Mr. RICE. Yes.

Mr. RICE (of the committee). And the Panama Railroad Company is chartered by what government?

Mr. RICE. I believe it is represented that the company holds its charter from the Government of Colombia; but how can a company hold a charter under one government and be organized under the laws of another government? As a matter of fact it does not hold its charter from the Government of Colombia. It only has a concession, and there is a very clear distinction between a concession and a charter.

Mr. RICE (of the committee). Is there anything from the New Granada Government beyond the concession made to individuals originally?

Mr. RICE. I think that that concession has been ratified.

Mr. RICE (of the committee). By the legislature of New Granada?

Mr. RICE. I think it has been ratified by the legislature and President of Colombia. The CHAIRMAN. New Granada is a State, and this company has only a State concession, not a national government concession?

Mr. RICE. I think it is a concession from the Republic of Colombia. Mr. de Lesseps showed me the papers, signed by the President, I believe. Everything was in due form. We all know that the concession has been made, and that the Colombian Government is very much in favor of the project. I do not pretend to have any further interest in the matter than merely as an American. I am against encroachment in America on the part of any foreign power. It seems to me that the great object of Mr. Crapo's resolution is to bring out the attitude of the French Government, for, although we hear that the French minister says that the French Government has no connection with the Panama Canal project, I do not believe that any official correspondence has passed on the subject. Judging by the letters which I have received from France, I do not understand that the action of the French Government has been straightforward toward our envoy.

The CHAIRMAN. Suppose that Congress passes this joint resolution, what effect would its passage have on Mr. de Lesseps and his friends?

Mr. RICE. It might have the effect, and supposably would have the effect, of calling forth certain remonstrances on the part of the French Government with Mr. de Lesseps; and if it did not bring that result, it would have the ultimate effect of keeping subscribers to the Panama scheme from going much farther into it.

The CHAIRMAN. Have you any information from Mr. de Lesseps, or from anybody else, as to what would probably be done in the event of the United States protesting against the Panama Canal?

Mr. RICE. Yes; I have always understood Mr. de Lesseps to say that he considered the matter entirely outside of the province of the United States, and that no regard would be paid to the interference of the United States. I believe that that is the general policy.

Mr. HILL. Did not Mr. de Lesseps disclaim any idea of French control over the canal in the event of its construction?

Mr. RICE. I think that Mr. de Lesseps' natural tendency would be to disclaim it, but the question is whether the French Government will never lay claim to control under given temptations. But if the company is organized under French law it is not, I think, for Mr. de Lesseps to state what would be the action of the French Govern

ment.

Mr. HILL. I understood that de Lesseps utterly disclaims any idea of the French Government having any control over the canal.

Mr. RICE. That may be. But it is not likely that he should be empowered to make any official and satisfactory declaration on the subject. I do not doubt for a moment that the French Government would be forced by the passage of this joint resolution to some written and public declaration, and then we should have at least plainer sailing.

VIEWS OF MR. CRAPO.

Mr. CRAPO suggested that as Captain Phelps was present, he might be able to give the committee some information as to the concession for the Panama Canal, and that he could also give figures and statistics as to the influence of an interoceanic canal upon American commerce. He went on to say:

The point of my resolution primarily was this: I had assumed that at some time and somewhere, an interoceanic canal would be constructed. The United States Government has been at work for the last forty years on surveys for an interoceanic canal. That work was pressed with considerable vigor prior to the war, but during the war, of course, the matter slumbered. After the war it was again renewed.

