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The monetary unit of the Republic shall be the balboa, or a gold coin of one gramme six hundred and seventy-two milligrammes (1.672) weight and nine hundred thousandths (0.900) fineness--divisible into 100 cents (100/100).

The actual gold dollar of the United States of America and its multiples shall be legal tender in the Republic for its nominal value, equivalent to the balboa.

ARTICLE II.

When the Executive power arranges the national gold coinage this coinage shall be minted in pieces of one, two and a half, five, ten, and twenty balboas, choosing those coins which will have the greatest circulation.

ARTICLE III.

The silver money shall consist of an alloy of nine hundred thousandths of pure silver and one hundred thousandths of copper.

ARTICLE IV.

The names, weight, and diameters of the silver coins shall be as follows:

The peso, weight 25 grammes, diameter 37 millimetres, value 50 cents (33) of the Balboa;

The half peso, weight 121 grammes, diameter 30 millimetres, value 25 cents;
The fifth of a peso, weight 5 grammes, diameter 24 millimetres, value 10 cents;
The tenth of a peso, weight 21 grammes, diameter 18 millimetres, value 5 cents;

The twentieth of a peso, weight 14 grammes, diameter 10 millimetres, value 2 cents.

In consequence two pesos of silver will equal in value one Balboa, which is the monetary unit. The other fractions of a peso shall retain the same proportional fractional equivalent with respect to the Balboa as a unit.

ARTICLE V.

The national silver coinage shall be legal tender for its nominal value in all transactions.

ARTICLE VI. The Colombian silver money not inferior to 835-thousandths fine and 666-thousandths of the same alloy, which is actually in circulation in the Republic, shall be exchanged for the new national currency at the rate of 212.50 for each 100 Balboas or their equivalent in Panama silver money. But the conversion of the Colombian silver of 666-thousandths shall alone be limited to the five-cent pieces and to the sum of 20,000 pesos, as stipulated in the first clause of Contract No. 36, entered into between the extinct department of Panama in the name of the Republic of Colombia and Messrs. Isaac Brandon and Brothers, of this city, for the coinage of Colombian silver money, which contract was approved by General Victor Manuel Salazar, civil and military chief of the Department of Panama, dated October 10, 1902, and published in No. 1399 of the Panama Gazet of October 9th of the same year.

The obligations contracted before the present law became effective, payable tacitly or expressly in Colombian silver not inferior to 835 thousandths, shall be redeemable in the new national money at the rate indicated in this article.

ARTICLE VII.

The Colombian silver money referred to in this law shall continue to be legal tender until the day upon which begins the verification of the exchange.

The Executive power shall initiate the conversion of moneys, as referred to in article 6, on the first day of September next. For this purpose there shall be designated

the public offices, where, in the capital and the provinces of the Republic, the verification of the exchange shall take place and due notification shall be published thirty days before the date of exchange.

This conversion shall be made within sixty days after September 1st next, after which date Colombian money shall cease to be legal tender in the Republic.

ARTICLE VIII. For the purpose of exchanging the silver money actually in circulation in the Republic, the Executive power is authorized to coin and issue, as stated in this law, Panaman money to the amount of 3,000,000 pesos.

ARTICLE IX. To guarantee the parity between the silver and the gold money, the Executive power shall deposit in a safe banking institution in the United States a sum in gold equivalent to 15 per cent of the value of coinage issued.

ARTICLE X.

The Executive power shall publish monthly statements in the Official Gazette of the amounts of Colombian silver presented for exchange, and when the conversion is completed the Executive power is authorized to sell the silver thus obtained in any foreign market and at the best rate obtainable. The product of such sale shall be deposited as part of the funds of the Republic.

ARTICLE XI.
The design of the Panama coins referred to in this law shall be as follows:

On the obverse, the bust of Vasco Nunez de Balboa, discoverer of the Panaman shores on the Pacific, in profile and facing the right, with an ornament upon which are engraved the words "God, Law, Liberty.' Above the bust, at the edge of the coin, the phrase “Republica de Panama;” on the base of the bust the word "Balboa' in capital letters, but not so large as the other inscriptions. In the lower part of the coin, under the bust, the year of coinage in figures.

The reverse of the coin shall bear the coat of arms of the Republic of Panama in the center; around the upper edge, the value of the coin in letters; around the lower edge, toward the right, the weight of the coin in grammes; toward the left, the amount of alloy in thousandths of fineness.

ARTICLE XII. It is absolutely prohibited to introduce into the territory of the Republic any other silver money except that which the Executive power may issue in completion of this law.

ARTICLE XIII. The Executive power is authorized to celebrate with the Government of the United States of America a monetary convention based upon the present law and arranged for at the conference held at Washington on the 18th of the present month of June between the commissioners of that Government and those of the Republic of Panama.

