they would not be paid at all. The inevitable result was that the men refused to work, asserting either that they were unable to work for lack of food or unwilling to work without being paid. They would come to the administration building in Panama in a body, demanding payment, and when told that it was impossible to pay them would proceed to the consul of their home government, especially the British consul, and demand that he assist them in securing their money. For weeks at a time there was not a day passed without strikes of this character somewhere along the line. This condition had prevailed prior to our arrival, and continued thereafter until the Commission opened the commissaries to the common laborers and adopted the present system of timekeeping and payment. The cause of the delayed payment was that the work of verifying the pay rolls could not be entered upon until the close of the last day of the two weeks' working period. The old Commission adopted the rule of auditing the pay rolls in advance of payment. The force in the local auditor's office was inadequate to do the work promptly, and after they had passed from the auditor's office into the hands of the disbursing officer he deemed it necessary, for his own protection, to go over the rolls again. The force in the disbursing office was insufficient to do this work promptly, and the double examination made inevitable inordinate delay. The situation was further complicated by the fact that yellow fever, a few cases of which had occurred from time to time since the preceding July, began to spread, and in June, 1905, it became epidemic; a number of clerks and offi cials occupying the offices in the administration building in the city of Panama had yellow fever. Two of the superior officials-the local auditor and the chief of the bureau of architecture and building-died from the disease, and the medical authorities had announced that the administration building was infected with the fever. A spirit of unrest and uncertainty permeated the ranks of the Commission employees. The intention to reorganize the Commission had been announced, and had been delayed for months by reason of the consideration of the matter in Congress. The reorganization was finally completed, but none of the new Commissioners had arrived on the Isthmus. None of the officials or the em. ployees knew whether or not they were secure in their positions, and all felt that affairs were so demoralized that a crisis was rapidly approaching. The very uncertainty as to what was impending increased the strain of the situation. Many of the employees were abandoning their positions and returning home, where they were giving out to the press sensational and extravagant stories. exaggerating and frequently misstating conditions, which were, at best, deplor able. This alarmed relatives and friends at home, who began beseeching the employees to come away. There was also the ubiquitous prophet of evil, who did not hesitate to foretell immediate or ultimate disaster and failure for the enterprise. The saving grace of the situation, and the steadying influence which prevented utter demoralization, was the presence on the Isthmus of a number of Americans who had full confidence in the ability of the Government to overcome the adverse conditions and work out a favorable solution of the situation. These were the officers of the Army and Navy, who had recently gone through the trying times of the Spanish-American war; officers of the Public Health and Marine-Hospital Service, who had encountered similar conditions at other stations; Americans who had been employed in the military government of Porto Rico, Cuba, and the Philippine Islands; engineers and civilians who had had previous experience in Government service, and other Americans whose faith in the executive ability of Government methods to meet emergencies could not be shaken. These men held the situation in line, and were incessant and untiring in their efforts to promote the work, secure order and discipline, and at least to preserve the status quo until adequate measures of relief were devised and applied; the feeling being general that upon the arrival of the executive committee, vested with the full powers set forth in the President's order, there would be a beginning of the work necessary to solve the problems with which they were dealing. Upon the arrival of the executive committee the large majority of the Americans on the Isthmus took new heart and courage, especially as it began to be understood that the heads of the departments possessed sufficient authority to apply immediate correctives or adopt adequate measures to overcome emergencies or necessities as they might arise; in other words, that delays were no longer unavoidable, and immediate action could be had, and that the executive committee could exercise the powers of the Commission, and the authority of the Commission was located on the Isthmus, and at all times available. During the four weeks Mr. Wallace