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canal from the Atlantic to the Pacific Ocean, to and across the territory of Colombia, such canal to be of sufficient depth and capacity for vessels of the largest tonnage and greatest draft now engaged in commerce, and also the same rights for the construction, maintenance, operation, control, and protection of railway, telegraph, and telephone lines, canals, dikes, dams, reservoirs, and such other auxiliary works as may be necessary and convenient for the construction, maintenance, protection, and operation of the canal.”

Do you remember the date of the organization of the New Panama Canal Company?

Mr. DRAKE. No, sir.

Senator MORGAN. I have it here as an appendix to your former testimony. The precise date of the authority for the organization is not given in the paper attached to Mr. Drake's former deposition, but I will supply it to the committee from other papers that are here as soon as I can lay my hands upon them. It was in conformity, however, to the laws of July 24, 1867, and August 1, 1893. You were in office in the Panama Railway Company at that last date, August 1, 1893 ?

Mr. DRAKE. Yes, sir.
Senator MORGAN. And had been for some time before?

Mr. DRAKE. I do not know that I held an official position. I was a director at that time.

Senator MORGAN. You were a director?
Mr. DRAKE. Yes, sir.

Senator MORGAN. As a director you had knowledge of the fact that the New Panama Canal Company had become the owner of the railroad!

Mr. DRAKE. If there was a transfer made at that time—I do not recall that there was—if there was a transfer made at that time I must have known of it.

Senator MORGAN. Do you not remember as important a fact as that in respect to the destiny of your railway-as important a fact as the ownership of it being transferred entirely from the old to the new company?

Mr. DRAKE. I know that at some date the New Canal Company came into the possession of the Panama Railway Company, but I can not fix it in my mind, sir.

Senator MORGAN. That was the date of the organization of the new company, was it not?

Mr. DRAKE. I do not know, sir.
Senator MORGAN. Under the French court?
Mr. DRAKE. I do not know, sir.

Senator MORGAN. I want to call attention now to one or two provisions in this charter which was granted by the French company. [Reading:]

“The present corporation shall become owner of the property and rights hereby ceded and contributed on and from the day when it shall have been finally constituted; except, however, what is to be stated hereinafter in regard to the Panama Railroad.”

That is in article 3 of the charter, as I call it, of the New Panama Canal Company.

“These cessions and contributions are made by Mr. Gautron under the following reservations and provisions, namely:"

I turn to the third provision and read it:

“The rights of every nature on the Panama Railroad belonging to the liquidation and contributed by Mr. Gautron under section 4 of this article shall become vested in the present corporation”

That is, the new corporation

“ From the day of the meeting, the convening of which is provided for under article 75 hereinafter, without any pecuniary consideration, but under the resolutory proviso that the canal shall be completed within the time stipulated in the act of concession. Should the canal not be completed within the said time, the said rights would revert to the liquidation.

“If, contrary to expectation, the above-mentioned meeting should not make the requisite provisions for the completion of the canal, or, if the provisions made by the meeting could not be carried out, the said rights on the railroad would remain the property of the present corporation, but the latter would be held to pay to the liquidation a sum of 20,000,000 of francs by way of indemnity, and the share in the profits allotted to the liquidation would be one-half of the profits of the present corporation, and no amount shall be set aside out of such profits except those provided for in paragraphs 2 and 3 of article 51 hereinafter.

" In consequence the said rights shall remain inalienable in the possession of the new company until the said sum of 20,000,000 francs shall have been paid, or until the canal shall have been entirely completed."

Then I read from article 6:

“Art. 6. The corporate stock is fixed at 65,000,000 francs, divided into 650,000 shares of 100 francs each.

“Out of these 650,000 shares, 50,000, entirely free from any liability, shall be allotted to the Government of the United States of Colombia in conformity to the extension law of December 27, 1890, as stated in the foregoing article.

"As to the remaining 600,000 shares, they shall be subscribed to in cash.

“The corporate stock may be increased once or from time to time by a resolution of the regular general meeting and on the motion of the board, by means of additional shares."

