Another notable figure in the railroad world had been chosen Chief Engineer of the Panama Canal.  John F. Stevens in 1903 was general manager of the Great Northern Railroad Company, and of his selection as Chief Engineer, James J. Hill said that if the whole country had been ransacked no better man could be found.

Mr. Stevens was about to start to the Philippine Islands to superintend the construction of government railroads, when drafted for the canal.  It is not possible to estimate the mischief that might have resulted if the selection of a successor to Mr. Wallace had been long delayed.  His salary was to be $30,000 annually, or $5,000 more than that paid to Mr. Wallace.  He was facing a situation in Panama that justified the figure.

The long continued "knocking" of the canal project was having its effect.  Not only were the men on the ground difficult to retain, but new ones would not come unless for exceptional considerations.  The yellow-fever epidemic was still uncontrolled.  An invoice of the situation as left by Mr. Wallace showed that considerable pioneer work had been done, but the housing, feeding, and general preparations for the comfort of employees were unsolved problems.

Mr. Stevens arrived at Colon on July 27, 1905.  As a railroad man his eye first was attracted by the congestion of freight on the wharves and the self-evident fact that the Panama Railroad was in a near state of collapse.  Freight was piled up in the streets in prodigious quantities and was moving over the railroad at a snail's pace.  His first report hit off the situation in one sarcastic sentence:

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"About the only claim for good work heard made was that there had been no collisions for some time.  A collision has its good pints as well as its bad ones—it indicates there is something moving on the railroad."

As for the railroad tracks in the Culebra cut, he said they were "lines, which by the utmost stretch of the imagination could not be termed railroad tracks."  Mr. Wallace had found the Panama Railroad, after half a century without competition, far behind the times in equipment, and practically no discipline or efficiency existed among the employees.  When Mr. Stevens took charge there was an improved situation, but the long absence in Washington of Chief Engineer Wallace, and his sudden departure, had caused the railroad to begin a retrograde movement.

For 31 miles the main line of the railroad had been retracked with American rails and the work of double-tracking it was just getting under way.  The principal shops were at Matachin, with a capacity of overhauling five locomotives and 150 dump cars a month.  The canal employees soon saw the caliber of man at their head by the way Mr. Stevens straightened out the railroad tangle, for the freight began to move, lax methods were rooted out of the system, and the semblance of an efficient organization, operating along modern lines, appeared.

The Commission visited the Isthmus in July and August and with Mr. Stevens reached the conclusion that construction work should be reduced to a minimum, even to turning away employees, and all energies bent to building up a system of feeding and housing the men and their families.  Preparatory work was given the right of way over construction, which accounts for the comparatively little excavation done under the Stevens régime.  The general verdict was that the ground work done by Mr. Wallace was good, in spite of disorganized conditions, and that no insuperable obstacles stood in the way of building the canal.  Delays in filling requisitions undoubtedly accounted for the lack of some of the equipment and supplies.

Mr. Wallace had left the following organization worked out on paper, with the explanation that large salaries had not attracted competent heads of departments, so that Mr. Stevens found many important positions unfilled:

The Department of Engineering and Construction was divided into five divisions, running from the Atlantic to the Pacific and known as the Colon, Chagres, Gamboa, Culebra, and La Boca Divisions.

Bureau of Personnel, Transportation and Quarters.
Bureau of Supplies.
Bureau of Waterworks, Sewers, and Roads.
Bureau of Machinery and Equipment.
Bureau of Architecture and Equipment.
Bureau of Meteorology and Hydraulics.
Bureau of Mapmaking and Printing.
Bureau of Communication.

There were 8,312 men in the department of engineering and construction, and other employees brought the total of 9,500, not including the Panama Railroad.  Municipal improvements in Colon and Panama, and certain Canal Zone towns, were well under way.   Effective progress had been made in the work of surveying the canal route, in making borings for lock sites, and in other engineering preliminaries.  As noted, 741,644 yards had been excavated and nine steam shovels were at work.  The 357 renovated French buildings and 48 new structures housed the employees, except those who provided shelter for themselves in Colon and Panama.  There were no commissary and hotels.