During the administration of President Grant the surveys went on with earnestness on the Panama route, the Nicaragua route, and other routes. The matter was pressed with so much vigor that it finally attracted the attention of the French Government. That government thought that it had some interest in the Latin part of America, as it

is called, and that it would step in and have something to do with the direction or control of it. That idea led to the assembling of the congress of engineers at Paris; and from that time the French people, and the French Government, seem to have assumed that the work of opening an interoceanic canal has devolved upon them, and that it should be done under French auspices, and, to a certain extent, under French control. It seemed to me that the simple organization of a company under French law (whether by a special charter, or under the general law of France) was an evasion of the matter. It seemed to me that the commerce of our own country required that we should have some control, if not ownership, of the canal, and that if we allowed foreign individuals to go on and obtain a control of it we should in a few years find ourselves perhaps in the same position as the English Government found itself with reference to the Suez Canal. That government found itself compelled to purchase a controlling interest in the Suez Canal, so as to be able to control its commerce with its Indian possessions. The United States Government would hardly be willing to do the same thing, but it may secure its purpose practically by having the organization and control of the company under an American charter, so that the United States can control its use and its tolls, because the products of the United States have got to pay a large part of all the tolls that will be paid to this canal company. Therefore the United States should have something to say as to whether the tolls shall be high or low. Now, the national idea is that we shall control whatever there is on this hemisphere; but, independently of that, I think that the commercial importance of an interoceanic canal, as affecting the relations between our Atlantic and Pacific coasts, is so great as to require this action on the part of Congress.

Mr. RICE (of the committee). Do you think that the Clayton-Bulwer treaty would interfere in any way with our ability to go forward and assume the control (as you suggest) of any corporation that should build any interoceanic canal?

Mr. CRAPO: No; I do not think it would. I cannot see anything in the ClaytonBulwer treaty that would interfere with our chartering a canal company, and having the control of it. The Clayton-Bulwer treaty, if it be in force, and if it is not so indefinite as to have become abrogated (because it was not clearly enough stated to become a treaty at all), only requires of us that we shall not discriminate against England.

Mr. RICE. Do not the contracting parties to that treaty covenant that neither will acquire any domination or control over any interoceanic canal which the other does not share in on equal terms? Now, if I understand it, our complaint against de Lesseps' project is that it is being carried forward under a French corporation, chartered by the French Government, whereby the French Government has acquired or assumed a domination or control over that project. Now, should we not be assuming domination or control in the same sense by chartering a corporation to build any canal across the Isthmus, which we are complaining against the French Government for having done? Are we not hampered in so doing by the terms of the ClaytonBulwer treaty? It may be, as you say, indefinite and vague, but still it exists, and it is claimed by the English Government perhaps that it means one thing and by our government perhaps that it means another thing, although I think that all these doubts have been removed, and that there is no difference of opinion at present between the two governments as to what it means.

Mr. CRAPO. I think that on general principles the Clayton-Bulwer treaty ought to be abrogated. I think it was a very foolish treaty and one that ought not to have

been made.

Mr. RICE (of the committee). But until it is abrogated

Mr. CRAPO. It has occurred to me that the English Government would not have any just cause of offense against our government if the English commerce had the use of the canal on the same terms as our own commerce-if there was no discrimination made against England.

Mr. RICE. (of the committee). If we should go forward and negotiate with the English Government to join with us in our action in the de Lesseps scheme, the English Government of course might have no objections to do so; but would that be good policy on our part, and is that what your resolution contemplates?

Mr. CRAPO. My resolution does not contemplate the favoring of any canal route. It does contemplate putting the stamp of disapproval and disapprobation upon any canal scheme that is under the auspices of a foreign government. That surely is in accordance with the Clayton-Bulwer treaty. The passage of the joint resolution certainly cannot interfere with the Clayton-Bulwer treaty. It is in full harmony with it. The English Government, I think, would join us in saying that the French Government shall not have control of an interoceanic canal, and then the English Government may say, we will keep (as we agreed to) outsiders out, and we will come together and act in this matter together under the Clayton-Bulwer treaty.