Were these provisions of the charter of this new company ever called to the attention of the board of directors of the New Panama Railroad Company?

Mr. DRAKE. No, sir.
Senator MORGAN. They took no action upon it at all ?
Mr. DRAKE. Not the slightest.

Senator MORGAN. So that when these changes took place by transfers of this stock back and forth between the liquidators of the old company and the new coinpany that was all the indication you had of a change of ownership?

Mr. DRAKE. Yes, sir.

Senator Morgan. And the company was not called upon to consent to it in any way at all?

Mr. DRAKE. No, sir.

Senator Morgan. You will notice the provision here that the railroad was transferred to the new company, and was to be inalienable in their hands, and that if at the end of the period fixed for the construction of the canal it was not constructed, or if for any other reason the canal was not constructed, then the New Panama Canal Company

had the right to buy the interest of the old Panama Canal Company in the railroad for 20,000,000 francs, which was about $5,000,000. Has the new company ever been a party in any way, within your knowledge, to any payment to the liquidator of the old company of that 20,000,000 franes?

Mr. DRAKE. I have no knowledge on the subject at all, sir.
Senator MORGAN. You have no knowledge on the subject?
Mr. DRAKE. No, sir.

Senator MORGAN. Your books do not show any transaction of the kind?

Mr. DRAKE. Not in any way, sir.

Senator MORGAN. So that the New Panama Canal Company, under these prescribed regulations, became the absolute owner of the railway and all of its belongings at the time when it was determined between Colombia and the United States and the Panama Railroad Company that the property might be sold to the United States, if it was sold, and when it was sold?

Mr. DRAKE. You said "the Panama Railroad Company." You meant the Panama Canal Company?

Senator MORGAN. Yes; the Panama Canal Company. Do you know anything about that?

Mr. DRAKE. Not at all, sir.

Senator MORGAN. And you were still a director, during all this period, in the railway company?

Mr. DRAKE. In the railroad company; yes, sir. The only knowledge that I would have in any way of any effect of any such negotiations would be by the transfer or retransfer of the stock, which is a matter of record.

Senator MORGAN. Yes. So that all the stock that belonged to the liquidator, and all of this railroad property of every kind, according to this provision, remained in the New Panama Canal Company as between it and the old company. It was made inalienable, and remained there. Now, if that is so, have you any conception of any reason why this stock that represented the ownership of the company was transferred back and forth between the old company and the new?

Mr. DRAKE. I have not, sir; I have not the slightest. Senator MORGAN. You have no knowledge on the subject ? Mr. DRAKE. I have not the slightest knowledge on the subject Senator MORGAN. And you are a railroad director? Mr. DRAKE. I am a railroad director; yes, sir. Senator MORGAN. And have been all the time? Mr. DRAKE. All the time, sir. Senator Morgan. And your company has taken no action upon it whatever?

Mr. DRAKE. Not the most remote. The directors have served as elected by the proxies of the owner of the stock, and have bad control of the direction and operation of the railroad company, without the slightest knowledge of the affairs of the canal company. Mr. Boyard, of course, was their representative.

Senator MORGAN. During the times that these transactions were taking place, and while you were a director, have you any recollection of any transaction at all in which the demands or requests of the old Panama Canal Company or the New Panama Canal Company, as they

alternately held the stock, were refused to be complied with by your board of directors?

Mr. DRAKE (after a pause). I have an indistinct recollection of one occasion when the views of the directors were opposed to the views of the stockholders, as expressed to us, but what it was I can not tell.

Senator MORGAN. The views of the directors of the railroad were opposed to the views of the stockholders?

Mr. DRAKE. They were opposed to the views of the stockholders.

Senator MORGAN. One of these companies, either the old or the new, being at that time the owner of the stock, or holding the stock?

Mr. DRAKE. Yes, sir.
Senator MORGAN. Do you recollect the subject that that related to?
Mr. DRAKE. I do not, sir. If I did-

Senator MORGAN. Well, which prevailed, the directors or the canal company?

Mr. DRAKE. I do not recall that, sir. It was not an important matter.

