Mr. DRAKE. Yes, sir.

Senator MORGAN. And how does he make the purchases for the railroad company; under advertisement?

Mr. DRAKE. Yes, sir. By resolution of the executive committee all supplies of every character, except such as are needed immediately for sustenance-perishable goods, such as eggs, butter, vegetables, and things of that kind, that have to be furnished regularly on requisition are requisitioned for on a regular form. They pass under my eye, and if there is anything extraordinary about them, as far as the New York end is concerned, I have them corrected, cut down, or whatever may be necessary, and they pass to him and he purchases them.

Senator MORGAN. All requisitions, therefore, that are made for purchases

Mr. DRAKE. For material and supplies.

Senator MORGAN (continuing). For the railroad company pass under your eye?

Mr. DRAKE. Yes, sir; but I have a general direction-I have a specific direction from the president of the company not to modify requisitions that come from the Isthmus, because he holds them responsible there for ordering what they require.

Senator MORGAN. But you do modify those made by the purchasing agent of the railroad company?

Mr. DRAKE. Those made by the steamship line or by the New York office.

Senator MORGAN. That is the purchasing agent of the railroad company?

Mr. DRAKE. No, sir; the requisitions are not made by the agent. They are forwarded to him. The requisitions are made by the terminal superintendent of the steamship line, for instance, or by the New York office.

Senator MORGAN. I am trying to untangle a mixture that seems to bewather beyond my power of description or almost of inquiry.

The CHAIRMAN. I think you are getting along first-rate, Senator. Mr. DRAKE. Do I not answer your questions intelligently enough, Senator, or explicitly? I would like to, if I can.

Senator MORGAN. I wish you would. You have got a purchasing agent for the railroad?

Mr. DRAKE. Yes, sir.

Senator MORGAN. That man is under your direction as to railroad purchases?

Mr. DRAKE. Yes, sir; as to railroad purchases.

Senator MORGAN. He is also acting as the purchasing agent for the Canal Commission?

Mr. DRAKE. Yes, sir.

Senator MORGAN. And he is under the direction of the Canal Commission as to matters that are confided to him in that capacity?

Mr. DRAKE. Yes, sir.

Senator MORGAN. Does he keep separate accounts?

Mr. DRAKE. Yes, sir.

Senator MORGAN. He refers these vouchers that relate to the rail. road to you for approval.

Mr. DRAKE. Yes, sir.

Senator MORGAN. And those that relate to the canal he refers to Mr. Ross?

Mr. DRAKE. Yes, sir.

Senator MORGAN. There the separation takes place?

Mr. DRAKE. Yes, sir.

Senator MORGAN. And he got into this double capacity from the fact that he was appointed by the Canal Commission as purchasing agent in New York for that Commission?

Mr. DRAKE. Yes, sir.

Senator MORGAN. You spoke of a large amount of coal that you were going up to-morrow to see about that had been purchased? Mr. DRAKE. Yes, sir.

Senator MORGAN. Is that exclusively for the railroad?

Mr. DRAKE. Exclusively for the railroad, yes; to be supplied to the Commission at cost delivered on the Isthmus, plus a slight percentage for handling to point of destination.

Senator MORGAN. It is bought for the railroad?

Mr. DRAKE. It is bought for the railroad; yes, sir.

Senator MORGAN. And to be delivered to the Commission on the Isthmus?

Mr. DRAKE. As required; as called for.

Senator MORGAN. As required?

Mr. DRAKE. Yes, sir.

Senator MORGAN. It was not bought, then, for the use of the railroad?

Mr. DRAKE. It was bought for the use of the railroad and for sale to anybody who wants it. The railroad sells coal on the Isthmus. Senator MORGAN. Those coal purchases are made really for the use of the Commission?

Mr. DRAKE. No, sir; they are made for the account of the railroad company, for its own uses. The railroad company uses 30,000 tons a year in operating the railroad and the balance is for sale to the Commission, or to connecting carriers, or to consumers on the Isthmus of all kinds.

Senator MORGAN. Then the railroad company is engaged in buying. coal in the New York markets, or wherever they can find it, and sending it to the Isthmus and selling it to the Commission?

Mr. DRAKE. Using it first and selling it.

Senator MORGAN. But I am talking about the amount of coal they are going to dispose of.

