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You were first appointed chief engineer of the canal. That was your first appointment?

Mr. WALLACE. Yes, sir.

Senator MORGAN. What was the date of it?

Mr. WALLACE. June 1, 1904.

Senator MORGAN. When did you arrive on the Isthmus?

Mr. WALLACE. I arrived on the Isthmus in the latter part of June. I do not recollect the date.

Senator MORGAN. How long did you remain there before you came back to the States?

Mr. WALLACE. I came back in the latter part of August or the first of September. I do not remember the exact date.

Senator MORGAN. Were you appointed a Commissioner before you came back?

Mr. WALLACE. No, sir; I was appointed a Commissioner in the following spring.

Senator MORGAN. The following spring?

Mr. WALLACE. In April, 1905.

Senator MORGAN. Yes. You remained chief engineer, then, from June until April?

Mr. WALLACE. Yes, sir.

Senator MORGAN. And then you were made a Commissioner?
Mr. WALLACE. Yes, sir.

Senator MORGAN. Where were you when you were appointed a Commissioner?

Mr. WALLACE. I received my appointment in New York; that is, it was handed to me in New York, by Mr. Cromwell, after my arrival from the Isthmus.

Senator MORGAN. What was the object of your return to the United States at that time?

Mr. WALLACE. I was ordered here by the Secretary of War.
Senator MORGAN. For any particular purpose?

Mr. WALLACE. In order to assist in the reorganization of the Panama Railroad or for a general conference.

Senator MORGAN. The reorganization?

Mr. WALLACE. Yes. You know the members of the new Commission were made directors of the Panama Railroad. I was never tokl what the object was in my coming to the States. I was very busy at the time.

Senator MORGAN. Did you have any connection with the Panama Railroad before you were made a Commissioner?

Mr. WALLACE. None, except that they tried to appoint me general superintendent of it, and I declined.

Senator MORGAN. You declined?

Mr. WALLACE. Yes.

Senator MORGAN. And did not accept the duties of the office at all? Mr. WALLACE. I performed the duties under protest, after receiving; instructions from Admiral Walker to do so. As I set forth in my previous testimony, the notice of my appointment as general superintendent of the Panama Railroad came first from Mr. Cromwell. Senator MORGAN. Your notice came from him?

Mr. WALLACE. My notice came that I was appointed. Then it came from Mr. Drake, the vice-president of the Panama Railroad; and as Admiral Walker, the chairman of the Isthmian Canal Commission, was

the only person to whom I was supposed to report, I naturally cabled him and asked him for instructions. That correspondence is all set forth in the testimony that I gave when I was before your committee the last time.

Senator MORGAN. The position of superintendent of the railroad was tendered to you without your application?

Mr. WALLACE. Yes, sir.

Senator MORGAN. And you declined it at first?
Mr. WALLACE. Yes, sir.

Senator MORGAN. And who persuaded you to take it?

Mr. WALLACE. Admiral Walker practically told me that I could perform those duties temporarily. În declining it, in writing to Mr. Drake, I said that as somebody had to perform the duties I was willing to perform them, but I would do it under protest until the annual meeting of the stockholders and the board of directors, when, if they desired me to run the Panama Railroad, I wanted to be put in the office of general manager or vice-president.

The reason that I objected was this: No man can serve two masters; and if I should have taken that position as general superintendent, my line of report would have been through Mr. Drake, of the New York office, who was not a United States officer at all, and I would have been serving two masters. I would have had to go to a man as my source of authority that had never been on the Isthmus, and did not know anything about the Panama railroad except what he got from letters and cablegrams; and, more than that, I did not feel that there should be that divided responsibility. I mean, that I should not serve two

masters.

Senator MORGAN. Is there any such office as general superintendent provided in the charter of the Panama Railroad Company?

Mr. WALLACE. I do not know.

Senator MORGAN. You never did know?
Mr. WALLACE. No.

Senator MORGAN. And do not know yet?
Mr. WALLACE. No.

Senator MORGAN. How long did you perform the functions or duties of general manager of that railroad?

Mr. WALLACE. Nominally from some time in April-I do not recollect the exact date of that reorganization-until about the 28th of June.

