The Panama Canal

How little the President of Colombia respected the laws of his country is shown by a dispatch received by the Government at Washington after the secession of Panama, in which it was promised that if the United States would assist Colombia in putting down the Panama revolution, the next Colombian Congress would ratify the rejected treaty. Or, failing that, the President would declare martial law, by virtue of vested constitutional authority when public order is disturbed, and ratify the canal treaty by presidential decree. If the Washington Government did not like such a proposal, the President of Colombia would call an extra session of Congress and immediately ratify the treaty.

The real cause of the failure of the Hay-Herran treaty is not difficult to discover. The concession of the New Panama Canal Company under one of its renewals expired October 31, 1893. It was then extended for a year, and, in 1894, was extended again for a period of 10 years. Still another extension was granted, which carried the date of expiration to October 31, 1910. This last extension was granted by the President without the consent of the Colombian Congress. In 1903, when the Hay-Herran treaty was pending, the validity of this last extension was denied, and the assertion made that on October 31, 1901, all of the rights and property of the New Panama Canal Company would revert to the Colombian Government.

The United States had agreed to pay to the New Panama Canal Company $40,000,000 for its concession and property. According to Representative Henry T. Rainey, of Illinois, who for years led the attack in the United States Congress on the acts of President Roosevelt in connection with the Panaman revolution, the purpose of Colombia in defeating the treaty was to wait until the expiration of the concession, when all of the property of the canal company would revert to Colombia, and it could then sell it to the United States and get the $40,000,000, or any other amount it could persuade the United States to pay.

Of course, the New Panama Canal Company did not look upon such an arrangement with any degree of complacency. It felt that it was a deliberate scheme upon the part of the Colombian Government to mulct it out of its property and its rights. As a result it was naturally ready to lend aid and encouragement to any movement which would circumvent this purpose of Colombia. It found conditions in Panama just what it might have wished.

The people of Panama felt that they had the same sort of grievance against Colombia that the people of the American colonies felt they had against England in 1776. The governors of the province were, with few exceptions, sent there from Bogota, and were entirely out of sympathy with the people of Panama. The taxes collected at Panama were carried to Bogota, as a rule, and the voice that the people of the Isthmus had in the Government of Colombia was negligible. Furthermore, they felt that they were entitled to their sovereignty.

After the countries of tropical America had thrown off the yoke of Spain, Panama found itself too small to stand alone, and accepted an invitation from Bogota to put itself under the Government there with the understanding that it was to retain its sovereignty. It soon found that this agreement was not respected at Bogota. Almost immediately there were attempted revolts and, in 1840, the Isthmus again won complete independence. The Confederation of New Granada promised that the people of the Isthmus should have better treatment, and it was set forth in the constitution of New Granada that Panama was a sovereign state, and that it had full right to withdraw and set up an independent government at any time. In 1885 a new constitution was proclaimed by Colombia, which had succeeded New Granada, and this constitution deprived Panama of all its rights as a sovereign state, and made it a province under the control of the Federal Government at Bogota. Upon these grounds Panama claimed that she was a sovereign state temporarily under the duress of a superior government. After the defeat of the Hay-Herran treaty the inhabitants of Panama knew that if the treaty failed and no other steps were taken, the Nicaraguan route would be followed and Panama would become almost a forgotten region instead of a land of great opportunity.

The consequence was that the Panamans lent willing ears to the suggestion of the representatives of the New Panama Canal Company that they should undertake a revolution to be financed by the canal company. Two representatives of the New Panama Canal Company working along independent lines were trying to bring about the revolution. One of these was Philippe Bunau-Varilla, formerly chief engineer of the Old Panama Canal Company, but who had become estranged from the New Panama Canal Company. The other was William Nelson Cromwell, for years general counsel of the Panama Railroad Company, and who, in his suit against the New Panama Canal Company for an $800,000 fee, claimed to have engineered and directed the revolution. M. Bunau-Varilla had some stock in the canal company and a great deal of pride in seeing realized the undertaking to which he had committed the best years of his life.

