The sun., 1904-12-05
PACIFIC MAIL MAY BE- 0USTED
FROM ITS EXCLUSIVE CONTRACT
WITH PANAMA RAILROAD.
Tho President Considering the Question
Of AbroEating an Agreement "hich
Gives the Hartman Interests Mo-
nopoIy OF Trade With CALIFORNIA.

Gives the HARTMAN mteFesu wv"
nopoly OF Trade With Cal1ornia'
WASHINGTON. Nov. 4-The President has
under consideration the question OF abro-
eating the contract between the Panama
Railroad and the Pacific Mail Steamship
Company. A report on the matter has
been made by the Isthmian Canal Com
mission, though the commission does not
make definite recommendations Quee-
tions OF policy are involved which will
REQUIRE the personal decision OF the Presi-
dent after consultation with Secretary
Taft.
The subject is OF intense interest to the
Pacific Coast, involving the question OF
reduced freight rates on transcontinentai
railroads by throwing open the Panama
Railroad to all comers. The Pacific Mail Is
likewise deeply interested, as the aoro-
cation Of It's contract would In all prob
ability lead to the establishment OF rival
steamship lines on the west coast
The United States owns sixty-nine-
seventieths OF the stock OF the Panama
Railroad Company. representing an In
vestment OF about si3,0oo,O0o The SIX
members OF the IsthIniau Canal Commission
have been made directors Of the railroad.
When a successor TO Col. Frank Hecker
ia appointed on the commission the new
member will also become director OF the
railroad company. There are eleven di-
rectors In all.
The United States, since acquiring the
interests OF the New Panama Canal Com
pany in the railroad, ha, purchased some
outside stock and will take all outstanding
stock obtainable at par. Within eight or
ten years, OF whenev the canal Is com
pleted, the Panama Railroad will become
a useless piece Of property. 30 far as profits
are concerned. It is believed by members
OF the Canal Commission that the outside
stockholders will decide to sell their hold
ings to the nited States at par.
The annual meeting Of the board OF
directors of the Panama Railroad Com
pany is held in April II Is expected that
by next April II not before, Secretary Taft
will nanle the four directors who will serve
In addition to tho anal commissioners.
It has already been demonstrated that the
United States will dominate the railroa
and its policy.
The exclusive traffic contract with the
Pacific Mail Company Is the most important
matter connected with the railroad. This
contract was entered into in 1902 and will
expire In June, 1905. II three months notice
to that effect Is given by either party.
Otherwise it will continue In force indef-
nitely A clause In the contract provides
that IL the railroad Is sold to the United
States six months notice Of the term ina
ton OF the contract must be given to the
Pacific Mail Company. II the contract
should run up to the termination OF its
three year period. 1t may be terminated
by the United St,tes without notice.
Nearly one-hfK Of the business OF the
Panama Railrrad Company consists Of
New York-San Francisco freight and pas
ssnger business Under the Pacific Mail
contract the Panama Railroad Company
withdrew its steamers from the Pacific and
operated the line only between New York
and Colon.
The control OF the Pacific Mail Com
pany by the Hartman interests, and the
mutual interests Of the transcontinental
railroads terminating In California, have
combined to make competition by way Of
Panama an impossibinty. California can
not obtain low freight rates as long as the
Pacific Mail enjoys exclusive arrangements
with the Panama Railroad Company It
has nov been pointed out to the President
that the contract should be abrogated.
since the Government itself cannot be ex-
pected to continue an arrangement which
Ia combination in restraint OF trade.
1t IL understood that the Canal Commis-
sioners have reported to the President that
In their opinion an increase Of business
would result from the abrogahon of the
contract with the Pacific Mail, because Of
the lower rates that would be offered by
tramp steamers competing with the Paci-
fo Mail. These low rates would attract
much overland business and the probable
result would be lowering Of transconti-
mental railroad rates to meet this CON-
petition. The Pacific Mall itself. II ii fol-
lows its precedents, will cut rates to drive
away competition on tho western coast.
The Canal Commissioners expect to en-
counter the strongest opposition from the
Hartman interests IN their efforts to termi-
nate the contract. A member Of the COM
mission hinted to-day that II the railroad
interests should appoint Benjamin B.
Odell, =, Jr., president Of the Pacific Mail,
in the hope that he would use influence
with the President to continue the con-
tract, they we're doomed to disappoint-
ment. No intimation has come from the
President regarding his attitude on the
subject, but Secretary Taft has indicated
that in due time the relations OF the Panama
Railroad and the Pacific Mail would be
severed,