who they were. There are one or two banking houses who had foreign connections, with some American representation here, who I have heard from time to time had some stock abroad.

Senator TALIAFERRO. Do you know, of your own knowledge, of any individual in this country-any American citizen-who was a stockholder in the French company, either the old company or the new?

Mr. CROMWELL. I do not, Senator. I know of one or two banking houses who had foreign connections who were said to have had

some of the old canal stock; but whether they had or not I do not know. They never even said so to me, but I understood that they had. I will answer your question squarely by saying that I do not know of a stockholder of the old Panama Canal Company in this country, or of the new company, who was a citizen of this country. Senator MORGAN. You have described a very horrible situationimaginary, of course in which the United States would have been put by the minority stockholders in this company, and you have shown how you succeeded in relieving the Government from that wretched situation. Now I want to get at the point as to how many individuals there were and who they were that would have suffered this outrage at the hands of the United States Government, if it had chosen to impose it.

Mr. CROMWELL. Between 40 and 50 persons.

Senator MORGAN. You were one of the number?

Mr. CROMWELL. I was one of the persons, in that I was one of the minority.

Senator MORGAN. What amount of stock did you hold then?

Mr. CROMWELL. Permit me to put in the exact number of shares. I think it is 29, 30, or 31.

Senator TALIAFERRO. You do not exactly mean that, I fancy, because I think that Senator Morgan is referring to the stockholders to whom you paid this unusual

Mr. CROMWELL. No; he was not, Senator, I think.

Senator TALIAFERRO (continuing). To whom you paid this unusual and exorbitant price for the stock.

Mr. CROMWELL. I think not, Senator.

Senator MORGAN. I am speaking, first of all, of the stockholders; then I will get at that other part of it.

And then, in order to relieve the Government from the oppression and the disturbance in its business that you describe as being horrible

Mr. CROMWELL. As being serious and grave.

Senator MORGAN (continuing). You assumed the task of buying up this other stock, paying for it out of your own pocket?

Mr. CROMWELL. I took the responsibility of acquiring these four lots, at a price in excess of that which had been authorized by the Secretary of War.

Senator TALIAFERRO. The price being?

Mr. CROMWELL. That price being 105.

Senator TALIAFERRO. And the price you paid for this stock being? Mr. CROMWELL. The price of this being, in respect of 234 shares, $280 a share; and in respect of 30 shares, $200 a share.

Senator MORGAN. The Secretary of War having admeasured the value of this stock at the price you have mentioned what was it? Mr. CROMWELL. One hundred and five dollars.

Senator MORGAN. Yes. You took the responsibility of buying it up at $280?

Mr. CROMWELL. I took the responsibility of buying 234 shares at $280 and shares at $200.

Senator MORGAN. You took that responsibility yourself?

Mr. CROMWELL. I did; and I am very proud of it.

Senator MORGAN. I have no doubt that you are.

Mr. CROMWELL. Because it enabled me to complete the purchase of all the stock for the benefit of the United States.

Senator MORGAN. Yes.

Mr. CROMWELL. And to give you a complete unit.

Senator MORGAN. That was to forestall the action of the Secretary of War and to do something that he had not contemplated in the way of diplomacy?

Mr. CROMWELL. It was to accomplish the great purpose for which we were all so anxious, namely, the acquiring of all of this stock. Senator MORGAN. But they did not acquire it all? The Government did not acquire it all?

Mr. CROMWELL. It did acquire it all by reason of my action.

Senator MORGAN. With the understanding that they would sell back a share to each one of the directors-to men that they wanted for directors?

Mr. CROMWELL. There was no understanding of that kind in the

case.

Senator MORGAN. Oh, yes; you said there was.

Mr. CROMWELL. I say there was no understanding of that kind in the case.

The CHAIRMAN. Senator Morgan, you may recall that when Mr. Cromwell was here before he gave to us for examination some Panama coins. I suppose we are through with them now?

Senator TALIAFERRO. I move that they be returned to Mr. Cromwell.

Senator MORGAN. I have no interest in it. I merely wanted to show how easy it was to fool those negroes down there by making two coins of the same size and of different values. [Laughter.]

(The committee thereupon adjourned until to-morrow, Friday, May 11, 1906, at 10.30 o'clock a. m.)

ISTHMIAN CANAL.

COMMITTEE ON INTEROCEANIC CANALS,

UNITED STATES SENATE,

Washington, D. C., Friday, May 11, 1906.