Mr. DRAKE. Yes, sir.

Senator MORGAN. They are selling it first to the Commission and next to general consumers?

Mr. DRAKE. Yes, sir.

Senator MORGAN. To the Panamanians?

Mr. DRAKE. Yes, sir.

Senator MORGAN. Or to anybody else that wants to buy it?

Mr. DRAKE. Yes, sir.

Senator MORGAN. Is there any resolution or order of the railroad directors or of the executive committee that authorizes this purchasing agent to buy coal in the markets of New York or elsewhere, and to sell it to the Isthmian Canal Commission?

Mr. DRAKE. Yes, sir; there is a resolution adopted by the Isthmian Canal Commission; I believe I have the records; that the railroad company should buy all of the coal used by the Commission.

Senator MORGAN. That is the very point I am trying to get at. I want to know what your records show in the direction of authorizing this purchasing agent of the railroad company to buy coal for sale to the Isthmian Canal Commission or to private purchasers.

Mr. DRAKE. He has nothing to do with it, Senator, excepting to issue the proposals and get out the forms under the resolution that that you will find in the minutes.

Senator MORGAN. I am not asking about what he does, but about what his powers are. Where does he get his authority?

Mr. DRAKE. He got his authority to invite bids and proposals from

me.

Senator MORGAN. From you?

Mr. DRAKE. Yes, sir.

Senator MORGAN. Where did you get your authority to invite bids and proposals for coal to be sold to the Isthmian Canal Commission? Mr. DRAKE. My authority was to invite bids for coal to be supplied to the Panama Railroad Company by order of the board of directors. The executive officers not myself particularly, but the executive officers were authorized to invite bids for the supply of coal to meet the company's requirements at the Isthmus for the ensuing twelve months from April 1, 1906, and those proposals were issued some time ago and are to be opened to-morrow, or rather the 25th.

Senator MORGAN. I think you must understand, Mr. Drake, what I am trying to get at. I want to know where the authority came from to anybody, to you or to the purchasing agent or anybody else connected with the railroad to buy coal for the purpose of selling it to the Isthmian Canal Commission or to private dealers on the Isthmus.

Mr. DRAKE. I do not think that there is any authority except that the railroad has been doing it for forty years--selling to any body who wanted to buy coal of it, because it is the only one who has the plant or the means of handling any quantity of coal on the Isthmus, and it has been the source of supply to those who need coal there.

Senator MORGAN. This old practice of forty years, then, is kept up? Mr. DRAKE. Yes, sir.

Senator MORGAN. Without change?

Mr. DRAKE. Yes, sir.

Senator MORGAN. And the railroad company is doing what it used to do-selling coal to the Isthmian Canal Company?

Mr. DRAKE. The French Canal Company used to buy its own coal abroad, except in case of emergency, and then it would buy it from the railroad company; but since the old French Canal Company ceased operations the railroad company has sold all the coal that has been sold on the Isthmus.

Senator MORGAN. Has any order been given to this man, Mr. Walker, who represents the railroad company, and in his character as representative of the railroad company, to buy coal to supply the wants of the Isthmian Canal Commission?

Mr. DRAKE. No, sir.

Senator MORGAN. How do you get the estimates of how much coal they will take?

Mr. DRAKE. Allow me to interrupt for a moment, Senator. You used the name "Walker" inadvertently. You meant Anderson, the purchasing agent?

Senator MORGAN. Yes.

Mr. DRAKE. You used the name Walker inadvertently?
Senator MORGAN. Yes; I meant the purchasing agent.

Mr. DRAKE. We are advised about the sailing of every ship from the Isthmus, and by the same cable we are advised of the quantity of coal they have on hand, and we order forward from the loading point coal in sufficient quantity to keep them supplied, with a minimum quantity on hand. The consumption of coal has increased very rapidly lately, until at times I think they had a minimum quantity of ten or twelve thousand tons on hand, and it is being used at the rate of 75,000 or 80,000 or 85,000 tons a year.

Senator MORGAN. Is the railroad company furnishing coal to the Isthmian Canal Commission on the same terms that it furnished coal formerly to the New Panama Canal Company?