remained on the Isthmus substantial progress was made by the executive committee in straightening out the complicated situation, but the work was far from being completed-in fact, hardly begun when he returned to the States. He completed and announced his plan of organization. Under this plan the work of canal construction was to be conducted by the chief engineer and two assistant chief engineers. The work was divided into 5 divisions, calling for 5 division engineers and 17 assistant division engineers and superintendents, making a total of 24 engineers. Including the position of chief engineer, there were but 10 engineers occupying the positions provided for. From the minutes of the meeting of the executive committee held at Panama June 14, 1905, the following is quoted: 1. Commissioner Wallace submitted the following organization of the department of construction and engineering, effective June 1, 1905, which is hereby ratified, approved, and confirmed: DEPARTMENT OF CONSTRUCTION AND ENGINEERING. John F. Wallace-Member of Isthmian Canal Commission; member of executive committee; chief engineer. Vacancy-First assistant chief engineer, in charge of technical studies and construction in the field. Vacancy-Principal assistant engineer, in charge of records and office. H. F. Tenny-Assistant private secretary. COLON CONSTRUCTION DIVISION. (Comprising the territory on the line of the canal from Colon to Bohio.) F. B. Maltby-Division engineer temporarily, pending selection of a permanent man. Vacancy-Assistant division engineer. E. P. Thompson-Chief clerk. CHAGRES DIVISION OF CONSTRUCTION. (Including the line of the canal from Bohio to Bas Obispo.) W. E. Dauchy-Division engineer temporarily, pending selection of a permanent man. Vacancy-Assistant division engineer. William E. Swift-Resident engineer. GAMBOA DIVISION OF CONSTRUCTION. (Including the Gamboa dam site and the Chagres River.) W. E. Dauchy, division engineer temporarily, pending selection of a permanent man. Vacancy-Assistant division engineer. C. L. Carpenter-Assistant engineer. CULEBRA CONSTRUCTION DIVISION. (Including the territory from Bas Obispo to Miraflores.) W. E. Dauchy, division engineer temporarily, pending selection of a permanent man. Vacancy-Assistant division engineer. H. F. Dose-Resident engineer in charge of construction. W. B. Ruggles-Resident engineer in charge of survey. A. B. Nichols--Resident engineer in charge of technical work; canal prism. Vacancy-Superintendent of transportation. Vacancy-Superintendent of excavation. Vacancy-Superintendent of mining. E. Zook-Assistant engineer, superintendent of tracks. LA BOCA DIVISION OF CONSTRUCTION. (Including the territory along the line of the canal from Miraflores to the sea.) F. B. Maltby-Division engineer temporarily, pending selection of a permanent man. Vacancy-Assistant division engineer. A. C. Harper-Resident engineer. This plan involved the transfer of authority in numerous instances and occasioned no little ill will and dissatisfaction-matters which would have been readily adjusted had he remained and insisted upon harmonious action-but on his going away the dissatisfaction became rampant and resulted in numerous contentions, which increased, rather than diminished, the disorganization. His departure left but one member of the executive committee on the Isthmus, and therefore the powers of the executive committee were inoperative. Occasions continued to arise for the exercise of the authority vested in the head of the department of engineering and construction and the general manager of the Panama Railroad. Whenever the emergency was so far-reaching as to affect the department of government and sanitation I did not hesitate to exercise the authority and issue such orders with reference thereto as I thought were required, relying upon subsequent ratification. I attach hereto copies of three orders of this character, each of which was issued to an officer who was not in my department. Wallace left just at the time the yellow-fever epidemic was at its height, and the two combined brought about a crisis which well-nigh resulted in a panic. The number of employees returning to the States greatly increased, and upon arrival at New York and elsewhere they gave out statements to the press of highly sensational character. The difficulties and discomforts of the situation were many and distressing. Everyone felt that Wallace had abandoned the situation, and that his action countenanced similar action on the part of others, and that the inevitable result would be that imperative action by the executive committee, which should be had at once, must of necessity be long delayed and probably deferred until such time as to make the action unavailing. Had means of departure from the Isthmus been immediately available, I believe we would have had both a panic and a rout. Before it was possible for any considerable number of our people to leave the Isthmus, the papers arrived containing the expression of views made by