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NOVEMBER 18, 1910
The Commoner.
Harrimaris Panama Canal Profits
Tho Now York World, which by the way, is
very hostile to Theodore Roosevelt, prints tho
following showing about tho profits in Panama
securities reaped by the late E. H. Harriman.
Tho World article follows:
Edward H. Harriman's $50,000 contribution
to the $250,000 campaign fund that ho raised
in October, 1904, at the solicitation of Presi
dent Roosevelt, and by which 50,000 votes wero
changed in tho city of Now York alone," rep
resented part of the financier's profits on a single
sure-thing speculation in Panama canal bonds.
Mr. Harriman's claims on this ono deal had
been admitted for 10,595,065.07 francs; tho
$40,000,000 purchase price of tho canal had
been paid by the United States to the "French
owners" in May and June, 1904, and Mr. Har
riman was able to calculate to a' nicety just
what his profits would be.
Tho books of the banking firm of Kuhn, Loeb
& Co. reveal the fact that Mr. Harriman tipped
off by someone who know had bought tho
bonds for $160,613.09, and stood to receive
more than $250,000 in the final distribution.
As a matter of fact Mr. Harriman received
$253,060.47, which left him a profit of
$86,447.38.
Knew When to Buy
His first investments were made, when theso
securities were at their lowest ebb,' in January,
1902, e.fter tho house Of representatives had
passed the Hepburn bill for the construction
of the Nicaragua canal with only two dissenting
votes, refusing to consider tho Panama Canal
company's offer to sell for $40,000,000.
But President Roosevelt, whoso relations with
Mr. Harriman were then most cordial, had al
ready determined on the Panama route. Ho '
summoned the majority of the members of the
Isthmian canal commission individually to the
White House and insisted that they reverse their
previous findings and make a supplementary re
port in favor of Panama.
The commission reassembled on January 16,
1902, and its final report recommending tho
Panama route at the $40,000,000 price offered
by the Panama Canal company was adopted.
The motion to adopt this report was made by
George S. Morrison, who was on intimate terms
with William Nelson Cromwell, Mr. Harriman's
legal adviser, the Mr. Cromwell who in speaking
of Mr. Harriman had told' the Wells-Fargo
shareholders, "He can not be replaced, for ho
moves in a higher world which wo carv not
hope to enter."
On January 27, 1902, Mr. Cromwell, whoso
services as general counsel had been dispensed
with by the new Panama Canal company, was
reinstated as American attorney through the
Intervention of Senator Mark Hanna and others,
and the next day Senator Spooner introduced
the bill which Mr. Cromwell claims to have
inspired, authorizing the president to buy out
the Panama Canal company.
Bonds Were Down to 42
Between the adoption of the Nicaragua route
by tho house on January 9 and the introduction
of the Spooner bill in the senate on January
2d, Panama "sixes" bonds of the old Panama'
Canal company of a face valuo of 500 francs,
bearing 6 per cent interest sold on tho Paris
bourse as low as 42 francs.
Mr. Harriman had bought at the right time!
Again Mr. Harriman bought Panama bonds
in January, 1903.
As far as the company was concerned tho
deal had then been completed by a hard and
fast promise to sell to the United States gov
ernment for $40,000,000. This option expired
March 4, 1903, and President Roosevelt was
flourishing tho big stick to force the Colombian
minister in Washington to sign a' treaty giving
the United States sovereign power over tho canal
zone, which was contrary to the Colombian con
stitution. Threat Sent "Sixes" Down
Tho Hay-Herran treaty was finally signed on
January 23, 1903, though not until Secretary
Hay had threatened the Colombian minister,.
Senor Herran, on January 16, to break off diplo
matic relations if the Colombian government
persisted in its attitude.
Panama "sixes" which had risen as high as
80 droped to 68.50 in January, 1903, but imme
diately after the treaty had been signed they
rose again to 82.50.
Again Mr. Harriman had bought at tho right
moment.
