File No. 819.77/147.

The American Minister to the Secretary of State. 1

No. 302.]

Sir: I have the honor to acknowledge the receipt of the Department’s telegram of January 21, and, referring to my telegram of January 27, to enclose the report of the Commission appointed to examine the technical merits of the railway contract signed between Señor Acevedo, Panaman Minister of Public Works, and Mr. Basil Burns Duncan on the 30th ultimo and approved by President Porras on the same date.

I may note that every effort has been made to expedite this report on account of the approaching end of the session of the National Assembly. A slight delay was caused by the fact that the Acting Chairman of the Isthmian Canal Commission only received his instructions from the War Department on the 24th instant, and that it was impossible for Lt. Colonel Gaillard and Lieutenant Mears to meet before today.

As stated in my telegram of the present date, I have just been informed by President Porras that he has now decided to prolong the present extra session of the Assembly for a period of twenty days from tomorrow.

I have [etc.]

H. Percival Dodge.
[Inclosure.]

Report of a board appointed by the Secretaries of State and War to pass upon the technical merits of a contract for the construction of a railway signed by the Panaman Secretary of Public Works and Mr. Basil Burns Duncan and approved by the President of Panama on December 30, 1912. 2

In accordance with the telegraphic instructions of January 21 and 23, 1913, of the Secretaries of State and War, a Board composed of the American Minister at Panama, a member of the Isthmian Canal Commission and the Chief Engineer of the Panama Railroad met at the American Legation in the city of Panama, at 8:15 a.m., on January 27, 1913, to pass upon the technical merits of a proposed railway contract (in pursuance with the instructions of the above-mentioned telegram). The Board was composed of the following members: the Hon. Percival Dodge, American Minister, Chairman; Lieut. Col. D. D. Gaillard, Corps of Engineers, U. S. A., (designated by the Chairman of the Isthmian Canal Commission) and Lieut. Frederick Mears, U. S. A., Chief Engineer of the Panama Railroad.

The Board carefully considered the said proposed Contract No. 70, between Señor Ramon F. Acevedo, Secretary of Public Works, on the one part, and Mr. Basil Burns Duncan on the other part, which contract was signed on the 30th of December, 1912, by the aforesaid Secretary of Public Works and Mr. Basil [Page 1089] Burns Duncan and approved on the same date by the President of the Republic of Panama.

The Board finds it impracticable to discuss properly the technical merits of the proposed contract for the reason that neither the location of the main line of the proposed railroad nor the location of any of its branches is shown either in the text or by accompanying maps, Art. 1 of the contract simply specifying that the railroad shall start from the mouth of the Chagres River on the west bank of the same river and run in a direction more or less southwest and that the length of the main line shall be of at least fifty kilometers. This indefinite description is further modified by the statement that the general direction may be changed by the topographic conditions, nor are there any definite stipulations as to the number of tracks, or limiting grade or degree of curvature. The method of construction is not mentioned, nor is any definite terminal point given at the vaguely located southwest extremity of the line.

The contract contains no stipulations as to the quantity or character of the rolling stock to be provided for the operation of said road, nor in regard to station buildings, water tanks, etc., nor does it provide for the submission to the Government of any maps, profiles or plans until eighteen months after the approval of the contract by the National Assembly (Article 13, Para. 2).

So far as the Board has been able to ascertain, there would be little or no business for such a railroad at present in the general locality mentioned and it is therefore presumed that the sole purpose of the project is the exploitation and development of the Government lands as the various sections of the railroad are completed.

The Board is further of the opinion that the sums mentioned in Article 13, Paragraph 4, to be deposited by the contractor are inadequate to properly protect the Government in a contract of this nature, which is so indefinite and where so many necessary details are lacking.

The Board is of the opinion that to comply properly with the requirements of Art. 5, Page. 2, would require the expenditure of a sum largely in excess of that needed for the construction of the proposed railroad alone. The Board also notes that no description of the character of the works proposed for the improvement of the mouth of the Chagres River is submitted, as should be done, for the information and protection of the Government.

The Board believes it proper to invite the attention of officials of the War Department to the fact that the proposed terminus of the railroad at the mouth of the Chagres River will be but a few hundred feet from the boundary of the Canal Zone and will afford additional facilities to enable a hostile force to land on the coast to the southwest of this terminus and reach, by means of the railroad and the Chagres River, the locks and dam at Gatún.

The Board has no assurances from evidence furnished it that the contractor possesses the financial resources requisite for the proper prosecution of the work of constructing the railroad. It bases this opinion to a large extent upon the fact that he took over a contract in December, 1910, between Lewellyn Swain and the Isthmian Canal Commission (see page 158, Report of the Isthmian Canal Commission for the fiscal year ending June 30, 1912) for the excavation of certain material in the Canal Prison aggregating, as was estimated, 108,992 cubic yards at 21½¢ per cubic yard, and on May 16, 1912, signified his inability to complete the contract for lack of financial resources. The total amount involved in the contract was less than $25,000 and as monthly payments on same were made for a period of sixteen months, it will be seen that the amount of capital required for this contract was not large.

In order that a project of the nature of that proposed should be intelligently considered as to its technical merits it would be necessary to have definite maps, plans and profiles, accompanied by complete specifications for the construction and final acceptance of the railroad, with accurate description of the rolling stock, water stations, station buildings, etc.

In order to permit any contractor to bid intelligently on a project of this character the Board believes it essential that some means should be provided by which the topographic features of the area in question could be properly determined in advance of the drawing of a contract.

In view of the foregoing the Board has the honor to recommend that this contract be not approved.

  • H. Percival Dodge.
  • D. D. Gaillard.
  • F. Mears.
  1. Acknowledged by the Department February 11, with the addition that a copy of the despatch and inclosure had been sent to the Secretary of War for his comment.
  2. This report is not dated.