the railroad company does not run any boarding houses or hotels for the accommodation of the men or employees of the Commission.

Senator GORMAN. But you purchase supplies at wholesale and

retail them out?

Mr. STEVENS. Yes.

Senator GORMAN. Was that because of the conflict between the Panama Government and our Canal Commission which induced the Secretary of War to make that contract in regard to the supplies there?

Mr. STEVENS. Well, really, sir, I could not tell you what the causethey simply found the store there, and I think they extended it.

Senator GORMAN. Is that necessary for the operation of the railroad, that you should conduct a business of that sort?

Mr. STEVENS. Yes, I think it is; yes, sir. Heretofore it has been almost impossible to get the kind of supplies that our white people demand in our Panamanian stores, although they are improving all the time and extending their lines.

Senator GORMAN. Is it run at a profit?

Mr. STEVENS. The store?

Senator GORMAN. Yes.

Mr. STEVENS. Yes; it has always shown a profit.

Senator GORMAN. Do you sell or loan to men connected with the company, or do sell to establishments outside?

Mr. STEVENS. Nothing except to employees. We did part of this season extend it to consular representatives from other Governments, but the Panamanian Government entered a vigorous protest, and we withdrew that.

Senator GORMAN. Do you have a superintendent to this department that makes the purchases?

Mr. STEVENS. Yes, sir. The purchases are all made through the general purchasing agent of the railroad.

Senator GORMAN. That account alone is with the railroad company, whether it is a profit or loss it falls on the road?

Mr. STEVENS. Yes.

Senator GORMAN. Have you not arrangements with regard to the canal employees for feeding them?

Mr. STEVENS. Oh, yes: we have several small hotels and eating houses at different ports. I suppose we have six or eight of them that we are running ourselves. We obtain our supplies mostly from this railroad commissary. Those are run under my direction. Senator GORMAN. Both are running under your direction? Mr. STEVENS. Yes, sir.

Senator GORMAN. Is that being done by contract?

Mr. STEVENS. No. sir; the Commission buys supplies and hires labor, and charges the employees a fixed sum for board and lodging. Senator GORMAN. Will you not kindly give us a full statement in regard to that matter of the cancellation of a contract for feeding the men on the Isthmus; will you not begin at the beginning and give us your statement of the transaction?

Mr. STEVENS. When I went to the Isthmus the latter part of July there were practically no arrangements made for whites or blacks either to obtain meals, except on the outside or through messes that they might establish themselves, and the question came up as to what they should do. It was imperative to do something. Of course I

was new to the ground and the question came up the very first week. I said that some provision must be made to feed and board these people, and I could not see my way clear to take hold of it, there were so many things pressing at that time. Governor Magoon made a similar statement, that he felt that he could not take hold of the matter for the same reason. So, after talking the matter over with the governor and Mr. Shonts, after Mr. Shonts's return here I understand he advertised for bids to take these houses and run them. Meanwhile a gentleman named Markel came down there on Mr. Wallace's invitation. He was a well-known man of experience on those lines and was invited to come down and give some advice as to how these people should be taken care of. Mr. Markel did come down, and he was there when I got there.

I talked the matter over with him generally as to how the men should be fed and housed-not by whom, but how-and as to whether a commissary should be established along the line, and feeding and eating houses should be put up at different points, and I gave Mr. Markel every facility for looking into the business. There was nothing decided when they came back. Mr. Shonts came back to Washington. The thing drifted along, not very satisfactorily, and once or twice I wrote and cabled to Mr. Shonts, I think, that some step should be taken. Whereupon he advertised for a contract and let a contract to Mr. Markel, he being the lowest bidder. I was advised about it in September by cable, and about the terms. I thought the prices were higher than justifiable. In the meanwhile I had been experimenting and getting information all this time, but when the cable of the contract reached me, which I think was about the 20th of September, I cabled that I was not satisfied with the terms; that they were too high; that we coult board them cheaper, or words to that effect.

