The impression sought to be given that he has attempted to interfere in canal matters or to exercise great influence in controlling the policies to be pursued is wholly unfounded. So far as I have asked his assistance, he has sought to find out what the Government policy was and loyally to carry it out. If Mr. Shonts or Mr. Stevens or Judge Magoon were interrogated as to whether Mr. Cromwell had interfered in any way with their work or had of his own motion volunteered to do anything except what has been his legitimate duty as counsel for the railroad company, the answer would be an emphatic negative. I never have had the slightest reason to suspect any other motive on his part than a loyal desire to help along the construction of the canal, and I am glad to express in this public way my gratitude for his valuable and patriotic service.

Suggestions have been made in this hearing of two motives which Mr. Cromwell has had. One is that he represents the new French Panama Canal Company in a claim against the United States for $2,000,000 or more for work which was done by the Panama Canal Company in the canal construction between 1902, in January, when the inventory was taken, and May, 1904, when the property was turned over to the United States, and the intimation is that he has sought to acquire influence over the Commission by making himself useful to them in order that he might obtain from them a decision in his favor with respect to that claim.

The fact is that soon after the appointment of the Commission, it was agreed that the claim should be submitted to the arbitration of the President. The President referred the matter to the Commission for the determination as to the facts and an expression of opinion on the merits of the claim. The matter was presented to the Commission in the spring of 1904, and was decided by them in the fall of that year, and in October, their adverse decision was forwarded to me to be submitted to the President. I examined the findings of the Commission, and reached the conclusion that they were entirely proper and that the claim could not be supported. Accordingly, November 15, 1904, I wrote this letter to the President:

NOVEMBER 15, 1904.

MY DEAR MR. PRESIDENT: I herewith transmit the report of the Canal Commission on the subject of the claim of the New Panama Canal Company of more than $2,000,000 for expenses to which the Panama Canal Company was put in maintaining the property and its franchises after the making of the contract and before its consummation. I fully concur in the conclusion of the Canal Commission that the claim of the New Panama Canal Company can not be sustained either in law or equity. The fulfillment of the contract depended upon certain conditions, and the company could not be certain that those conditions would ever be fulfilled. What they did, therefore, was in part at least to preserve the property for themselves if the sale fell through. More than that, they had agreed to furnish a good title, and much of the work which was done was necessary to preserve the title until the transfer should take place. In other words, they expended money in order that they might be in a position to perform the contract when the time arrived.

There is no power on the part of the Commission to make the payment. The price by law is limited to $40,000,000, and that has already been paid.

Very sincerely, yours,

The PRESIDENT.

WM. H. TAFT, Secretary of War.

So far as the Commission was concerned, and so far as I was concerned, that ended the matter of this claim. Thereafter, my recollection is, the President approved the findings of the Commission and my recommendations, but an application was made to him to rehear the

matter on the ground that he had not given the proper day in court to the counsel for the French Panama Canal Company. The matter was referred to the Attorney-General. The Attorney-General has reported adversely to the French Panama Canal Company and has submitted his opinion to the President, who expects to decide the matter in a few days.

What I wish to point out is that since November 15, 1904 (and that was before I assumed control of the railroad company or consulted Mr. Cromwell in an advisory way in respect to canal or railway matters), neither the Commission nor I, who have had charge of the management of the canal construction and the railroad, have had the slightest relation to the decision of the claim of the French Panama Canal Company. So far as either the Commission or I had to do with it, the decision was then adverse and final. I may add that Mr. Cromwell never exchanged one word with me about the claim either before or after I reported adversely on it.

The other suggestion is that because Mr. Cromwell owns 22 per cent, or about $40,000, of the stock of the ice and electric light company in Pamama therefore he has a pecuniary interest that makes it dangerous for him to assist the Secretary of War or the Commission or the Panama Railroad Company officers and directors with his advice upon the matters arising for a decision in the discharge of their duties.

Upon this point all I have to say is that Mr. Cromwell never mentioned the subject of the ice and electric-light enterprise to me or to any of the Commission so far as I have been advised. The person charged with managing the ice company was a Mr. Lundie, an electrical engineer, a man who wrote to me when I was on the Isthmus in November, 1905, objecting to our erecting a government electric-light plant on the Isthmus because it would injure his enterprise. In this letter, in November, 1905, he mentioned who were the stockholders of the company, including Mr. Cromwell. I answered him by stating that the United States could not afford to depend upon private enterprise for its ice and its electric light, such was the magnitude of the work which it had to do there, and, therefore, that a conference with him for the purpose of discussing such an issue was useless. The result was that Mr. Lundie wrote a violently abusive letter about Mr. Shonts, Mr. Stevens, and myself to the President. I need not say that he demonstrated thereby that while Mr. Cromwell might have stock in the enterprise, he had very little to do with its management.

