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before we could get them to do it) when they did make a proposition, they wanted $109,000,000.

Senator MORGAN. One hundred and nine millions?

General HAINS. Yes, sir.

Senator MORGAN. Yes, that is my recollection.

General HAINS. Then, afterwards, after the bill for the construction of the canal, I think it was on the Nicaragua route, had passed the House of Representatives, they made this offer "Here, take this canal at your own figure."

Senator MORGAN. That was the first Hepburn bill, was it not?
General HAINS. I believe it was the first Hepburn bill.

Senator TALIAFERRO. They offered what?

General HAINS. They offered then to the United States everything they had for just what we valued it at.

Senator MORGAN. Forty millions of dollars?

General HAINS. Forty millions of dollars. Now, that came as a proposition from the French company.

Senator TALIAFERRO. Let me ask you right there, General-if you know about it did they not remove Monsieur Hutin, who was the director-general of that canal company, from office, and put Monsieur Bô in for the express purpose of making that drop?

General HAINS. That I can not say, Senator.

Senator TALIAFERRO. Did the French company offer to sell that property to this Government at what your Commission estimated it to be worth, or did they offer to sell it at $40,000,000?

General HAINS. I think the thing was put something like this: "Take the canal and everything we have there for your own valuation. You estimated it was worth forty millions. Take it at forty millions." That is the way I understood it.

Senator TALIAFERRO. So that, whatever the circumstances may have been, the French company understood that they were to receive forty millions of dollars for that property-no more, no less?

General HAINS. That is the way I understood it.

Senator TALIAFERRO. So that there is no obligation on the part of this Government to pay anything in excess of the forty millions that have been paid?

General HAINS. I do not think there is any obligation other than that, perhaps, of an equitable amount for work they did subsequent to the time that we accepted their proposition.

Senator MORGAN. If you will allow me, if there is any such equitable sum, is it not set off by another equitable allowance in favor of the United States for filling up that they permitted to go on there the dilapidation of their property?

General HAINS. Not the dilapidation of the property, Senator, in that sense the dilapidation of the property-you might say the filling up of the canal, though I do not think there was much more of that; but so far as the property was concerned (I am speaking now of the movable property-the plant) we did not attach any value to it at all in our forty millions. When we made the estimate of forty millions of dollars we did not consider that there was a locomotive or anything there that was worth anything.

Senator TALIAFERRO. What work have they done since their offer to sell that property to us was accepted by this Government?

General HAINS. There comes up a question of law that I am not capable of dealing with. Their offer was accepted, I understand, on the 3d of March, 1903, subject, however, to the ratification of a treaty between the United States and Colombia to enable the United States to step in and take possession.

Senator TALIAFERRO. And the United States took possession just as soon as satisfactory treaty arrangements were made?

General HAINS. Yes, sir.

Senator TALIAFERRO. Where have they any claim on that score, if it was subject to the ratification of this satisfactory treaty? You say the purchase was made subject to the ratification of a satisfactory treaty. General HAINS. It seems to me it is a question of equity altogether. The French company, after they had made their proposition to us, gave us a certain time in which to accept it. I think it was an option that would expire on the 3d of March, 1903.

Senator KITTREDGE. Was not that option extended?

General HAINS. I do not know. I did not have anything to do with the canal after that, so that I do not know much about it; but as I understand it, I think the Attorney-General accepted the proposition on the 3d of March, subject to these conditions.

Senator TALIAFERRO. Subject to satisfactory treaty arrangements? General HAINS. Yes, sir.

Senator MORGAN. I had a document printed yesterday and referred to this committee that I got from the Attorney-General, setting forth all of the propositions and all of the agreements; so we have the official status upon that question.

Senator TALIAFERRO. In negotiating the purchase of that property, through whom were the negotiations conducted on the part of the French company? Who represented the French company in the negotiations?

