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Sec. 4. The directors (of whom five shall constitute a quorum for the transaction of business) shall appoint one of their number to be president, and may appoint such other officers and agents as they shall deem necessary, and they may make and establish such by-laws, rules, and regulations as they shall think proper and expedient, touching the disposition and management of the property, estate, and effects of the said corporation, the transfer of shares, the duties and conduct of cheir officers and servants, the election and meeting of the directors, and all matters whatsoever which may appertain to the concerns of said corporation. When any vacancy shall happen among the directors it may be filled by the remaining directors, and the directors may remove all officers appointed by them and appoint others in their place and fill all vacancies in the offices.”

That relates entirely to the organization and powers of the board of directors.

Now, Mr. Drake, can you point out in this statute and I think it is all here—the authority under which this executive committee is appointed ?

Mr. DRAKE. Yes, sir; it says that the board may make such by-laws as it may deem proper and necessary for the transaction of the business of the company.

Senator Morgan. Is there a by-law establishing this executive committee?

Mr. DRAKE. There is.
Senator Morgan. Have you a copy of that!

Mr. DRAKE. The by-laws have been recently amended and are being printed now. I have not a copy. I can get it.

Senator Morgan. The by-laws have been recently amended and you have no copy with you?

Mr. DRAKE. No; the record of the board would show how they were amended in some minor point. But the by-laws do provide, by one of their articles, that there shall be an executive committee. I have not a copy here, answering your question specifically. But the by-laws provide that there shall be an executive committee who shall exercise all the powers of the board in the absence of the board. Further, the statute is amended somewhat by the by-laws in another respect.

Senator MORGAN. That statement is in your former deposition before this committee, just as you state it now, but I have looked in vain to find out anything in the charter that authorized the establishment of an executive committee, and you now explain it by saying the by-laws provide for that?

Mr. DRAKE. Yes, sir. The statute provides that the directors may make such by-laws.

Senator MORGAN. Yes, sir.
Mr. DRAKE. And under that there is an executive committee.

Senator MORGAN. The statute provides that. I was trying to find it.

Mr. DRAKE. I want to say that I told my assistant to put in some copies of the new by-lays, and he overlooked it:

Senator MORGAN. I want to get your recollection, which will do until we can get the papers before us, so as to continue your examination intelligently. I want to get your recollection as to the date when the first executive committee was established by this company.

Mr. DRAKE. Long before my time. I do not know.
Senator Morgan. Long before your time?

Mr. DRAKE. Yes, sir. I have only been with the company since 1888.

Senator MORGAN. When you came in you found the executive committee?

Mr. DRAKE. Yes, sir; there has always been one.
Senator MORGAN. And that consisted of five directors?

Mr. DRAKE. Yes, sir. I do not know exactly the number before my time. I have studied the records pretty steadily, but I do not know the number of the executive committee before

The CHAIRMAN. It is five now?

Mr. DRAKE. Yes; it is five now, and I believe it has always been five.

Senator MORGAN. It has been five ever since you have been in office? Mr. DRAKE. Yes, sir.

Senator MORGAN. Has that executive committee been regularly kept up!

Mr. DRAKE. Yes, sir.

Senator Morgan. I will get you to describe, according to your recollection, what are the powers of that executive committee.

Mr. DRAKE. They are just as comprehensive as the powers of the board, in the absence of the board.

Senator MORGAN. Fully as comprehensive?
Mr. DRAKE. Yes, sir.

Senator MORGAN. The executive committee, in the absence of the board, can do anything!

Mr. DRAKE. It can do anything in the management of the affairs of the company. It is all powerful.

Senator MORGAN. Are the proceedings and actions of the executive committee required to be taken down on journals or minute books?

Mr. DRAKE. Yes, sir; they are.
Senator Morgan. Are they required to be approved by the board ?

Mr. DRAKE. They are, sir. The by-laws provide that they shall be approved.

Senator Morgan. Does it say—this by-law-that the action of the executive committee shall be approved before it takes effect?

Mr. DRAKE. No, sir.

