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5. If the coals were to be stored at Panamá, the Company would lease a piece of land abutting on railway about 200 yards from pier on same terms as at Colon. The charges would be practically the same when coal was shipped, wherever the coals were stored.

In general terms, the value of the coal put right through on board a mañ-of-war at Panamá would be about as under :-

Value of coal in England, per ton Freight to Colon from England Stacking

Railing..

Shipping and barging alongside

Dol. c.

4 00

5.00

0 60

4 30

2.50

16 40

Appendix No. 4.

ISLANDS

NEAR PANAMA.

Rent of land not included.

6. Without a written contract more exact terms could not well be given, and the shipping of the 1,000 tons contemplated would be a mere item in the affairs of the Company, who pass about 500 tons of produce over their rails per day.

7. The Company do not employ any person specially to guard their coals, which they do not believe are pilfered to any extent, inasmuch as the people of the country burn wood only in their cooking, and they have hardly any use for coal.

The Company would not supervise the Admiralty coal except under special contract.

8. The advantages of the store of coal of, say, 1,500 tons being maintained at Colon would be that it might be serviceable to ships on both sides of the isthmus, and, from there being five or six lines of steamers on the Atlantic side, a portion of the coal might be sold every year, so as to keep always a stock by renewal of good coal without paying the transit dues.

The drawback of this arrangement is that the Pacific squadron would not have command of the stock of coal, and there might be delay in receiving it, owing to press of work on the railway, as was the case about six weeks since, when, although I had arranged to take about 70 tons of coal in the "Tenedos" and "Fantôme," in order to proceed to San José on urgent service, we could not have got it over on that occasion under three or four days, and had to leave without it. The advantages of having, say, 1,000 tons of coal stored at Panamá are all in favour of this squadron.

9. If it should be determined to have a store of coal on the isthmus, an iron shed suited for the climate should be erected, capable of storing, not only the coal, but, say, 50 tons of stores and provisions, and that authority should be given to demand from Jamaica, by telegraph or otherwise, provisions and other stores, or to enable those ordered from Valparaiso to be stored pending the arrival of ships.

10. Almost the whole of the Pacific squadron has been detained adjacent to Panamá for five or six weeks this year, purchasing coals at 27 dollars per ton, and provisions which not only require most exact surveying on reception, but have in instances been bad. Stores have now to be ordered from Valparaiso by packet, which, if the ship is not detained for or present on their arrival have to be stored at an expense of 3s. per packet per month. These considerations point to a store depôt on a small

scale.

11. The stores, if telegraphed for, could arrive from Jamaica at Panamá in four days (thirty-six hours is the time of steaming). From Valparaiso, to obtain stores, about two months is required.

12. Suggestions relative to a coal and store depôt adjacent to Panamá have been under their Lordships' consideration. A depôt ship has been suggested; a depôt at the Island of Taboga; one at the Island of Pedro Gonzales (one of the outer Pearl Islands), and which it was proposed to their Lordships to purchase towards the end of 1857. [Sec Papers (A) and (B)].

Assuming that our relations with the United States of America remain pacific, and that their Lordships only purpose temporary accommodation, then the coal and store-shed on the isthmus would be best.

13. If a more permanent establishment is thought of, then I should recommend that Pedro Gonzales be bought and utilized.

Another island contiguous to it, named San José, might as well be purchased also, as it would be troublesome to have a hostile force occupying it. Though a small island, it has a large cascade of fresh water.

My reason for preferring Pedro Gonzales to Taboga is that on Taboga is a town, with its laws, the land occupied and of value, whereas Pedro Gonzales is almost unoccupied, and settlers could be only allowed to occupy land on English terms.

14. Pedro Gonzales is in a very fair position for commanding the trade of Panamá in war, and is now of small value, though, when the isthmus canal is cut, its importance will be great.

15. I visited Pedro Gonzales when at Panamá, but will do so again if possible in my proximate visit. It possesses a good anchorage, capable, owing to islets and promontories, of good defence; has hilly and flat ground, and there are 5 or 6 fathoms of water almost alongside the shore in some parts of the harbour.

16. In the vicinity of Panamá are numbers of coloured people belonging to our West Indian islands, who came to the isthmus when the Panamá Railway was built, and who would gladly, I believe, if Pedro Gonzales and San José (the island on which the lighthouse will be built) were practically under English rule, rent and occupy land on the islands, which would enable the coal and store establishment to be self-supporting.

There is a large chart plan of Pedro Gonzales and San José.

I have, &c. (Signed)

A. A. COCHRANE, Rear-Admiral and Commander-in-chief.

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