General HAINS. I do not know that I can answer that question from my own knowledge. During a part of the time I know that Mr. Hutin, the director, was in negotiation either with the Commission or with the chairman of the Commission; and subsequently he was removed, or subsequently Mr. Bo was made director, and I think the matter was consummated by Mr. Bo, assisted by Mr. Lampré. Mr. Lampré, the secretary of the company, was in Washington a part of the time when these negotiations were going on; but I had very little to do with it at the time. In fact, I did not have anything to do with it, and I only know that these things were going on as a matter of common knowledge to anybody that might be around the Commission's office. I was not getting any pay as a member of the Commission at that time.

Senator TALIAFERRO. You are a member of the Commission now? General HAINS. Yes, sir; I am now.

Senator TALIAFERRO. And you say this claim for something over two millions of dollars, this claim of the French company for additional compensation, is now pending in the Commission?

General HAINS. I do not understand that it is pending in the Commission; no, sir.

Senator TALIAFERRO. Has it not been presented to the Commission? General HAINS. It was presented to the Commission, and the Commission acted on it about a year and a half ago.

Senator TALIAFERRO. What action did the Commission take?

General HAINS. I think the action of the Commission was adverse; but they have not given up all idea of working the claim through, notwithstanding.

Senator TALIAFERRO. Did you coincide with the decision of the Commission?

General HAINS. I never went into that subject, Senator.

Senator TALIAFERRO. You were not on the Commission at that time? General HAINS. No, sir; I was not on the Commission at that time, and I do not know enough about it to justify me in expressing an opinion. I would rather not express an opinion.

Senator TALIAFERRO. Has the claim been presented to the present Commission?

General HAINS. To this existing Commission?
Senator TALIAFERRO. Yes.

General HAINS. No, sir; not that I know of.

matter of arbitration in some way.

Senator TALIAFERRO. In what way?

General HAINS. I do not know.

Senator TALIAFERRO. Who is to arbitrate it?

I think it is now a

General HAINS. I think they have asked the President to do so.
Senator TALIAFERRO. Through whom?

General HAINS. I was called before the Assistant Attorney-General a few days ago to give my testimony, or to give my recollection of how those estimates were made up, and that was with a view to its effect on this claim. I understood that they had agreed to let it be determined by the President whether they are entitled to anything or not, just as a matter of equity. Of course that would not give them

the money.

Senator TALIAFERRO. When you say "they" have, you understand, agreed to leave it to the President, who do you mean?

General HAINS. I mean the representatives of the canal company. Senator TALIAFERRO. The French company?

General HAINS. Yes, sir.

Senator TALIAFERRO. Who are they?

General HAINS. Cromwell & Sullivan, I think, is the name of the firm.

Senator TALIAFERRO. You say you were called before the Assistant Attorney-General recently in connection with this case?

General HAINS. Yes, sir.

Senator TALIAFERRO. What was his name?

General HAINS. Charles H. Russell, I think his name is; Mr. Russell.

Senator MORGAN. Was it Mr. Russell you appeared before to give your statement?

General HAINS. Mr. Russell and Mr. Hill. Mr. Russell represented the United States. Mr. Hill, I understand, represented the canal company in the capacity of a member of the firm of Cromwell & Sullivan.

Senator MORGAN. That was just a few days ago?

General HAINS. Yes, sir.

Senator MORGAN. So the matter is pending yet?

General HAINS. That is the reason, I suppose, it is pending.

Senator MORGAN. Of course, they would not have asked you unless there had been some matter pending.

Senator TALIAFERRO. You gave your statement, General Hains, I understood you to say?

General HAINS. Yes, sir.

Senator TALIAFERRO. Was the question of this option given to the United States in connection with the purchase of that property discussed in your investigation?

General HAINS. In what?

Senator TALIAFERRO. In your investigation by the Attorney General?

General HAINS. I do not know that I exactly understand your question, Senator?

Senator TALIAFERRO. The French company gave this Government an option for the purchase of that property?

General HAINS. Yes, sir.

Senator TALIAFERRO. I say, was the question of that option discussed in your examination by the Attorney-General?

General HAINS. I do not think the question of that option was discussed, exactly. It was more a question of the time our estimate was made, and how we came to make it forty millions of dollars. That is what it was about-the time when we made it, and how we made it, what we based it on.

