Part 3
Chapter XXXV
Building the Foundations

As it was the policy of the commission which originally appointed me to preserve pleasant relations with the native element in Panama and Colon, and as it was felt that some social recognition should be given to encourage a friendly attitude on the part of these people, I occupied the residence in the heart of the City of Panama, which had been used by the managing director of the French company.  the first night I slept in Panama I occupied this residence and continued to occupy it until my connection wit the work ceased.

During the summer of 1904 Admiral Kenny, who was the treasurer of the Isthmian Canal Commission, occupied this residence with me during his stay on the isthmus.  I also had with me Mr. William J. Karner, who was my office engineer.

My household staff consisted of a butler who had been with the French administration, a Martinque negress as cook, a Spanish house boy, and a personal valet who was half Spanish and half Irish.

During this summer Mr. Karner was taken down with the fever and taken to the hospital.   during his illness he was waited on by my valet, who was later removed to the hospital, and he was followed by the cook, leaving Admiral Kenny, the French butler and myself as the remaining occupants of the house.

Later we secured the services of a Chinese cook who had served under Admiral Walker in Nicaragua.  In a few days he was also taken down with the fever and removed.

However, all of these patients finally recovered and returned to their duties.

The residence I occupied, the old Casa Dingler, derived its name from being the residence of M. Dingler, who was considered the most efficient of the French chief engineers, and who occupied the residence with his wife, a son and a daughter.  A short time after his arrival his son died of the fever, and later his daughter, and then his wife.   This so depressed M. Dingler that he dropped into a state of melancholia.

The family  had all be enthusiastic horsemen and each member of the family was provided with mounts brought over from France.  After the death of the last of the family, his wife, M. Dingler took his horses up into one of the mountain ravines and shot them, then returned to France and later died in an insane asylum.

To this house I brought my wife in November, 1904, and set up a social center in the heart of the City of Panama.  As General Davis, the governor of the zone, was a widower, and John Barrett, the American minister, was a bachelor, our house naturally became the social American center of Panama, and throughout our stay we cultivated and maintained social relations with the leading families on the isthmus.

On November 27, 1904, Secretary and Mrs. Taft made a visit to the isthmus and were our guests for ten days.  during this time the first American reception was given at our residence that ever occurred on the isthmus.

At this time Admiral Goodrich and his fleet were in Panama harbor and at this reception were the various naval officers from the fleet, the marine officers from Culebra, and numerous army officers detailed in various positions on the canal work, also the officials of the Panama Republic, the bishop of the Catholic church, the consular representatives of the various foreign governments with their wives, and the leading families of Panama and Colon.  the interesting feature was the cosmopolitan characteristics of the people in attendance, representing almost every nationality, at least in that part of the world, and various grades of official rank, politics and religion.

Secretary Taft's visit, with the social activities which grew out of it, and the creation of an American social center, did much to establish harmonious relations between the Panamanians and the American element, and I think to some extent made our relations with these people easier to handle.

One of the greatest difficulties we had to contend with was the securing of the necessary labor, both skilled and unskilled.  The higher grades were of course obtained by importing Americans from the United States.  The backbone and sinew of the force, however, had necessarily to be recruited from among those people and those races that were accustomed to work in a tropical climate.

It was at first considered that Jamaica would be the best source of supply.  In an attempt, however, to secure a sufficient force from there we were met by prohibitory regulations upon the part of the government of Jamaica, which endeavored to impose a tax and conditions so burdensome that they could not be complied with.

On the return of Secretary Taft and William Nelson Cromwell from the isthmus the British Consul, sir Claude Mallet, a representative Minister Barrett's office, Mrs. Wallace, and I, accompanied the Secretary on the cruiser Columbia to Jamaica, where in response to a cable communication we were met by the Governor of Jamaica and escorted to the King's House, his official residence.

Secretary Taft, after introducing me to the governor and explaining the object of my mission and after some preliminary discussion of the conditions, sailed for the United States, leaving me at Jamaica to endeavor to arrive at some understanding with the governor.

