Mr. WALKER. I should say that was it.
Senator MORGAN. That was the situation?

Mr. WALKER. That is the way it looked to me when I was down there. The bank was giving way, as they were digging at the bottom. Senator MORGAN. So that the diversion was not an actual advantage to the railroad as a route of transit, but was an advantage to the canal company because they had to occupy the ground in digging the canal? Mr. WALKER. I am under the impression that the change did benefit the railroad, in straightening it out in some way.

Senator MORGAN. There was a very large amount of work done by the railroad assisting in the construction of the canal, in hauling material backward and forward, and by hauling out the spoil from the diggings to the dumps?

Mr. WALKER. I do not know anything about that.
Senator MORGAN. You kept no account of that?

Mr. WALKER. None at all.

Senator MORGAN. No arrangements were made with you as traffic manager for the control of that business?

Mr. WALKER. No, sir.

Senator MORGAN. Who did manage that on the part of the railroad? Mr. WALKER. I suppose it was done by the superintendent on the Isthmus.

Senator MORGAN. Well, the aggregate amount of charges for this construction work on the canal was large?

Mr. WALKER. The only part that I knew about was the hauling of the supplies for the canal.

Senator MORGAN. Yes.

Mr. WALKER. And that was arranged by special rates for quantitythat is, 50 tons was one rate and a train load was another rate-but whether the old canal company ever moved a pound of excavation over the road or not I do not know.

Senator MORGAN. So that whatever traffic arrangements were made for the removal of this spoil or this material you did not include in your accounts at all; that was an outside business?

Mr. WALKER. Yes, sir; that was an outside business.

Senator MORGAN. The railroad company was an indispensable factor in the digging of that canal, was it not-the railroad of the company? Mr. WALKER. It was indispensable in getting the supplies to the canal, or to the point of use.

Senator MORGAN. And also in hauling

Mr. WALKER. But, as I say, about the hauling out, the Frenchmen had a great many small tracks down there of their own, and I do not know where their dumps were or what they did with what they dug

out.

Senator MORGAN. But for the fact that the canal company was the majority stockholder, nearly to the full amount of the stock, that company would have had no right to control the railroad, an independent American corporation, in any of its dealings?

Mr. WALKER. No, sir; it controlled the railroad exactly the same as the United States controls it now.

Senator MORGAN. It did control it?

Mr. WALKER. In just the same way the United States does now, as stockholder.

Senator MORGAN. So that the control of the canal company over

the railroad was practically the same that the United States now exercises over it?

Mr. WALKER. The United States bought from the French people their rights.

Senator MORGAN. Yes.

Mr. WALKER. And got just what they had, and then bought a little

more.

Senator MORGAN. Since they took over the property. I am referring to that period of time, of course.

Mr. WALKER. Yes, sir.

Senator MORGAN. While the French company was the owner of this majority of the stock, there could not have arisen any important controvery between the railroad company and the canal company as to the management of the road, because the canal company had the absolute control?

Mr. WALKER. Well, the canal company elected a set of directors, and the directors were responsible for their acts. I should say if the directors were called upon to do something that they did not think proper to do that they could not enforce it.

Senator MORGAN. They might get turned out for it, too.

Mr. WALKER. They could not until the next annual election. If you are a director in a railrord you are there for a year if you choose to stay.

Senator MORGAN. They could not be removed?

Mr. WALKER. There would be no way to do it, except by putting the thing in the hands of the court, that I know of, in any railroad in the United States.

Senator MORGAN. Then it was a calculation on their loyalty to the canal company when they were appointed by it in the conduct of the business of the railroad?

Mr. WALKER. The same as the present directors are accountable to the United States.

Senator MORGAN. Yes. Well, in all material respects and to every material extent, I understand that the canal company was the owner and the controller and the director of the operations of the railroad? Mr. WALKER. Yes, sir.

Senator MORGAN. In a large sense?

Mr. WALKER. Yes, sir; in the broad sense.
Senator MORGAN. In the general sense?

Mr. WALKER. Yes, sir.

Senator MORGAN. I do not think, Mr. Chairman, that I have occasion to ask Mr. Walker any more questions. I desire to express my very great respect for his statements, because they have been strictly impartial.

Mr. WALKER. Thank you, Senator.

The CHAIRMAN. I think Mr. Walker has given his statement, as he understands it, very frankly and very fully. We will excuse you now, Mr. Walker, so that you may return to New York, and we thank you for coming over.

(The committee thereupon adjourned.)

ISTHMIAN CANAL.

COMMITTEE ON INTEROCEANIC CANALS,

UNITED STATES SENATE, Washington, D. C., May 9, 1906.

The committee met at 10.30 o'clock a. m. Present: Senators Millard (chairman), Kittredge, Dryden, Knox, Morgan, and Taliaferro.

TESTIMONY OF WILLIAM NELSON CROMWELL, ESQ.-Continued.

Mr. Cromwell was duly sworn, and testified as follows:

Senator MORGAN. Mr. Cromwell, when we last had the pleasure of your company here for examination we had gotten down to the date of 1898, and were referring to a letter written by you on December 21, 1898, addressed to Mr. Hay, in which you say (reading):

"It is the opinion of the Government executives and of ourselves that power to give such extension is already located in the Government by the terms of the original concession, but the formality of ratification will be requested in due course, and of its being granted we have not the remotest apprehension.

"You will thus see that my confidence in the attitude of Colombia, as indicated in my last note, has been fully and quickly confirmed." What does that relate to?

Mr. CROMWELL. It speaks for itself, Senator. I have already answered upon that subject.

Senator MORGAN. That is not an answer to my question, Mr. Cromwell. I ask you, upon your personal knowledge and oath, What does that relate to?