Senator TALIAFERRO. You are quite clear that your Commission fixed this price of forty millions, instead of the French company?

General HAINS. Oh, it is in our report; we fixed it at forty millions of dollars. I can show you where it is in our report.

Senator MORGAN. Perhaps I can refresh your memory about that. Senator TALIAFERRO. I would like to have you read it. Just read it, General.

General HAINS. This is the report of the Commission of 1899-1901 [reading]:

"The quantities given in the foregoing estimate are based upon the present condition on the Isthmus, utilizing the excavations already made where they are useful. The new company has excavated about 5,000,000 cubic yards"

That is, altogether; it is what the new company had done in several years [reading]:

"Which, added to the 72,000,000 cubic yards excavated prior to its organization, make a total of 77,000,000 cubic yards excavated by the two companies. Much of it is of no value because of the various changes of plan. For example, sites for locks have been excavated and then abandoned; the spoil banks on the Atlantic maritime section frequently come within the limits of the canal prism now projected, and must be rehandled. The amount of work done which will be of value under the plan recommended by the Commission has been carefully computed for the main canal line, and is found to be 36,689,965 cubic yards.

"The amount of excavation which can be utilized in the Chagres diversion is 210,873 cubic yards, and in the Gatun diversion 2,685,494 cubic yards. Adding these together, the total quantity of excavation which will be of value in the new plan is 39,586,332 cubic yards. A temporary diversion of the Panama Railroad has been made at the Culebra Cut, which also must be considered. Using the same classification of materials and the same unit prices as in the other estimates,

with the 20 per cent added for contingencies, the value of the work

done is found to be:

Canal excavation..

$21,020, 386

Chagres diversion

Gatun diversion...

Railroad diversion (4 miles)

Contingencies, 20 per cent.....

Senator MORGAN. That was just added to the price?

178, 186 1,396, 456 300,000

22, 895, 028

4,579, 005.

General HAINS. We explain that after awhile, Senator; it comes in later.

Senator MORGAN. All right.

General HAINS. Making an aggregate of $27,474,033 [reading]. "There is on hand an immense amount of plant, consisting of locomotives, excavators, dredges, cars, rails, and machines, implements, tools, spare parts, and supplies of various kinds, besides buildings used for offices, quarters, storehouses, hospitals, and miscellaneous purposes, and some 30,000 acres of land. The inventory furnished to the Commission includes many thousands of items, classified as follows:" Then comes in lands, buildings, and so on.

Senator TALIAFERRO. Yes; you need not read that.

General HAINS (reading): "As a general rule, this property shows signs of attention, and the evidence seems satisfactory that it has been well cared for since the liquidator took charge of it in 1889. It would manifestly be imprudent, however, to fix a value upon any important machine which has been idle that length of time without first actually testing it at work, however neatly painted and sheltered it may now be. Much of the property is ill adapted to American methods, and all of it is now from thirteen to twenty years old, during which period the improvements in this class of machinery have been such that contractors would generally find it to their advantage to buy entirely new machinery of modern pattern rater than attempt to use this of an older class, even if given to them free and in good order.

"The locomotives, rails, and cars may be of some service, but their value is doubtful; the locomotives are much lighter than is desirable for economical service, the rails are of a pattern ill fitted to rough use, and the cars have narrow-tread wheels. The cars are probably the best part of the whole outfit. It has seemed to the Commission that in acquiring the Panama Canal the United States should not buy this plant as a whole, and that no special allowance should be made for it in estimating the total value of the property. Its owners may realize something by the sale of portions of it to contractors if the latter find that they can use it to advantage. This valuation is al! that the Commission can put upon the plant; it has already appeared in the estimates, since the unit prices have been fixed upon the condition that contractors furnish their own plant."

Now, there is a paragraph about the value of buildings and another one about the value of concessions and lands. Shall I read them? Senator TALIAFERRO. You need not read those. Just go to your summing up.

General HAINS. The summing up is:

"The existence of the Panama Railroad is, however, a very important factor, as it supplies a service railroad for the entire length of the

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