File No. 819.77/118.
The American Minister to
the Secretary of State.
No. 128.]
American Legation,
Panama,
May 13, 1912.
Sir: I have the honor to acknowledge the
receipt on the 26th ultimo of the Department’s instruction No. 42, dated
April 8th last, informing me of the appointment of a board composed of
myself, a member of the Isthmian Canal Commission and the Chief Engineer
of the Panama Railroad Company, to consider the technical merits of the
proposed contract between the Panaman Government and Messrs. J. N.
Hyatt, H. G. Prescott, and R. Wilcox, for the construction of a railway
from Anton, Province of Code, to Santiago, Province of Veraguas, via
Nata and Aguadulce, and a branch road from Antón to Penonomé.
According to the Department’s instruction I immediately put myself in
communication with the other members of this board, i. e.
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Lieutenant Colonel D. D.
Gaillard, U. S. A., member of the Isthmian Canal Commission, who, under
instructions from the Secretary of War, had been designated by the
Chairman of the Isthmian Canal Commission, and Lieutenant F. Mears, U.
S. A., Chief Engineer of the Panama Railroad Company. Subsequently the
board held meetings at the Legation on the 25th ultimo and on the 8th
and 13th instant, and after full discussion of the proposed contract
drew up a report. I have the honor to enclose herewith two signed copies
of this report, of which another signed copy has been deposited in the
Legation archives and three further copies have been furnished to
Lieutenant Colonel Gaillard and Lieutenant Mears for transmission to the
War Department and for the archives of the Isthmian Canal Commission and
the Panama Railroad Company.
I have [etc.]
[Inclosure 1.]
Report of the Board.
[Extract.]
In conclusion the board desires to state that it is of the opinion
that the price per mile as provided by this contract is a fair one,
when it is considered that this region is subject to unusually heavy
rainfall, which would increase the expense of construction over what
it would be in a region of ordinary rainfall. The estimates for the
section of the line from Nata to Santiago, via Aguadulce, and for
the section of line from Nata to Penonomé, were prepared from the
best existing data, i. e., survey made by the Panama Railroad
Company for the Panaman Government in 1910; the estimate for the
section of line from Nata to Antón were prepared largely from data
of the Intercontinental Railroad Survey, which covered the territory
in question. This survey shows that the country between Nata and
Anton is exceptionally favorable for railroad construction. The
opinion of the Panama Railroad assistant engineer, who made the
survey of 1910 in this territory, and who has been over this route a
number of times in the course of his work, was also given due
consideration. It is well known that the first three miles
separating the pert from Aguadulce presents absolutely no
difficulties, as the terrain has a very gentle slope and permits of
inexpensive railroad construction.
The average cost of the entire line, according to these estimates, is
B. 24,015 per mile, agreeing closely with the price quoted by the
contractors. The board believes this road can be constructed within
the estimate mentioned, and give a profit of from 10 to 20 per cent
to the contractors, depending upon the efficiency of the management
and character of weather conditions encountered.
Although the board has attempted to so modify the proposed contract
as to insure, so far as possible, construction of a suitable road,
yet attention should be invited to the fact that it is not possible
to draw any set of specifications which will insure first-class work
of this character, unless the official inspectors are thoroughly
efficient and zealous in their endeavors to secure a proper
performance of the contract.
Respectfully submitted.
-
F. Percival Dodge.
-
D. D. Gaillard.
-
F. Mears.
[Inclosure 2.]
Proposed Contract.
[Extract.]
- Article VII. The contractors bind themselves to renounce, as
they in fact do renounce entering any claim through diplomatic
channels relative to the rights and obligations arising from
this contract, and that all controversies
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between the Government and the
contractors, on account of the interpretation of this contract,
shall be submitted in each case to an arbitration tribunal,
which shall be appointed in the manner determined in Article
VIII.
- Article VIII. The arbitration tribunal shall be appointed
thus: one by the President of the Republic, one by the
contractors, and the other by the Supreme Court of Justice of
the Nation. The decision of the majority shall be considered as
a final and definite solution for both contracting
parties.
- Article XVI, paragraph 5. The Government agrees to issue bonds
for an amount not to exceed B. 2,000,000 in denominations of
$100, $500, and $1,000. These bonds will draw an interest of 5%
per annum and will be redeemable at par 50 years from date of
issue. To guarantee the principal and interest on these bonds
the Government binds itself to set aside yearly from the
$250,000 which it will receive annually from the Government of
the United States in accordance with Article XIV of the treaty
of November 18th, 1903, a sum which shall be sufficient to cover
the interest on the bonds as well as a proportional amount for
the amortization of the bonds 50 years from date of issue. The
bonds will be issued in blocks of $125,000 and will commence to
accrue interest from date of issue.
