est which it now has or may hereafter have in and to the lands, canal, works, property, and rights held by the said companies under said concessions or otherwise, and acquired or to be acquired by the United States from or through the New Panama Canal Company, including any property and rights which might or may in the future, either by lapse of time, forfeiture, or otherwise, revert to the Republic of Panama under any contracts or concessions with said Wyse, the Universal Panama Canal Company, the Panama Railroad Company, and the New Panama Canal Company.

The aforesaid rights and property shall be and are free and released from any present or reversionary interest in or claims of Panama, and the title of the United States thereto upon comsummation of the contemplated purchase by the United States from the New Panama Canal Company shall be absolute, so far as concerns the Republic of Panama, excepting always the rights of the Republic specifically secured under this treaty.

ARTICLE XXIII.

If it should become necessary at any time to employ armed forces for the safety or protection of the canal, or of the ships that make use of the same, or the railways and auxiliary works, the United States shall have the right, at all times and in its discretion, to use its police and its land and naval forces or to establish fortifications for these purposes.

ARTICLE XXIV.

No change either in the government or in the laws and treaties of the Republic of Panama shall, without the consent of the United States, affect any right of the United States under the present convention, or under any treaty stipulation between the two countries that now exists or may hereafter exist touching the subject-matter of this convention.

If the Republic of Panama shall hereafter enter as a constituent into any other government or into any union or confederation of states, so as to merge her sovereigty or independence in such government, union or confederation, the rights of the United States under this convention shall not be in any respect lessened or impaired.

ARTICLE XXV.

For the better performance of the engagements of this convention and to the end of the efficient protection of the canal and the preservation of its neutrality, the Government of the Republic of Panama will sell or lease to the United States lands adequate and necessary for naval or coaling stations on the Pacific coast and on the western Caribbean coast of the Republic at certain points to be agreed upon with the President of the United States.

ARTICLE XXVI.

This convention, when signed by the plenipotentiaries of the contracting parties, shall be ratified by the respective Governments and the ratifications shall be exchanged at Washington at the earliest date possible.

APPENDIX (.
[PUBLIC NO. 190.]

AN ACT To provide for the temporary government of the Canal Zone at Panama, the protection of the canal works, and for other purposes,

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the President is hereby authorized, upon the acquisition of the property of the New Panama Canal Company and the payment to the Republic of Panama of the ten millions of dollars provided by article fourteen of the treaty between the United States and the Republic of Panama, the ratifications of which were exchanged on the twenty-sixth day of February, nineteen hundred and four, to be paid to the latter Government, to take possession of and occupy on behalf of the United States the zone of land

and land under water of the width of ten miles, extending to the distance of five miles on each side of the center line of the route of the canal to be constructed thereon, which said zone begins in the Caribbean Sea three marine miles from mean low-water mark and extends to and across the Isthmus of Panama into the Pacific Ocean to the distance of three marine miles from mean low-water mark, and also of all islands within said zone, and in addition thereto the group of islands in the Bay of Panama named Perico, Naos, Culebra, and Flamenco, and, from time to time, of any lands and waters outside of said zone which may be necessary and convenient for the construction, maintenance, operation, sanitation, and protection of the said canal, or of any auxiliary canals or other works necessary and convenient for the construction, maintenance, operation, sanitation, and protection of said enterprise, the use, occupation, and control whereof were granted to the United States by article two of said treaty The said zone is hereinafter referred to as "the Canal Zone." The payment of the ten millions of dollars provided by article fourteen of said treaty shall be made in lieu of the indefinite appropriation made in the third section of the act of June twenty-eighth, nineteen hundred and two, and is hereby appropriated for said purpose.

SEC. 2. That until the expiration of the Fifty-eighth Congress, unless provision for the temporary government of the Canal Zone be sooner made by Congress, all the military, civil, and judicial powers, as well as the power to make all rules and regulations necessary for the government of the Canal Zone, and all the rights, powers, and authority granted by the terms of said treaty to the United States shall be vested in such person or persons and shall be exercised in such manner as the President shall direct for the government of said Zone and maintaining and protecting the inhabitants thereof in the free enjoyment of their liberty, property, and religion.

Approved, April 28, 1904.

APPENDIX D.