Senator MORGAN. It was not an important matter?

Mr. DRAKE. No, sir; as I remember it. In answering your question, I remember that there was a time

Senator MORGAN. Mr. Bovard during all this time was the representative of one company or the other, whichever the ownership of the stock happened to be in?

Mr. DRAKE. Yes, sir.

Senator MORGAN. Did he hold consultations with the board of directors?

Mr. DRAKE. About railroad affairs?
Senator MORGAN. Yes.

Mr. DRAKE. He was a director of the railroad, and participated in their deliberations.

Senator MORGAN. He was a director of the railroad also ?
Mr. DRAKE. He was also a director of the railroad.

Senator MORGAN. And therefore had full access to all of its meeting and all of its workings?

Mr. DRAKE. Oh, yes, sir; he was a member of the executive committee.

Senator MORGAN. He was a member of the executive committee also?

Mr. DRAKE. Yes, sir.
Senator MORGAN. Along with Mr. Cromwell?
Mr. DRAKE. Yes, sir.

Senator MORGAN. Now, is it not a fact that Boyard, in whatevers capacity he acted, whether as proxy for the old canal company or proxy for the new canal company, tixed the policy of the railroad company?

Mr. DRAKE. No, sir.

Senator MORGAN. In what instance was he denied that opportunity or privilege?

Mr. DRAKE. He would be denied it persistently and constantly by an intelligent board of directors. He would communicate the views of the stockholders-he might do that, if it was necessary or advisable for him to do so; and the directors would exercise their judgment and decision in doing what they thought best.

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Senator Morgan. Can you give an instance now, from your recollection, when the railroad board of directors went against Boyard's request or demand?

Mr. DRAKE. No, sir; I can not.

Senator MORGAN. How do you know the fact, then, if you do not remember an instance in which it occurred ?

Mr. DRAKE. Because I know the character of the board and I know the character of their deliberations.

Senator MORGAN. That is all you know about it, is it?
Mr. DRAKE. Yes, sir.

Senator MORGAN. You know that the character of the board was such that they would resist anything that they did not like from Bovard?

Mr. DRAKE. Anything that seemed like dictation; yes, sir.

Senator MORGAN. But you do not remember any instance in which Boyard made any suggestion or request?

Mr. DRAKE. No, sir.

Senator MORGAN (continuing). To the board of directors, in which he was thwarted ?

Mr. DRAKE. No, sir.

Senator MORGAN. This railroad company and railroad property was practically in the ownership of the canal companies, whether it was Gautron as the liquidator of the old company, or whether it was the president or the managing agent, or whoever he might be, of the new company?

Mr. DRAKE. Yes, sir, if they owned the stock; as owners of the stock-whichever one of them was the owner of the stock.

Senator MORGAN. That sixty-eight thousand and odd shares controlled the destiny and the operations of the railway company?

Mr. DRAKE. By the selection and election of the board of directors; yes, sir. By voting their stock they would elect the board of directors, and so have representative directors in the stock control, exactly as the position is to-day.

Senator MORGAN. Did you not consider yourself, as one of the directors of that railroad, as being a director of a property that was owned, according to the transfers of stock, either by Gautron as liquidator, or by the New Panama Canal Company, whichever it might be!

Mr. DRAKE. Yes, sir.

Senator MORGAN. And was not the request of Mr. Gautron or his demand upon the railway company equivalent to that of a stockholder in a meeting?

Mr. DRAKE. Not except at a stockholders' meeting, sir, when & stockholder holding one share is all-powerful. Once the board of directors was elected the control of the operation of the railroad was vested in that board.

Senator MORGAN. If such a man as Gautron, who appears, according to your statement, to have owned one share for the purpose of qualifying himself personally to be a director in that company, at the same time received a mandate from a stockholder that owned sixtyeight thousand and odd shares out of 70,000, would he regard the mandate of the ownership of the railroad to that excessive extent over bis holdings as being equivalent to the mandate of a stockbolders' meeting!

Mr. DRAKE. If a man were elected by such a majority he would undoubtedly be a representative director. He would be an independent

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