There is further provision that the United States may acquire any other lands and waters outside of the Zone as may be necessary for canal purposes. It will be found upon inspection that the boundaries marked for the Zone on the map, appearing as Exhibit E, are always exactly 5 miles from the line of the canal, and this results from a very peculiar shape or outline of the Zone itself, a shape which it is hoped may be corrected when the time comes to make a definite and permanent delimitation of the Canal Zone.

The area given above, about 448 square miles, may be subdivided into approximately the following areas:

Received by purchase from the New French Canal Company, 52.11 square miles; owned by the Panama Railroad, 68.12 square miles; the private ownership seems to amount to about 139.23 square miles; and the public lands owned by the Republic of Panama formerly, and now understood to be the property of the United States, in pursuance of the cession made by article 2, 188.91 square miles, making a total, as above, of about 448 square miles. Of lands owned by the Panama Railroad there are 12.87 square miles outside of the Canal Zone.

At the time of the purchase by the United States of the rights and property of the French Canal Company there was certain litigation in progress in the courts of the Republic of Panama that had resulted in the obtaining of judgments by the plaintiffs; in the execution of those judgments an embargo had been laid upon certain property of the New French Canal Company situated in the city of Panama.

In order to secure the interests of the United States Messrs. Day and Russell, in Paris, required that there should be deposited in their hands a sum of money sufficient in amount to satisfy these embargoes in case the French Canal Company should not cause them to be extinguished. Quite recently compromises have been effected by the New French Canal Company with the judgment creditors, and the embargoes laid upon the properties belonging to the Government in the city Panama have been canceled. This property, lately under embargo, consisted of the canal office building, for which the Canal Company paid 1,000,000 francs in the year 1881, and the other is the present residence of the chief engineer of the Canal Company, also in the city of Panama, for which at the same time 300,000 francs was paid. These properties are now worth much more than the price paid for them originally, and are very valuable assets of the United States.

On the island of Taboga, situated in the Bay of Panama and not within the Canal Zone, are 2 hectares of land (say, 5 acres) upon which, many years ago, was erected a large building to be used as a convalescent hospital or retreat, to which the employees on the Isthmus could go as a resort for better health conditions. This building is in fair condition and is being rehabilitated.

The landed properties taken over by the United States in France number in all 52, and all of them are traversed by the right of way of the canal. In the purchases made a considerable area of land was obtained by the Old French Canal Company that was not required for the canal purposes proper; but as the owners refused to sell a part, the purchases were made, in some instances, for the whole.

One of the first acts of the Old French Canal Company was the purchase of more than nine-tenths of the stock of the Panama Railroad, and by virtue of this ownership the control of the railroad passed into the hands of the French company. One of the acts of the board of directors was to authorize the conveyance of all the lands belonging to the Panama Railroad to the canal enterprise, which was done, and this condition of affairs continued until just before the canal went into bankruptcy; whereupon the lands were all reconveyed to the railroad company, and that is their status at the present time. These lands of the railroad company were considered as available for the location of the canal as were also the public lands of the State. So that, at the present time, it may be said that the canal location is situated within one of these three classes of landed property. There are one or two instances where private rights have not been procured, but in nearly every instance they have been. It is certain, however, that during the building operations the Government will require some additional land in order that space may be obtained for dumping the soil taken from the canal excavation. Other areas may be required for reservoir purposes or for rights of way for railroad diversions.

The Old Canal Company erected on its lands, or on the railroad lands, a very large number of wooden buildings with galvanized-iron roofs. At one time the total of these numbered about 4,000. At the present time, of the buildings that have not been removed, there are more than 2,000. During the period of cessation of work the managers of the Canal Company leased many of these buildings and a considerable revenue was obtained from this source. Large areas of land not required for canal purposes, and that never would be required for such purposes, were also leased to farmers and cattle raisers. The net amount of revenue derived by the French company from these leases reached upward of $30,000 silver a year, and in pursuance of

the authority of the Secretary of War, the governor of the Canal Zone has continued the method of leasing lands and buildings for private ownership, the money received for the same being treated as a revenue of the Canal Zone.