On December 1, 1905, the Commission made its annual report to the President, containing Mr. Stevens' first review of the canal.  Both he and the Commission pleaded for "a thorough business administration, unhampered by any tendency to technicalities, into which our public works sometimes drift."  Like Mr. Wallace, Mr. Stevens found government red tape galling.  Civil service and the eight-hour day were just as obnoxious, the Commission urging that "it is a mistake to handicap the construction of the Panama Canal with any laws save those of police and sanitation."

An Executive Order had made the Civil Service cover the Canal Zone on November 15, 1904, but both Mr. Wallace and Mr. Stevens protested so earnestly against the restrictions of this order that on January 12, 1906, President Roosevelt removed all employees, except clerks, from the scope of the act, thus allowing Mr. Stevens to employ anyone he saw fit on any terms he chose.  The eight-hour day restriction likewise was lifted, but agitation in the United States caused the President later to reimpose both limitations, with whatever increase in time and cost of constructing the canal they might involve.

The Americans had been in Panama more than a year, and still the type of canal to be built was undecided.  Mr. Wallace's service had terminated and a full year of Mr. Stevens' administration before the choice was made.  In the meantime, Mr. Stevens rapidly was rounding into shape an organization of workers, getting suitable quarters erected for the employees who were coming in large numbers, organizing the commissary and hotel systems, securing mechanical equipment, and bringing the transportation facilities to a satisfactory standard.  Gov. Magoon simultaneously was organizing a civil government along the lines blazed by Gov. Davis.  Police, courts, schools, fire departments, post offices, recreation clubhouses, churches, in short, duplicating on a scale suitable to the Canal Zone the civilization of the United States.

By June, 1906, the end of his first year as Chief Engineer, Mr. Stevens had made a remarkable showing in every phase of the work.  There were 39 steam shovels at work as against 9 in 1905; the working force had increased to 23,901, of whom 3,264 were Americans.  But, as showing how closely his efforts were concentrated on preparatory work, the total excavation for the year was only 1,499,562 yards, the highest figures for one month being in March, 1906, when 239,178 yards were removed.

Col. Gorgas and his sanitary department got on top of the yellow-fever epidemic in September, 1905, and in general so dominated the hitherto unhealthful Isthmus, that even the hostile press began to show a change in heart on this score, with the result that the immigration of workers largely increased.  Recruiting agencies already had been opened in the West Indies, Europe, and the principal American cities.  More than 12,000 men were imported in 1906 on contract with the Commission.  the common labor was estimated by Mr. Stevens to be about 33 per cent as efficient as similar American labor.  It was not until 1906 that the wives and families of the Americans began coming to the Canal Zone in considerable numbers, although there had been a heroic band of them throughout the trying days before the tropical terrors had been conquered.

Early in his connection with the canal, Mr. Stevens discovered that practically all the material in the Culebra cut would have to be blasted before it could be handled by the steam shovels.  "The problem of Culebra cut," he wrote in the first annual report, "is one of transportation (including disposal) pure and simple."   He had to be careful in selecting dumps so as to insure that they would not become an obstruction to any type of canal or route that might be selected.  "As the gift of prophecy is withheld from us in these latter days, all we can do now is to make such arrangements as may look proper as far ahead as we can see," he wrote in his report in 1905 on the unsettled question of a sea-level or lock-type canal.

The high wages and salaries for which the Canal zone is noted originated under Mr. Stevens.  So bad a name had been given the Isthmus in the past that extra inducements had to be made to attract workers, free quarters, pay from 30% to 60% higher than in the United States, and a rate of $20 from New York to Colon on steamers operated by the government, with other perquisites, being some of the advertised attractions.   Besides, in the latter part of Mr. Stevens' régime, the United States was enjoying unexampled prosperity, the palmy days before the panic of 1907.  Mechanics and all kinds of workers could obtain employment at home at high wages and would not come to Panama unless for the unusual inducements enumerated, and, in addition, vacations with full pay, sick leave on pay, and cheap food and other necessaries.