The committee met at 10.30 o'clock a. m. Present: Senators Millard (chairman), Kittredge, Morgan, and Taliaferro.

TESTIMONY OF WILLIAM NELSON CROMWELL, ESQ.--Continued. Senator MORGAN. Mr. Cromwell, on page 1112 of your former testimony I will read what occurred.

Mr. CROMWELL. Before you read, Senator, permit me to make a remark, so as not to interrupt the line of your inquiry.

Senator MORGAN. Yes.

Mr. CROMWELL. There are two topics upon which I have been charged by the previous examination to furnish further evidence, and I have been gathering it for this purpose. That of yesterday concerned the purchase of the shares of the Panama Railroad Company minority holdings. I was to furnish certain other material, and I have gathered it and am ready now to present it.

Senator MORGAN. Then present that, and let us get it in the record. Mr. CROMWELL. The second subject related to the Pacific Mail contracts, concerning which Senator Morgan interrogated me on Tuesday last, and with reference to which I was also to furnish some_narrative of the successive contracts relating to the Pacific Mail. I am also prepared upon that point to make a further statement. Senator MORGAN. Let us have it, then.

Mr. CROMWELL. Those topics I will take up in their order.
Senator MORGAN. Just put them in the record.

Mr. CROMWELL. I have not prepared them in writing. I am pre pared to state them.

Senator MORGAN. Very well. State them, then.

Mr. CROMWELL. With reference, then, to the subject of the purchase of the minority of the Panama Railroad shares, concerning which, as I said yesterday, I had not then before me the memoranda, accounts, and records, because I had filed the accounts with the Secretary of War

Senator MORGAN. One moment. Let me ask you a question while I think of it. Did I understand you to say yesterday that the minutes of the Panama Railroad Company are printed?

Mr. CROMWELL. No, sir; they never were printed, sir. They are embodied in the minute books which are here with the committee. The annual reports, however, were printed, and it is those, perhaps, to which reference was made.

I shall make this statement consecutive, so as to be of assistance to you, with reference to the purchase of the minority stock of the Panama Railroad Company.

I was charged with the duty upon that subject under the following letter of the Secretary of War, dated January 16, 1905 [reading]:

WAR DEPARTMENT, Washington, January 16, 1905.

MY DEAR MR. CROMWELL: We have secured from the New Panama Canal Company 68,887 shares of the capital stock of the Panama Railroad Company, and since that time have purchased 100 shares additional, leaving a balance of 1,013 shares.

The President is desirous of obtaining the remaining shares of stock for convenience in the administration of the railroad as an instrument in the building of the canal. As you negotiated the sale of the property of the New Panama Canal Company to the Government and have been general counsel for the Panama Railroad Company, you will doubtless have greater facility in reaching the minority stockholders than anyone else who could assist us in the matter.

I therefore authorize you to buy all the shares of stock of the Panama Railroad Company outstanding at a price of par and 5 per cent in lieu of dividend, agreeing, on behalf of the President and the Government of the United States, to make you whole in all the reasonable expenses which may be incurred in the negotiation and purchase of these shares.

It is my purpose to invite Congress to pass an act authorizing the Attorney-General to begin a proceeding to condemn the outstanding shares in a Federal court in the State of New York, because the shares have their legal situs within that jurisdiction, but of course if we are able to obtain the shares by negotiation it will save all parties in interest expense and annoyance. I add this that those who now hold the shares may understand the attitude of the Government with respect to them. WM. H. TAFT, Secretary of War.

66

Very respectfully, yours,

WM. NELSON CROMWELL, Esq.,

49 Wall Street, New York City.

Senator MORGAN. Turn back in that letter and repeat that remark as you negotiated,” etc.

What was that?

Mr. CROMWELL (reading): "As you negotiated the sale of the property of the New Panama Canal Company to the Government and have been general counsel".

Senator MORGAN. Is that a fact; did you do that?

Mr. CROMWELL. I assisted in the negotiation.
Senator MORGAN. Did you do it by yourself?

Mr. CROMWELL. Yes, sir.

Senator MORGAN. In what capacity?

Mr. CROMWELL. As general counsel of the Panama Canal Company. Senator MORGAN. That was the sale, now, of the property of the Panama Canal Company, of every kind and character, to the United States that you negotiated?

Mr. CROMWELL. It was the sale as the offer of the canal company describes; a sale of the totality of the property on the Isthmus. Senator MORGAN. The totality?

Mr. CROMWELL. Yes, sir.