The boundary lines of some of the tracts of canal and railroad lands are very indefinite, and controversies have occurred and will hereafter occur respecting the limits of those properties that abut upon private lands.

There are many cases where squatters have occupied canal or railroad lands and refuse to leave, asserting private ownership. These cases will have to be litigated.

PUBLIC WORKS.

As has already been stated in the preceding pages, there is nothing answering to the definition of this title in existence in the Canal Zone except the Government work of constructing an interoceanic canal, and the Panama Railroad in so far as its ownership makes it a public work, this ownership consisting of 98.4 per cent of public property:

Within the whole extent of the Zone there is not in existence a public road or highway or bridge except within the aggregation of houses along the line of the railroad. There are a few footpaths and pony tracks in the jungle made to reach detached hamlets and huts, but they are mere paths opened out with a machete, and upon which no grading or draining has ever been done.

There is one exception to the foregoing statement, and that concerns the city of Panama. During the time when the French operations were being carried on in an active way, a public highway was constructed at the expense of the Canal Company on land owned by the Canal Company from the western city limits all the way to the station La Boca, at the mouth of the Rio Grande River, which is now included in the new port of Ancon, and where are located the extensive wharves and terminal works of the Panama Railroad. This road, situated entirely within the Zone and also entirely on United States Government land, is maintained at public expense d is now being repaired so as to restore it to a condition of usefulness. The length of the road is about 2 miles, and its repair will cost probably $3,000 or $4,000 the first year, and about $1,000 a year thereafter.

Extending from the city of Panama to the eastward is a road, metaled in part and in part simply a dirt road, constructed for the purpose of enabling certain of the better class of Panama merchants and landowners to reach their suburban homes in what are called "The Savanas;" that is to say, open prairies of considerable extent, situated all the way from 1 to 6 miles from the city. This road, for the first mile of its length, is situated within the city of Panama, as defined in the delimitation agreement of June 16, 1904. Beyond the city limits of Panama to the Zone limit on the eastward is a distance of approximately 2 miles, about one-half of which has been metaled in a rather indifferent manner, and the remainder is a dirt road. This road is within the Canal Zone, and the inhabitants of the city of Panama and those who are property owners within and without the Zone, in the neighborhood of "The Savanas," consider that it is the duty of the United States to maintain this road in a serviceable condition, which it is not at the present time in some places. The half of the road which is now poorly metaled and without any suitable provision for drainage will cost, to be completed, approximately $3,000, and for the other mile, which is simply a dirt track, the expense of construction, drainage, etc., will amount to about $5,000, as the broken stone for the road metal must be hauled a considerable distance.

Diverging from the road in question, at a point about half a mile from the city of Panama, is a road that was opened by the Old French Canal Company through private lands to the railroad station at Corozal, which is 3 miles toward Colon from Panama. The work done by the Canal Company in opening this road, while considerable as respects cost, did not leave anything like a completed road. It is now generally impassable, except for pedestrians and saddle or pack animals. The making of this road resulted in the claim of damages against the Canal Company, and in a judgment of damages to the amount of upward of 33,000 pesos which had just been paid by the New French Canal Company. By this payment the Canal Company acquired no right to any land whatever, but simply paid the owners of the land the amount stated because of damages assessed at that amount by the local courts.

The road from the canal headquarters at Ancon to La Boca must be maintained, as well as the roads which join the various hospital, office, and storehouse buildings situated at Ancon. The authorities of the Republic of Panama will be very much disappointed if the United States does not incur the expense, which seems to belong to the country exercising the equivalent of sovereignty, of maintaining the public highway already existing and referred to above from the city limits of Panama out as far as the Zone limits in "The Savanas." It would be very convenient, but not essential, to have the road repaired and made passable from Panama to Corozal,

where are a considerable number of buildings belonging to the United States, and which is an important center of dredging and other excavation work yet to be done. In Cristobal some road work of a limited amount will be required to connect various buildings and workshops, but outside of those items referred to there is no necessity for any extensive expenditure in the way of public works. The municipalities should take care of themselves and pay for the expenses of keeping open mule trails and maintaining streets within villages; but all of the stations are connected by the railroad, and along the railroad track, in the cuts, and on the embankments are footpaths that suffice for the passing and repassing of pedestrians and ponies. It is not believed that any other public work than that referred to above will be required.