Senator MORGAN. Has it been the practice of the board of directors to regard what the executive committee has done prior to their meeting in which an approval has taken place as being obligatory upon the company?

Mr. DRAKE. In so far as it has been made effective, they can revoke it. They can undo it. The board has power over the executive committee.

Senator Morgan. But as far as it has been made effective by execution, that stands?

Mr. DRAKE. Yes; until revoked or disavowed.

Senator MORGAN. Suppose this executive committee should make some very important arrangement in regard to any matter connected with the conduct of the railroad, would that action stand, if it had been executed, notwithstanding that they might afterwards revoke it or attempt to revoke it?

Mr. DRAKE. I think it would stand as the action of the board for the time.

Senator Morgan. To put a case—not an instance that has occurred, but in order to illustrate the situation—I wish to ask you this

Mr. DRAKE. I am expressing an opinion, Senator.

Senator MORGAN. Yes. Suppose the executive committee should find it convenient and necessary and proper, in their estimation, to buy a steamship.

Mr. DRAKE. Yes, sir.

Senator MORGAN. And they bought it and paid for it. They would have the right to do that?

Mr. DRAKE. Yes, sir.

Senator MORGAN. Suppose they had bought it and paid for it, and that afterwards, at a meeting of the board, they disapproved the act. Would that revoke it?

Mr. DRAKE. No, sir; there would be another party to the transaction.

Senator MORGAN. So that the action of the executive committee, when taken, is final if it is within the purview of the powers conferred upon the board ?

Mr. DRAKE. Yes, sir.

Senator MORGAN. And in that connection, the executive committee can do anything that the board could do if they were there?

Mr. DRAKE. Yes, sir.

Senator MORGAN. Now we have an idea of what the powers of the executive committee are.

You have mentioned the names of the directors who now comprise the executive committee?

Mr. DRAKE. Yes, sir.
Senator MORGAN. At what date were they chosen or appointed ?
Mr. DRAKE. At the last annual meeting, in April.
Senator Morgan. The first Monday in April ?
Mr. DRAKE. The first Monday in April; yes, sir—the 2d of April.
Senator Morgan. Who preceded them in that office ?

Mr. DRAKE. The only change that was made in the committee was the retirement of Colonel Edwards, on account of illness, and his replacement by Mr. Pepperman.

Senator MORGAN. Mr. Pepperman was put on the executive committee in place of Colonel Edwards?

Mr. DRAKE. Yes, sir.

Senator MORGAN. Is Colonel Edwards the same gentleman who is the Chief of the Division of Insular Affairs?

Mr. DRAKE. Yes, sir. He has gone to New Mexico, I believe.
Senator MORGAN. He is a director now, is he not?
Mr. DRAKE. Yes, sir.

Senator MORGAN. But when Mr. Pepperman came into the board he was put upon this executive committee?

Mr. DRAKE. Yes, sir.

Senator MORGAN. Do you remember when the previous executive committee, the one next prior in date to the executive committee that is now in office, was appointed ?

Mr. DRAKE. At the previous annual meeting.
Senator Morgan. They were appointed at annual meetings!

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the year.

Mr. DRAKE. They may be appointed quarterly, by the board. They are appointed by the board—at the annual meetings, yes, sir.

Senator MORGAN. At the annual meetings?
Mr. DRAKE. Yes, sir.

Senator MORGAN. And I suppose in every instance they have held their term of office until they either retired from the board or a new election took place?

Mr. DRAKE. Yes, sir.

Senator MORGAN. Do you recollect, now, who was on this executive committee at the date at which the United States took over the property of the Panama Railroad Company from the Panama Canal Company?

Mr. DRAKE. So as not to be in error, I will refer to the copy of the annual report that I have here, where it is stated on the first page: J. Edward Simmons, William Nelson Cromwell, J. H. Parker, Vernon H. Brown, William Barclay Parsons, and Edward A. Drake.

Senator MORGAN. What was the exact date of the taking over of the property in Paris?