Mr. RICE (of the committee). Under the Clayton-Bulwer treaty England stands with us against the de Lesseps scheme, but does England stand with us on the terms of this joint resolution, namely, "That the construction of an interoceanic canal

connecting the waters of the Atlantic and Pacific by means of foreign capital under the auspices of, and through a charter from, any European government is hostile to the established policy of the United States, and cannot be sanctioned or assented to by this government." Does the English Government stand with us in that? Mr. CRAPO. The Clayton-Bulwer treaty is hostile to the policy of the American idea. Mr. RICE (of the committee). It unites England with us against the de Lesseps scheme, but it goes no farther. Now, supposing the Clayton-Buiwer treaty abrogated to-morrow, we should then be left alone, not only against the de Lesseps scheme, but against any similar foreign scheme; and if France would go forward against our opposition (disunited from that of England) to superintend and control the construction of this Panama Canal, we should also have to prevent England from sending her navy and taking possession of the strong points of the Isthmus anywhere that she chose, with a view to further operations in her own behalf. Is not that where the abrogation of the Clayton-Bulwer treaty would leave us? Mr. CRAPO. Perhaps that may be so.

The CHAIRMAN. What is your opinion as to whether the Clayton-Bulwer treaty is consistent with our exclusive protectorate over any canal or railroad across the Isthmus?

Mr. CRAPO. I hardly think it is. I am heartily in favor of the abrogation of that treaty, and I think that the report of this committee in favor of abrogating that treaty was wise action. I think that Congress ought to take that step.

VIEWS OF MR. S. S. PHELPS.

Mr. CRAPO suggested that Mr. Phelps was present and could present some information to the committee.

Mr. RICE (of the committee). It is scarcely within our province to hear the merits of any special route discussed.

The CHAIRMAN. The only thing before us is this joint resolution of Mr. Crapo's on the application of the Monroe doctrine.

Mr. PHELPS. The question seems one entirely relating to international affairs, and not as to which canal project is the best or most economical. It seems to me that it reaches far beyond the Monroe doctrine. It does involve that, but it involves, further, the right of every nation to protect its own interests. If you look at the map there (indicating) you will see the great circle that we have to make around South America in order to get to our Pacific possessions. Observe that narrow isthmus there, where either of these canals is to be constructed, and you will see that the piercing of the isthmus will make North America and South America islands. Our Atlantic coast reaches almost to this isthmus, and our Pacific coast comes down still farther. We have on either side 3,000 miles of coast line, for which this canal will be, in fact, a connecting link. The canal will be nothing more nor less than an extension of this coast to the Isthmus. In Europe we see (indicating on the map) the Black Sea surrounded by Russian, Turkish, and Austrian territory, and yet Europe, for her own interest, closes that sea against our men-of-war. So that, if we wish to enter the Black Sea (although it is one of the high seas of the world) we must obtain permission, and have to wait 48 hours before our ships can pass the Dardanelles. Now it seems to me that when a canal is opened through this Isthmus we have the same right to exercise authority over it and to protect ourselves that Europe claims over the Black Sea. This canal would change entirely the aspect of the question of the defense of our Pacific coast possessions. We are not, by any means, one of the great_naval powers of the world, and if that canal were in the control of any naval power, that power would have a highway to the Pacific coast, and could close it against us and drive us entirely away from it. With that canal in the hands of our friends, our Pacific possessions can easily be defended, even against superior naval forces.

Mr Crapo has desired me to make some statement in regard to the Panama concessions. The first of them is the Wyse concession-from the United States of Colombia (not from the State of New Granada) to Lucien N. B. Wyse.

The CHAIRMAN. Who is Mr. Wyse?

Mr. PHELPS. Mr. Wyse is a lieutenant in the French Navy. He was sent out to Panama, nominally at the head of a scientific surveying expedition, got up by a society of seven persons in Paris, just prior to the opening of the Paris canal congress. The CHAIRMAN. What were Mr. Wyse's relations to the French Emperor? Mr. PHELPS. He was a cousin of the Emperor. An association was then entered into under which the concession was to be transferred for $2,000,000 to a canal company. In his experience with the Suez Canal, de Lesseps had found that a toll of 10 francs a ton on the regular tonnage of shipping did not pay very well, so a new concession was prepared, to be obtained either from New Granada or from the United States of Colombia, by which the tolls were to be made satisfactory to the company. The clauses in regard to tolls were therefore altered, so as to read:

"3d. The principal navigation dues to be collected shall not exceed the sum of ten francs for each cubic meter resulting from the multiplication of the principal dimensions of the submerged part of the ship in transit (length, breadth, and draught). "4th. The principal dimensions of the ship in transit, that is to say, the maximum exterior length and breadth at the water-line, as well as the greatest draught, shall be the metrical dimension inserted in the official clearance papers, excepting any modifications supervening during the voyage. The ships' captains and the company's agents may demand a new measurement, which operations shall be carried out at the expense of the petitioner; and,

5th. The same measurement, that is to say, the number of cubic meters contained in the parallelopipedon circumscribing the submerged part of the ship, shall serve as a basis for the determination of the other accessory dues."

That mode of measurement gives, in the case of a steamer, a good deal more than the weight of steamer and cargo and everything on board of her-50 per cent. more. Another clause provides:

"Special dues for navigation shall be reduced in proportion to the excess when the net profits derived therefrom shall exceed 12 per cent. of the capital employed in the enterprise.'

It is not the tolls that are to be reduced. The ten francs a ton (equivalent to 40 francs per ton carrying capacity) is not to be reduced. It is the special dues that are to be reduced-the dues for towage, for harbor, for anchorage, and various other charges of that kind.

There is another feature about the concession which is rather peculiar.

"ART. 17. The ships which shall infringe upon the rules established by the company shall be subject to the payment of a fine which said company shall fix in its regulations, of which due notice shall be given to the public at the time of the issue of the tariff. Should they refuse to pay said fine, nor furnish sufficient security, they may be detained and prosecuted according to the laws. The same proceedings may be observed for the damages they may have caused."

There is no reference provided to the Colombian Government, no supervision at all on the part of the Colombian Government. It is the company that is to fix the fines and the amount of damages. The company itself is to be the judge and is to enforce its decrees.

I saw yesterday, in the Baltimore Sun, an interview with Mr. Thompson, in which he said that the Panama Canal Company had a charter from the Government of Colombia. If you read the concession on page 84 of Senate Ex. Doc. No. 112, you will find that it is in no sense a charter. It is a concession; a right to build a canal. Mr. RICE (of the committee). A company issuing stock must have a corporate existence under some jurisdiction.

Mr. RICE. Under what jurisdiction is it acting in that respect?

Mr. PHELPS. Under that of France.

Mr. RICE. Have you any information as to the articles of the charter?

Mr. PHELPS. No, sir.

Mr. RICE. You do not know whether it is under a general law or under a special charter from the French Government?

Mr. PHELPS. I do not.

Mr. RICE. Would the bankers in this country, who undertook to place a portion of the stock here, not be able to inform the public with whom they are dealing what are the provisions of the charter under which the stock is issued?

Mr. PHELPS. I presume they may be.

Mr. HILL. Would not the late Secretary of the Navy be able to inform us?
Mr. PHELPS. I should suppose so.

the terms of the charter.

ness.

At all events I have not been able to find out

Now the question arises as to what are the national interests involved in this busiThis canal is to be the outlet for the trade of our Pacific Coast-the outlet for its agricultural products. These products must reach the Atlantic. Now they go around Cape Horn. The freight on wheat is, at present, as high as £3 178. and £3 198 a ton, which is at the rate of 50 or 55 cents a bushel. The voyage around the Horn is several months in duration. The insurances are high and the liability of damage to the grain carried is very considerable. These charges weigh very heavily on the general interests of the Pacific coast. Those interests are not developed because it is very difficult and tedious for European immigrants to reach the Pacific coast. Few of them can pay the expense of transit across the Atlantic, and after they land in New York there is still a long railway journey before the immigrant can reach the Pacific coast, so that only about fourteen thousand immigrants reach the Pacific slope in the course of a year. The canal that is to be opened across the Isthmus will be the highway of immigration to the Pacific States, and ships leaving Europe will carry

passengers to the Pacific coast for little more than the charge to the Atlantic coast Consequently we shall have a large immigration to the Pacific coast, and the development of that coast will be based on something more substantial in character than the mere mining interests on which it is now based.

