It got to such a point that they were pressing so for employees that there were six or seven stenographers that were needed; and during the yellow fever excitement stenographers did not come forward with great alacrity to go down there, and the board said: "We have not any stenographers who will go, but we have a number of applicants," and without any examination some six or seven applicants were sent down, after having applied to the Commission directly, without any examination at all. I only give that instance to show, first, how utterly inapplicable to outside employees the civil-service law and the machinery of the Civil Service Commission were, but also to show that there were no restrictions whatever; that the Commission really employed those whom they could get.

The difficulty was that they could not find in any way the men who were competent. There was a great demand for labor in this country. For instance, there came up an order, I recollect, that Mr. Edwards brought to me for a hundred track foremen. That was a year, according to my recollection of the statistics, when there was more railroad construction going on than ever before in the history of the country, and the only way you could get track foremen was to send out men and draw them away from the various railroad companies who were using them. By advertisement you could not get them. You could only get them by agents, and that is what had to be done when the new Commission came in. The civil service did apply, but finally, when Mr. Stevens came up, in November, 1905, we talked it over with him, and we made an order that nobody should come under the civilservice law except the clerical employees and the inside employees of the Commission.

Senator KITTREDGE. So that the civil-service régime continued for about a year?

Secretary TAFT. If you can call it a régime in which they did not exercise any power; yes.

Senator KITTREDGE. I understand the circumstances.

Secretary TAFT. Yes.

Senator KITTREDGE. At whose instance was that method of employment inaugurated?

Secretary TAFT. At the instance of the President.

Senator KITTREDGE. Did not the fact that track foremen and mechanics and laborers practically of all sorts were under civil service interfere with the securing of help of that character?

Secretary TAFT. Practically not. For instance, I see that Mr. Wallace in his evidence says that there were 25 track foremen sent there by the civil service. The records of the Civil Service Commission show that they sent 2 track foremen there, and that they are still employed there. The truth was and if you will call Mr. Pepperman I have no doubt he will so testify--that they simply evaded the law; that they got the men where they could get them, and they could not get-because they did not have the organization-the men that they needed. They applied time after time to the Civil Service Commission, and the Civil Service Commission could not furnish them.

Senator KITTREDGE. My question is whether the fact that they were compelled, under that order, to apply to the civil service for the class of employees of which you speak interfered with the ready procurement of those men?

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Secretary TAFT. I am not prepared to say that it did not give them an opportunity to say that they applied to the civil service and could not get them; but they did make efforts. Every man that Mr. Wallace sent up here on vacation he would ask to go about and see if he could not employ men. But it was exceedingly difficult, without any restriction of any sort, to get the men that were needed.

Senator TALIAFERRO. My understanding is that there was some understanding between the Commission and the civil service by which certain of these men were selected by the Commission and were then certified by the Civil Service Commission.

Secretary TAFT. The Civil Service Commission, I am bound to say that, for I am personally cognizant of that, were most compliant in every way with the desire to lift the restrictions of the law and let anybody go down there that the Commission would take.

Senator TALIAFERRO. Yes.

Secretary TAFT. But they were not equal to the duty of selecting eligibles. They did not have them on their lists.

Senator KITTREDGE. It was not in their line?

Secretary TAFT. It was not in their line; that is the truth of it, except for clerical employees.

Senator KITTREDGE. I am not speaking of them.

Secretary TAFT. Yes. They have an eligible list of locomotive engineers and that sort of thing, but they have no eligible list of track foremen.

Senator KITTREDGE. Did you ever see an examination of the Civil Service Commission prepared for applicants for that sort of work? Secretary TAFT. I do not remember to have done so; no, sir.

Senator KITTREDGE. When this civil service was inaugurated at the Isthmus, was that without a protest on the part of the officials of the Government or the employees of the Commission?

Secretary TAFT. Well, I have stated what Mr. Wallace said to me. Senator KITTREDGE. Did your inquiries extend beyond Mr. Wallace? Secretary TAFT. No, sir; I do not think they did. I do not remember. I may have talked with some of the Commission. I do not know. Mr. Wallace was the chief person in interest, the man who knew most about it, and I conferred with him.

Senator KITTREDGE. And he objected to the installation of the civilservice system?

Secretary TAFT. No; he said he was in favor of the principle of the civil service, but that he thought there ought to be wider exemptions, to include the practical men the foremen and the heads of departments and that sort of thing. When I say departments, I mean those divisions or bureaus on the Isthmus. And I said to him that any exceptions that he wanted made would be made. Thereupon, as I say, a committee of the civil service went down and agreed with him on a plan which they never worked out. I think Mr. Wallace testified, in his own evidence before the committee here, that he found that the civil service people were very anxious to accommodate him in every way; and that is true.

Senator KITTREDGE. The civil service that Mr. Wallace had in mind was, possibly, the civil service that maintains in railways?

Secretary TAFT. Well, he had the official civil service in mind, because that is what he was dealing with.

Senator KITTREDGE. You spoke yesterday, Mr. Secretary, regarding the cost of doing railway business across the Isthmus?

Secretary TAFT. Yes.

Senator KITTREDGE. And gave the figures as $3.06 a ton, as I made the memorandum?

Secretary TAFT. Yes, sir. That you will find in the report to me, made by the traffic manager of the road.

