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Senator MORGAN. Now, give the date of the contract with Cramp. What is the date of that contract with Cramp?

Mr. DRAKE. November 13, 1903.

Senator MORGAN. Did you pay Cramp any money on account as he went along with that work?

Mr. DRAKE. Yes, sir.
Senator MORGAN. Give the date of payment and the amounts.
Mr. DRAKE. I can not do that now, sir. I can get that for you.

I will have to get copies of that. Do you want me to get them? I want to make a memorandum of it, if

Senator MORGAN. Yes; I want you to get it. What payments were called for in that contract? What are the dates of payment called for in that contract?

Mr. DRAKE. The contract was conditioned upon our paying them as work

progressed in bonds, and it stipulated that we would make them cash advances on those bonds, they depositing the bonds with us from time to time, so that they might carry on the repairs. The payments that we first made to them from time to time were cash loans on the bonds, on which they paid us interest, and the final adjustment was made in August, 1904. I am going to get the dates of all of those.

Senator MORGAN. And the bonds were $200,000?

Mr. DRAKE. Two hundred thousand dollars; yes, sir. When the repairs were completed, it was found that they cost $370,000; something like $373,000 and something. We had in our books, in our current assets, a depreciation fund amounting to $102,000, which we had accumulated and put by for just such repairs. We applied $102,000 of that depreciation fund to the cost of these repairs and sold $265,000 of bonds to pay the balance.

Senator MORGAN. Let us get at that depreciation fund a moment. Was it kept in cash or on paper?

Mr. DRAKE. In cash. It was a regular contribution from earnings monthly, and was kept in cash, at interest, in the trust company.

Senator Morgan. And you resorted to that for that payment of how much?

Mr. DRAKE. Of $102,000 on account of the repairs. We applied it to that.

Senator MORGAN. When was that contribution made!
Mr. DRAKE. At the time of the settlement.
Senator MORGAN. In August, 1904?

Mr. DRAKE. Yes, sir. At the time of the settlement of their accounts. I will present the vouchers here.

Senator MORGAN. You then had that fund there and you resorted to that?

Mr. DRAKE. Yes, sir; and sold $265,000 of bonds for the balance.

Senator MORGAN. At that time that fund belonged to the United States, did it not, as the chief stockholder?

Mr. DRAKE. Yes, sir.
Senator Morgan. What you call the depreciation fund?
Mr. DRAKE. Yes, sir.

Senator MORGAN. Then, having put in deposit with Mr. Cramp at the time that contract was made $200,000 of bonds

Mr. DRAKE. From time to time we emitted bonds to that extent to them. They were not all given at once, but they were given as the work progressed.

Senator Morgan. They were delivered as the work progressed?

Mr. DRAKE. Yes; at different times a certain number of the bonds were given in payment. I will read the contract.

Senator Morgan. I shall have to put it in evidence, I see, but I want a little explanation of it before it is put in. I do not want you to read it now.

The contract was, then, that you were to put up $200,000 of bonds, from time to time, as the work progressed, and that you had the privilege of redeeming them? Mr. DRAKE. Yes. sir. Senator MORGAN. That, then, was not a payment of the bonds? Mr. DRAKE. Will you let me read this [referring to contract)?

Senator MORGAN. Please follow me, if you will. I am so dull that I can not do two things at once, as you can.

You commence, then, giving the bonds out on this arrangement under the right of redemption!

Mr. DRAKE. Yes, sir.
Senator MORGAN. And then upon that you make cash payments ?
Mr. DRAKE. Cash advances.
Senator MORGAN. Well, advances.
Mr. DRAKE. Yes, sir.
Senator Morgan. Upon which you would charge him interest?
Mr. DRAKE. Yes, sir.

Senator MORGAN. So as to keep the accounts in balance? The bonds were drawing interest?

Mr. DRAKE. Yes, sir.

Senator MORGAN. And you charged the same rate that was in the bonds?

Mr. DRAKE. Yes, sir.

Senator Morgan. So as to keep the bookkeeping all right. You went on that way until $200,000 of bonds were put in?

Mr. DRAKE. Yes, sir.
Senator MORGAN. When was the last of those bonds put in?
Mr. DRAKE. I will get the dates of the payments.
Senator MORGAN. In August?
Mr. DRAKE. Prior to August, 1904.