THE CIRCUMSTANCES LEADING TO THE SEVERANCE

OF MR. WALLACE

FROM THE CANAL ENTERPRISE.

I met Mr. Wallace for the first time in November, 1904, when I was on the Isthmus. I was quite impressed with his earnestness and interest in the work, his ability, his facility of expression, his power of planning ahead, and the experience that he had had on the great Illinois Central system.

I talked with him much about the Commission and the necessity for a change. I invite attention to the letters which Mr. Wallace wrote, all included in the exhibits, in order to show how closely we adhered to every wish that he had expressed in regard to the matter of the reorganization.

The selection of Mr. Shonts by the President was induced not only by Mr. Shonts's experience and ability as an organizer of constructive

enterprises, but also because he was believed to be on friendly terms with Mr. Wallace.

Mr. Wallace came to Washington to assist at the reorganization early in April, 1905. After he had been here a month working with Judge Magoon and Mr. Shonts on the needed changes in the Washington office, and necessary preparations for the Isthmus, reports of a disquieting character as to the conditions on the Isthmus began to come to me. I was anxious that Judge Magoon and Mr. Wallace should then return to the Isthmus. Mr. Wallace, however, requested that he be allowed to take two weeks in Chicago before going back, on personal matters, saying he could unite public business with the main object of his trip. On May 15th or 16th, just before Mr. Wallace sailed, he came to my office with Judge Magoon and others. After a little conversation he asked that the others precede him from the room and he remained for a last word with me alone. He said he was not content to leave without expressing in a personal interview the profound gratitude that he felt to the President and to me for reorganizing the Commission on the lines of the order of April 1. He said he went back to the Isthmus with happiness in his heart and with confidence that the canal would be built and that he would build it. He asked me to convey this message to the President and to assure the President that he could have every confidence in him. I invited his attention to the disquieting rumors as to the condition of the employees on the Isthmus and asked him to devote his chief attention to the reconstruction of buildings for the occupancy of our employees and to making them comfortable.

Before Mr. Wallace sailed he had received letters from Mr. Dauchy and General Davis, which I attach as Exhibit 18, showing a most demoralized condition on the Isthmus. The rainy season had set in and yellow fever, which it was supposed had been stamped out, showed itself in the last week in April, and six cases of fever-all of them employees at work in the canal building-were reported. Mr. Dauchy described the very unsatisfactory condition on the Isthmus, and especially at Culebra, showing that the conditions were due to the result of lack of preparation, and because material and men were wanting. He wrote that the yellow-fever scare had caused great demoralization in the whole personnel. He said that on account of having no lumber he had not been able to push the work of preparing quarters for men; that at that time they were more crowded than at any time since the work started, and that this crowded condition was causing dissatisfaction. He said that he had not the superintendents or foremen or engineers to enable him properly to instruct the men under him, and that without an organization he could not cement the force into a working organization commensurate with the requirements of the work.

General Davis, in his letter to Mr. Wallace under date of March 3, says that there was no head there to command the necessary confidence and respect, and there was a great deal of bickering and fault finding and scolding among the employees all along the line; that they were now pitching tents in Culebra for the shelter of the United States employees, and the employees occupying the tents were naturally discontented and found fault; that the death of Johnson and West, one

the superintendent of construction and the other the auditor, had created a panic and that he supposed a great many men would go back on that week's steamer to the United States.

He said:

I think I have never known of an instance where the strong directing hand of a man in power was more necessary than it is here now. Mr. Dauchy does the very best he can, and is patient and painstaking, but he is not regarded as the "head" in the real sense.

In a telegram to me of May 4 General Davis said: "At no time. since I have been here has there been so great necessity for presence of strong directing head of canal work, a head recognized by the public and by all as commanding the confidence of the President and Secretary of War. The absence of such a man at this time, in my opinion, is exceedingly detrimental to public interest."

