_ Labor
Colony,
Cristobal.

- Purchase of

Treasury

Certificates.

Reserve
Fund.

Income
Tax.
‘

Audit of
Company’s
Accounts.

Designa-
tion of
Mercantile
Trust &

PANAMA RAIL ROAD COMPANY. 29

sold to the Army to be delivered in New York by our steamers. That
arrangement continued in operation beyond the signing of the Armistice
on November 11th, 1918 until May, 1919, when there developed a possi-
bility that no further shipments of our beef might be required by the
Army, at least for a time, in which event we would have been compelled
to seek other purchasers. ‘That possibility, however, was overcome by
arrangement authorized by the Secretary of War to continue shipments -
up to ten millions of pounds, the estimated excess output of our Isthmus
plant for twelve months ensuing.

In order to facilitate the operation of the Company’s docks and i impor-
tant auxiliary plants at and in the neighborhood of Cristobal, C. Z., and
to that end to provide a selected area in which to house and otherwise
improve the living conditions of nearly all Canal and Rail Road laborers
at present engaged in operating those plants, and as well of numbers that
may be later employed for the same work, favorable action was had at a>
meeting of the Directors on the Isthmus on May 14th, 1919, upon the ©
conclusion reached by separate special committees appointed to report
upon plans and methods to be adopted for the above purpose by the
initial appropriation of $619,900, or such part thereof as may be necessary
to develop and complete the comtemplated project, and an additional
appropriation of $10,000 or such part as may be necessary for the estab-
lishment and maintenance of a silver-labor colony to be located at Las
Cascadas, Canal Zone.

At its December, 1918, meeting the Board of Director approved of —
the withdrawal of as much as possible of the Company’s funds on deposit
with banks and trust companies that allow only 3% per annum on bal-
ances, for use in the purchase of long term United States 444% Treasury
Certificates of Indebtedness. In December $1,200,000 was so invested
and that sum increased to $3,000,000 by May, 1919, since which time the
proceeds of matured Certificates have been reinvested in new issues of the
same.

The interest accrued on the securities in the Company’s Reserve Fund
was reinvested in United States Liberty Bonds of current issues.

The Company’s Income and Excess Profits Taxes assessed by the
United States Government amounted for the calendar year to $1,159,-
051.18, payment of which was arranged for by quarterly installments
of $289,762.80 in 1919.

No effort has been made to secure exemption from the Government
Income Tax that would perhaps have been warranted by the fact that our
entire capital stock is owned by the Government of the United States, as
represented by the Secretary of War, and because of which fact the Com-
pany might reasonably be characterized as a Government Agency—the
Directors decided that all Federal taxes should be paid by the Company
to the same extent as if the Company were privately owned.

The Company’s books and accounts for the fiscal year were, as cus-
tomary, audited by Messrs. Haskins & Sells, our regular certified account-
ants and found to be correct; their report to that effect has been placed
on file.

The Mercantile Trust and Deposit Company of New York was added
in January last to the Company’s list of depositories for its funds in New |

ork. :

Deposit Co. .

as a De-
pository.