Mr. DRAKE. May 7, 1904.
Senator MORGAN. Was it May 7 or May 4?
Mr. DRAKE. May 7, 1904.

Senator MORGAN. Were those gentlemen in office in the executive committee at that time?

Mr. DRAKE. They were, sir.
Senator MORGAN. How long did they continue to hold?
Mr. DRAKE. I think that executive committee continued through
Senator Morgan. Until the next April ?
Mr. DRAKE. Yes, sir.

Senator Morgan. So that this executive committee that you have just named were in office at the time that we took over the property?

Mr. DRAKE. Yes, sir.
Senator MORGAN. And until the next April ?
Mr. DRAKE. Yes, sir; that is my recollection.

Senator MORGAN. Having taken over the property May 7, they had been in there since

Mr. DRAKE. Since early in April—the first Monday in April.
Senator MORGAN. The first Monday in April ?
Mr. DRAKE. Of the preceding April.
Senator MORGAN. Yes; of the same year?
Mr. DRAKE. Yes, sir.

Senator MORGAN. Please state who comprised the executive committee that preceded them.

Mr. DRAKE. J. Edward Simmons, William Nelson Cromwell, Vernon H. Brown, Xavier Boyard, and Edward A. Drake. That was in the year 1903. The previous one was 1904.

Senator Morgan. Mr. Xavier Boyard was the general agent of the Panama Canal Company in the United States at that time, was he not?

Mr. DRAKE. He was the commercial agent; yes, sir.

Senator MORGAN. And he was also a director in the Panama Canal Company?

Mr. DRAKE. Not in the canal company, I believe. I do not know. He was a director in the railroad company.

Senator MORGAN. I know he was a director in the railroad company, and I have the impression that he was also a director in the canal company. I will ascertain how that is.

Mr. DRAKE. I do not know, sir.

Senator MORGAN. During the year when this property was taken over from the canal company, did the board of directors, after the first Monday in April, have any full meeting?

Mr. DRAKE. That book would tell, sir sindicating minute book]. The first Monday in April would be the meeting for election, and there would be immediately a meeting of the board for organization. Yes, sir.

Senator Morgan. Well, the first meeting of the board in that year was the first Monday in April, when they were chosen ?

Mr. DRAKE. Yes, sir; and there was a meeting to organize that same day.

Senator MORGAN. Did they have any other meeting of the full board during that year?

Mr. DRAKE. They must have, because the meetings were always on the second and fourth Thursdays of the month, at that time.

Senator MORGAN. The meetings of the board?

Mr. DRAKE. Yes, sir; they were always on the second and fourth Thursdays of the month. The minute book that Senator Taliaferro has before him would tell that.

Senator TALIAFERRO. What is the question?

Mr. DRAKE. The Senator has asked if there was a meeting of the board of directors in May, 1904.

Senator TALIAFERRO. Do you wish the book?

Mr. DRAKE. Yes, sir. (After referring to the book.] Yes, sir; there was a meeting on April 14, 1904. The meeting for election was held on Monday, April 4.

Senator MORGAN. The meeting of the full board was on April 19, was it?

Mr. DRAKE. April 14. And another meeting on April 28.

Senator MORGAN. Now, up to the time that this property was transferred or turned over to the United States by the Panama Canal Company, the Panama Railroad Company had had the possession of all of its railroad, all of its belongings and property of every description, in Panama and everywhere else?

Mr. DRAKE. Yes, sir.
Senator MORGAN. It had full possession?
Mr. DRAKE. Yes, sir.

Senator MORGAN. On the 7th day of May, 1904, this possession was turned over to the United States, was it not?

Mr. DRAKE. I so understand, sir. I do not know. I so understand, by the press.

Senator MORGAN. That was the date that the contract was to take effect?

Mr. DRAKE. The railroad had nothing to do with the contract, sir, so you must excuse my ignorance on that score.

Senator MORGAN. I am proceeding to prove that very fact—that the railroad had nothing to do with it.

Mr. DRAKE. I know nothing about it.

Senator Morgan. Very good. But the possession of the property, up to May 7, 1904, was in the railroad company?

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