Mr. HaTriman bought moro Panama bonds in
April, 1903.
Although tho Hay-Herran treaty had then
neon signed, Colombia was'not willing to ratify
it unless tho Panama Canal company paid an
Indemnity to offset tho loss to Colombia of hot
reversionary interest in tho Panama Railroad
company which tho transfer of tho concession
to thb United States entailed.
Tho canal company refused to negotiato with
Colombia, but Mr. Cromwell "had numerous
conferences with Secretary Hay, Senator Hanna,
and on certain occasions with tho president," and
induced tho government of tho United States
to accept his client's view that "Colombia had
already pledged herself to consent and that her
consent ought to bo imposed on her as being
exacted by international good faith."
Somo Diplomatic History
Mr. Harriman bought Panama bonds, and Mr.
Cromwell collaborated with Secretary of Stato
Hay in tho preparation of Instructions to Mr.
Beaupre, tho United States minister at Bogota,
saying that tho proposed action of Colombia
"would bo inconsistent with tho agreements al
ready mado between this government and tho
canal company, with tho act of Juno 28, 1902,
and with tho express terms of the treaty Itself."
Mr. Cromwell even sent a copy of theso instruc
tions a highly confidential diplomatic docu
ment to tho new Panama Canal company in
Paris which conveyed its appreciation by cablo
in the following terms: "We have received
Mr. Hay's letter of instruction to tho United
States minister at Bogota, which satisfies us,
and for this wo thank you."
In April, 1903, Panama "sixes" which had
been firm at 87 fell to 81. President Roosevelt
had United States army officers on tho Isthmus
Beeing that tho work on tho canal was dono
in accordance with tho plans and purposes of
his policy. Tho "culmination of tho deal" ap
peared assured.
Apparently Mr. Harriman had again bought
at tho right time.
But Colombia, willing to walvo pecuniary ad
vantages, willing even to forego tho indemnity
which in all justice and equity sho had a right
to exact from tho French company, wanted to
amend tho treaty so as to avoid a direct viola
tion of the Colombian constitution.
President Roosevelt, who was never a re
specter of constitutions, would have no amend
ment. He had an interview with Mr. Cromwell,
and as a result Secretary Hay sent an ultimatum
on June 9, 1903, to the Colombian government
threatening reprisals if tho treaty were rejected
or its ratification unduly delayed.
Prepared for tho Emergency
Mr. Cromwell who had proposed this step
.knew that it could have but ono result, tho re
jection of the treaty. But ho was prepared for
this emergency. Preparations had already been
mado for the Panama revolution both in Wash
ington and New York.
When the treaty was finally rejected by an
unanimous vote of the Colombian senate on
August 12, 1903, Panama "sixes" fell to 62.50
and then dropped as low as 54. They reached
their lowest point on October 15, tho day on
which President Roosevelt gavo orders to the
navy department to hold war vessels within
striking distance of the Isthmus, and Mr. Crom
well left for Paris to obtain the official sanction
of the board of directors of tho new Panama'
Canal company to tho understanding at which
he had arrived with President Roosevelt.
On November 4, the day after the revolution,
Panama' "sixes" jumped to' 114 on the Paris
bourse. Just double the price at which they
stood when Mr. Harriman made his first
purchase.
When Roosevelt Sent for Harriman
From then on the- bonds of tho old Panama
Canal company and tho shares of tho new Pana
ma Canal company rose steadily, and in October,
1904, "when it "looked certain that tho state
ticket would go democratic and was doubtful
a"s to Roosevelt himself;" when President Roose
velt sent for Mr. Harriman and begged him to
raise the necessary funds; and when Mr. Harri
man saved tho day by collecting $260,000, of
which $50,000 was his personal donation, Pan
ama "sixes" had gone up to 93.50 and Mr. Har
riman lcnow that ho was only lotting go part
only of his profits on thin particular deal In
Ponama bonds.