Secretary Taft at the time of his interview with Mr. Wallace in New York. The effect of reading this published statement was immediate, farreaching, and beneficial. The ordinary comment was, "Well, that ought to stop the cold-footed brigade," or some expression of like tenor. It brought to the attention of all of us what had been lost sight of in the general discomfort, that there was something more involved in the enterprise in which we were engaged than our personal comfort or personal advantage; it aroused the spirit which is so important to armies or other large bodies of men engaged in a common endeavor, that they owed allegiance to the cause, and, having once entered upon the accomplishment of a purpose, they must of necessity sacrifice personal advantage to the public enterprise. There were many evidences that came to my knowledge, and to my personal observation, that the effect of the publication of the Secretary's remarks promoted, if it did not create in the minds of the Americans on the Isthmus, the sentiment to which I have referred. Very respectfully, The SECRETARY OF WAR. CHARLES E. MAGOON, Governor. ISTHMIAN CANAL COMMISSION, EXECUTIVE OFFICE, Ancon, Isthmian Canal Zone, July 7, 1905. SIR: I have the honor to inclose herewith copies of letters which I have to-day written to the supervising architect, the chief of material bureau, and the superintendent of the Panama Railroad in respect to the erection of additional quarters and repair of old buildings, and also of the necessity for prompt transportation of lumber and other building material already here or about to arrive on the Isthmus to the various sites decided upon by the Commission. Very respectfully, CHAIRMAN ISTHMIAN CANAL COMMISSION, CHARLES E. MAGOON, Governor. Washington, D. C. ANCON, ISTHMIAN CANAL ZONE, July 7, 1905. SIR: I have already had several conversations with you respecting the necessity for the erection of additional quarters for the employees of the Isthmian Canal Commission on the Isthmus and of repairing the old structures taken over from the French Canal Company, fixing them up so that they could be used as homes by our employees. This provision is essential not only to the peace and comfort of the employees, but to the great work of proper sanitation. The erection of the quarters and repair of the buildings has been greatly delayed by reason of the nonarrival of lumber of proper dimensions and building material required for the work. I am advised that large quantities of lumber of the proper sizes will shortly arrive, both at La Boca and Colon. In fact, the vessel now discharging at Panama brought a considerable quantity of the desired sizes. Within a very short period the long-waited-for building material will be afloat on one side or the other, and probably both sides, of the Isthmus, and it will then become necessary to deliver necessary amounts at the various building sites along the line of the canal and the Panama Railroad. It is of the utmost importance that we avoid additional delay of even one day. I am aware that the rolling stock of the Panama Railroad and its facilities for handling freight are taxed to their utmost, and this fact occasions the writing of this letter, for I wish to urge upon you that the paramount necessity of the present is the construction and repair of quarters and increase of hospital space. The transportation and delivery over the line of the Panama Railroad Company of this lumber and building material should be given precedence to all other business, and the transportation facilities of the road should be worked to their utmost capacity to accomplish the transportation in the least possible time, and the facilities for unloading vessels and landing the lumber should likewise be devoted to the unloading of lumber ships in preference to the more profitable commercial freight of the road. I know from my previous correspondence with you that you are aware of the importance of the matter to which this letter refers, but it is possible that, the railroad having heretofore been operated as a commercial enterprise, you will think that the commercial traffic paying higher rates than is paid by the Commission is entitled to preference. As a director of the road and a member of the executive committee of the corporation, I assume the responsibility of requiring that the lumber and building material to be used in the construction and repair of quarters, hospitals, and other sanitary works of the Commission and of the government of the Canal Zone shall be given precedence over any and all other traffic tendered to the road. I do this for the purpose of relieving you of responsibility should it be found necessary to delay the transfer of commercial freight or to put on extra trains or work overtime. I know, from conversations heretofore had with you, that you realize the importance of the proper sanitation of the Isthmus, especially in the construction of more and better quarters, and I rely with confidence upon your active