Mr. DRAKE. Oh, very much cheaper, sir; 50 per cent less. It used to furnish the New Panama Canal Company with coal, for instance, at $12 at Panama, and $9 along the line of the road, and $8 at Colon. It is selling it to the present Commission at $5 or less than $5-$4.95about $5 at Colon and $6 along the line of the road.

Senator MORGAN. Before the railroad was turned over to the United States, and the canal also, the railroad company was doing a pretty thriving business selling coal to the canal company, was it not? Mr. DRAKE. It never sold any large amount, sir.

Senator MORGAN. But it sold for heavy prices?

Mr. DRAKE. It sold for higher prices than it is selling for now; yes, sir; very much.

Senator MORGAN. It sold then for about twice as much as you get now!

Mr. DRAKE. Yes; but we did not sell in quantity. We used to order 10,000 to 50,000 tons, and now we order up to 125,000 tons. The canal operations have increased the consumption.

Senator MORGAN. What you are losing in price you are making up in the quantity of the traffic?

Mr. DRAKE. Yes, sir. There is not much profit on it now. We are selling it so cheaply to the Canal Commission that there is no profit.

Senator MORGAN. There is not so much profit to the ton, but there is more in the aggregate?

Mr. DRAKE. There is a great deal more coal, of course.

Senator MORGAN. It is a bigger job and you make more money than you did before?

Mr. DRAKE. In the aggregate-I do not know, sir. I would have to find out about that.

Senator MORGAN. But it certainly must be so?

Mr. DRAKE. Yes, sir; I should judge so.

Senator MORGAN. This purchasing of coal that is done by the purchasing agent in New York is never done for the benefit of the Isthmian Canal Commission?

Mr. DRAKE. No, sir.

Senator MORGAN. It is all made for the benefit of the railroad!
Mr. DRAKE. Yes, sir.

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Senator MORGAN. And then the railroad has the control and ownership of the steamers that carry it down?

Mr. DRAKE. No, sir. At the same time that we make a contract for coal, so as to know what it is going to cost us down there, we make a contract for transportation of all up to the amount we have purchased, so that the combined cost of the coal at the loading point and its carriage to the Isthmus represent the cost of the coal laid down there. So that coincidentally we have invited bids from steamship lines to carry the coal to the Isthmus, and these bids will be opened at the same time that the bids for the coal are opened.

Senator MORGAN. You mean other steamship lines than those owned by the railroad company?

Mr. DRAKE. The tramp steamers carry it. steamers that carry bunk cargo to the Isthmus.

not compete.

Senator MORGAN. They are tramps?

Mr. DRAKE. Yes, sir.

They are all foreign
American ships can

Senator MORGAN. They are the men that can not get the issue of the 25 per cent

Mr. DRAKE. These are heavy cargo boats

Senator MORGAN. I understand. Is that coal bought for delivery in Panama or Colon?

Mr. DRAKE. At Colon.

Senator MORGAN. So that the railroad takes it up and charges freight on it to Panama if it has to go that far?

Mr. DRAKE. Yes, sir.

Senator MORGAN. Or wherever it hauls it to on the railroad?
Mr. DRAKE. Yes, sir.

Senator MORGAN. Which adds an additional charge of so much a ton? Mr. DRAKE. Six dollars we charge to the Commission for it delivered anywhere along the line of the road. Other people at the ports just beyond, the next port to Panama where coal is sold, charge $18 for a very inferior coal. We send down a high-grade coal and sell it for $6 to the Commission.

Senator MORGAN. Under whose direction is this coal purchased? Mr. DRAKE. Under the authority of the board of directors. The executive officers are authorized by resolution

Senator MORGAN. It is purchased under your direction?

Mr. DRAKE. No, sir; I am acting as an executive officer under the resolution adopted by the board of directors.

Senator MORGAN. By the board of directors or the executive committee?

Mr. DRAKE. By the board of directors.

Senator MORGAN. Do they take an account of all the coal purchases that are made?

Mr. DRAKE. They authorize the bids. Under the authority to invite bids the final action for making the award would be reported to the president. My first act after opening all of the bids, both for the coal and for its transportation, would be to have them tabulated, so as to show the results and make a recommendation accordingly.

Senator MORGAN. Has the purchasing agent of the Panama Railroad any standing contracts with coal producers for the purchase of

coal?

Mr. DRAKE. No, sir. The railroad company has had.