NOTES OF A MEETING HELD IN THE OFFICE OF THE SECRETARY OF WAR, JUNE 11, 1904.

Secretary TAFT. Have you any idea of the amount of silver that is now in circulation there?

Mr. ARIAS. About two and a half millions.

Secretary TAFT. Of gold?

Mr. ARIAS. No, of pesos.

Secretary TAFT. How many people are there on the Isthmus?

Mr. ARIAS. About 350,000 in the Republic.

Secretary TAFT. You think there are about 5 pesos a head?

Mr. ARIAS. About 8 pesos per capita.

Secretary TAFT. That would be about 3,000,000 pesos.

Admiral Walker, how

much do you suppose your going in there would add to the demand for the peso?

Admiral WALKER. Well, it would add considerably. We should use it. would pay our men with it.

We

Secretary TAFT. Would you pay every week or every month?

Admiral WALKER. Probably twice a month.

Secretary TAFT. Would you pay all your men in the peso?

Admiral WALKER. Yes; we should pay in that way probably all the people we employed down there. The people sent down from here we should pay once a month in gold or in United States currency, but the laborers and the people of the Isthmus would go on the silver roll and be paid every two weeks.

Secretary TAFT. Of course it is impossible to say what that roll would amount to?

Admiral WALKER, We could count on having in our employ down there somewhere from 12,000 to 20,000 men.

Mr. BARRETT. Camp followers would add 5.000 more, probably. Secretary TAFT. The number of people would be a great deal in excess of the laborers. It would take about 20 pesos per capita every half month-about 400,000 pesos would be disbursed every half month?

Admiral WALKER. Yes.

Secretary TAFT. That would about double the circulation down there?
Admiral WALKER. Yes, fully.

Mr. BARRETT. The increase of the population generally would be very marked.
Secretary TAFT. Your idea, is it not, is simply to recoin the existing silver?
Mr. CROMWELL. Yes, sir: and to limit it.

Secretary TAFT. Don't you think you might have a provision that you could double it? You might safely do that if you retain what is there. You could retain a good deal more than that on a million and a half deposits, but what I am afraid of is that it would double the demand for silver, possibly treble it, because it will be very active.

Mr. ARIAS. We can not afford to have a deposit of one and a half millions. We need every cent of the money in the country at present. By the constitution, out of the $10,000,000 we have to set apart six million, to be placed in securities giving annual fixed interest, so it can not be diverted to other purposes. With this balance we have to do everything.

Secretary TAFT. How much would be made from seigniorage?

Mr. CONANT. It would raise the value of the peso from 42 to 50 cents. Secretary TAFT. Then they would make no money unless they increased their circulation on bullion. In that case they would make from 10 to 12 per cent on the silver bought.

Mr. CROMWELL. This subject has been very deeply considered by these gentlemen; not only by the gentlemen present, but by distinguished men in the Isthmus. It was considered by their convention; and a bill has been prepared by the Government, submitted, and is under consideration. That bill is very intelligent. I suggest Mr. Arias read and explain to you the measure pending. The convention is standing ready; the bill is here; if this form is acceptable it will be cabled there and probably passed. In other words, we have the measure on the table, and this conference may put it in shape where it will be adopted.

The bill which you hold is the original bill presented in March last by the Government, as a government measure, to the convention then assembled as a lawmaking body. That measure was not passed. It stopped at the reading of the first clause. It, however, developed a strong support. Then there was introduced, April 25, a second measure, called the “Balboa bill," called by that name because the draftsman designated the new dollar as the "Balboa" dollar, and that was passed.

Secretary TAFT. Was that a gold dollar or a silver?

Mr. CROMWELL. Silver. Those two measures were on the table of the convention when the whole subject was referred to a second committee, taking up both measures. That committee, only two or three weeks ago, gave its support and recommended the adoption of the original bill, with a few changes. That is the state of affairs to-day. It came on for debate; it was debated, and it failed to pass because of the tie vote, the total membership being 32, 16 voting for and 16 against. You will see, then, that the state of legislation is this— that that measure which you hold, slightly amended, has received the indorsement of one-half of the legislature.

Secretary TAFT. The "balboa" bill. so called, provided, as our friend says, for a gold standard of 50 cents, with a silver coin, the parity of which was to be maintained with that 50 cents gold. Was there any provision in that bill for a security to the world that it was to be maintained?

