all

is to say, we paid 70 cents for one of their dollars, and we took up of the Spanish money in circulation in Porto Rico which, by the way, every coin of it, had the words "Porto Rico" stamped on it-and brought it to Philadelphia and melted it up. But we paid for it an American 70 cents for a Spanish 100 cents.

The other fact I wanted to refer to is this: I said if this was a new proposition I would proceed so and so; but it is not a new proposition, and what has happened makes my remarks perhaps inapplicable, and that is this: The Secretary of War and a commission appointed by the Republic of Panama to discuss this subject of a currency for Panama have arranged a certain modus vivendi or basis for understanding, or protocol, or whatever it may be called, and under that the Republic of Panama has gone to work and coined $3,000,000, and that puts the thing on a different basis entirely.

We have encourged them to do that. We not only got them to coin $3,000,000, but then we found that there was a deficiency of money for circulating purposes, and then we asked them to coin another milJion, which they did. So it is not an original proposition, and we can not revert to the status quo ante, and I only remarked if we were to start all over again that would be my idea of the way to treat it.

Senator MORGAN. I would like to ask you to give a description, first, of the taking over of the property of the Panama Canal Company and Railroad Company by the United States. You were there, I believe, and conducted that operation?

General DAVIS. Not exactly, Senator; but I will explain. The passage by Congress of an act authorizing the President to organize a government for the Canal Zone, which I think was approved about the 1st of April, 1904-I am not sure of the date, but that is about the date, I think upon the approval of that act instructions were sent to Paris by the proper officer of the Government (I don't know who) to take over the property of the new French Canal Company and to arrange for the payment of the money. All I know about that is what I have read.

At the same time that order was given, concurrently with it or concurrent with the actual taking over of the property in Paris, I think instructions were sent to an officer of the Army, on the Isthmus of Panama at that time. I refer to Lieutenant Brooke, of the Corps of Engineers. Those orders directed him to receive from the directorgeneral of the Panama Canal works on the Isthmus all property of the Panama Canal Company. I was at that moment in this city. This telegram was sent to Lieutenant Brooke and was received by him on the 3d of April and, if I remember correctly, was acted upon on the 4th of April, the director-general of the New Panama Canal Company on the Isthmus having received the same day instructions from the Paris office to do exactly the same thing.

Upon receipt of those instructions by cable Lieutenant Brooke waited on Mr. Renaudin and took over from him the property of the New Panama Canal, situated on the Isthmus of Panama, including all its offices, drawings, works of all sorts and kinds. I may be wrong about the date; upon reflection I do not think it was the 4th of April, but the 4th of May; I think I was a month off in stating my dates. But that is not very important. I arrived on the Isthmus on the 17th of May. This transfer had taken place, I think, on the 4th of May. I found Lieutenant Brooke in charge of the works, so that my functions

in connection with the transfer of the control of the property were almost nil, the transfer having been effected about ten days before I arrived there, and all the correspondence between Lieutenant Brooke and Mr. Renaüdin is all printed in one of these documents which you have before you.

The transfer of the Panama Railroad was never made to me at all. The orders I received from the president of the Isthmian Canal Commission, I think, dated the 8th of May, directed me to proceed to the Isthmus and take over from Lieutenant Brooke all this canal property, but specifically excepted the Panama Railroad, so that I had no authority over the Panama Railroad at all.

Senator MORGAN. Was the railroad property taken over at the same time that the canal property was taken over?

General DAVIS. The railroad property was never taken over at all in a physical sense. The United States purchased 68,900 shares of the Panama Railroad stock from the New French Canal Company, and the control of that stock permitted the Government of the United States to control the board of directors and put new men in office and control the management through the board of directors. So that in a physical sense there was never any transfer of the property of the Panama Railroad Company to the United States. I had nothing to do with it, and I am only speaking of that by general information.

Senator MORGAN. That is to say, there was no actual delivery?
General DAVIS. No; none at all.

Senator MORGAN. But the property went into the possession of the United States?

General DAVIS. Oh, of course it went into the control of the United States through its own agents, the directors.

Senator MORGAN. From the date of the transfer of the Panama Canal?