Senator MORGAN. And not until then. Yes. So that when this property was turned over to the United States Cramp held those bonds. Have they ever been taken up!

Mr. DRAKE. Yes, sir.
Senator MORGAN. Taken up by the company?

Mr. DRAKE. They were taken up and sold; $265,000 of bonds were sold.

Senator MORGAN. By whom?
Mr. DRAKE. In the open market.
Senator MORGAN. What for?
Mr. DRAKE. To raise the money to settle the account with Cramp.
Senator MORGAN. How many were sold?
Mr. DRAKE. Two hundred and sixty-five thousand dollars.

Senator Morgan. What became of the money you had been paying Cramp all this time? Was that the balance?

Mr. DRAKE. That was deducted from the amount due them. They paid their cash loans.

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Senator MORGAN. When you came to make a settlement with Cramps

Mr. DRAKE. We charged them with the money that had been loaned them.

Senator MORGAN. You answer a question before I can get it out. When you came to make a settlement with Cramp, you paid him $265,000?

Mr. DRAKE. No, sir.
Senator MORGAN. How much?
Mr. DRAKE. We paid him the balance due him.
Senator MORGAN. How much was that?
Mr. DRAKE. I do not know, sir. I shall have to find it.

Senator MORGAN. You do not know what the balance was that was due, then?

Mr. DRAKE. No, sir; because I do not know what the dates or amounts of payment were.

Senator MORGAN. What fund did you pay that out of
Mr. DRAKE. We paid it out of the proceeds of the sale of the bonds.

Senator MORGAN. So that you sold $265,000 of those bonds that you had left in Cramp's hands to raise the money to pay him for repairing those ships?

Mr. DRAKE. Senator, I am sorry if I can not make myself plain. Senator MORGAN. Well, you certainly can not, if

Mr. DRAKE. The contract called for hypothecating, or rather for the payment of $200,000 of bonds

Senator MORGAN. I think you had better stick to that word “hypothecating:

Mr. DRAKE. No, sir. That was a mistake, and I do not want to stick to a mistake. They hypothecated the bonds with us. We paid them $200,000 in bonds. We made delivery and cash advances on those bonds while they held them. When we came to settle their account, the total cost of the repairs, of the $370,000, we applied $102,000 of the depreciation fund for steamers, and we sold the $200,000 of bonds that we had taken up from the Cramps, and $65,000 more of bonds, making $265,000 in all, to raise the necessary money to pay the whole amount of $370,000 due to the Cramps.

Senator MORGAN. Now I think we understand it. Therefore, when we took over those ships, we took them over with a debt which finally amounted to $265,000, which you sold bonds to get the money to pay?

Mr. DRAKE. Yes, sir.
Senator MORGAN. That is the fact?
Mr. DRAKE. Yes, sir.
Senator MORGAN. Did Cramp buy the bonds?
Mr. DRAKE. No, sir.
Senator MORGAN. Who has got them now?
Mr. DRAKE. They were sold to the public, and are outstanding.

Senator MORGAN. Where had these bonds been kept before you sold them?

Mr. DRAKE. In the care of the committee of securities of the company.

Senator Morgan. Had they ever been issued to the public?

Mr. Drake. They were in the treasury of the company. There is a question about what you would call issued to the public. They were

issued, bonds up to the full extent of the authorized issue, 4,000 bonds. Of that 4,000 bonds a certain number were sold when we retired the 7 per cent sterling. A certain additional number were sold when we paid the contractors who had built the La Boca wharf. The balance were in the company's treasury. And of that balance, $265.000 were sold to pay Cramp & Sons. Of the balance that have not been redeemed by drawing, there are 628 in the company's treasury now.

Senator MORGAN. These are amongst the bonds that were subject to be drawn and paid on the drawings--they were that class of bonds ?

Mr. DRAKE. I do not understand the question, Senator.

Senator MORGAN. There were certain bonds there that you owed; that you put in circulation that were subject to redemption

Mr. DRAKE. Yes, sir.
Senator MORGAN. These are of that class?
Mr. DRAKE. All of the issue are subject to redemption.
Senator MORGAN. They are of that class?
Mr. DRAKE. Yes, sir.