But the question is whether the great traffic that is to go through this canal, and which is purely American in character, is to be subjected to the conditions that are stipulated in this article of the Wyse concession, which gives to the Panama Canal Company the right to impose a tariff to such an enormous amount, and the right also to be the judge in all cases touching its own interests.

I know something of the history of this whole Panama business, and it is really a very strange history. I undertook to state it the other night to a correspondent of the New York Tribune, and I saw in yesterday's Tribune that the question was very largely entered into. The calling of the scientific congress in Paris and the decision at that congress were brought about entirely in conformity with a contract which had been made by seven individuals with themselves, two of them then holding concessions from the Colombian Government. They entered into this contract prior to the meeting of the congress. Turr was the president of the little society then formed, with the condition that he was to resign as soon as the scientific congress should determine that the Panama Canal was the one to be built, and that de Lesseps was then to take the chairmanship of the society.

If the committee desire any statement as to the business of the canal, I should be glad to give it.

The CHAIRMAN. The committee does not desire to enter into that question.

Mr. PHELPS. The question is one of what would be the position of the canal company in that country. The republics of Central America are very small in population. Nicaragua has a population of about 400,000, Costa Rica of about 300,000, and Colombia of perhaps 1,000,000. But these countries are extremely poor in comparison with our own States having like populations. They have very few such facilities as we have, and they would consequently be completely under the dominion of the canal company. Mr. HILL. What would be the difference to this government in an international point of view, whether a foreign government constructed one or two canals across the Isthmus or one or two railroads?

Mr. PHELPS. They are both important, but not equally important. Do you mean ship railways?

Mr. HILL. Yes; I mean ship railways.

Mr. PHELPS. As to ship railways they may be of the same degree of importance. The history of the Panama Railroad is sufficient evidence of the importance of this question. Our government from the time of the building of that railroad has always kept a force on the Isthmus to protect it. I have myself lain for nineteen months in the Bay of Panama for no other purpose than to protect the American transportation on the Panama Railroad. We have had women and children murdered there.

Mr. RICE. By what government was the Panama Railroad Company incorporated? Mr. PHELPS. By the State of New York.

Mr. RICE. Since the Clayton-Bulwer treaty?

Mr. PHELPS. No, before it. It was opened about 1849 or 1850. We have had soldiers distributed along the entire railroad from ocean to ocean, in order to protect our people and merchandise while in transit, during the time of revolutionary movements there. The same thing, exactly, will happen in the course of building and operating the canal. It will be necessary to land military forces there to protect the works. Now, if the work is to be under the control of a French company, the French Government will bave to land troops there, and we all know what are liable to be the results of that proceeding. We are not going quietly to see the French Government land troops and maintain them in these little Central American republics to interfere with them or with their authority, or to take possession of any of their territory.

That is one point. Another point is that when this canal is opened the canal company will literally hold our coast trade and the protection of our Pacific coast at its mercy. The company may charge what tolls it chooses. But the greatest danger to us as a people is that any government which charters this canal company will of necessity have to protect it. We have had the Panama Railroad there for thirty years, and up to this day we maintain a force at Panama and Aspinwall almost constantly for no other purpose than to protect our population and our merchandise in transit by that railroad.

Mr. RICE. Have we any treaty with the United States of Colombia by which we have any special privileges, or are entitled to any special privileges in any concession which they may make for an interoceanic canal?

Mr. PHELPS. Our treaties with Colombia require that the United States shall enjoy the same degree of advantage as any other nation in any canal or transit line.

Mr. RICE. Is that treaty of ours secured in terms in the concession, to which you have referred, to these French parties?

Mr. PHELPS. Yes, it is; that is to say, that the tariffs are to be imposed without