ARTICLE XIV. The expenses incurred in carrying out this law shall be considered included in the regular budget of expenses.

Given at Panama the 27th day of June, 1904.
The President,

JERARDO ORTEGA. The secretary,

LADISLAO Sosa.

NATIONAL EXECUTIVE POWER, TREASURY DEPARTMENT, Panama, June 28, 1904.

Publish and execute,

HI, AMADOR GUERRERO.

The secretary of the treasury,

F. V. DE LA ESPRIELLA.

EXHIBIT 9.
[Memorandum for Mr. Carpenter.]
ISTHMIAN CANAL AFFAIRS, OFFICE OF ADMINISTRATION,

Washington, D. C., April 9, 1906. Referring to your memorandum of the 7th addressed to Mr. Seymour, stating that the Secretary of War desires an itemized statement of the amount of money paid out by the Commission for exchange under the monetary agreement from the time it went into force until now, and for what purpose paid, there is attached hereto a memorandum from the acting general auditor giving the data desired up to the end of February last, which includes the latest report received.

JOSEPH BUCKLIN BISHOP, Secretary.

Statement of payments made by the Isthmian Canal Commission, at the rate of three

quarters of 1 per centum for United States currency delivered to the Commission by the banking concerns under the term of an agreement entered into for one year from the 29th day of April, 1905, being all payments to February 28, 1906, under said agreement.

Month.

To whom paid.

Amount
secured.

Premium

paid.

1905.

June.

July
August

September.....

October

Ehrman & Co
International Banking Corporation
American Trade Developing Co..
I. Brandon & Bros
Ehrman & Co
International Banking Corporation.
I. Brandon & Bros
American Trade Developing Co..
Ehrman & Co..
I. Brandon & Bros.
International Banking Corporation.
American Trade Developing Co...
Ehrman & Co..
International Banking Corporation.
American Trade Developing Co..
I. Brandon & Bros.
American Trade Developing Co..
Ehrman & Co..
International Banking Corporation.
I. Brandon & Bros..

.do
American Trade Developing Co..
International Banking Corporation.
Ehrman & Co.
International Banking Corporation.
I. Brandon & Bros.
Ehrman & Co..
American Trade Developing Co..
Ehrman & Co..
International Banking Corporation.
I. Brandon & Bros..
American Trade Developing Co.
International Banking Corporation.
American Trade Developing Co..
Ehrman & Co....
I. Brandon & Bros..

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November....

December

1906. January.

February

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Total

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mus.

EXHIBIT 10.

APRIL 1, 1906. MY DEAR MR. SECRETARY: I herewith transmit to you copy of a letter received by me to-day from Disbursing Officer Williams.

I have been giving this subject a good deal of thought the last ten days, knowing that the present arrangement will expire on April 29, but did not intend to write you until I had studied the situation personally on the Isth

However, as I desire you to read the letter of Williams, I take this occasion to give you my ideas on the subject.

I understand that the bankers have not found the present agreement profit. able and do not care to renew it. I am also advised that the question of keeping an adequate amount of silver on hand is constantly growing more serious. It is also true that our inability to pay by check necessitates the handling of large quantities of coin, with attendant risk, etc. You will see from Mr. Williams's letter that the Jamaica negroes are becoming used to our $5 gold pieces, and that in his judgment it would not embarrass anyone if we paid partially in gold. in fact, he thinks this method to be the only feasible solution of the silversupply question.

It seems to me that the best thing to do is to appoint a fiscal agent, advising him what we expect him to accomplish, and paying him a reasonable compensation for same. The Government can not any more than an individual expect something for nothing without in the long run being a sufferer.

I understand that the International Banking Corporation is now nominally fiscal agent for the Government, and I believe an arrangement can be made with them under which they would keep a sufficient supply of both gold and silver coin on hand for our necessities, maintain the parity between the two, possibly have branches at the points mentioned by Mr. Williams, and do some or all of the work indicated by Mr. Williams in his letter. I saw General Hubbard in New York last week, and, having this subject in my mind, asked him how le would feel toward the proposition of acting as our fiscal agent under instructions without any demand for a certain amount of deposits, but simply receive a fair compensation for the work done. The general said he would be glad to so act, carrying out any instructions we might give them; so, I believe, if you favor Mr. Williams's recommendations, that an arrangement could be made on a satisfactory basis with the International Banking Corporation to do the work required. Very truly, yours,

T. P. SHONTS. The SECRETARY OF WAR.

ISTHMIAN CANAL COMMISSION,
OFFICE OF THE DISBURSING OFFICER,

Panama, March 10, 1906. Hon. THEODORE P. SHONTS,

Chairman Isthmian Canal Commission, Washington, D. C. SIR: I have the honor to address this communication to you with reference to the monetary situation.