Senator MORGAN. You say "nominally." Why do you use that word?

Mr. WALLACE. Simply because I did not get back on the Isthmus again, right in direct connection with the road, until in the latter part of May.

Senator MORGAN. Then you never have been in actual charge as general manager of this railway?

Mr. WALLACE. I was, yes; during that period.

Senator MORGAN. You had the actual charge of it?

Mr. WALLACE. Yes, sir.

Senator MORGAN. Did you give your attention to it?

Mr. WALLACE. I gave it what attention I considered was necessary while I held that position, while I was there.

Senator MORGAN. You were not then a stockholder?

Mr. WALLACE. Yes, sir; I was.

Each one of us bought one

Senator MORGAN. You had one share of stock?
Mr. WALLACE. I had one share of stock.
share of stock and gave our check for it.
Senator MORGAN. Yes.

Mr. WALLACE. And then we gave the Secretary of War, I think it was, an option on that stock to buy it back again.

Senator MORGAN. Was that share of stock sold to you for the purpose of qualifying you as general superintendent? Mr. WALLACE. No; as a director.

Senator MORGAN. As a director?

Mr. WALLACE. As a director; yes.

Senator MORGAN. But at the time of your appointment as general superintendent, or as general manager, rather, I will call it-I believe that is what you call it you had no share of stock?

Mr. WALLACE. Yes, sir; I did. First we met in the New York office, and under the directions of the Secretary of War, Mr. Cromwell and, I think, Colonel Edwards, voted the stock and elected us directors. Then, after we were elected as directors by the stockholders, I was elected vice-president and general manager by the board of directors. That was the sequence.

Senator MORGAN. Oh, yes-all at the same time, in New York?
Mr. WALLACE. All at the same time, in New York.

Senator TALIAFERRO. From whom did you get your share of stock, Mr. Wallace?

Mr. WALLACE. I do not know where it came from. I gave my check to the Secretary of War.

Senator TALIAFERRO. Personally?

Mr. WALLACE. Personally. That is, it was made out to William Taft.

The

Senator TALIAFERRO. To whom did you deliver your check? Mr. WALLACE. I delivered my check to Mr. Cromwell, I think. Senator TALIAFERRO. Who delivered the stock to you? Mr. WALLACE. The stock was never actually delivered to me. stock was produced at that meeting, and then I reassigned that stock— I think I signed it in blank; I do not remember who it was assigned to-and gave the secretary an option to purchase that stock back from me. I think it was $10 that he paid for the option. So that in the railroad offices at New York was retained the share of stock and the option, you understand.

Senator MORGAN. Did he pay you the $10?

My check came

Mr. WALLACE. They paid me the $10; yes, sir. Senator MORGAN. That is all you ever got out of it? Mr. WALLACE. That is all I ever got out of it. back, though, all right, indorsed; that is, I found it. Senator MORGAN. Who was the most prominent and most active person in having you, then, forced into office, first as a director and afterwards as general manager?

Mr. WALLACE. That was all understood; that was talked over at Washington before we went over to New York.

Senator MORGAN. Talked over by whom and with whom?

Mr. WALLACE. It was talked over by the secretary and the chairman and Magoon and I—that is, as to how we should reorganize this railroad company.

Senator MORGAN. Was that before you came up from the Isthmus? Mr. WALLACE. No; that was after I came up here, in April, and I said I wanted the control of the railroad on the Isthmus. It was understood between us that Mr. Shonts would be put in as president and would handle the railroad and steamship line in this country, and that I would be made vice-president and general manager and would handle the railroad on the Isthmus.

Senator MORGAN. You never were made vice-president?

Mr. WALLACE. Yes; I was made vice-president.

Senator MORGAN. Vice-president-is that the same office you call general manager?

Mr. WALLACE. Vice-president and general manager.

Senator MORGAN. Yes. When did your term of office as Commissioner begin?

Mr. WALLACE. That was about the 1st of April-the first week of April.

Senator MORGAN. These transactions of making you vice-president and general manager and Commissioner were practically simultaneous? Mr. WALLACE. No; that was a week or two afterwards.

Senator MORGAN. That you were made vice-president or general manager?