Then Mr. Shonts came down and Mr. Markel came with him; it was at the time the consulting board of engineers came down. I understood there was a clause in the contract, or an addition made to it, whereby the Commission could cancel it. Meanwhile I had been running these hotels and boarding houses myself, and had demonstrated to my own satisfaction about them; and then when they came down and investigated we were giving as good board as the men wanted, and at considerably less rates than those expressed in the contract. Whereupon Mr. Shonts canceled the contract, acting under the clause in the contract enabling him to do so.

Senator GORMAN. You say they advertised for bids to furnish the supplies down there, and the Markel contract was given after an opportunity was given to other bidders?

Mr. STEVENS. I do not know; that is what I gathered from the impressions I got there. The whole matter was concluded when I was not in the States.

Senator GORMAN. Was anybody else but Mr. Markel invited to the Isthmus for the purpose of looking over the ground?

Mr. STEVENS. I do not understand that any one came there; neither do I understand that Mr. Markel was invited there for the purpose of putting in a bid. I found Mr. Markel there, and I do not know that any one had discussed the matter with him for the purpose of proposing that he should do it by contract.

PC-06-5

Senator GORMAN. You only know that, after looking into the matter and advertising, this contract was let and that it was too high? Mr. STEVENS. Yes, sir.

Senator GORMAN. How much cheaper are you doing it now?

Mr. STEVENS. If I remember the terms of the contract, they were $40 a month; and we have been furnishing, or we had at that time, and are now, board and lodging for $27.50 a month.

Senator GORMAN. And that embraces everything-that is, for the laborers and all?

Mr. STEVENS. No, that is for the whites; for the blacks we put up houses and feed them at 30 cents a day gold.

Senator GORMAN. That is run under your auspices; you furnish everything?

Mr. STEVENS. Yes, sir.

Senator GORMAN. And you have a department of supplies, I suppose?

Mr. STEVENS. Yes; I have a department I call a branch of labor and quarters, and it is handled under that.

Senator GORMAN. And he keeps an account and you charge him with everything that is given to him?

Mr. STEVENS. We are supposed to, yes.

Senator GORMAN. Who has charge of that?

Mr. STEVENS. Mr. Jackson Smith.

Senator GORMAN. What compensation do you pay Mr. Smith? Mr. STEVENS. Seven thousand two hundred dollars a year. He has charge of hiring all the labor and the distribution and care of all the houses and quarters, and everything of that kind.

Senator GORMAN. At the time Mr. Markel went down there had he any relation to the Canal Company or was he simply an outsider? Mr. STEVENS. I understand that he had no connection with the company.

Senator GORMAN. He had no connection with the organization? Mr. STEVENS. No, he did not.

Senator GORMAN. Do you think it is necessary, Mr. Stevens, that the Canal Commission should run a commissary department; do you think that is the only way that you could provide for your men and laborers?

Mr. STEVENS. Yes; I think that some such arrangement is absolutely necessary. It may develop in the future that merchants down there will be able to handle this matter for us, but certainly, judging by the past, there was no way to do it except the way we are doing it

now.

Senator GORMAN. How were they provided for before you entered on this work?

Mr. STEVENS. The eating houses?

Senator GORMAN. Yes.

Mr. STEVENS. They boarded wherever they could, or established messes, and some of the men kept house. Some of the men keep house

there now.

Senator GORMAN. You permit them to have their own establishments, then?

Mr. STEVENS. Yes, sir.

Senator GORMAN. You think you are boarding them for about onehalf what the Markel contract amounted to?

Mr. STEVENS. My recollection of the Markel contract is that for whites the charge was $40 a month, and I know our charges are $27.50. At the time I left we were keeping even. We might not be furnishing as good board as was contracted for under that other contract, but it is what the men are satisfied with.

Senator GORMAN. What do I understand you to say was the arrangement of the ordinary laborers?

Mr. STEVENS. The majority of them take care of themselves; they buy their supplies wherever they see fit and do their own cooking, and they seem to prefer to do that.

Senator GORMAN. Buy their supplies from you?

Mr. STEVENS. Some of them, and from other sources.

Senator GORMAN. What is your rule about sales?

Mr. STEVENS. I think the commissary is being run at 20 per cent. That includes all the distribution and clerical force and depreciation and loss.