Coming to New York on another mission, he met Dr. Amador, who was one of the Panamans desiring the independence of his country. According to the testimony of M. Bunau-Varilla, which is borne out by documentary evidence, he and Dr. Amador worked out the plan for the revolution. He declares that the documents were drawn in the Waldorf-Astoria Hotel and as far as they were written in Spanish, they were copied letter by letter by an English stenographer who knew no Spanish, in order that there might be no possibility of the secret leaking out. He declares that the whole project of the revolution as it was carried out was conceived by him in cooperation with Dr. Amador, and that William Nelson Cromwell, the other factor in the situation, knew nothing about what was going on. He also asserts that William Nelson Cromwell had promised to introduce Dr. Amador to Secretary of State John Hay, but that later Dr. Herran, the representative of Colombia, found out what was going on and wrote a letter of warning to Mr. Cromwell as to the consequences which would come to the Panama Railroad, of which Mr. Cromwell was the representative, if that organization should give aid or comfort to the projected Panama revolution. Thereupon, according to M. Bunau-Varilla, Mr. Cromwell turned his back upon Dr. Amador, although it has been claimed by some that this was only a ruse on the part of Mr. Cromwell to shield himself and his company from responsibility. About this time M. Bunau-Varilla borrowed $100,000 in France to finance the revolution, pending the recognition of the new Republic by the United States. Other money was forthcoming later.

The revolution itself, which took place in November, 1903, was bloodless. The world knows that President Roosevelt forbade the Colombian troops to move across the Isthmus, while at the same time he would not allow the revolutionists to make any move. A similar situation had arisen in a former revolution in 1902. At that time the Colombian troops were disarmed, and three days later insurgent troops were prevented by United States marines from using the railroad and were actually compelled to leave a train which they had seized and entered. The principle was enunciated and maintained that no troops under arms should be transported on the railroad, no matter to which party they belonged. That was because to permit such transportation would be to make the railroad an adjunct to the side using it, and to subject it to attack by the other party. In this way, if the Colombian troops used it, the insurgents would have attacked, and the United States would either have been forced to permit such an attack, which might suspend traffic on the transit, or to prevent it with force, which would make this country an ally of Colombia against the insurgents. On the other hand, if the insurgents were permitted to use the railroad, Colombia would attack it, and in that case the United States would have to help repel the attack and thus would become the ally of the insurgents. It was, therefore, held that the only way to make the road absolutely neutral was to allow neither party to use it.

This was the doctrine under which President Roosevelt proceeded in 1903. Of course, the world knows that this was tantamount to preventing Colombia from reconquering the Isthmus, if that were possible. It is claimed by some that if President Roosevelt had allowed the insurgents to use the railroad in 1902, Colombia would have been defeated in that revolution.

At the time of the revolution it is said that the Colombian garrison which espoused the cause of the Panamans was bribed to do so; that their commander two days afterwards was paid $12,500 for his services, and that he is to this day drawing a pension of $2,400 a year. It is also charged that some of the troops who could not be bribed were sent into the interior to repel an imaginary invasion from Nicaragua. It is asserted that when the governor of the State of Panama telegraphed the Colombian Government that Nicaragua was invading Panama, the Bogota authorities sent additional troops to the Isthmus to help fight Nicaragua, and that this accounted for the arrival of the gunboats from Cartagena on the eve of the revolution.

At the time of the coup d'etat, the United States was living under a treaty made with Colombia in 1846, guaranteeing the sovereignty of that country over the Isthmus in return for the recognition of the rights of the United States, under the Monroe doctrine, in connection with the building of a canal. Under this treaty it was mutually agreed that the United States should keep the Isthmian transit free and open at all times. It was contended by President Roosevelt that he was only carrying out this provision when he refused to allow the revolutionists and the Federal troops to fight along the line of the Panama Railroad, although this was almost the only ground on the Isthmus on which military operations could be prosecuted. He admitted the justice of the contention of the Colombian Government that the United States undertook to guarantee the sovereignty of Colombia over the Isthmus so far as any alien power was concerned, but denied that it was ever intended that the United States should be called upon to guarantee it against the people of the Isthmus themselves.

Once the revolution was started three courses were left open to the United States: One was to force the Panamans back under Colombian rule; the second was to let the two sides fight to a finish; the third was to recognize the independence of the Republic of Panama and forbid Colombia to land troops on the Isthmus. President Roosevelt took the last course. A breezy Western congressman remarked in defense of that course: "When that jack rabbit jumped I am glad we didn't have a bowlegged man for President!" The result of the revolution, and the recognition of the independence of the Republic of Panama, was that Colombia, which had tried to grasp everything and to get possession of the assets of the New Panama Canal Company, now found itself without anything.

