Having undertaken an eleven-year task in Panama, the Americans realized at the outset that it must be gone about with the deliberation of a permanent settlement in the tropics.  The problem was to duplicate the civilization of the United States on a scale suitable to the Canal Zone, so that the employees and their families would not lack for anything essential to their happiness and normal advancement.

In the first conception of the needs of the situation the position of Governor was created, with Maj.-Gen. George W. Davis as the head of civil government.   His powers were coextensive with the Chief Engineer and the Chairman of the Commission.  During the year he spent in the Canal Zone as Governor, Maj.-Gen. Davis was occupied with engineering problems and in settling disputed points with the Republic of Panama, but substantial progress in organizing the powers of government was made.

Charles E. Magoon was appointed Governor on April 1, 1905, to succeed Maj.-Gen. Davis, and he served until September 25, 1906.   Gov. Magoon had powers as extensive as Gov. Davis, and the present civil government was rounded into form under his direction.  Ex-Senator Jo C.S. Blackburn, of Kentucky, became the head of civil government with the Goethals Commission on April 1, 1907, but the President had transferred the vital powers of the office to the Chairman and Chief Engineer, and thenceforward the Governor was known as the Head of the Department of Civil Administration.  Gov. Blackburn resigned on December 4, 1909, and was succeeded on April 12, 1910, by the Hon. Maurice H. Thatcher, also of Kentucky.

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This department conducts the diplomatic affairs of the Commission with the Republic of Panama.  It is organized as follows:  Division of Posts, customs, and Revenues; Division of Police; Division of Schools; Division of fire Protection; Division of Public Works; Division of Courts.

The Division of Posts, Customs, and Revenues has the supervision of the Canal Zone post offices, the entrance and clearance of ships at Cristobal and Balboa, the leasing and taxing of government lands, and the laying and collecting of taxes on houses, occupations, and businesses.  Every settlement has a post office, which the employees used as a bank until the opening of the postal savings system on February 1, 1912.   Since the opening of the money-order department on June 1, 1906, the Canal Zone post offices have sold more than $25,000,000 in money orders.  Out of this amount more than $5,000,000 was for money orders payable in the Canal Zone and represents a practice of buying the orders to have a safe depository of surplus earnings.  When an employee desired his money, he presented the money order payable to himself.  In 1911 the money-order business was $5,304,906.60, divided among 214,000 orders.  The great bulk of the orders was payable in the United States.  Postage rates are the same as in the United States, but Panama stamps are used.

Spanish taxing methods were followed, so far as was practicable, by the Americans in dealing with the natives.  The sixty or seventy saloons that the Commission licensed in the Canal Zone are regulated strictly and pay an annual license, each, of $1,200.  Selling liquor on government property is another instance where the Canal Zone is an exception t the rules followed in the United States.  Only revocable leases for lands are issued to the natives now, so that the Canal Zone may be cleared of all but employees on short notice.

The Division of Police was organized by George R. Shanton, a Western type of rough-and-ready sheriff, specially selected by President Roosevelt.  The division now is a well-disciplined body of officers and men, numbering forty-one of the former and 233 of the latter, of which all the officers and 117 of the privates are white.  Each town has a police station, and, considering the conglomeration of races, the Canal Zone is conspicuously law-abiding.

The judiciary system as developed for the Canal Zone includes a Supreme Court at Ancon, circuit courts and district courts, with right of appeal to the Federal courts of the United States.  It was not until February 6, 1908, that jury trials for capital offenses were granted, as President Roosevelt wanted "frontier" justice to prevail, on the idea that discipline among the employees and population best could be maintained thereby.  The first execution for a capital offense was on November 20, 1908.  The first jury trial was on March 19, 1908.  The natives found American ideals of justice somewhat exacting, especially the one requiring all those of opposite sexes who lives together to be married formally.  Free love was a practice of long standing.  A penitentiary, maintained at Culebra, will be relocated on the east side of the canal for the permanent organization.  The native people have been nicknamed "spiggoty" by the Americans from their expression "speeka-da-Engleesh," which finally was contracted into "spiggoty."