Mr. WALLACE. Yes. My commission as Commissioner was signed by the President, and Mr. Cromwell met me, when I came up from the Isthmus, in New York, and I was taken to his office and sworn in as a Commissioner and my commission given to me. Senator TALIAFERRO. By Mr. Cromwell?

Mr. WALLACE. By Mr. Cromwell. Now, then, I was a day or two in New York, and when I came over to Washington we had our conference about what to do with the Panama Railroad. Then a little later we all went back to New York and reorganized this Panama Railroad by the new directors coming in and the old directors going out. That was a week or two weeks later, and I do not recollect how much time elapsed between those two transactions.

Senator MORGAN. Where were you when you were first informed that you were to be or had been made a Commissioner?

Mr. WALLACE. I got the first information that I had from Mr. Cromwell.

Senator MORGAN. Where?

Mr. WALLACE. In New York.

Senator MORGAN. You did not know that you would be made a Commissioner until you got to New York?

Mr. WALLACE. Yes; yes. The Secretary wired me on the Isthmus? Senator MORGAN. How; by telegram?

Mr. WALLACE. By cable, and told me what the scheme was, and asked me what I thought of it.

Senator MORGAN. And part of the scheme was to appoint you Commissioner?

Mr. WALLACE. Yes-that the scheme was to appoint me Commissioner and put me on the executive committee.

Senator MORGAN. And also to make you general manager of the railroad?

Mr. WALLACE. No; nothing was said about the railroad at all. That all came afterwards.

Senator MORGAN. At that time that was all there was of it?

Mr. WALLACE. Yes. Senator MORGAN. Had you ever made any application to be appointed a Commissioner?

Mr. WALLACE. No, not in that way, except in this way: When I had my first talk with Admiral Walker, at the start, I said to him: "Now, Admiral, I don't know how this thing is going to work out. You may not be able to carry out this arrangement; I may be dissatisfied down there, or you may be dissatisfied with me, or my health may not stand it, or a great many things may occur. Now," I said, "the majority of these Commissioners are men of considerable age, and there will undoubtedly be a vacancy in this Commission inside of the next year or two or three years.

"Now," I said, "I don't want you to pledge that you will recommend to the President to make me one of these Commissioners; but," I said, "if you could do so it would give me a chance after I got that work organized and started to come back to the States here and serve on the Commission; and I think the experience that I would get down there would make me a valuable member of it. But," I said, "I simply want to tell you what is in my mind. I do not want to ask you to commit yourself;" and the Admiral, as I understood him, said that he thought it would be a very good plan. That is the only conversation that I recollect I ever had about going on the Commission. That is, I mean, I never applied for it.

Senator MORGAN. And you never asked anybody to recommend you? Mr. WALLACE. I do not think I ever did; at least I have not any recollection of it.

Senator TALIAFERRO. Did anyone ever tell you that they meant to recommend you?

Mr. WALLACE. I do not remember of any person telling me that they intended to recommend me. Of course there is this thing: I presumed after I got down there that that would be a logical step a little later on.

Senator MORGAN. I suppose, from he statements you have made, that you had in mind an expectation that after you had gotten the engineering work thoroughly under way you would prefer not to live in the Isthmus on account of your family; and you were looking forward then to falling back upon the position of a Commissioner, not required to live in the Isthmus, rather than to retain the position of chief engineer, who was required to live there? Was that the idea? Mr. WALLACE. Yes; that was in my mind.

Senator MORGAN. Was it strongly in your mind?

Mr. WALLACE. Yes, sir; it was so strongly in my mind that that was why I had this preliminary conversation with Admiral Walker.

Now, what may have occurred is this: Different men may have at times said to me something like this: "Why, Wallace, you ought to be a Commissioner," or something of that kind, and I might have simply smiled and passed it off with some remarks. But I never made any effort to get on the Commission.

Senator MORGAN. After you were notified that you were going to be a Commissioner, you came to New York?

Mr. WALLACE. Yes, sir.

Senator MORGAN. Soon after?

Mr. WALLACE. Yes, sir.

Senator MORGAN. Within a few days-ten or fifteen days?

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