After remaining in Jamaica six days and being cordially entertained by the governor we returned to Colon on the U.S.S. Dixie, which touched at Jamaica for coal on her way to Colon, without having accomplished the full purpose of my mission, finding that the only way we could secure labor from Jamaica without submitting to burdensome conditions was to make such gradual acquisitions to our force as might voluntarily come to us from that source of their own initiative.

I then sent various labor agents to other adjoining countries, but owing to the regulations of the Treasury department was not able to advance them money for their own necessary expenses and the transportation of the laborers which they secured, without which it was impossible to obtain them.  In some cases, however, I advanced the money personally.

In this connection I finally sent Mr. Wm. J. Karner to Barbados and made an arrangement with a British steamship company to transport the laborers to Colon, and then upon the rendition of a bill by the steamship company to the Isthmian Canal Commission, certified by the chief engineer, Lieutenant Geo. C. Schafer, the disbursing officer of the Treasury department, arranged to pay for the transportation.

At first this enabled me to secure a moderate supply of labor.

Unexpectedly, due to some ruling of the Treasury department, Lieutenant Schafer declined to pay further bills for transportation.  This resulted in the British steamship company notifying their captains touching at Barbados not to transport any more laborers unless their transportation was paid in advance, which, as I had not been able to secure funds for that purpose, cut off this source of supply until Governor Davis came to my rescue and provided funds out of the treasury of the Zone Government, over which he had absolute control, his treasury being afterward reimbursed by the Isthmian Canal Commission upon properly approved bills.

Upon a forcible presentation of the case, however, being made to the commission and by it to the authorities at Washington, Mr. Karner was finally appointed a disbursing officer of the Treasury department and was provided with the necessary funds to take care of the transportation of laborers from Barbados, which from that time on was the principal regular source of supply.

In the meantime negotiations were carried on with a view of obtaining a supply of Chinese labor.  This, however, was opposed by the authorities at Washington on account of political considerations, and also by the authorities of Panama, as they did not desire an importation into the Canal Zone of Chinese, who would afterward drift into Panama and Colon and become in the opinion of the Panamanians undesirable citizens, due to the fact that the Chinese who had been left on the isthmus at the close of the de Lessees regime had gone into various lines of trade that were considered competitive.

In June, 1904, when I arrived at Panama, the force in the engineering department consisted of 165 men paid in gold and 1,324 paid in silver, a total force at that time of 1,489 men.

When I left the work, the force employed in the department of construction and engineering consisted of 1,100 men paid in gold and 5,500 natives, negroes and others paid in silver, a total working force of approximately 6,600.

When I first arrived on the isthmus I found it difficult to secure from the authorities in charge of the Panama Railroad, on account of its peculiar organization methods, that degree of cooperation that I considered necessary to properly carry on the canal work, as the railroad was of course one of the principal instrumentalities to successful work.

Ninety-seven per cent of the stock of the Panama Railroad at that time was owned by the United States Government, and while the members of the Isthmian Canal Commission were directors of the railroad, it was directly controlled by a vice-president located in New York and by a general manager under him, also located there.  The resident authority on the isthmus in charge of the Panama Railroad was Colonel J.R. Shaler, who at that time was over seventy years of age.  He was a perfect type of Southern gentleman, and so far as he was concerned was anxious and more than anxious to do everything possible to assist me in my work.  the executive work under him was under the control of Mr. H.G. Prescott, his assistant superintendent, who was also desirous of rendering me all assistance possible.

The first difficulty I had with the railroad was when I desired some frog and switch apparatus placed in the lie of the road in order to connect with tracks that led into an engine house in which were stored a number of Belgian engines in good condition, which I desired to transport to Culebra to be used on the canal work.

The putting in of this switch and making a connection with the old tracks required only a few hours work.

I was informed that Colonel Shaler was without authority to make this change without consulting New York, and that under his instructions he did not desire to request the authority by cable and would have to take it up by letter, which would require about three weeks to receive an answer.

With the intimation, however, that if the connection was not made by the railroad force inside of twenty-four hours I would do it with my own force, although this might be considered an unwarranted interference with the operations of the Panama Railroad, I prevailed upon Colonel Shaler to perform the service, and I presume he took the matter up by cable and received the necessary authority.

This incident is only cited as one out of many where it was difficult to secure proper cooperation from this source, on account of organization methods, which while proper for routine operations were not suited to the new situation and conditions.