Although the French had abandoned the idea of a sea-level canal in favor of a lock type, there still was a good deal of life in the idea among the American people.  For one thing, a sea-level canal was so much more easily grasped by the popular mind, and then all engineers concede that it is the ideal canal where it is practicable.  In Panama, the division of opinion arose over this point of practicability.

A sea-level canal aptly has been described as "a wide and deep passage navigable at all times, day or night, at all seasons and in all weathers, by all sorts and sizes of vessels."  The lock type involves operations not readily portrayed to the lay mind, but eminently simple when seen in practical use.  Popular opinion, and the daily and periodical press, divided and fought bitterly from the time the Canal Zone was taken until it finally was decided by congress, and even then the sea-level advocates kept up an anvil chorus against the lock type.

The Walker Commission of 1901 had estimated the cost of a sea-level canal at $145,000,000.  The Spooner act authorized $135,000,000 for any type that might be chosen, but leaned toward the lock type.  The Commission of 1905 recommended a sea-level type to cost $230,500,000.  Mr. Wallace later estimated the cost at sea-level at $300,000,000, exclusive of the $50,000,000 paid for the Canal Zone and French property.

That these American estimates should come, in the main, under the amount actually spent by the French, who little more than scraped the surface, shows, for one thing, that the Americans believed there had been gross extravagance and inefficiency in the French operations, and for another thing, that the Americans had no adequate grasp upon the task they were undertaking.  This same insufficiency of estimates continued until 1908, when Col. Goethals faced the situation frankly and announced the cost for a lock type to be $375,000,000, which was far ahead of the highest estimate for a sea-level.  In 1909, Col. Goethals said a sea-level canal would cost $563,000,000 and take six years longer to build than a lock canal, which was before the slides in the Culebra cut became so formidable and a sea-level canal had been shown thereby to be all but impossible.   It is probable that a sea-level canal would cost around a billion dollars, and take from ten to twenty years longer to build, if engineers should now decide to practicable.

President Roosevelt took a characteristic step to end the dispute.  On June 24, 1905, a few days before the appointment of Mr. Stevens as Chief Engineer, he named the following International Board of Advisory Engineers to recommend a type of canal:

MAJ.-GEN. GEORGE W. DAVIS, U.S.A., Chairman,
CAPT. JOHN C. OAKES, U.S.A., Corps of Engineers,, Secretary,
ADOLPH GUERARD, Inspector-General of Public Works, France,
EDOUARD M. QUELLENEC, Consulting Engineer, Suez Canal,
HENRY HUNTER, Engineer of Manchester Canal, England,
HERR EUGENE TINCAUSER, Engineer on Kiel Canal, Germany,
J. W. WELCKER, Engineer Dyke System, Holland,
ISHAM RANDOLPH, Chief Engineer, Chicago Drainage Canal,
FREDERICK P. STEARNS, Hydraulic Engineer, Boston,
WILLIAM H. BURR, Consulting Engineer, New York,
JOSEPH RIPLEY, Chief Engineer, Sault Ste. Marie Canal,
ALFRED NOBLE, Chief of Pennsylvania R.R. Improvements, N.Y.C.,
WILLIAM B. PARSONS, Chief Engineer, Subway System, New York.

Out of this number, five were foreigners and the remainder Americans.  The Board visited the Isthmus in October, 1905, and reported to the President on January 10, 1906.   The majority, composed of eight engineers, and comprising all of the foreigners, recommended a sea-level canal.  Messrs. Davis, Burr, and Parsons were the three Americans who signed the majority report.  The minority of five Americans recommended a lock-type canal with a lake at 85 feet above sea-level formed by a dam across the Chagres River at Gatun.  They estimated the excavation at 103,795,000 cubic yards, and the cost, exclusive of sanitation and civil government, at $139,705,200.  Nine years, or until 1915, was the time estimated for completing the canal.  There were to be three locks in flight at Gatun, each 95 by 900 feet usable dimensions, and on the Pacific side, one lock at Pedro Miguel, and two at La Boca, at the entrance, the distance between Pedro Miguel and La Boca, 8 miles, to be a second artificial lake.  The Culebra cut was to be 200 feet wide for 5 miles and 300 feet wide for 4 miles.

