The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1906-01-09
ACTED WITHOUT
ASKING ANYBODY
Fanama Canal Commission Followed
the Lead of Taft and
Roosevelt.
CONGRESS CUTS NO FIGURE
TWO TRANSACTIONS WHICH
CAUSED TROUBLE.

Washington, Jan. S-The letter of
the secretary of war to the president,
transmitting the reports Of the 18th
mian canal commission and Of the
president OF the Panama Railway
company. together with the reports.
were received by the two houses of
congress today. The report of the ca
nal commission has been made public
Secretary Taft in his letter. advised
the president that there is to be a ma
Jortty and minority report from the
,OoS.rd of consulting engineers as to the
type Of canal to be recommended, and
that he expects soon to receive by
cable from General Davis, chairman
of the board, who will meet the for
etgn members in Brussels on Jan. O.
a confirmation of the majority report.
The minority report is being prepared
he added, and he hopes that the whole
matter may be presented for submis-
sion to congress by Feb. /.
Two Dubious Transactions.
The secretary takes up the report of
the president Of the railway company
and discusses two transactions re-
ferred to in the reDort-the issue of
pany and the market contract for feed
ing employees on the isthmus. Of these
the secretary says:
There are two transactions referred
to in the report of the president of the
railroad company. Of which special
mention should be made In Deem
Der, at a time when the creditors Of
the railroad were urgent in demanding
the payment of the bills and when the
"a al RI
meet its obligations because the canal
commission was unable to pay the
railroad company what was due It, the
president and directors sold 62S one
thousand-dOllar Alp per cent bonds
which had been IN the treasury of the
corporation ever since the United
States acquired a controlling interest
in its shares. The bonds had been
placed there by the former manage
ment Of the road On Nov. S last the
directors authorized the executive Of
fiCerS to issue the bonds, and after
written invitation TO several probable
purchasers they were sold on the 18th
day of November to Mackay & Co,
bankers, as the highest bidders. One
hundred and seventy-fve thousand
dollars of the purchase price was paid
on Nov II, though the bonds were not
delivered until the oath of November.
The purchasers paid par and a pre-
MUM Of . per cent for the bonds.
Government Owns the Road.
at has been suggested that as the
government owned all the shares Of
the railroad company and was in fact
the owner of the road, the sale Of the
cCmpany's bonds was in effect to in
crease the Indebtedness to which the
government property might be sub
1ected, and in this way Indirectly to
increase the Indebtedness of the gov
eminent, and that such power ought
not to be exercised without special au-
thOrity from congress. On the other
hand. it may be pointed out that the
company still preserves its character /
as a corporation by the acquiescence !
of congress, and that under the char
ter the directors had the power. to issue /
the bonds and bind the company, no
matter who owned the shares
''The question Of issuing the bonds
was not submitted to you or to me
before final action was taken by the
board Of directors. The policy Of sell
ing the bonds was a doubtful one and
should not have been adopted until
after a conference with this govern
ment. ] have not the slightest doubt
that the president and directors of the
company acted in entire good faith in
what they did, and, as they thought
for the best interests Of the govern
ment; but it is regarding the anomaI-
Gus and peculiar relations between the
directors and the company and the
government the bonds should not have
been issued without your approval or
mine. In view of this fact, by your
authority, I instructed the president
of the railroad company to proceed to
at once reDurchase the bonds. The
bonds themselves contained a stipula-
ton providing that they might be re-
deemed either on the 1st of October or
the 1st of April by the payment Of
the previous six months interest. the
principal and a premium of per cent.
Bonds Repurehased.
arrangements were made with the
purchasers by which the bonds were
bought back at the premium paid, 105,
and accrued interest to date Of re-
purchase from the 1st Of October. To
make the reDurchase it was at first
thought necessary for the railroad
company to borrow 100000 from the
canal commission"
The acting attorney general held
that the commission had the authority
to lend the money to the railroad com
pany for that purpose, but it was
found that the Indebtedness of the ca
nal commission to the railroad COM
pany was quite large enough to supply
the railroad company with the needed
funds for taking up the bonds with
out borrowing from the commission.
1.-THE executive officers of the rail-
road company have been advised Of
their error" says the secretary in his
letter to the president, land hereafter
questions of this character win not be
acted upon finally by the commission