Colombia ever since has contended that the United States was under a solemn obligation to protect the Colombian sovereignty over the Isthmus—an obligation that has been assumed in return for valuable considerations—and that it had been despoiled of the Isthmus of Panama under the very treaty that had guaranteed its permanent control of that Isthmus. It further asserted that President Roosevelt had been a party to the revolution for the purpose of circumventing the stand of the Republic of Colombia. It made a long plea against the action of the United States and urged that in the event the two countries could not come to any agreement, the pending questions should be submitted to The Hague for adjudication. Secretary Hay at one time proposed that a popular election should be held on the Isthmus to determine whether the people there preferred allegiance to the Republic of Panama or to the Republic of Colombia, but Colombia would not agree to that. Secretary Hay rejected the plea of Colombia for arbitration, upon the ground that the questions that Colombia proposed to submit affected the honor of the United States and that these matters were not arbitrable.

After Elihu Root became Secretary of State, he declared that the real gravamen of the Colombian complaint was the espousal of the cause of Panama by the people of the United States. He said that no arbitration could deal with the real rights and wrongs of the parties concerned, unless it were to pass upon the question of whether the cause thus espoused was just—whether the people of Panama were exercising their just rights in maintaining their right of independence of Colombian rule. "We assert and maintain the affirmative upon that question," he declared. "We assert that the ancient State of Panama was independent in its origin, and by nature and history a separate political community; that it was federated with the other States of Colombia upon terms that preserved and continued its sovereignty, and that it never surrendered that sovereignty and was subjugated by force in 1885." Mr. Root further asserted that the United States was not "willing to permit any arbitrator to determine the political policy of the United States in following its sense of right and justice by espousing the cause of the Government of Panama against the Government of Colombia."

When Mr. Taft became President it was his desire to adjust our controversy with Colombia. His Secretary of State, Philander C. Knox, just before leaving office, declared that he had spared no efforts in seeking to restore American-Colombian relations to a footing of complete friendly feeling, but that these efforts had been rebuffed by the Colombian Government. He declared that it was undeniable that Colombia had suffered by its failure to reap a share of the benefits of the canal, and that the Government of the United States was entirely willing to take this consideration into account, and endeavor to accommodate the conflicting interests of the three parties by making a just compensation in money. In pursuance of this idea three treaties were negotiated: One between the United States and the Republic of Columbia, one between the United States and the Republic of Panama, and one between the governments of Columbia and Panama, all three being interdependent, to stand or to fall together. These treaties were negotiated at the instance of Columbia and were framed with every desire to accommodate their terms to the just expectations of that country. They were accepted by the Columbian Cabinet but were not acted upon by the Columbian Congress.

In the Knox treaty negotiated with Columbia in 1910 that country proposed to agree to a popular election upon the separation of Panama and to abide by the result. The United States offered to sign an additional agreement to pay to Columbia $10,000,000 for a permanent option for the construction of an interoceanic canal through Columbian territory, and for the perpetual lease of the Islands of St. Andrews and Old Providence, if Columbia would ratify the treaties with the United States and Panama. This proposition was refused. It was then proposed that in addition to the $10,000,000 the Unites States would be willing to conclude with Columbia a convention submitting to arbitration the question of the ownership of the reversionary rights in the Panama Railroad—rights which the Columbian Government asserts that it possesses. In addition to this the United States offered its good offices to secure the settlement of the Panama-Columbian boundary dispute.

All of these propositions being rejected, the Republic of Colombia was asked if it would be willing to accept $10,000,000 outright, in satisfaction of its claims against the United States. This was also refused.

Acting upon his own authority, the American minister then inquired if Colombia would accept $25,000,000, the good offices of the United States in its boundary controversy with Panama, the arbitration of the question of the reversionary rights in the Panama Railroad, and the gift of preferential rights in the use of the canal—all these in satisfaction of its claims. The Colombian Government replied that it would not do this and that it did not care to negotiate any further with the Taft administration, preferring to deal with the incoming Wilson administration.