Mr. ARIAS. There was to be a fund of $100,000 that was to be kept in the treasury intact.

Mr. CROMWELL. The essence of this bill is to establish the gold dollar of the United States standard. The issue is limited to a conversion of the outstanding silver coinage, and the ratio is maintained by the conversion at a fixed figure, in the bill named at 225, but it may be amended later on to a different figure.

Secretary Taft then read the bill, during which the following remarks were made:

Secretary TAFT. (After section 2.) In other words, the bill proposes the actual coinage of a dollar which shall be equal in fineness and size to that of the United States, with different insignia?

Mr. CROMWELL. Yes.

Secretary TAFT. But that the United States dollar itself shall be legal tender exactly as your own?

Mr. CROMWELL. Yes.

Secretary TAFT. (After section 6.) Now that limits the power of the Government to issue fractional currency beyond the amount of Colombian dollars, half dollars, quarter dollars, and ten-cent pieces that there are now in circulation in the Isthmus?

Mr. CROMWELL. Yes, sir.

Secretary TAFT. That is, you can not recoin anything that is not the product of the present coin in circulation in the Isthmus.

Mr. CROMWELL. No, sir.

Secretary TAFT. You could not send out under that and buy a lot of silver in Bogota and recoin it?

Mr. CROMWELL. No, sir.

Mr. CONANT. Mr. Arias explains that his theory is the Panama money would not be used to any considerable extent in the Canal Zone, and the two countries would make their money interchangeable. But the result would be that the Panama peso would be twice the size of the United States peso.

Secretary TAFT. (After section 8.) In other words, the Government obligates itself to maintain the legal parity of gold and silver and leaves to the Executive the power to determine what measures are necessary.

You would wish to facilitate the exchange of the old coin for the new, and in order to do so you want to furnish to those who want to exchange a slight motive for making the exchange-that is, to give them a little more than the coin is worth in ordinary exchange.

Mr. ARIAS. We want to make the conversion as economically as possible. If you take the Colombian money and move it to New York and exchange it for bullion, you would be at a loss. At that rate between the two values there is a difference in favor of the Government of about 4 per cent, but that does not cover the expense of shipping and reshipping the coin.

Secretary TAFT. How are you going to induce them to bring the money in?

Secretary TAFT. We have had this same question in the Philippines, where we had the Mexican money, which corresponds, so far as our desire to get rid of it is concerned, with your Colombian money. In the islands we have also had the Spanish-Filipino money, which has circulated on an equality with the Mexican money at its intrinsic value. The difficulty that we have had is in inducing anybody to give us that Mexican or Spanish-Filipino money and turn it over to us in order that we might return our new dollar, and the reason why it is difficult to induce them is that whether you abolish the legal-tender character of the money or not, it still buys things in the market. They go down to the abaca provinces, and they can buy as many pounds of hemp with the Mexican dollar as they can with the new dollar. It is the ignorance of the people as to the exact value of the coinage that enables the speculators-the exporters-to go down and buy at Mexican rates and turn around and sell at gold rates at Manila. Therefore there is every motive for those men not to turn over the old money at all.

Mr. ARIAS. But the Colombian dollar has not the merit of the Mexican. Secretary TAFT. But it is money that buys things. As long as your ignorant people of the 350,000 see a big, round silver dollar with Colombia on it, which has heretofore purchased things, they will not be affected by the declaration of legal tender.

Mr. ARIAS. But, for instance: I pay my employees in Colombia silver; then my man goes to the retailer and buys his goods; but the retailer will have to pay to the big merchants, and that is not good for them to exchange. Secretary TAFT. You mean the retailer will not take the money? Mr. ARIAS. Yes.

Secretary TAFT. But he will take it-for the purpose of purchasing with the cheap money.

Mr. ARIAS. We rely more on the condition of silver itself to keep its parity than upon the powers we give to the Government. Here is a country where we never have a scarcity of silver, and never an abundance.