Mr. CROMWELL. I repeat that it speaks for itself, and refers to the proposal for the extension of the concession of the Panama Canal. Senator MORGAN. Which concession?

Mr. CROMWELL. The concession of the company; the extension of the original concession of 1878.

Senator MORGAN. That was the extension from 1904 to 1910?

Mr. CROMWELL. The one which was subsequently granted, in April. 1900.

Senator MORGAN. Extending from 1904 to 1910?

Mr. CROMWELL. Yes, sir.

Senator MORGAN. You had knowledge of that transaction?

Mr. CROMWELL. I had such knowledge as I have indicated in the letter.

Senator MORGAN. No more?

Mr. CROMWELL. I had more.
Senator MORGAN. What is it?
Mr. CROMWELL. It is confidential.

Senator MORGAN. You refuse to state it?

Mr. CROMWELL. I do.

Senator MORGAN. You refuse then to make any statement in regard to your knowledge of the transaction referred to in that letter? Mr. CROMWELL. I do.

Senator MORGAN. You gave the transaction to Mr. Hay. Did you explain to him also further in oral conversation with him anything about it?

Mr. CROMWELL. I decline to make further explanation than I have, sir.

Senator MORGAN. Do you decline to answer that question?

Mr. CROMWELL. I do, sir.

Senator MORGAN. Well, do you decline on the ground that you were the counsel of the Panama Canal Company?

Mr. CROMWELL. I do; and also upon the ground that it is not germane to the inquiry of this committee.

Senator MORGAN. Well, its being germane I do not think is a question that a witness has a right to decide. You put it upon both grounds? Mr. CROMWELL. I do.

Senator MORGAN. Do you put it on the ground that you were also counsel of the Panama Railroad Company?

Mr. CROMWELL. I do not.

Senator MORGAN. You do not? Well, we will go back to that, then. You do not consider that, as counsel of the Panama Railroad Company, you are under any obligation to withhold any facts from the United States Government that you received from that company as counsel? Mr. CROMWELL. I do not care to answer such a question. you put me a question I will answer it.

When

Senator MORGAN. Well, that is the question I put to you. Mr. CROMWELL. When you put a pertinent question to me I will answer it not hypothetical questions.

Senator MORGAN. Probably, Mr. Cromwell, you overrate either your capacity or your standing if you think that you have the right to decide upon the pertinency of any question that is asked you at this board.

Mr. CROMWELL. I think I must decide whether it is pertinent. Upon my responsibility I must decide. You may decide upon your responsibility.

Senator MORGAN. You do decide that it is not pertinent?

Mr. CROMWELL. Upon my responsibility I do so decide.
Senator MORGAN. You decide that it is not pertinent?
Mr. CROMWELL. Yes, sir.

Senator MORGAN. And that is one of the reasons you have for not answering it?

Mr. CROMWELL. It is.

Senator MORGAN. You have no reason such as that there is some obligation resting on you as counsel of the Panama Railroad Company that prohibits you from answering?

Mr. CROMWELL. I again state, Senator, that I will not reply to hypothetical questions. If you will be good enough to address me a question which is pertinent, I shall be glad to give you my conclusions upon it.

do

Senator MORGAN. As the counsel of the Panama Canal Company, you refuse to answer any question that you believe is covered by the protection of your clients against your making any disclosures?

Mr. CROMWELL. The question you present is hypothetical, and I decline to answer hypothetical questions.

Senator MORGAN. It appears from this minute book, Mr. Cromwell, that in 1893 there was a purchase of rolling stock by the railroad company from the liquidator of the old canal company. Do you recollect that transaction?

Mr. CROMWELL. What date is it, Senator?
Senator MORGAN. 1893.

Mr. CROMWELL. What time of the year, sir?

Senator MORGAN. I have not got the precise date.

Mr. CROMWELL. I have no recollection of it. I thought perhaps the date might assist me.

Senator MORGAN. You have no recollection of the purchasing of rolling stock from the old company?

Mr. CROMWELL. It would not come in my province, and I would not be likely to have.

Senator MORGAN. If you were present at the meeting when it was done?

Mr. CROMWELL. Was I present?

Senator MORGAN. Well, if you were? Were you?

Mr. CROMWELL. I have no recollection, sir. What date did it occur? Senator MORGAN. Was there not about five or six hundred thousand dollars of the rolling stock of the old company that the liquidator held and the railroad company under your advice bought?

I

Mr. CROMWELL. No, sir; not under my advice, I am very sure. have no recollection of the transaction even. When did it occur,

Senator?

Senator MORGAN. It occurred in 1893.

Mr. CROMWELL. What time of the year?

Senator MORGAN. I will find you the time presently. I want to test your recollection.

Mr. CROMWELL. Yes. I have no objection to its being tested. Senator MORGAN. Do you think you would recollect a transaction involving five or six hundred thousand dollars for the purchase of rolling stock for the railroad company from the liquidator?

Mr. CROMWELL. It would have no significance to me. It is a traffic question, or a business question, and it would have no particular interest to me.

Senator MORGAN. You think you would not recall it?

Mr. CROMWELL. It would have no particular interest, Senator, one way or the other. It would be a business question.

Senator MORGAN. Well, that was a very important transaction, was it not?

Mr. CROMWELL. I do not know how important it was. It was a transaction that speaks for itself. I was not counsel for the canal company at that time, you know.

Senator MORGAN. No; you were counsel for the railroad company? Mr. CROMWELL. Yes, sir.

Senator MORGAN. You have read all of the proceedings of the court in France that organized the New Panama Canal Company?

Mr. CROMWELL, No, sir.

Senator MORGAN. You have read the charter, as it is called, in that decree?

Mr. CROMWELL. Oh, yes; of course, I have read the charter.