CHAPTER XX

The treaty gave to the United States most unusual rights. For instance, in no other country on earth does one nation possess ultimate jurisdiction over the capital of another nation; yet this is what the United States possesses at Panama. The first consideration of the treaty was the establishment of the Canal Zone. This gave to the United States a territory 5 miles beyond the center line of the canal on either side, and 3 miles beyond its deep water ends, with the exception of the cities of Colon and Panama, to hold in perpetuity with all rights, powers, and authority that the United States would possess if it were sovereign, and to the entire exclusion of the exercise of any sovereign rights, powers, or authority by the Republic of Panama.

Further than this, it gave to the United States the same rights with respect to any land, or land under water, outside of the Canal Zone necessary and convenient for the canal itself, or any auxiliary canals or other works required in its operations.

Further yet, the Republic granted in perpetuity a canal monopoly throughout its entire territory, and also monopolies of railroad and other means of communication between the two oceans.

Under the terms of the treaty the cities of Panama and Colon are required to comply in perpetuity with all sanitary ordinances, whether curative or preventive, which the United States may promulgate. The Republic of Panama also agrees that if it can not enforce these ordinances, the United States become vested with the power to enforce them. The same is true with reference to the maintenance of order. The Republic of Panama agrees to maintain order, but gives to the United States not only the right to step in with American forces and restore it, but also to determine when such action is necessary.

The treaty between the two countries further provides that the United States has the right to acquire by condemnation any property it may need for canal purposes in the cities of Panama and Colon. The Republic of Panama also grants to the United States all rights it has or may acquire to the property of the New Panama Canal Company and of the Panama Railroad, except such lands as lie outside of the Canal Zone and the cities of Panama and Colon, not needed for the purposes of building the canal. The Republic guarantees to the United States every title as absolute and free from any present or reversionary interest or claim. It will be seen from all this that the United States did not overlook any opportunity to make sure that it had all of the powers necessary to build a canal.

It is also agreed by the Panama Government that no dues of any kind ever shall be collected by it from vessels passing through or using the canal, or from vessels belonging to the United States Government. All employees of the canal are exempted from taxation, whether living inside or outside the Zone. The Republic grants to the United States the use of all its rivers, streams, lakes, and other bodies of water for purposes of navigation, water supply, and other needs of the canal. It also agrees to sell or lease to the United States any of its lands on either coast for use for naval bases or coaling stations.

The Republic of Panama further agrees that the United States shall have the right to import commodities for the use of the Canal Commission and its employees, free of charge, and that it shall have the right to bring laborers of any nationality into the Canal Zone.

In return for all of these concessions the United States gives to the Republic of Panama many valuable considerations. Most vital of all, it guarantees the independence of the Republic. This means that the Republic of Panama is today practically the possessor of an army and a navy as large as the United States can put into the field and upon the seas. The only aggressor that Panama need fear is her benefactor.

The second consideration involved the payment of $10,000,000 cash to the Republic, and a perpetual annual payment of a quarter of a million dollars beginning with the year 1913. The ten-million-dollar cash payment gave the impoverished new-born government a chance to get on its feet, and from this time forward the Panaman Government can look to the United States for the major portion of its necessary revenues.

Under the terms of the treaty the United States undertakes to give free passage to any warships belonging to the Republic of Panama when going through the canal, and also agrees that the canal shall be neutral. It also agrees to provide free transportation over the Panama Railroad for persons in the service of the Government of Panama, and for the munitions of war of the Republic. It also allows the Republic of Panama to transmit over its telegraph and telephone lines its message at rates not higher than those charged United States officials for their private messages.

Another stipulation of the treaty provides that it shall not invalidate the titles and rights of private landholders and owners of private property, nor of the right of way over public roads of the Zone unless they conflict with the rights of the United States, when the latter shall be regarded as superior. No part of the work of building or operating the canal, however, at any time may be impeded by any claims, whether public or private. A commission is provided, whose duty it shall be to pass upon the claims of those whose land or properties are taken from them for the purpose of the construction or operation of the canal.

In carrying out the terms of the treaty the first step taken by the Americans was to "clean up" the cities of Panama and Colon. Remarkable changes were wrought by the establishment of water and sewerage systems, and by street improvements. For several years preceding the acquisition of the Canal Zone, and the sanitization of the cities of Panama and Colon, the late W. L. Buchanan was the United States minister to Colombia. He was transferred to another South American capital and afterwards came back to the United States by way of Panama. Former Senator J. C. S. Blackburn was then governor of the Canal Zone or, more strictly speaking, the head of the Department of Civil Administration. As he and Minister Buchanan drove through the streets of Panama and surveyed the changes that had taken place, Mr. Buchanan declared to Governor Blackburn that if an angel from heaven had appeared to him and said that such a transformation in the city of Panama could be made in so few years he scarcely could have believed it.