As the arrangements now in force with the isthmian bankers expire April 29 next, and as Congress must take action before that time as to future arrangements in order to avert embarrassing complications that may arise to add to the difficulties for obtaining satisfactory results, I have without special instructions from you given this my attention and submit my vews, which I urge will have your serious consideration without delay.

I have studied the present monetary conditions on the Isthmus and have carefully investigated the situation as to the supply of United States currency and Panama silver, as well as our present arrangements for obtaining the requisite amounts for our disbursements. I am firmly of the opinion that the present method is not the best, from a sound business standpoint, as we are absolutely dependent upon the banks, who, under the present arrangements, may at any time be unable to fill our requirements for silver, as they have already acknowledged to me that there is a serious doubt as to their being able to entirely fill our requisitions for Panaman silver. All but one of the banks have taken the full ten days allowed by the agreement for delivery during the past few months. This shows the inevitable embarrassment to which I would

vance.

be subjected if all the bankers took the limit of ten days allowed by the agreement, as I would have no work for my money counters nor counted money for the pay clerks with which to meet payments at that particular period, and leave us face to face with the necessity of having to have more silver coined on short notice or suddenly having to pay a part of our silver rolls in United States gold without first paving the way for such action, thus possibly bringing about temporary financial disturbances and criticism of our administration.

The black laborers are quite familiar with our $5 gold pieces, for which they pay a premium to brokers, who sell them at from 1 per cent to 2 per cent ad

I desire to take advantage of the inclination of the black laborers toward United States gold and gradually accustom them to receive gold direct from us in payment of wages. The United States $5 gold piece is commonly called, by the laborers from English possessions, an "American pound" and taken by them in preference to an English sovereign, and is considered by them equal to P10 silver and the premium they have to pay the brokers for the coin. 1 know that a part of our silver rolls can, without question, be paid in gold if the laborer is properly prepared for the change. I know from actual observation that the introduction of our actual gold money here will not have a tendency to deplete the United States Treasury, as whenever our gold is in circulation there has been shown no inclination on the part of anyone to accumulate and hoard our gold. It circulates very freely in quite a quantity here on the Zone and in the Republic of Panama, and we receive a large amount of it in our daily remittances from postmasters, hospitals, etc.

For example, if a laborer who receives his entire pay in silver and goes directly to a broker and pays a premium for $5 gold pieces has due him, say, P30 silver, the equivalency in gold of $15, we could pay him one or two $5 gold pieces as equivalent of P10 or P20 silver, respectively, and the balance of his pay in actual silver, thus utilizing gold in part settlement of our silver rolls, with a corresponding decrease in the amount of silver required. This will have the effect of reducing our requirements for silver and in doing away with the necessity for having to consider a further coinage and will make the silver now in circulation here sufficient for all requirements as subsidiary coinage and place us in a position to pay much or little silver, as we may see fit, according to conditions as they exist, as to whether there is a large or small supply of silver available. The fear expressed by some that by the payment of our silver rolls in gold the necessities of life will be doubled is rank absurdity, so long as the parity is maintained, and particularly so if we pay only a part in gold and the balance in silver at the legal parity.

All prices here are reckoned in gold now. I have read the testimony of various witnesses before the Senatorial committee regarding the money situation and have come to the conclusion that the witnesses either know very little about the real conditions or have held back altogether too much, and I think that it is high time for you to know the actual facts, and that we are not all dishonest down here. I hope, if consistent, that you will bring, in a clear and concise way, to our lawmakers the fact that up to now we have handlded millions of dollars without the loss of one cent, as well as the fact that there is great danger of serious financial complications if present conditions are not looked after, and that unquestionably the matter should be placed in the hands of a financial agent to act for and advise us in all matters relative to our monetary requirements, so that any financial disturbances may be anticipated and the necessary remedy applied before it becomes critical.

In order to place the Commission in a strong and commanding position and surround myself with every safeguard possible, and by which a certain sure supply of both United States and Panama moneys can be had when needed and the financial situation on the Isthmus absolutely controlled by the Commission, including the assurance of a stable silver currency circulating on a parity with United States gold, regardless of any action on the part of the Panama Government, I propose, and strongly urge, the immediate careful consideration of the following plan:

That arrangements be made whereby a bank will be established under our laws at Empire, Canal Zone, and near to my future office, with an agent or branch at Ancon, the Pacific terminal, and at Cristobal, the Atlantic terminal, or in the cities of Panama and Colon, preferably in the Canal Zone.

That such an institution be made the fiscal agent and designated “A depository for the funds of the Commission and the Canal Zone,” who will cash my drafts on New York and where I can deposit all funds, subject to check, that come into my possession, and by this means keep the money in constant circu

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