Secretary TAFT. The question of maintaining parity depends something on your security. You ought to have a good strong reserve, merely to demonstrate your good faith. We keep in our Treasury $150,000,000 gold, but we never have to touch it. That is not because of our making a paper declaration, but by setting aside the fund. It is to give assurance to the world that we have enough, and more than enough. Our Philippine gold reserve is about $7,000,000, with an 18,000,000-peso issue. It must be admitted that the use by the United States of a large fund, in which it recognizes and enforces and stands back of your currency, will itself help you.

Mr. ARIAS. What objections have you to the soundness of the silver currency of ours?

Secretary TAFT. The only objection is the absence of any other except a general pledge of the Government to maintain the parity.

Mr. ARIAS. We give the Government full power. In two years from now, when the legislature convenes, we shall have the experience to tell just what conditions are needed.

Secretary 1AFT. here is the United States Government. Its word is usually regarded as good, but in order to back that up with security it takes $150,000,000 of gold; so with the Philippine Government, which has authority to borrow $10,000,000 in order to maintain the parity, nevertheless it has thought it wise to buy silver, and we have in our Treasury $7,000,000 to maintain the parity of $18,000,000 pesos.

Mr. CONANT. It is made a trust fund, specifically applied.

Judge MAGOON. About this question of maintaining the parity; as I understand it you are relying, first, upon the limitation of the coinage of silver, and, second, upon the ability of the Government to maintain it. Now, the limitation in the proposed law is only as to the Colombian silver in circulation in Panama, Would it not be better to fix a certain amount rather than a variable amount? It would be difficult to prevent the bringing in of Colombian silver into Panama if it were a profitable industry. You are relying on a limitation, but have not specifically limited the amount of silver which your Government may coin.

Mr. ARIAS. If you should find when we collect the silver that it is too much, we have power to contract the currency. If we find that difference, then instead of returning our dollar for the Colombian silver we would throw up the difference.

Secretary TAFT. That bill in many respects is admirable. It is just exactly what we want, because we want to have a currency there that will assist us and we want to have a currency to assist you. If you could place the actual limit on the amount of silver you will coin, and then leave to us to say to you when additional coinage is needed to meet the demands of Admiral Walker, representing the canal, that would be well. Suppose he would need double the amount. Say that at the instance of the United States Government you would issue an additional sum of $3,000,000, with the provision that you should use to secure the parity thereof, say, 20 to 25 per cent by depositing it at interest with an accepted trust company in New York for the benefit of your Government. You will observe that it is to our interest that we should use that coin to maintain the parity, and if we agree, as we must agree, in the estimates in our dealings to make that good by announcing it as worth so much and paying our laborers in that way, we enable you to secure the parity, and you aid us by depositing 20 to 25 per cent, not for the first three million but for any additional to be issued for the benefit of Admiral Walker.

BRIEF OF A CONFERENCE HELD IN THE OFFICE OF THE SECRETARY OF WAR ON THE AFTERNOON OF JUNE 18, 1904, BETWEEN THE SECRETARY OF WAR AND A DELEGATION FROM THE REPUBLIC OF PANAMA.

After a general discussion of the three paragraphs constituting the proposed agreement between the United States and the Republic of Panama for a monetary system, Mr. Cromwell stated:

Mr. CROMWELL. The essential points, Mr. Secretary, are a gold standard with the United States gold coins circulating now. Next, that we will issue a limited money for the first conversion up to 3,000,000 half-dollar pesos, and that on January 1, 1906, we will issue additional coinage as you may call for it, up to the limit of 3,000,000 half-dollar pesos more; that we will secure a guaranty of the parity, first, by a deposit of 15 per cent at each time from the beginning to the end of the series; and, second, that the Commission shall open its reserve funds to the amount necessary to insure this parity. That is the essence of our proposal. Now we put that in writing. If you accept it, Mr. Secretary, we are going to cable it to Panama to-night, and the convention is in session and is waiting solely for this, and they are anxious to get home. The cables are asking us almost every hour to get this conclusion, and we want them to receive your response. They will hold a session Monday morning, and they probably will pass the law in the form that is reported to-night.

After a general discussion of proposed amendments, Secretary Taft read the draft of the agreement, with amendments, as follows:

First. That the issue of silver coin of the Republic in exchange for Colombian silver coin in circulation in the Republic within a period to be fixed by the latter, shall be limited in the aggregate to the conversion of three million pesos, Colombian silver coins.