Rensselaer Semi-Weekly Republican, Volume 38, Number 36, Rensselaer, Jasper County, 19 January 1906 — TAFT ON THE CANAL. [ARTICLE+ILLUSTRATION]

TAFT ON THE CANAL.

SECRETARY DISCUSSES ISTH- . MIAN AFFAIRS. . - Leller to Ifce President on fauna Condition* Sent to Congress—Action on Type Delayed—Railway Bond. Inane and Harltel Criticised.

The letter of the Secretary of War to the President'transmitting the antraal reports of the Isthmian CanaL

Commission and of the president of the Panama Rail* road company, together with the reports, were received by the two bouses of Congress. The report of the canal commission has been made public. Secretary Taft in his letter advised the

President that there is to be a major-. Ity and a minority report from the board of consulting engineers as to the type of canal to be recommended, and be hopes that the whole matter may he presented for submission to "Congress by Feb. 1. The Secretary takes up the report of the president of the railroad company and discusses two transactions referred to in the report—the issue of bonds and their repurchase by the company, and the market contract for feeding employes on the isthmus. Of these the Secretary says: “The question of Issuing the bonds was not submitted to you or to me before final action was taken by the board of directors. The policy of selling the bonds was a doubtful one and should not have been adopted until after a conference with higher governmental authority. I have not the slightest doubt that the president'and directors of the company acted in entire good faith in what they did, and, as they thought, for the best interests <of the government; but considering the anomalous and pecullar TeTatlons Tjetween the directors and the company and the government, the bonds should not have been issued without your approval or mine.

“in view ofthis fact, by your authority, I Instructed tho president of the railroad company to proceed at once to repurchase the bonds. Th 6 themselves contained a stipulation providing that they might be redeemed either Oct 1 or April 1 upon the payment of the previous six months’ interest, the principal, and a premium of 5 per cent. “Arrangements were made with the purchasers by which the bonds were bought back at the premium paid, 105, and accrued interest to date of repurchase from Oct. 1. To make the repurchase it was at first thought necessary for the railroad company to borrow $400,000 from tbe canaj commission.” In future, the Secretary says, questions of this character “will not be acted upon until after conference with the proper authorities.” Dticouei Markel Contract. Secretary Taft then discusses the cancellation of the Markel contract for feeding the Panama laborers. He 'says:* “The reason for the cancellation of the contract was that, in carrying out Mr. Markel’s recommendations, the railroad company, under Mr. Stevens, had been able to furnish food to its employes and those of the commission at a less price than that fixed in the contract Mr. Markel still insists that the estimate of cost made by him was reasonable and "that thfe results obtained by the company were due to two circumstances —one that all the elements of cost to the contractor were not Included in the railroad company’s estimate for the cost of firstclass meats, and the other that the specifications of the contract required for meals for the second class of employes a more expensive meal than the company was actually furnishing.” After stating that Mr. Markel was later allowed $10,745 for hia expenses under the contract, Mr. Taft says: “This action was taken without consulting either you or me, and was not brought to my attention until some time after my xeturn from Panama on Nov. 15. Looked at from a purely and strictly legal standpoint, if th« amendment of the contract- with respect to the cancellation at the discretion of the President was to 6e strictly construed, a cancellation would end tbe obligations of both parties under It and leave them without any claim for damages by either against the other, and therefore Mr. Markel would seem to have no claim against the railroad 1 company after the right of absolute cancellation had been exercised by the president In other words. It would appear that the payment ordered by the directors was gratuitous and without legal consideration.” Panama Hallway Report. The-annual report of the Panama Railroad Company for the ten months ended Oct. 31 last, submitted to Congress, shows that after payment of all fixed charges and cost of operation for the period covered there remains $354,248, or somewhat In excess of 5 per cent on the capital stock. The total earnings of the road for the transportation of ail kinds of .traffic show an increase of $302,204, or 18.77 par cent over tbe corresponding ten months of tha prcvloaa year.

SECRETARY TAFT.