Mr. Harriman wan not tho only American
citizen who profited by Insldo Information on tho
Panama Canal deal.
. Even In this instanco Mr. Ilnrrlnmn wan tho
only ono of thoso operating through Kuhn, Loob
& Co. Among tho othors who wero lot in on t)u:
ground lloor with him woro S. Loab, J.icob II.
Sehlff, Albert Halm, I. N. Sollgmnn, M. M. War
burg and Otto II. Kahn.
Mr. CroimvtiM'H Sweeping Denial
Proaldont Roosevelt transmitted to congrmm
with IiIb moiinago of Docombor, 1908, and as
part of that massago, a statement from Mr,
Cromwell, who had Just assorted:
"Neither I nor any of my law firm nor nny ono
connoctod with mo over owned, directly or In
directly, nny share of stock In tho now Panama
Canal company, nor any of tho obligations or
securities of tho old Panama Canal company, nor
over bought or sold any of tho sharos or securi
ties of cither of tho said companloa, nor woro
directly or Indirectly 'Interested in them. I am
nlso positivo that not a man in public Ufo in
America, in or out of congress, ever had tho
least pecuniary Interest in tho Panama canal.
I do not know, and never nave known, of any
American citizen who has ever dealt In any of
tho shares of tho now Panama Canal company
or tho shares or bonds of tho old company."
This statoment by Mr, Cromwell was origin
ally published In tho World October 3, 1908,
when Mr. Cromwell, to quoto his own words,
mado his denial "tho most swooping statement
that language can convoy."
And the president said In his mossago to
congress of December 15, 1908, and as part of
that message, President Roosevelt also trans
mitted a letter that ho wrote to William Dud
ley Foulko on December 1, 1908, In which ho
says: "Tho United States did not pay a cent
of tho $40,000,000 to any American citizen.
It is an abominablo falsehood, it is a
slander."
that HAiriMoms conference
Tho following telegraphic correspondence ox
plains itself:
"Baltimore, Md., November 13, 1910. "Hon.
William Jennings Bryan, Lincoln, Nob. Tho
Sun suggests a national conferenco of demo
cratic leaders, to be hold in Baltimore within
the next six weeks, to outline tho proper policy
of the party. The leaders to consist not only
of prominent democratic mombers of congress,
but also other prominent democrats throughout
tho country. Please wire us one hundred words
of your views. THE SUN."
Lincoln, Neb., November 13, 1910. Tho Sun,
Baltimore, Md. I doubt tho practicability of
the suggestion. Everything would depend upon
tho personnel of the unofficial members of tho
conferenco and that would depend upon tho
person or committee making tho selection. I
think it better to trust the democratic senators
and members of congress. They aro selected
by tho people and must bear tho responsibility.
Individuals desiring to adviso can do so with
out a conference, and the sonators and congress
men aro always at liberty to consult whom thoy
please. W. J. BRYAN.
CIRCUMSTANCES SOMETIMES CONTROL
Circumstances play an Important part in poli
tics, at least in determining the fate of Indi
viduals. The congressional elections of 1890,
1894 and 1910 Illustrate this. In each of theso
campaigns the result surprised oven tho victors
and in each campaign men were elected to con
gress who, at the time of their nomination,
were supposed to have no chance. Tho efforts
of the individual count for much, but a general
movement often buries (temporarily, of course)
men who have earned re-election, and some
times re-elects men who ought to be burled.
But potent as circumstances are their Influence
is temporary they can not be relied upon to
permanently suspend the law of merit.
So with parties. One party may profit for a
time because of the mistakes of tho other, but
in the long run the party must stand or fall
according to its deserts. The democratic vic
tory won this year Is partly duo to the fight
which the party has been making for reforms,
partly to tho fact that the republican party
proved false to the promises made during tho
last presidential campaign. Now that the dem
ocrats control congress they must make a record
satisfactory or suffer defeat in 1912.