After a vigorous attempt to get control of the Panama Railroad, I finally in April, 1905, secured a position on the board of directors of the road and was elected vice-president and general manager of the Panama Railroad and steamship line, and thereafter during my continuance on the work had full and complete control of both the railroad and the steamship line as far as their operation was concerned.

During this time I also planned to reconstruct the Panama Railroad as a double track road with improved dock and wharf facilities and re-equip it with proper equipment.

During my connection with the work I suggested the simplification of the tariffs of the Panama Railroad.  Mr. Jos. L. Bristow, since elected U.S. Senator from Kansas, was detailed to visit the isthmus and examine into the situation and report.  I explained to him my views in full and in detail, and they were embodied in a report which, he afterward made and which is part of the government records.

In this report I suggested a modification in the rates of transportation across the isthmus, on a basis that would at least approach the rate per ton which would be charged on the world's commerce after the completion of the canal; the practical doing away with classification, and the collection of all railroad tariff charges from the steamships which either delivered freight to or received freight from the Panama Railroad; and the throwing open of this avenue of transportation to the world'
s commerce on some equal and uniform basis.

The existing rates over the Panama Railroad at that time were almost prohibitive, and were dependent not only upon the classification of the freight but also upon the origin thereof and the final destination, the theory evidently being to charge all the traffic would bear for transportation between the east and west cost, based on the comparative cost of carrying the freight by the route through the Straits of Magellan.

The most striking example of this was the rate on coffee from Costa Rica, which as I recall it now was at the time $6.00 per ton for the rail transportation of less than fifty miles.

The theory upon which I recommended this innovation in the reduction of rates was based on the provision of improved methods for the handling of freight, the construction of adequate terminal facilities, improved methods of handling from cars, and on the provision of modern equipment, so that the number of tons of freight handled per train might be increased.

At that time the maximum capacity of freight cars was ten tons, and as the freight was sorted on each side according to destination, a great many loaded cars were handled across the isthmus with only one or two tons of freight to the car.  this reduced the amount of tonnage per train so that it increased the cost, which was one of the arguments the railroad traffic officials used against the reduction of rates.

My principal reason, however, for the utilization of this means of transportation before the completion of the canal and during its construction, and reducing the rates, was to encourage the opening up of this line of transportation to the commerce of the world, in order to build up a business prior to the opening of the canal, so as to reduce the length of time after the canal was completed in which this tonnage would be increased to such an amount as would place the canal on a paying basis.

I recommended $2.00 a ton, without regard to classification, as a proper rate.

One of the objections raised to my suggestion was that this would create a disturbance in through transcontinental rates.  My natural answer to this was the inquiry as to the purpose for which we were constructing the canal.  The reply was that during the ten years that would be required for the completion of the canal, the trans-continental lines would have time to meet the new conditions.

In answer to this I developed the fact that while the actual rate paid for freight across the isthmus was concealed in the proportions of the through rate between west and east coast points and between origin and destination, and was not expressed in so many dollars per ton, as far as traffic between New York and San Francisco was concerned the Panama Railroad's proportion of the rate gave a revenue that averaged less than $200 per ton considering all classes of freight.  This against the fact that coffee from Costa Rica had to bear a charge of $6.00 a ton.

It was my understanding with Admiral Walker and the Isthmian Canal Commission that civil service rules would not be put into effect in regard to the Panama work until after the preliminary organization was made effective, and then only under such regulations as would be practically adapted to this work.

On November 17, 19904, I received a cablegram advising me that the Isthmian Canal Commission had been placed under civil service rules, which was confirmed by the following letter:

Washington, D.C.
November 17, 1904
Mr. John F. Wallace, Chief Engineer,
Isthmian Canal Commission, Ancon, Canal Zone

Dear Sir:
I beg to advise you that under date of November 15, 1904, the President signed the decree placing the Isthmian Canal Commission under civil service rules, and I enclose herewith a copy of the classification of this commission, with a list of the exceptions made thereto, for your guidance.
Very respectfully,
J.G. Walker,
Chairman of the Commission

I remonstrated with the chairman of the commission on this order and requested him to take the matter up with the President, which he declined to do.