Chief Engineer Stevens and all but one member of the Commission concurred in the minority report.  Secretary Taft's visits to the isthmus had converted him to the lock type, and President Roosevelt consistently had favored it.

The situation was one where the choice would be decided by the weight the President should throw to either report.  To reject the majority report favoring a sea-level canal, and to advocate the minority report for a lock-type canal, was a responsibility of unusual magnitude for an Executive who professed to have no technical engineering knowledge.  Yet President Roosevelt made the momentous decision without hesitation, sending a strong message recommending the minority report.  It was, perhaps, the greatest crisis in the history of the project, and the American people have to think his sound judgment in preventing a sea-level experiment that, undoubtedly, in the light of recent years, would have exhausted the patience and maybe the finances of the nation.

Congress debated the issue until June 21st, when the Senate by the close vote of 36 to 31 decided for a lock type, and on June 28th, the House concurred, the bill becoming law on June 29, 1906.  The sea-level advocates were beaten, but they watched operations sullenly and flared up into hot criticism frequently, with dismal prophecies of the impending collapse of the lock canal.

Of the three Chief Engineers who have directed the construction of the canal, Mr. Wallace along favored the sea-level plan.  He uniformly opposed a dam at Gatun, expressing the opinion that there was not a foundation at that point for so heavy a structure, nor did he believe from his investigations that the earth there would support the great locks contemplated in the minority report.  Any type of canal, he reasoned, which would require years to repair a break was inadvisable, and even a lock type should be convertible to a sea-level canal, if such action should appear desirable.  Messrs. Stevens and Goethals were equally unwavering in their advocacy of a lock canal.

Two years and two months had passed from the time the Americans came to Panama, in May, 1904, to July 1, 1906, before this decision was made, and at last the Commission knew what plan of canal was to be followed.  In September, 1906, Mr. Stevens started the excavations in the sites for the Gatun locks, the Pedro Miguel lock, and the Gatun Dam Spillway.  Surveys were begun for relocating the Panama Railroad which, for a considerable distance, would be swallowed by the completed canal.  The fifteen months' preparatory work was beginning to tell in the increased excavations in the Culebra cut as the organization was getting its stride.  Commissaries, which sold everything the canal employee needed, were in operation in the principal towns, the hotels for the bachelors were well organized, quarters had been erected until all were housed, though at times rather crowded, machinery, supplies, and equipment were on hand, or ordered to the extent of 80 per cent of what would be needed to complete the canal, health conditions were admirable, and the whole situation was shaping for the real work of building the canal.

President Roosevelt paid the Canal zone a visit in November, 1906.  It was a trip of exploration for him, and the way he ignored the formal plans for his entertainment delighted the employees.  Subordinate officials were rather anxious that he should inspect just the things they had spick and span for him to inspect, but from the time he landed at Colon, where he jumped on a horse instead of into a waiting carriage and rode down the unpaved side streets, noting the mud and unfinished improvements, until he ate in the line hotels with the dirt-covered employees, inspected the kitchens and quarters, and had nosed in and out of every part of the canal, he led them a merry chase.  The enthusiasm for the "daddy" of the project was boundless, and the shortcomings he noted resulted in better conditions of employment for the men.

One evidence of the growing luxury of living conditions in the Canal was the installation on January 1, 1907, or electric lights in the quarters of the married and bachelor employees at Empire and Culebra.  Other towns soon were furnished with electricity.  The first public school had been opened a year before this event, or on January 2, 1906.  Gov. Magoon, on September 25, 1906, had been transferred to Cuba by the President, occasioning the first break in the Shonts Commission.  The summer and fall of 1906 and the winter of 1907 saw another great controversy raging around the canal, which, like the battle of the levels, was to be decided arbitrarily by President Roosevelt.


Chairman Shonts long had entertained the opinion that the canal should be constructed by private contractors.  He pressed the plan so vigorously, and the popular opinion of the inefficiency of the government was so strong, that the President authorized Secretary Taft to ask for bids on October 9, 1906.

