the Canal Commission was strongly opposed to having a lottery on the Canal Zone, one is main-' tained just across the line in the city of Panama. The Panama lottery and the Bishop of Panama share the same house. One has to pass the lottery to see the bishop and, mayhap, a half dozen old women ticket sellers will try to intercept him before he reaches the church dignitary.

This lottery is a veritable gold mine to those who own it. Each ordinary drawing brings in $10,000

$1 for each ticket issued. The grand prize takes $3,000 of this, the next 9 prizes calling for a total of $900, the next 90 for a total of $450 and the remaining prizes for $2,070. Thus, $6,420 in prizes is paid out of the total of $10,000 received. Out of the remainder, 5 per cent goes to the ticket sellers and 5 per cent to the Panaman Government. Once a month the drawing is made for a grand prize of $7,500. Most of the money which the lottery people make is contributed by workers on the canal. Only 64 per cent of the money received from the sale of tickets is won back by the ticket buyer at each drawing. The net profits approximate a hundred thousand dollars a

year.

On the whole, however, the relations entered into between the two Republics in 1904 have been such as to leave no serious ground for complaint. They have permitted the satisfactory construction of the canal, and they will permit its satisfactory operation. With the United States as the ultimate judge of every question vital to American interests, little is left to be desired. The fact is that the canal has been built

with less friction and fewer difficulties with the Republic of Panama than could reasonably have been hoped for at the outset. This has been due principally to the fact that the Americans responsible for the success of the work have approached the Panaman situation with tact where tact was needed and with firmness where firmness was essential.

CHAPTER XXI

THE CANAL ZONE GOVERNMENT

HE Canal Zone is a strip of territory ten miles wide, its irregular lines following

the course of the canal, which is its axis. Over this zone the United States, under its treaty with Panama, exercises jurisdiction "as if it were sovereign." The American Government was unwilling to undertake the great and expensive work of constructing the canal without having this guaranty to protect it from possible harassment at the hands of the Panaman authorities.

One of the first tasks that confronted the United States authorities when they entered upon the work of building the canal was that of providing a civil government for this territory named by law the Canal Zone. Postal facilities had to be provided; a police system had to be established; customs offices were required; fire protection was necessary; a court system was needed; a school system was demanded; and, in short, a sort of territorial government had to be put in operation before the work of building the canal could go forward satisfactorily.

This government was established in 1904 under the direction of Major General George W. Davis, the first governor of the Canal Zone. From time to time it was extended and improved. More

than half of this was appropriated out of the Treasury of the United States, and the remainder collected in the operations of the government. In addition to directing the government of the Zone, the head of the department of civil administration was the titular representative of the Canal Commission in all matters in which the commission and the Republic of Panama had a mutual interest. However, in practice, the Panaman Government looked directly to the chairman and chief engineer on all important

matters.

One of the earliest and most important subjects requiring their cooperation was that of sanitation in the cities of Panama and Colon. The United States agreed to advance money for building sewer and water systems, and for street improvements, in the two principal cities of the Republic, on condition that the Republic of Panama and the two cities would reimburse the United States Treasury through the water rents. The street improvements were to be paid for in 10 years, and the sewer and water systems in 50 years; in the meantime the United States was to be allowed 2 per cent interest on the money advanced. This amortization of the Republic's debt for these improvements has been going steadily forward.

In laying out the government of the Canal Zone it was thought wise to adhere as closely to Spanish laws and customs as was expedient under the new conditions. In view of this consideration the methods of taxation on the Canal Zone were allowed to remain largely the same as under the old Spanish laws of Colombia. Likewise the

Spanish system of judicial procedure was adhered to during the early years of the construction period. It was not, indeed, until 1908 that the right of trial by jury was established in the Canal Zone. At that time former Senator J. C. S. Blackburn, of Kentucky, was at the head of the department of civil administration, and he regarded it as repugnant to American ideas of justice to deny to Americans on the Isthmus the right to be tried for felonious offenses by juries of their peers. Upon his representations President Roosevelt issued an executive order extending the right of trial by jury to the Canal Zone, and that order was effective after 1908.

With the early opening of the canal it became advisable for Congress to determine the future policy of the United States toward the Canal Zone, and to lay out a system of government there which would meet the needs of the future. It was determined that the Canal Zone should be used for the operation of the canal, rather than for a habitation for such settlers as might choose to go there. Hence the provision was made that the President of the United States should have the right to determine how many settlements there should be on the Canal Zone and how many people should be permitted to live there.

It will be the policy of the United States to discourage general settlement and to maintain only such towns as are necessary for the operation of the big waterway, granting only revocable leases to any outsiders when it is deemed advisable to allow them to occupy land within the Zone. There will be only five settlements in the Zone, if