When he was there the main streets of the city were nothing but unbroken chains of mud puddles in which, during the wet season, carriages sank almost to the axles. When he returned he found those same streets well paved with vitrified brick, measuring up to the best standards of American street work. Where formerly peddlers hawked water from disease-scattering springs, there were hydrants throughout the town and wholesome water on tap in almost every house. Where there had been absolutely no attempt to solve the problems of sewage disposal, where the masses of people lived amid indescribable filth, absolutely oblivious to its stenches and its dangers, now there was a sewerage system fully up to the best standard of American municipal engineering.

When one considers that the Republic of Panama is made up largely of the cities of Panama and Colon, with a large area of almost wholly undeveloped territory, it will be seen that this service was rendered to practically all the people of the Republic.

The relations which have existed between the Republic of Panama and the United States have not always proved wholly satisfactory to the Panamans. Like all other tropical Americans, the Panamans profess great admiration for a republican form of government, but the party in power seldom has relished the idea of a full and free accounting of its stewardship at the polls. When the time came for the first national election, the party in power sought to insure its return by the use of tropical-American methods; that is, by a wholesale intimidation of the opposition supporters. When the registration books were opened the administration was unwilling to register the supporters of the opposition. The government forces always were relied upon to back up the registrars. This situation was resented by the opposition and the indications were that the usual civil war, the tropical American substitute for an election, was about to follow.

At this juncture Governor Blackburn called the Panaman authorities together and notified them that the United States did not care a continental which side won the election, but that it was very deeply interested in maintaining conditions of peace and amity on the Isthmus—conditions which could not prevail except there be a fair election. He reminded them of the right of the United States to maintain order in their two principal cities, and of the blood and treasure the United States had invested in Panama, all of which would be placed in jeopardy by any civil conflict. He therefore declared it the intention of the United States to see that there was a fair election.

Election commissioners were consequently appointed, and they saw to it that the voters were fairly registered, allowed to vote, and to have their votes counted. The result was that for the first time in Central American history there was a fair election and for the first time a real change of administration without a resort to arms. So successful was this plan that in the election of 1912 both sides agreed again to call in the United States to umpire their battle of the ballots, and once again the "outs" won over the "ins."

The French Canal Company has some very unpleasant experiences with the Republic of Colombia when it, as a private corporation, undertook to build the canal. It was at the mercy of the Government and the Government seldom showed mercy. For instance, a Colombian owned 30 acres of swamp land which was needed for the construction of the canal. It was worth $10 an acre; he demanded $10,000. The canal company took the matter to the courts of the Republic and instituted condemnation proceedings. Here the owner admitted that the land was not intrinsically worth more than $10 an acre, but claimed that he had as much right to demand $300,000 for the tract as if it were located in the very heart of Paris; that in every case it was what the land could be used for that determined its value. The court shared his view and nothing was left for the canal company to do but to pay the $300,000.

Shortly after the Americans took charge, the Central and South American Telegraph Company wanted to land the new "all American" cable on the Canal Zone. They applied to the United States for permission which was granted. The Panamans fought against it under every possible pretext, their desire being to have their consent regarded as essential, so that they could get a good fee for the concession, but the United States notified the Republic of Panama that it had no interest whatever in requiring compensation, and so the cable was laid.

While there has been substantial agreement between the two countries, it has been difficult to prevent some conditions which are contrary to American ideas of morality. For instance, while the Canal Commission was strongly opposed to having a lottery on the Canal Zone, one is maintained just across the line in the city of Panama. The Panama lottery and the Bishop of Panama share the same house. One has to pass the lottery to see the bishop and, mayhap, a half dozen old women ticket sellers will try to intercept him before he reaches the church dignitary.