General DAVIS. When transfer of the Panama Canal was effected, an annual election had taken place only one month before, I think. The annual meeting of stockholders, I think, occurs in the first week in April, and the transfer of the canal property was made in May, and a new board of directors had been elected and gone into office for the Panama Railroad on the 1st of April. They are elected for one year; they stay in office during the remainder of the period for which they are elected, unless they see fit to tender their resignations earlier, or for some reason a vacancy occurs.

So that some of the board of directors who had been chosen while the canal company was the owner of the stock remained in office until the next annual election took place. I think there were a few changes made, meanwhile. I think several members of the Isthmian Canal Commission, the old Walker commission, were elected to places on that board of directors on account of the resignations of other persons; but there was no general change of the directorate of the railroad until the ensuing annual meeting of the stockholders took place. Senator MORGAN. In April, 1905?

General DAVIS. In April, 1905.

Senator MORGAN. Do you know of any order of the board representing the Panama Railroad Company transferring its property to

the United States?

General DAVIS. No, sir; I do not know anything about it; I never sat with them in a board meeting in my life.

Senator MORGAN. You were not a member of the board?

General DAVIS. I believe I was elected a member of the board of directors while I was on the Isthmus, but I never met with my colleagues at all. I remember I was informed that one share of stock was put in my name, and I was sent a check for $5 in payment of a dividend on the stock, which check I indorsed over to the Secretary of War, and that closed the incident so far as I had anything to do with the stock of the Panama Railroad Company. As I have said, I never met with the board at all.

Senator MORGAN. But you met with the Isthmian Canal Board. General Davis. With the Isthmian Canal Commission, yes; I think they had eighty-five meetings, and I think I was present at seventeen of them.

Senator MORGAN. Were you present at the first meetings?

General DAVIS. Yes; a few of the first, and then three or four or five or six in August.

Senator MORGAN. But nearly all those meetings were held here in Washington?

General DAVIS. Yes.

Senator MORGAN. And you remained in charge at Panama?

General DAVIS. I was at Panama for a year, except in the middle of the summer for two weeks, when I was in the United States on a special personal errand.

Senator MORGAN. I notice that on the 20th of May, 1904-that is, while you were governor?

General DAVIS. Yes; I was on the Isthmus, then.

Senator MORGAN. And you were a Commissioner, then?

General DAVIS. Yes, sir.

Senator MORGAN (continuing). The following letter was laid before the Commission:

"WASHINGTON, D. C., May 20, 1904.

"Rear-Admiral JOHN G. WALKER,

"Chairman of the Isthmian Canal Commission,

"Washington, D. C.

"SIR: The New Panama Canal Company, through its president, and Mr. Cromwell, its American counsel, has notified the President that it is desirous of taking up and disposing of the question of compensation claimed by the New Panama Canal Company for construction upon the new Panama Canal during the negotiations that have just terminated in a transfer of that property to the United States. I am directed by the President to notify you that he will expect the Isthmian Canal Commission to take up the question with the New Panama Canal Company with the view of determining what the facts are in relation to this claim, to the end that if possible when the matter ultimately comes before the President for decision it will involve only the question as to whether or not the claim is well founded and he has authority to pay it.

"Yours, respectfully,

"P. C. KNOX, Attorney-General."

You became acquainted with that demand at that time? General DAVIS. I was not present then, as you see. I was on the Isthmus; but copies were sent to me, and as I read them I of course became familiar with what had transpired in the Commission as recorded.

Senator MORGAN. Was this subject ever brought to the attention of the Commission while you were present?

General DAVIS. No, sir; never at any board meeting at which I was present. I have heard the members of the Commission talk about it in an informal way, but I have never heard it discussed formally or officially at any meeting at which I was present.

Senator MORGAN. Was not the date of the taking over of this property in Paris the 16th of April, 1904?

General DAVIS. I think that was the date when the title papers were passed; but the instructions sent to Lieutenant Brooke on the Isthmus were not until later than that. I can not remember now exactly the date, but they were later than that. I think that is the date of the actual transfer of the papers, but I think some time was consumed in passing them through their various stages.