TELEGRAPHS AND TELEPHONES.

The franchise of the Panama Railroad was construed to include the right to operate works accessory to the same. This has been held to include the telegraph and the telephone. During the French canal operations independent lines for canal purposes were installed and were generally used, but not to such a great extent as they will be used in the future. For railroad purposes the railroad company have installed two or three wires along its own roadbed, connecting the termini and the principal stations. The railroad company had two or three main wires extending all the way across the Isthmus, serving all other stations.

In the Republic of Panama is a local telegraph, and in the city of Panama is a local telephone; the last, especially inefficient, and has not been in commission for some time past. The officers connected with the canal enterprise have found the telegraph and telephone service here exceedingly inefficient, and in the hope of improving the same, provisional arrangements have been entered into by which the canal wires have been turned over to the Panama Railroad, so far as operation and maintenance are concerned, and one telegraph and telephone system for both interests has just been installed, with modern instruments, and with a better equipment in every way, which it is hoped will render efficient service.

RECEIPTS AND DISBURSEMENTS.

The revenues collected from the inhabitants of the Canal Zone from the 4th of May to the 30th of September, 1904, are as follows, not including municipal revenues:

Total sales of United States postage stamps surcharged "Canal Zone" from July 17 to September 30.

$1,583.80

The receipts from the sale of Panama postage stamps surcharged "Canal Zone' from June 25 to July 16

$926.60

Sales of stamped paper used in official documents from July 17 to September 30,
required by the laws of the Republic of Panama..

Internal-revenue stamps required by the laws of the Republic from July 17 to
September 30..

Receipts from rents of lands, houses, and materials from May 4 to September 30.
Real-estate tax...

Excise tax on distillation of rum..

Retail-liquor tax..

Taxes and fines collected by police.

Collection from barrio of Farfan

Slaughterhouse tax, a total of

Total...

18.00 2,487.35

1,583.80 22, 152. 73

The disbursements made by the disbursing officer from May 19, 1904, to September 30, 1904, are as follows:

Receipts and disbursements of the various municipalities of the Canal Zone from July 1 to September 30, 1904.

SUPPLEMENTAL REPORT

OF

MAJOR-GENERAL GEORGE W. DAVIS, U. S. A. (Retired),

GOVERNOR OF THE CANAL ZONE.

TELEGRAPHS.

The public, wishing to send messages by telegraph across the Isthmus, or from or to intermediate points, have the means of doing so by using the Panama Railroad telegraph, and paying the customary tolls for the service; but the rates charged by the railroad company are far and way beyond what should be charged. The rate from Panama to Colon, and vice versa, and from Ancon to Cristobal and vice versa, is $1 for 10 words, address and signature being both counted, whereas in the United States 10 words would be sent over a distance of 250 miles for 25 cents, without counting address or signature. When the work is being carried on rapidly, as it must be, to insure the completion of the canal in the time set for its completion, the telegraph and telephone service on the Isthmus must be very active, and as no private line now exists, and, in the opinion of the undersigned, none ought to exist within the Zone, the railroad across the Isthmus ought to be treated just as the Panama Railroad is recommended to be treated; that is, as a Government line, incidentally performing some service for the public, which the public should pay for at a fair rate. Not that the Government desires to handle the private business; it is submitted that it would be much more preferable to have nothing to do with it; but the establishment of a local telephone and telegraph line here would be objectionable in many ways, and it therefore follows that if the public are to have use of the telegraph or telephone, they must make use of the Government line.

The Isthmus is connected with the outside world by two systems of cable communication; one is the Central and South American Cable Company's wire, which comes down from the United States via Galveston, to Mexico, Central America, and which is continued on in the Pacific Ocean to Valparaiso, and has a land line across the continent to Buenos Ayres.

The other is the West India and Panama direct cable system, whose wires reach all the West Indies islands, and also Key West. Both of these companies are doing business on the Isthmus. There is another outlet by way of Jamaica and Bermuda to Halifax, and so to the United States.

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