Senator MORGAN. Were those bonds ever before in circulation, hav ing been sold by the company—those that you sold in order to get the money to pay the Cramps?

Mr. DRAKE. No, sir.

Senator MORGAN. They had been all the time in the treasury of the company?

Mr. DRAKE. Yes, sir.

Senator MORGAN. What resolution of the board authorized the sale of those bonds? Please refer to it.

Mr. DRAKE. I ink that will be another case where the action of the executive committee was approved by the board.

Senator MORGAN. I am afraid so. I am afraid it is, but I want to find out.

Mr. DRAKE (after looking through book of minutes). I do not see it specifically stated in this minute book.

Senator MORGAN. Then, there is no record of any order by the board of directors of the Panama Railroad Company for a sale of those bonds?

Mr. DRAKE. There is a record of the approval of the acts of the executive committee.

Senator MORGAN. There is no record, though, on your minutes? Mr. DRAKE. I do not see any; no, sir.

Senator MORGAN (continuing). By the company authorizing the sale of those bonds. I wish to ask you in regard to all this transaction, beginning with that contract with Cramp

Mr. DRAKE. I would like to answer that last remark that you made, Senator, if I may.

Senator MORGAN. Yes.

Mr. DRAKE. I say there is an official record of the authority to sell the bonds. It is not in this book.

Senator MORGAN. That is the book of the railroad company?
Mr. DRAKE. This is the minute book of the board of directors.

Senator MORGAN. I say, of the board of directors of the railroad company.

Mr. DRAKE. The book shows that they approved the action of the executive committee. This book shows that.

Senator MORGAN. I am not going to take your answer upon that other book until you produce the record to show it. I want to see it before I take that as being established.

From the time that that contract was made with Cramp down to the time of the settlement of this transaction, in September, 1904, your minutes do not show what the transaction was?

Mr. DRAKE. This book of minutes does not.
Senator MORGAN. That book of minutes does not?
Mr. DRAKE. No, sir.
Senator Morgan. Those are the minutes of the railroad company?
Mr. DRAKE. This is the minute book of the board of directors.
Senator Morgan. Of the board of directors of the railroad company?
Mr. DRAKE. Yes, sir.

Senator MORGAN. All the transactions in regard to that business were in the hands of the executive committee, and whatever is shown by their records is what took place in these transactions, and it is not shown anywhere else?

Mr. DRAKE. Yes, sir.

Senator MORGAN. Now, who comprised that executive committee during this period of time?

Mr. DRAKE. J. Edward Simmons, William Nelson Cromwell, Vernon H. Brown, Edward A. Drake, Xavier Boyard, during part of the time; and J. Edward Simmons, William Nelson Cromwell, J. H. Parker, Vernon H. Brown, William Barclay Parsons, and Edward A. Drake during the balance of the time.

Senator MORGAN. When did Mr. Parsons come into that executive committee?

Mr. DRAKE. In August, I think, sir. I ought to have these things on the end of my tongue, but I do not pretend to remember them.

Senator Morgan. If you get it from the books, that will be satisfactory to me.

Mr. DRAKE. Yes, sir. Senator MORGAN. Can some one give me the date of the ratification of the Hay-Varilla treaty.

Senator KITTREDGE. The 23d of February, 1904. Senator MORGAN. At what time was it dated? Senator KITTREDGE. It was negotiated in November, 1904. Senator MORGAN. On the 17th, was it not? Senator KITTREDGE. I think so; I am not quite sure. Mr. DRAKE (reading from minute book). At the meeting of October 13, 1904, the President announced to the board, under the authority given him by amended article 8, the appointment of William Barclay Parsons as a member of the executive and finance committee.

Senator MORGAN. This transaction with Cramp had been closed before that?

Mr. DRAKE. Yes, sir.

Senator MORGAN. Why did you put Parsons in as one of the members of the executive committee while this transaction was current?

Mr. DRAKE. I gave you the directors of the two years 1903 and 1904.

Senator MORGAN. I was not running by years; but about the date of the making of the Cramp contract and the date of the final settlement of it Mr. Parsons was not one of the executive committee?

Mr. DRAKE. No, sir.

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