Senator MORGAN. The paper I have just read to you is dated the 20th day of May.

General DAVIS. Yes.

Senator MORGAN. I find on page 60 of the proceedings of the Isthmian Canal Commission, from March to September, 1904-during all of which time you were a Commissioner, were you not?

General DAVIS. Yes, sir.

Senator MORGAN. I find the following:

"DEPARTMENT OF JUSTICE, "Washington, D. C., March 10, 1904.

"Mr. WILLIAM NELSON CROMWELL,

"General Counsel, New Panama Canal Company.

"SIR: I have received your letter of the 9th instant concerning work done on the Panama Canal since execution of the work included in the Isthmian Canal Commission's estimate of $40,000,000 as the value of the Canal Company's property. The President directs me to say, that without committing himself to any proposition of fact or law stated in your letter, he is willing to determine what amount, if any, the company should receive on account of such work in addition to the price of $10,000,000 agreed upon.

"Respectfully,

"P. C. Knox, Attorney-General.

"Signed at Paris, France, April 16, 1904, by W. A. Day, assistant to the Attorney-General; by Charles W. Russell, special assistant Attorney-General."

That letter seems to have been withheld from delivery to Mr. Cromwell from its date, the 10th of March, 1904, until April 16, 1904, and antedates the letter of Mr. Knox that I have just previousiy read by one month and four days.

On that date the minutes of the Commission show that Mr. Cromwell made the following statement:

"Gentlemen, upon the statement of the case, which I have read for your information, I recently applied to the President to proceed with the arbitration, and he divided the work of his duties into branches. He has, as I understand it, referred all questions of fact concerned in the claim to the Commission for its advice, and all questions of law to the Attorney-General; so that upon the Commission's report the whole

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matter may be considered and determined by the President, with the advice of the Attorney-General.

"Following the general basis of the claim, which is embraced in the communications which I have read to you, I have delivered to the Attorney-General, for the President, the detailed statement of claim, of which I now hand you a copy for your own use. You will, of course, want to examine this statement of claim more in detail; but I will now read so much of it as I think will assist you at this session."

And then he goes on to present the claim. It covers several pages, and an affidavit is made to the claim by Mr. Louis Chorin, who was the chief engineer of the new Panama Canal Company.

General DAVIS. He was.

Senator MORGAN. Were you ever present at any time when that claim was being considered by the Commission?

General DAVIS. I never was.

Senator MORGAN. Did you ever have any conversation with Mr. Cromwell about it?

General DAVIS. Never: not a word.

Senator MORGAN. Do you know what the opinion of the Commission was as to the validity of the claim? It seems never to have been taken to final settlement.

General DAVIS. I have been told by members of the Commission that they made a report, that they sent that report to the Secretary of War, in which they expressed the opinion that there was no basís whatever for the claim, but I never saw the document and only know of that from verbal statements made to me.

Senator MORGAN. Do you know whether that claim is being pressed before the Department now?

General DAVIS. No; I do not know officially. I have no official knowledge on the subject, although I have heard it as a matter of common conversation that it is being pressed.

Senator MORGAN. One of the present Commissioners stated the other day that he was examined about it in the Department of Justice. General DAVIS. I had heard that also.

Senator MORGAN. As I understand this claim, it dates from the date of the first proposition of the Panama Canal Company made to Admiral Walker for the sale of the property of the Panama Canal Company, including its shares of stock and all the property on the Isthmus.

General DAVIS. I have had the same understanding, although I do not know. I have not read with any great care the presentation there made by Mr. Cromwell himself. That would disclose the scope of it, I think.

Senator MORGAN. I want to ask you in connection with that claim, what was the condition of the work on the Isthmus in regard to opening up the canal and completing it at the time you first saw it? General DAVIS. You mean the extent of progress?

Senator MORGAN. Yes.

General DAVIS. The condition as regards points of activity? Senator MORGAN. Activity, and also the character and condition of the machinery, and anything else about it.

General DAVIS. To answer the last part of the question first, I should say that you might as well eliminate the machinery as having any particular value. There was some value in the stuff that was under stor