cooperation. Yours, very truly, Mr. H. G. PRESCOTT, Superintendent Panama Railroad, Colon. CHARLES E. MAGOON, Governor. ANCON, ISTIIMIAN CANAL ZONE, July 8, 1905. SIR I learn that about 50 per cent of the force of carpenters and builders attached to the architectural bureau are unemployed, while at the same time there is imperative need of more quarters. The most important measure now pending is the sanitation of the Isthmus, and to accomplish such sanitation it is of prime necessity that additional quarters be provided by the erection of new buildings and the repair of the old structures taken over from the French company. The failure to provide quarters heretofore has been occasioned by the nonarrival on the Isthmus of lumber of required dimensions and other building material. In recent conversations with me you stated that lumber of proper dimensions and other building material necessary for construction of dwelling houses and the repair of old ones would shortly arrive on both sides of the Isthmus, and that the vessel now being unloaded at the American wharf in the city of Panama brought a considerable quantity of lumber of the required sizes. In our conversation yesterday I understood you to say that you intended to complete the unloading of the vessel now in the Bay of Panama, transport the lumber to La Boca, pile, inspect, and measure it before any was issued for construction purposes. I am advised that this course, if adhered to, would occasion a delay of nearly a month's duration. The necessity for increased quarters outside of Panama and additional hospital structures is so great that not an hour's delay should take place that can be avoided. Obviously much time could be saved if an arrangement could be made with the master of the vessel now discharging lumber whereby the sizes required for dwelling houses could be loaded on cars at the American wharf in Panama, inspected, and measured by your men and by a man representing the ship. A record should be kept of the amount so disposed, and it seems as easy to satisfactorily ascertain the quality and amount of lumber on a car as in a pile at La Boca. If this course is adopted the carpenters could be put to work at once, and not stand in enforced idleness awaiting the complete discharge of the cargo. I hope you can make the suggested arrangement. If you can not do so, or if there are reasons for not adopting the course which commend themselves to your judgment, will you please make report thereof in writing? Yours, very truly, Mr. E. C. TOBEY, Chief of Bureau of Supplies, Ancon. (Through the Acting Chief Engineer.) CHARLES E. MAGOON, Governor. ANCON, ISTHMIAN CANAL ZONE, July 7, 1905. SIR: I understood you to say, in response to my inquiry this morning, that practically one-half of the force of carpenters and builders attached to the bureau of architecture and building were not at work because of inability to secure the delivery of lumber at the places selected as sites for the numerous buildings heretofore authorized by the Commission. You also advised me that you were about to begin the grading for the governor's house, but that it would be necessary to erect quarters for the laborers to be employed on that work, and that such erection would require lumber of the sizes needed for construction and repair of quarters intended for the employees of the Commission. Thereupon I instructed you orally, and I now wish to instruct you in writing, that you are not to enter upon the construction of the governor's house until adequate provision has been made for the proper housing and feeding of the entire force of the Isthmian Canal Commission on the Isthmus, including not only clerks and employees, but also common laborers, and including also hospital accommodations for not less than 5 per cent of the maximum force to be employed during the year ending June 30, 1906. I am giving you this instruction in writing because you have heretofore been advised of the fact that the Secretary of War especially directed the head of the department of construction and engineering that the erection of the governor's house was to be commenced at once and continued without interruption until completed. I assume the responsibility of modifying the Secretary's direction, for it is clear that an emergency exists for increased quarters and accommodations for the employees, and that every energy of the Commission should be exerted toward meeting it. The necessity is paramount, and you should act accordingly. Yours, respectfully, Mr. A. M. BURTT, Supervising Architect, CHARLES E. MAGOON, Governor. Chief of Bureau of Architecture and Buildings, Ancon. (Through the acting chief engineer.) EXHIBIT 26. FEBRUARY 12, 1906. MY DEAR MR. SECRETARY: With reference to former Chief Engineer Wallace's statement before the Senate committee that the authorities refused to take the result of his year's work on the Isthmus and declined to receive his reports for the benefit of the Canal Commission, and that all of his work was conse |