Senator KITTREDGE. I was about to ask you whether you are familiar with the details of that matter, or whether you would prefer that it should be taken up with Mr. Drake.

Secretary TAFT. No, sir; I do not believe Mr. Drake knows, either. You will have to send for Mr. Walker in regard to that.

Senator KITTREDGE. What is his business?

Secretary TAFT. He is the traffic manager of the Panama Railroad. Senator KITTREDGE. The reason I have in making the inquiry is that the cost seems very large.

Secretary TAFT. Well, it is; because it includes the fixed charges, I suppose. Yes; it must include the $5,000 a mile.

Senator KITTREDGE. The $5,000 a mile is the amount that the railway pays for its concession?

Secretary TAFT. Yes, sir.

Senator KITTREDGE. That is what you mean by fixed charges, as well as the interest on bonds?

Secretary TAFT. No, sir. I do not include those.

Senator KITTREDGE. Do you not mean that?

Secretary TAFT. No, sir. At least, that is what Mr. Walker told me. I did not go into the figures at all. You will find in his statement to

me, if you read it

Senator KITTREDGE. Yes; I read that. Secretary TAFT (continuing). That he says that the charges must be made high because the cost is $5,000 a mile on 50 miles.

Senator KITTREDGE. I am not proposing to conduct an examination upon that question, as I will take it up later with the railway people, but simply to call your attention to what seems on the surface to be the fact that the actual cost of transportation, independent of fixed charges to which you refer, is much higher than obtains in this country. Secretary TAFT. Of course it is.

Senator KITTREDGE. Have you in mind the conditions that make inevitable that result?

Secretary TAFT. I never examined it, but I suppose, of course, that would be true, when you have $5,000 a mile, and a railroad run 2,000 miles away from your supplies, and with the necessary force required to run 50 miles, which would not be any larger if you ran 200 miles, probably-all that would increase the cost of running the road. The cost of its construction, everything, was great; and, as I say, we have reduced very considerably the cost of transportation. I do not think we have reduced it enough, but

Senator KITTREDGE. You mean by cost of transportation the cost to the shipper?

Secretary TAFT. Yes; to the shipper.

Senator KITTREDGE. I am speaking now about the cost of operation. Secretary TAFT. Yes; so am I.

Senator KITTREDGE. The cost to the company.

Secretary TAFT. So am L

Senator KITTREDGE. As I recollect, you stated that the earnings of the steamship company and the railway company were divided. Secretary TAFT. Yes, sir.

Senator KITTREDGE. Fifty-five per cent to the steamship company and 45 per cent to the railway company, or was it the reverse? Senator TALIAFERRO. Forty-five per cent to the railway company, I think.

Secretary TAFT. I think so.

Senator KITTREDGE. That was the way I had it here. I did not know whether it was accurate. Was that a purely arbitrary division? Secretary TAFT. That was an adjustment made by Mr. Shonts. Senator KITTREDGE. Why was there a necessity for any division to

be made?

Secretary TAFT. In order to determine what would be fair to the other steamship companies, in order to put them all on a level. What we did not want to do was to establish a monopoly for the Panama Railroad ships, and now they all come in there on the same basis.

Senator TALIAFERRO. Also for the purpose, I fancy, Mr. Secretary, of providing a through rate?

Secretary TAFT. Yes, sir; as well. It was an adjustment that I was not able to investigate the justice of, because it is really a traffic question, and I am not an expert in that direction. Did not Mr. Shonts testify on that subject?

Senator TALIAFERRO. I think he did.

Senator KITTREDGE. He did to some extent, but I do not remember that he touched that precise point.

Secretary TAFT. He will be back, and you can call him again. Senator KITTREDGE. I wondered if that was a purely arbitrary division, or whether it had reason back of it.

Secretary TAFT. I think he thought it was a fair division after consulting with Mr. Walker, who has had a great deal of experience with it. But what I was anxious to bring about, and what I think has been brought about, was an equitable arrangement by which the other steamship companies the Royal Mail Steamship Company, the Fruit Line Steamship Company from New Orleans, and the Atlas Line-might not complain that in the transportation of property across the Isthmus we were excluding them by charging a higher rate on the railroad for them than we were to our own shipping line.

Senator KITTREDGE. Would not the charge for transportation on the railroad be based upon the cost of doing it?

Secretary TAFT. We charge each line 45 per cent of the total rates that they charge from the place from which they ship in the United States to Panama, delivered on the other side.

Senator KITTREDGE. Why should not that charge from Colon to Panama and the reverse be fixed as an independent proposition? Secretary TAFT. It is.

The CHAIRMAN. Would it not be better to take this matter up with the railway people, who will be here next week?

Senator KITTREDGE. Certainly.

The CHAIRMAN. The Secretary is almost everything, but I do not suppose he pretends to be a traffic man.

Secretary TAFT. I think if you will call Mr. Walker that he can give you all the information you want on this subject.

The CHAIRMAN. Who is Mr. Walker?

Secretary TAFT. He is the traffic manager of the Panama Railroad Company.

The CHAIRMAN. He lives in New York, I suppose?

Secretary TAFT. Yes. He has been there for a great many years.

(Thereupon the committee adjourned until Tuesday, April 24, 1906, at 10.30 o'clock a. m.)