New-York tribune., 1905-02-21
PANAMA R. R. INQUIRY.
Tice-P President Drake Says Canal
Commissioners Kept Fees.

Washington, Feb. 20-Testimony before ths
House Committee Interstate and Foreign
Commerce, which is investigating the ahars
Of the Panama railroad to-day showed that not
withstanding the letter of Commissioner Grun-
sky TO Chairman Hepburn, read to the committee
Saturday, in which it was said that Mr.. Grunsky
had returned unopened" his first fee envelope
as director of the road he had afterward taken
this same fee and all others accruing, amount
ing in all to $3.50 This statement was made by
Vice. President Drake, OF the road. After say
ing in his letter that he had returned the first
fee because he considered it was compensation
in violation of the Presidents orders, Mr.. Grun-
sky quoted the minutes OF the Canal Commission
meeting, held just after he had returned the
fee, and which contain the statement Of Admiral
walker that the President did not consider the
fee additional compensation and that 1t was
not in violation Of his own order. Mr.. Grunsky
however did not explain in the letter that after
ward he had taken the fee
THE United States could as the owner of the
Panama Railroad and Steamship Line from Co
lon to New York, establish line from San Fran
cisco TO Panama and put every transcontinental
railroad out of business" This the conclu-
sion OF r. L. Walker, general traffic manager OF
the Panama line, after general discussion of
rates at the afternoon session Of the committee.
Mr. Mann had asked If it was not the opinion
Company, controlled by the Union and South
ern Pacific railroads, was interested in keeping
up the steamship rate between New York and
San Francisco and the above statement was in
reply. Mr. Walker said 1t was not until the Pa
mama Railroad Company had threatened to break
with the Pacific Mail Steamship Company that it
secured any considerable amoent of through
freight Thirty-six thousand tons year were
wanted, and only twelve thousand tons were
forthcoming. The result Of the demand for more
had brought the tonnage from San Francisco
20 New-York up to thirty thousand last year.
The through rate from New York to San
Francisco, by way Of the isthmus, he said, aver
aged So a ton and from San Francisco to New
York S975 a ton. The difference in price was
due to the difference in the class of goods
shipped. The rate he said, was based on the
transcontinental railroad rate, and was 80 per
cent less on carload lots and 20 per cent less
on less than carload lots. He maintained that
the railroad property would not be valuable to
near the extent it was at present should the
steamship line from New-York TO Colon be dis
continued.
A statement showing fees paid to members of
sbe Canal Commission for service as directors
of the Panama railroad was filed with the COM
rnittee by Mr.. Drake. 1t also shows dividends
received on stock of the road held by the COM
rnissioners Admiral Walker received 500 for
attending ten board meetings and S4I5 as divi-
dend on ninety-five shares Of stock Commissioner
Burr received $3.50 for ten board meetings and
a 50 dividend on share Of stock; c. T. Grun-
sky received $3.50 for meetings and 80 divi-
dend; W. B. Parsons 1896 for meeting and a So
dividend; B. NJ. Harrod received $l2o for meet
ings and So dividend.
Mr. Drake took up the question of the pro-
posed discontinuance Of the steamship line oper-
ated in connection with the road and argued
against it. He also spoke against moving the
Offices from New-York to Colon.
AS an argument against surrendering the
traffic agreement with the Pacific Mail Steam
ship Company Mr.. Drake said the business OF
the railroad in 1904 aggregated $1O6.951 on
westbound business and $4,000 eastbound
business as the result of this contract. More
than one-half of the roads earnings. he said.
were derived from this source. To withdraw
from the traffic agreement with the Pacific Mail,
Mr.. Drake maintained, would subject the whole
Pacific Coast to the control Of the transcon-
tinental railroads He suggested that when all
the stock of the road was owned by the govern
ment it would not be necessary TO maintain
board Of directors the management Of the
road can be accomplished by a chief executive
Mr. Drake filed with the committee copy Of
q letter dated january L. giving notice TO the
Pacific Mail Steamship Company that the traffic
agreement between that company and the rail-
road company would terminate on July l.. He
said that this agreement had twice been out of
force for certain periods. On one occasion the
railroad put its steamers into the Pacific
trade and operated them a loss. In the last
period of six months that this agreement had
been not in force the Pacific Mail Company lost
S3I5,OO0. The officers Of this company he said,
then stated that, should the agreement be ter
minated again. the Pacific Mail would cease to
take Panama business. The action in giving
notice OF the termination Of the contract was
taken by the directors of the road on January
II last, pursuant to a supplemental agreement
between the road and the steamship line, allow
ing either party TO terminate the contract on
six months notice If the stock OF the road
should be purchased by the United States This,
the letter says. is the ground for the termination
of the agreement There are two South Ameri-
can lines which VIII be put into this trade if the
Pacific Mail abandons st. in the opinion OF Mr..
Drake
IN answer to Mr.. Townsend, Mr.. Drake said
that Commissioner Hecker never attended a
meeting Of the board and received no fees al
though he had been elected a director, and his
place had not been filled.