Fires have been unusually rare occurrences in the Canal Zone, where all construction is frame.  The largest and only fire of consequence was at Mt. Hope on April 1, 1907, when the quartermaster's storehouse was destroyed at a loss to the Commission of $100,000.  There are sixteen officers and forty-six foremen on the regular pay-rolls, and there have been as many as eighteen volunteer companies with 295 members.  The equipment is of the most modern American type.

Gov. Magoon opened the first public school in the Canal Zone on January 2, 1906.  In 1912 there were 25 buildings for both white and colored pupils, with 46 white and 28 colored teachers, an enrollment of 1,240 white and 1,524 colored pupils, and an average attendance for the former of 904, and of the latter, 688.  The schools have a number of disadvantages to overcome, not the least of which has been the epidemic of matrimony that has raged unremittingly among the teachers.  Sometimes the personnel changes 40 per cent from this factor alone.  Another factor has been the diversity of standards and nationalities.  In one year the teachers were from 16 different states, bringing as many systems of education into their work; 732 pupils had come to the Canal Zone from thirty-six states, and there were twenty-one nationalities other than American.  To weld all these heterogeneous elements into a uniform system has been a difficult task.  Transportation over the railroad to and from the schools is free to the pupils, as are the books and other materials used.   High schools are maintained at Gatun and Ancon.

Social life in the Canal Zone expresses itself in weekly dances at the clubhouses and Tivoli Hotel, in woman's clubs, lodge auxiliaries, church societies, and the usual round of parties.  The Commission has furnished houses for use by the lodges and religious denominations, many of which are represented in regular meetings and services.  The clubhouses, under the supervision of the Y.M.C.A., are the social centers of each community, as the women are given limited privileges.  Soft drinks, tobacco, and luncheons may be obtained at the clubhouses at all hours.  The annual cost of operating them is about $150,000, the Commission paying the deficits where the membership fees do not cover expenses.

The Panama Lottery has found in the canal employees generous patrons.   It was started in 1883, with a provision in the concession that 64 per cent of the income should be paid out in prizes.  When the President, in 1904, forbade the sale of the tickets in the Canal Zone, the Lottery Company thought they had been damaged several million dollars' worth, but the Americans have been able to all the tickets they wanted, either by going into Panama and Colon for them or sending others.  A full ticket costs $2.50 and may draw a prize of $7,500.  A fifth of the ticket may be bought for fifty cents and, if of the winning number, draws $1,500.  There are smaller prizes for approximations of the right number.  Each Sunday at Panama a boy draws a number from a box, and there has never been complaint of unfairness in deciding the winning number.  It is difficult to estimate the amount invested each week in the lottery the Americans, but it runs well into the thousands of dollars.  Many of them have won capital prizes.  In view of the fact that the moral sense of the nation has condemned lotteries, this free participation in the one at Panama does not constitute a praiseworthy feature of the American occupation.

Each Sunday afternoon or evening in some Canal Zone town the Commission band gives a concert.  This pleasing organization has a director who is paid $2,000 a year and the members receive slightly more than $3 each for a concert.  The band members are canal employees.

The first census of the Canal Zone was taken in 1908, and a population of 50,003 was reported.  In February, 1912, another census was taken, and the population had increased to 62,810.  However, there were 8,871 employees living in Panama and Colon, which brings the population to 71,682, not including the native populations of the cities of Panama and Colon.  The white persons numbered 19,413; the colored, 31,525; yellow, 521; mixed, 10,323; miscellaneous, 1,028.  Great Britain had 30,859 subjects; the United States, 11,850, and the remainder was distributed among thirty-eight other nationalities.  Of the American citizens, 9,770 were born in the United States, mainly from eight States, as follows:  Pennsylvania, 1,375; New York, 1,372; Ohio, 692; Illinois, 453; Massachusetts, 386; Indiana, 382; Kentucky, 369; Virginia, 338.   Gatun was the largest town, Empire second, Cristobal third, Gorgona fourth, Paraiso fifth.

Dr. Belisario Porras, as President of the Republic of Panama, will play a decisive part in the next four years in guiding the relations of his country with the United States.