This lottery is a veritable gold mine to those who own it. Each ordinary drawing brings in $10,000—$1 for each ticket issued. The grand prize takes $3,000 of this, the next 9 prizes calling for a total of $900, the next 90 for a total of $450 and the remaining prizes for $2,070. Thus, $6,420 in prizes is paid out of the total of $10,000 received. Out of the remainder, 5 per cent goes to the ticket sellers and 5 per cent to the Panaman Government. Once a month the drawing is made for a grand prize of $7,500. Most of the money which the lottery people make is contributed by workers on the canal. Only 64 per cent of the money received from the sale of tickets is won back by the ticket buyer at each drawing. The net profits approximate a hundred thousand dollars a year.

On the whole, however, the relations entered into between the two Republics in 1904 have been such as to leave no serious ground for complaint. They have permitted the satisfactory construction of the canal, and they will permit its satisfactory operation. With the United States as the ultimate judge of every question vital to American interests, little is left to be desired. The fact is that the canal has been built with less friction and fewer difficulties with the Republic of Panama than could reasonably have been hoped for at the outset. This has been due principally to the fact that the Americans responsible for the success of the work have approached the Panaman situation with tact where tact was needed and with firmness where firmness was essential.

CHAPTER XXI

This government was established in 1904 under the direction of Major General George W. Davis, the first governor of the Canal Zone. From time to time it was extended and improved. More than half of this was appropriated out of the Treasury of the United States, and the remainder collected in the operations of the government. In addition to directing the government of the Zone, the head of the department of civil administration was the titular representative of the Canal Commission in all matters in which the commission and the Republic of Panama had a mutual interest. However, in practice, the Panaman Government looked directly to the chairman and chief engineer on all important matters.

One of the earliest and most important subjects requiring their cooperation was that of sanitation in the cities of Panama and Colon. The United States agreed to advance money for building sewer and water systems, and for street improvements, in the two principal cities of the Republic, on condition that the Republic of Panama and the two cities would reimburse the United States Treasury through the water rents. The street improvements were to be paid for in 10 years, and the sewer and water systems in 50 years; in the meantime the United States was to be allowed 2 per cent interest on the money advanced. This amortization of the Republic's debt for these improvements has been going steadily forward.

In laying out the government of the Canal Zone it was thought wise to adhere as closely to Spanish laws and customs as was expedient under the new conditions. In view of this consideration the methods of taxation on the Canal Zone were allowed to remain largely the same as under the old Spanish laws of Colombia. Likewise the Spanish system of judicial procedure was adhered to during the early years of the construction period. It was not, indeed, until 1908 that the right of trial by jury was established in the Canal Zone. At that time former Senator J. C. S. Blackburn, of Kentucky, was at the head of the department of civil administration, and he regarded it as repugnant to American ideas of justice to deny to Americans on the Isthmus the right to be tried for felonious offenses by juries of their peers. Upon his representations President Roosevelt issued an executive order extending the right of trial by jury to the Canal Zone, and that order was effective after 1908.

With the early opening of the canal it became advisable for Congress to determine the future policy of the United States toward the Canal Zone, and to lay out a system of government there which would meet the needs of the future. It was determined that the Canal Zone should be used for the operation of the canal, rather than for a habitation for such settlers as might choose to go there. Hence the provision was made that the President of the United States should have the right to determine how many settlements there should be on the Canal Zone and how many people should be permitted to live there.

It will be the policy of the United States to discourage general settlement and to maintain only such towns as are necessary for the operation of the big waterway, granting only revocable leases to any outsiders when it is deemed advisable to allow them to occupy land within the Zone. There will be only five settlements in the Zone, if present plans are carried out: One at Cristobal, one at Gatun, one at Pedro Miguel, one at Corozal, and the settlement at Ancon and Balboa at the Pacific terminus of the canal. The total number of people who will reside in these settlements will probably not exceed 10,000, a material reduction from the 62,000 living on the Zone in 1912. Those who are still there, but who will not be needed in the permanent organization, will be repatriated at the expense of the United States Government. In 1912 there were approximately 31,000 British subjects on the Zone, practically all of them negroes from the British West Indian islands and British Guiana. The great majority of these will be carried back to their homes, as will all of the 4,300 Spaniards who desire to return. There were nearly 12,000 Americans on the Zone at that time, and perhaps two-thirds of them will leave before 1915. There were nearly 8,000 Panamans on the Zone and most of them will go to the cities of Panama and Colon, or upon the Government lands owned by the Panama Republic outside of the Zone.