Senator GORMAN. So you add 20 per cent on the original cost?
Mr. STEVENS. Yes.

Senator GORMAN. And that, in your judgment, must continue as long as the Government is doing the work itself?

Mr. STEVENS. Directly or by contract, but so far that would seem to be the only way that we can work it.

Senator GORMAN. How do you manage about your supplies and matters of that sort-do you buy them after advertising here, after making a requisition here?

Mr. STEVENS. We make the requisition the same as we would for any other supplies. I suppose they buy them after advertising. A purchasing agent handles all that; it is something I have nothing to do with.

Senator GORMAN. That is not so with the supplies for the railroad company, is it?

Mr. STEVENS. How is that?

Senator GORMAN. The railroad does not advertise always?

Mr. STEVENS. Yes, and the same purchasing agent; I assume he applies the same rules. You see my work is confined to handling supplies and workmen after they reach the Isthmus. The supply department is not under me at all; they report directly to Washington.

Senator GORMAN. How many men have you employed in this commissary business of yours down there?

Mr. STEVENS. I presume there are fifty or sixty.

Senator GORMAN. What is about the aggregate amount of salaries you pay them all?

Mr. STEVENS. I could not tell you.

Senator GORMAN. You can furnish a statement as to that, I sup

pose?

Mr. STEVENS. Yes, I can do that.

Senator GORMAN. I wish you would.

Mr. STEVENS. Very well.

Senator MORGAN. Some one has said that Mr. Markel on the rescission of his contract was paid a sum of money for visiting the Zone. Did you know that?

INVESTIGATION OF PANAMA CANAL MATTERS.

Mr. STEVENS. I know the records show that they paid him a sum of money. That was done here in New York, and I know nothing about it personally.

Senator MORGAN. Do you know what the sum was?

Mr. STEVENS. No, sir; I do not.

Senator MORGAN. While he was there, you saw him?
Mr. STEVENS. Yes.

Senator MORGAN. He was looking after the question as to whether he could afford to make a contract with the Government, and the terms upon which he could make it?

Mr. STEVENS. Not while I was there. My entire conversation with him when found him there was how we could best take care of these men; there was nothing said between him and me about any contract. Senator MORGAN. Are there merchants throughout the Zone having stores for the supply of provisions and goods of different kinds for the laboring people?

Mr. STEVENS. Yes, sir; we have them there.

Senator MORGAN. Are they admitted on license-are they given a license to trade in the Zone?

Mr. STEVENS. I could not tell you about that; that is a Government transaction I do not know about.

Senator MORGAN. In the dealings directly between the merchants and their patrons you have no say; you have no charge of that? Mr. STEVENS. No, sir.

Senator MORGAN. In what coin are the laborers and employees on the road paid?

Mr. STEVENS. The native laborers-the blacks-are paid in silver.
Senator MORGAN. How about the others?

Mr. STEVENS. The whites are paid in gold.

Senator MORGAN. In coin?

Mr. STEVENS. Well, in paper money-in greenbacks and Treasury notes.

Senator MORGAN. What Treasury money is there?

Mr. STEVENS. That is ours.

Senator MORGAN. It comes from here?

Mr. STEVENS. Yes.

Senator MORGAN. The Government has connections with banks there, has it not?

Mr. STEVENS. We do our business through the banks there; yes. Senator MORGAN. Whenever they want silver to pay off the laborers, for instance, on pay day, do they go to the bank and get it?

Mr. STEVENS. Really, I can not tell you that; that comes within the disbursing officer. I know they pay them off in silver.

Senator MORGAN. Is there more than one bank there with which the Government has dealings?

Mr. STEVENS. I think there are four.

Senator MORGAN. Could you give the names of them?

Mr. STEVENS. The International Banking Corporation, the Panamanian Banking Company, and Ehrman Brothers. I do not recall the other, but I think it is Branton Brothers. I never had any personal dealings with any but one of them.

Senator MORGAN. Has the Government connection with each of these banks or just a selected bank?

Mr. STEVENS. I do not know about that, Senator Morgan.