This description of conditions by General Davis and Mr. Dauchy are confirmed by Mr. Wallace in his letter of June 8 (the full text of which I append as Exhibit 19), in which he says:

Upon my arrival on the Isthmus it was needless to say that the entire organization was found in a state of more or less demoralization. At the same time, the spirit of disloyalty mentioned by Mr. Barrett did not exist. The feeling was more one of depression and discouragement.

The dissatisfaction among the men, however, that gave the most anxiety was of the silent, unexpressed nature, which is existing among our loyal and better class of employees. In time this would have resulted in their gradually leaving the Isthmus as they were offered positions in the States, or in taking their leaves of absence in the normal way and not returning, provided they could find any other means of earning their living. Above all was the disadvantage to the work where men were compelled to remain here in order to earn a living, the silent feeling of discourage

ment.

The American employees were leaving the Isthmus by every steamer. The exodus would have been very much greater but for the fare of $75 to New York. Employees on leave were given a fare of $20, but those who left without leave were charged the full fare. The numbers of American employees who left the Isthmus and the employ of the Commission are given, by months, in the following list (see Exhibit No. 20):

April...
May.

June

109

150

171

The news of depressed and alarming conditions reached the public through the press of this country on every steamer from Panama. For the information of the committee I have had collected, and append as Exhibit No. 21, a number of clippings on this subject from New York and other journals.

While, of course, the President and I were concerned over the situation, we were very hopeful that with the reorganized Commission and the new courage which Mr. Wallace had evidently taken by his trip, and the promotion given him, matters would gradually be straightend It was his presence on the Isthmus and his strong hand in coordinating the parts of the machine which under Mr. Dauchy had drifted apart that we were counting on.

out.

Under these circumstances I received with surprise and anxiety the following telegram from Mr. Wallace, dated Panama, June 5, 1905, only a fortnight after his return to the Isthmus:

SECRETARY OF WAR, Washington:

Important complicated business matters which can not be arranged by correspondence and which may affect my relations as chief engineer of Commission necessitates immediate return to the United States to confer with you and others. An order from you to return for official consultation will prevent apprehension on the part of employees. Suggest Shonts remain until my arrival. Please answer.

WALLACE.

I thereupon directed the sending of the following cable, indicating the reluctance I felt about granting him permission to leave the Isthmus at that time:

WALLACE, Panama:

WASHINGTON, June 6, 1905.

Secretary of War and Shonts, in accordance with your request and without knowledge of circumstances that justify, approve your return for consultation with them at Washington.

EDWARDS.

My surprise and feeling of uneasiness were not relieved by receiving about the 15th or 16th of June the letter from Wallace, dated June 8, 1905, already among the appended exhibits, and containing the following:

Since my return I have been most vigorously employed in arranging for the reorganization of the work and in stiffening up the weak points.

In the meantime cables and letters have been received from the States in regard to matters which vitally concern my personal interests, which could not be brought to a consummation before leaving the States.

There are also several matters which it is desirable to discuss with you before your departure for the Philippines, which I do not think it wise to hold until your return, and which can not satisfactorily be handled either by cable or by letter.

While they might be considered largely of a personal nature, any action taken for my personal interest would affect, to a greater or less extent, the work here.

My intention was to make a hurried trip to the States, in order to return here in time to be present at the meeting of the Commission on the 2d of July.

However, it is possible to make such progress in my reorganization work that I believe I can finish everything up and sail for the States on the steamer Finance, which will leave here Monday, June 12: and as I have been continuously at work for the Commission without any vacation (having taken practically none when in the States), I respectfully request that I be granted at least six weeks' leave of absence, dating from the completion of the conference with yourself and the chairman of the Commission, or after I have finished such business as I may be called upon to attend to in Washington or New York for the Commission or the Panama Railroad.

In this connection I desire to say that one of the basic conditions made with Admiral Walker in May, 1904, when I considered the proposition to come to Panama, was that I should have at least two months' leave of absence during each year.

The Admiral was disinclined to accept this proposition, but finally stated to me that I could have six weeks in connection with some of my business trips to Washington, and that the six weeks would date from my leaving Washington until again reporting there for duty.

I know of no time during the next year when the work will be in better condition to permit of my absence. It is thoroughly organized, everything possible that can be foreseen provided for, and a feeling of loyalty and enthusiasm now permeates the entire personnel.

On landing in New York, on the 19th or 20th of June, I would like to spend one or two days there on matters connected with the Panama Railroad before I proceed o Washington, when I hope you will be able to give me a personal interview.