The work of clearing the Zone of its population was begun early in 1913. A joint land commission was appointed to adjudicate the claims of those Panamans who were living within the Zone on lands that were needed for the operation of the canal. This commission consisted, under the treaty existing between the two countries, of two Americans and two Panamans. In their work they first took up the claims of the poorer classes who had nothing but a thatched hut and a small patch of ground. The commission visited the various parts of the Zone and fixed the value of such holdings. The people were given free transportation over the Panama Railroad, and usually were allowed from $50 to $100 for their homes. They preferred to move in colonies, so the Republic of Panama laid out small towns away from the Canal Zone for them. These natives, usually almost full-blooded Indians, were treated as kindly and as considerately as conditions would allow. They were willing to "fold their tents" like the Arabs, and leave their homes behind as they went out to conquer new ones in the jungles where the needs of a gigantic waterway could not encroach upon them.

The claims for lands which have to be taken from individuals by the United States will aggregate a half million dollars. As the Panaman Government allows homesteading on Government lands at a cost of about a dollar an acre, and as there are tens of thousands of acres of better land outside of the Canal Zone than inside, the policy of the United States in freeing this strip from native population will not work any great injury to the people.

During the construction period the laws under which the people of the Zone lived were made in three different ways. Of course, Congress as the legislative assembly was always supreme. But under the laws passed by it, the President of the United States was empowered to issue executive orders covering points not touched by congressional legislation, and under his instructions the Secretary of War could promulgate certain orders. In addition to this, the Canal Commission had a right to serve as a sort of local legislature. During the year 1912 sixteen executive orders pertaining to the Canal Zone were signed by the President and the Secretary of War, while five ordinances were promulgated by the Isthmian Canal Commission during the same period.

The court system under the construction-period government consisted of district courts, circuit courts, and a supreme court. There were five district judges and three circuit judges; and the circuit judges sitting together constituted the supreme court, from whose decisions there was no appeal. Under the permanent law there will be a magistrate's court in each town, which will have exclusive, original jurisdiction in all civil cases involving not more than $300, and of all criminal cases where the punishment does not exceed a fine of a hundred dollars or 30 days in jail, or both. Its jurisdiction will include all violations of police regulations and ordinances, and all actions involving possession or title to personal property or the forcible entry and detainer of real estate. These magistrates and the constables under them will serve for terms of four years. There will be a district court which will sit at the two terminal towns with the usual court officers. The circuit court of appeals of the fifth circuit of the United States will be the court to which appeals from the district court will be carried.

The postal service of the Canal Zone is practically identical with that of the United States. The revenues collected from the sale of stamps and postal cards amounted to $87,550 in 1912. Nearly a quarter of a million money orders were issued during that year, representing a total of approximately $5,000,000. A postal savings bank system is also maintained, a counterpart of the one in the United States.

All mail matter sent from the Canal Zone bears Panaman stamps countermarked by the Canal Zone government. When the United States established the postal system at Panama, American postage was used. The Panamans were very much dissatisfied with such a procedure, however, since it deprived them of a large share of their postal revenue. Their postal rates to the United States were those of the universal postal union—5 cents per ounce or fraction thereof on all first-class mail matter. The rate from the Canal Zone Was only 2 cents. The result was that the citizens of Panama and Colon would not patronize their own post offices, but carried their mail across the line to the post offices at Ancon and Cristobal where they could mail their letters at the 2-cent rate. The Panaman Government protested against this, and it was agreed by the Americans that in the future all mail matter should carry Panaman postage stamps. These are furnished to the Canal Zone government at 40 per cent of their face value. In this way the share of the Republic of Panama in the postal receipts of 1912 amounted to nearly $33,000.

President Roosevelt selected one of his "rough riders," George R. Shanton, to establish the police force on the Zone. This police force was selected generally from men who had seen service in the United States Army and had made good records there. In 1912 the force consisted of 117 first-class white policemen, 116 colored policemen, 20 corporals, 8 sergeants, 7 lieutenants, and 2 inspectors, besides a chief of police and an assistant chief of police. During that year 7,055 arrests were made, 70 per cent of which resulted in convictions. Police stations were maintained at all settlements along the line. A penitentiary was located at Culebra where approximately 140 convicts were confined. The penitentiary had to be removed owing to slides at Culebra Cut, and the men were put to work on the roads of the Canal Zone. They were kept in well-guarded stockades at night.