At that time Senator Kittredge was on the isthmus and I explained this situation to him thoroughly and suggested that I be permitted to have a conference with the civil service commissioners, in order to formulate such regulations as would enable the system to work out in a practical way.

Senator Kittredge succeeded in securing a suspension of the immediate application of the order, and when Commissioner Greene and Chief Examiner Snyder, of the civil service commission, visited the isthmus I went over the situation with them on the ground and a modification of the original order was finally arranged between us, which, although it did not fully meet my views, was a step in the right direction; but many difficulties afterward arose in its application.

It is needless to say that this work was of such a peculiar nature, in a foreign country, and conducted under such strenuous conditions, that to whatever extent the civil service rules were made to apply to it they were to that extent an impediment to the efficient and economical conduct of the work.

One incident that occurred in the later application of these rules was in connection with a requisition I made for a certain number of track foremen.  After several weeks of waiting one foreman was finally furnished me, who, upon being placed in charge of a gang of track laborers to put in a switch, confessed that he knew nothing about track work and that his only experience as foreman had been in a bicycle repair shop.

The utter impracticability of selecting expert technical or mechanical help qualified to render efficient and effective service in a tropical climate thousands of miles away from headquarters, should be apparent to every practical man.

While I have always been in accord with a short working day, the strict enforcement of the eight-hour day under the legal requirements in force in the United States interfered seriously and must have since added materially to the estimated cost of the work.

To those familiar with constructive operations it will be realized that a large amount of work was needed prior to the commencement of work hours and also subsequent thereto, in preparing for the day's work and in straightening matters up thereafter.  This particularly applied to work in the transportation department.

Without a great loss of efficiency, trains could not be permitted to stand at the exact point that they occupied on the stroke of the hour, and the cleaning up of transportation work after the day's work and preparation for it before it commenced necessitated more or less overtime work upon the part of employees in this department.  Other parts of the work were similarly affected thereby, although the essence of the eight-hour day for the mechanic or the laborer employed at individual effort could be observed.

The various difficulties and drawbacks enumerated above have not been mentioned with any view of criticism of individuals, but simply to call attention to the difficulties of supervision from Washington, by officials of the Government departments, of constructive work, particularly in a foreign tropical country, and on work of this character where such unusual conditions existed and unforeseen complications arose daily, which in order to secure efficient and economical results had to be handled and decided upon by some authoritative agency on the spot.

Even in the history of our own Civil War the immediate success of the earlier and able generals in charge of campaigns was partially nullified, not through their own acts or their inability to understand or cope with the situation, but through the lack of a proper appreciation of the conditions and necessities surrounding the field of operations and the pressure, through the press and otherwise, of an impatient public, as well as the failure of the administration and public to appreciate at the start the necessity of concentrated authority and the lack of patience to calmly wait for the accomplishment of the necessary preparation in order that the foundations for more effective work in the future might be accomplished.

The foundations of all great structures are hidden from sight, and only the architectural effect of an imposing building resting thereon appreciated.

Nevertheless without the foundations the final structure could not be erected, and without any expectation of public appreciation either at present or in the future, I felt in my own conscience that my compensation would consist in the personal feeling that during the strenuous period of preparation at least a foundation of ideas in organization and plans had been made, and that the misunderstandings which I may have had with the administration and those above me at least made the way easier for my successors.

I do not feel it necessary to attempt to analyze or to express to the public the complexity of causes which led up to my resignation, further than to say that my controlling motive was not due to any desire to better myself in a financial way or to obtain through the offering of my resignation any personal consideration.

While it might have been temporarily postponed if more frankness had been exercised in the consideration of the matter, both by the administration and myself, owing to certain irritating circumstances to which undue importance was probably attached by all concerned, still the conditions surrounding the work and the policy of the administration seemed to me then, and still seem even with the reflection that has come with the years that have since passed, to make it necessary for me to sever my connection with the work, as it seemed utterly impossible for the administration, uninfluenced by outside interference, to take at that time the proper view which was essential for the efficient conduct of the work, an attitude to which the administration finally came and due to which the administration finally came and due to which the eventual successful completion of the work has been obtained.

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from:  The History of the Panama Canal
by Ira E. Bennett, 1915

March 24, 1999

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