Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-02-26
PRESIDENTS REASONS
Els LETTER TO THE ISTHMIAN
CANAL COMMISSION.

following letter to isthmian canal commits
sion:
Sir: I 'haveconsidered with much care
the question whether the commission
should accept one Of the bids for the con-
struction Of the Panama canal under the
proposed contract, or should reject them
all. There were two bids worthy Of con-
sideration. The bid of the Macarthur SYM
dictate at 12h per cent was the only one
which came within the requirements. The
Oliver & Bangs bid at 6.75 per cent was
rejected as not satisfying the specifica-
lions of the invitation.
Mr.. Macarthur and his associates not OBJ
jecting. and preferring this course to an
invitation for new bids, Mr.. Oliver was al
lowed to perfect his bid with new asso-
ciates and new financial responsibility; but
this permission did not in any way change
the situation from what Is would have been
had Mr.. divers bid in It's present form
been presented on January Ii, the day fixed
for receiving the bids. Under the invitation
for bids the reserved power exists in the
commission to reject all bids, and the first
question is whether, it shall do SO.
The purpose of the contract was to secure
In the building of the canal the services OF
the best, most experienced and most skilled
contractors in the country at the least risk
to them, and at the least expense to the
government An investigation into the two
pose Of the government has failed.
In each bid the contractors of experience,
whose personal services in the work are
what the commission has sought, have
under the percentage bid with bankers
or others to whom the contractors have
had to look for the needed capital; so that
the contractors who are actually to do the
work have arranged to accept compare
lively small proportion of the profits accru-
ing under the contract.
In other words, the government by this
arrangement is made to pay high per-
centage for the of capital which 1t
might itself have furnished at much lower
rate, while the percentage which the con-
tractors are to receive for the real beneht
they are to confer on the government Is
equate compensation. No contract can ulti-
mately operate to the benefit of the govern
ment in which the contractors energy,
skill, experience and personal supervision
of the work are not adequately paid for.
1.-The defect in the bids which have de-
scribed. and which our investigation has
made apparent may Ne due to a defect in
the Invitation for bids, which perhaps stipu-
lated for too heavy bond and the invest
ment of too large capital by the contractors,
or it may be because the bidders have taken
an entirely different view Of the money risk
involved from that taken by the govern
ment.
Mr.. Stevens, the chief engineer, who pro-
posed the form of contract which, with
notifications was adopted, advises against
accepting either bid, because acceptance OF
either would not, in his judgment, accom-
plish the purpose he sought. The consld-
erations stated are by themselves sufficient
to require rejection of all BIDS ana q
change in the proposed form OF contract.
One of the chief reasons for ADOPT
ing the contract as proposed was that
in it's main features it was formu-
lated by Mr.. Stevens, who was ex.
pected to supervise the work as chief
IL had ,nria witt
tracts of this character, and he had had
eighteen months actual experience with
the work on the isthmus. Less than ten
days ago / received letter from Mr.
Stevens, in which he asked to be entirely
relieved from work on the canal as soon
as he could be replaced by competent
person and that person could become ia
miliar with the work.
withdrawal of Mr.. Stevens takes away the
special reason mentioned for proceeding
under the present form of contract.
In order to secure continuity in engineer
have decided to request you to assign to the
office of chief engineer Major Goethals,
member of the corps of army engineers
1t is not my purpose by requesting this
appointment to disturb in any way the
present organization on the isthmus
which is very satisfactory, nor to inter-
fere with the admirable work now being
done by the present assistant chief en-
of departments. The work of construc-
ton is going on we'll and will continue
to do So
The organization already created is in
creasing the excavation each month, and
can be relied upon under competent leader
ship to make further and constant progress
pending a period within which new form
of contract can be devised by Maj. Goethals
and his associates, it is deemed advisable to
do the work by contract. The services of
the same high class contractors whose bids
we are now rejecting, or others Of similar
may then be invoked in the inter-
est of economy and speed.
Two other competent members of the En-
gineer Corps, Maj. Gaillard and Maj. Sci
bert, will accompany Maj. Goethals to the
isthmus and assist him in his labors. They
will be appointed on the commission.
Majs Goethals concurs with Mr.. Stevens
in advising me that all bids on the present
form OF contract should be rejected
l request the commission to take the for
NAL action necessary to reject the Nc
Arthur and the Oliver bids. in accordance
with the power reserved to 1t in its invita-
ton. Very respectfully yours,