By this time conditions had so improved in the Canal Zone that the employees viewed the assumption of control by contractors as likely to militate against their interests.   Mr. Stevens was making admirable headway, both in the creation of an effective organization and the physical equipment to do the actual work of construction.  He had little enough patience with governmental methods, but on the point of securing competent workers, which Mr. Shonts seemed to think the government could not do so speedily and well as a contractor, Mr. Stevens said in his report of 1905: "The very liberal and wise policy which the Commission is carrying out in its care of its employees and in its treatment of them in every way must, after patient and careful selection, result in a personnel entirely capable of producing good results."

The plan Mr. Shonts advanced for turning the job over to a private contractor, left in the hands of the government the last word on every vital question that might arise.   Viewed today, the terms of the invitation for bids seem to have been drawn with so much rigidity as completely to have robbed any contractor of the very flexibility of action which appeared to be the main drawback of a government enterprise.  The government was to decide upon the cost and plans and the contractor was to receive a percentage of that amount for his services.  Civil government and sanitation were to remain in the hands of the government.

It is safe to assume that had the plan been adopted, it would have broken down in less than three months, because the contractor either would have settled to the mere foremanship of the job, with the government engineers the court of last resort on all issues, or he would have asserted an independence of judgement and action which the terms of the contract did not permit.  Either result would have been disastrous to the canal project.

Those who favored the contract plan had some considerations which were potent with them, but which they did not shout from the housetops.  They knew that the terms of the contract on which bids were invited practically reduced the contractor to the position of superintendent, but by nominally placing the work in his hands they would get the private contractor's freedom of action as to hours of work, standard of wages, fitness of employees and cheapness of markets for materials.  In other words, so long as the government itself built the canal, the eight-hour day, civil-service regulations, and the whole web of official procedure than enveloped the undertaking, would be operative.   The contract plan offered a neat way of sidestepping these cumbersome conditions of doing business.

Mr. Wallace heartily favored the contract plan, expressing his belief in "the utter impossibility of the United States Government carrying on a constructive enterprise in a common sense, businesslike manner."  Whatever his attitude at first, toward the last Mr. Stevens opposed the contract plan, as he believed that the work he had done in the Canal Zone was efficient, and if a little relaxation in red tape was indulged, the canal could be built more advantageously by the Government.

Bids for constructing the canal by private contract were opened at Washington on January 12, 1907, and rejected on the ground that they failed to meet the requirements of the government.  The Oliver-Bangs syndicate was nearest in its bid to the specifications.  The real reason for rejecting the bids was that both the country and the administration had undergone a change of heart as to the wisdom of the contract plan.

Another epoch in the life of the canal project was marked by the President's action in definitely committing the enterprise to direct government supervision.  Chairman Shonts resigned, effective March 4, 1907.  An executive order than consolidated the offices of Chairman and Chief Engineer in Mr. Stevens.  On March 16th the remainder of the Commission, except Col. Gorgas, resigned, to be followed on April 1st by the resignation of Chief Engineer Stevens.  His resignation came like a sickening accident to the canal employees.  "The Chief," as he was called familiarly, had established himself firmly in their minds and hearts as a thoroughly competent engineer and just administrator.  No official explanation of the motive for his quitting had been made, but the general understanding is that he opposed the assignment of government engineers to the Commission as likely to create friction with civilian engineers and partly to a stiff communication he sent the President on the limitations of red tape and governmental methods generally.  His departure was featured by a remarkable demonstration at Colon, when he was presented with a gold watch, a diamond ring, and a silver service by the employees, who did not restrain their emotion at his loss.

Mr. Stevens was not soured by the termination of his services as Chief Engineer.   His faith in the ultimate success of the project has remained unshaken, and in the Engineering News of December 31, 1908, a year and three quarters after his resignation, he wrote that the public criticism of the locks and dams was erroneous, and advised that Col. Goethals be backed up in his admirable efforts.  The greatest tribute to his work as Chief engineer is found in the fact that the organization of employees was so thorough and the foundational work so well done that the enterprise was not harmed by a change in managing directors.