The San Francisco call., 1904-08-09
MAY TERMINATE
IN SIX MONTHS
Panama Railways Contract
to Pacific Mail Provides
for Government Control
PRIVILEGE CONDITIONAL
At Latest ISthmian Road
Will Be Opened to All in
About a Year From Date

A special dispach from the corre-
spondent of The Call at Washington.
D. c., brings information on authority
that the contract between the Panama
Railway Company and the Pacific Mail
Steamship Company continues in force
until June IL, 1907. There is. however,
a supplemental agreement that provides
that the contract may terminate upon
six months notice by either party IN
the event that the United States be-
comes the owner Of a majority Of the
shares Of the railway company. The
United States now owns sixty-nlne-
sevendeths of the shares Of the Pan
ANA Railway Company. Taking these
statements together, II appears that
the United States can terminate IN ak
months from date the contract that ties
the Panama Railway up with the In
terests of the Pacific Mail Steamship
Company which is another way OF de-
scribing the arrangement made by the
transcontinental roads for their own
purposes and in restraint Of trade.
ORIGINAL CONTRACT.
In a previous dispatch from Wash
ington the fact was mentioned that the
original contract between the Panama
Railway Company and the Pacific Mall
Steamship Company was dated June IL
1902, and that II was to continue in
force three years, but that it might
continue for two years more II either
party should so elect. This would make
the possible date Of expiration June IL.
1907.
In any ordinary corporation when a
new interest secures control or owner
ship of a majority Of the stock one OF
the first steps after such change OF
control or ownership Is to call a meet
ing of the stockholders and elect a set
of directors to administer the property
in accordance with the wishes Of the
stock majority. The singularity Of the
present situation in regard to the Pan
anna Railway is that One-seventieth OF
the stock Of the company is represented
by ten directors and sixty -nine-Seven-
tieths are represented by only three di-
rectors.
DANGER IN SIGHT.
In vote taken in the board Of d.
rectOrs at this time, or until the United
States has the majority of directors.
that it is entitled to by reason of its
stock ownership, there is a chance that
the transcOntinental railways may sue
ceed in tying up the Panama Railway
with another contract. This danger
has been pointed out previously in The
Call. Already there is a claim in the
East, as indicated by special dispatches
from the correspondent Of The Call at
Washington, that the Government viii
not be in any position to take action
relating to the Panama Railway and
its contracts until April 1, 1905. There
is no explanation concerning this state
ment.
If the Governments directors Of the
Panama Railway see no way to taks
action now, 1t is difficult to see how
the Government can fail to have ma
jority of the board Of directors Of the
Panama Railway in April. If notice OF
a termination of the contract between
the Panama Railway Company and the
Pacific Mail Steamship Company is then
given, six months would bring about
the expiration Of the trade-restraining
agreement on October 1. 1905, OF a little
more than a year from to-day.