When Judge Henry A. Gudger was made a member of the judicial system of the Canal Zone he believed that it would be the scene of unusual lawlessness; he thought it would be a dumping ground for lawless people from all parts of the world. He therefore believed in strong repressive measures, and his earlier sentences were made heavy with that end in view. He found later, however, that the opposite was true. Under the system of quartering the canal help there was comparatively little mixing of the races. The negroes lived to themselves, the Spaniards to themselves, and the Americans to themselves; therefore, racial friction was largely overcome. The lawless found the Canal Zone a desirable place to shun. Judge Gudger soon discovered that severe measures were unnecessary, and in recommending pardons frequently stated that he had imposed sentences heavier than necessary to carry out the repressive policies he had in mind.

A well-organized, paid fire department was maintained from the beginning and it was supplemented by volunteer companies in many places. In a number of towns fire engines of the latest automobile type were installed. Out of 300 fire alarms in 1912, nearly 200 were for fires in Government property valued at one and three-quarters million dollars, while the total loss was only $5,000.

The school system of the Canal Zone was laid out along the same lines that characterized all other activities for the welfare of the people who were engaged in building the canal. It was founded by Charles E. Magoon when he was governor of the Zone, and in 1912 had 75 teachers and officials, with an enrollment of 2,105, of whom nearly 1,200 were white. The standard required of the teachers was maintained at a high point. Of the 48 white teachers employed in 1912, 13 held degrees from colleges and universities, 19 held diplomas from standard normal schools, and 12 others had enjoyed at least two years of normal teaching. The white children on the Zone were given free transportation to and from the schools. Those who had to go on the railroad to reach their schools were given free passes. Those who attended the schools in their own neighborhood were gathered up in wagons and transported to school.

The system of roads for the parts of the Canal Zone adjacent to the canal itself was built mainly by convict labor at comparatively little cost. They have been useful to the natives in getting their few products to market, and during the years to come will be available as military roads for use in the defense of the Zone. These roads are built according to the best American standards and are almost the only real roads in the entire Republic. The Panaman Government has extended one road from the Zone line to old Panama, and for a few miles into the interior, but aside from this national road activities have been few indeed.

The American road from Panama to the Zone boundary, leading toward old Panama, over the savannahs, is the pleasure highway of the Republic. It is practically the only road in the Republic where one drives for pleasure, and here every automobile in Panama City is pressed into service during the late afternoon and the evening. The elite of the capital city own summer homes along this road. These homes are by no means as elaborate as the summer homes along the Hudson, but the fact that they were seated amidst veritable gardens of flowers gives them an air of beauty and restfulness attractive even to the most blase traveler.

The water-supply system of the Canal Zone consists of a number of reservoirs on the watersheds of the Isthmus where no human habitations are allowed, and where trespassing is forbidden. The waters are examined for bacteria and other properties once each month, and a report thereon is made to the proper officials. Twice each month a physical examination of each reservoir, and the land from which it receives its water, is made by inspectors who report all conditions to the sanitary and other authorities. If there is any sign of contamination, steps to overcome the trouble are taken immediately.

Where the reservoirs fill up to the spillway the waste water is not allowed to go over the top, but is drawn out from the bottom in order that the under layers of water may be the ones wasted. Water drawn out for domestic purposes is taken from the top wherever possible. The water has a somewhat unpleasant taste to people newly arrived upon the Isthmus, and in some cases serves to disturb the digestive tract, but to the people who become accustomed to it the unpleasant flavor, due to the presence of decayed vegetation, is forgotten, and the workers on the Canal Zone frequently declare they miss the Panama water when they go back to the States.

The permanent Government of the Canal Zone will be, in the main, merely a miniature of the government during the construction period. The law providing for the operation of the canal makes this Government entirely subsidiary to the main purpose for which the canal was built. It provides that when war is in prospect the President may appoint a military officer to take charge of the Canal Zone, and to conduct its affairs as they might be conducted were the Zone nothing more than a military reservation. The Government will have its headquarters at the Pacific end of the canal where Balboa, the principal permanent town on the Isthmus, will be located. This little American city will be Government-built and Government-owned, and it will be the smallest of all the world's capitals.