UNIVERSITY OF FLORIDA LIBRARY ■MS VOLUME WS^ttH «K?^«smof nmOK LIBRARIES. I' PANAMA CANAL TRAFFIC AND TOLLS BY EMORY R. JOHNSON SPECIAL COMMISSIONER ON PANAM.'V CANAL TRAFFIC AND TOLLS WASHINGTON 1912 LETTER OF SUBMITTAL. Washington, D. C, August 7, 1912. Sir: I have the honor to submit herewith a report upon Panama Canal TrafHc and Tolls. The report is made pursuant to your instructions of September 1, 1911, which were to bring "up to as late a date as practicable the data contained in the Report of the Isthmian Canal Commission for 1899-1901, and also to formulate rules and regulations governing the measurement of ships going through the canal, and to make an investigation and recommendation regarding the tolls to be charged." It was deemed advisable to prepare two reports, one upon Traffic and Tolls and another upon The Measure- ment of Vessels. The latter report, which is in course of preparation, will explain the regulations governing the measurement of vessels in the United States, Great Britain, and Germany, and at the Suez Canal. The report will also include a set of rules recommended for the measurement of vessels that are required to pay tolls for using the Panama Canal. The conclusions reached as the result of the investigation and the recommendations that follow from the conclusions reached are presented in Chapters Xll and XIII of the following report. It is recommended that merchant vessels be required to pay tolls upon net tonnage so measured as to express their actual earning capacity, and that warships be charged tolls based upon displacement tonnage. The rates of toll recommended are $1.20 per net ton for merchant vessels carrying cargo or passengers, with a reduction of 40 per cent in the rate for vessels in ballast, and 50 cents per displacement ton for warships. It is recommended that no tolls be levied upon passengers. In submitting this report I wish gratefully to acknowledge the aid I have received from my assistant, Grover G. Huebner, Ph. D., University of Pennsylvania. Without his help the task would have been more laborious and would have taken more time. Very respectfully, Emory R. Johnson, Special Commissioner on Panama Traffic and Tolls. . The Secretary of War. 59d35 Digitized by the Internet Archive in 2010 with funding from Lyrasis IVIembers and Sloan Foundation ^ http://www.archive.org/details/panamacanaltraffOOjohn CONTENTS. Part l.~Traffic. P»g9. Chapter ^. Distances via the Panama Canal and alternative routes 3 JI. Tonnage of the vessels employed m the commerce that might have advantageously used the Panama Canal in 1909-10 . 19 VIII. Increase in available canal traffic, 1899 to 1914-15 37 [V. The relation of the Panama Canal to the traffic and rates of American railroads _iZ- V. The Suez Canal, its dimensions, and its financial and traffic history _ 89 VI. The Kaiser WUhelm Canal, its traffic, toUs, and revenues 105 VII. The Manchester Canal, its history, finances, and traffic 117 VIII. The Amsterdam Canal, construction, costs, and traffic 131 Part II. — Tolls and Revenue. IX. The basis or unit of toU levies upon merchant ships and war vessels 147 X. Coaling facilities and coal costs via the Panama Canal and alternative routes 155 XI. Relation of tolls to the volume of traffic through the canal; toUs the traffic will bear 171 XII. Panama Tolls I, principles and considerations that should control in fixing tolls 191 XIII. Panama ToUs II, rates of toU — gross and net revenue 203 APPENDICES. Appendix I. Report on the industrial and commercial value of the Isthmian Canal, by Emory R. Johnson, Ph. D. (Reprinted from Report of Isthmian Canal Commission, 1899-1901) . 217 II. ToUs and other charges imposed by the Suez Maritime Canal Co 381 III. Statute of the German Empire concerning charges for the use of the Kaiser WUhelm Canal, June 20, 1889 387 IV. ToUs and other charges for the use of the Kaiser WUhehn Canal 393 V. Schedule of port charges and demurrage fees imposed by the Kaiser WUhelm Canal Administration 401 VI. Manchester Canal, "ship dues" and other charges payable by shipowners 409 VII. Manchester Canal, "toUs" on merchandise and other charges payable by merchants.. . 431 VIII. The Panama Canal act of August 24, 1912 465 Index 475 LIST OF PLATES. LIST OF PLATES. Page Plates and Charts. Page. Plate A. Transcontinental rate groups _. 60 Plate B. Rate zones established by Interstate Commerce Commission in adjusting rates to inter- mediate western points 61 Chart I. Gross and net tonnage of vessels passing through the Suez Canal, 1870-1911 Facing 95 Chart 2. Gross and transit receipts, net earnings, interest amortization and dividends, Suez Canal, 1870-1911 .- Facmg 102 Chart 3. Administration, operating, and maintenance expenses of Suez Canal, 1870-1911 Facing 102 Plate C. Port of Ijmuiden. Facing 135 Folded Plates. 1. Trade routes and distances by existing lines and by the Panama Canal. 2. Points equally distant from New York and from Liverpool via the Panama and Suez routes. 3. Intercoastal steamship lines and water routes. 4. Suez Canal. 5. Suez Canal, types of cross sections. 6. Kaiser Wilhelm Canal. 7. The Manchester Canal. 8. The Manchester Canal and connections. 9. The Manchester port and docks. 10. Amsterdam or North Sea Canal. 11. The port of Amsterdam. 12. Coaling stations of the world. PART ONE. TRAFFIC. CHAPTER 1. DISTANCES VIA THE PANAMA CANAL AND ALTERNATIVE ROUTES. CHAPTER I. DISTANCES VIA THE PANAMA CANAI AND ALTERNATIVE ROUTES. The Panama Canal is being constructed to shorten ocean routes. Relative distances via Panama and other routes will mainly determine the use made of the canal and the toUs that may be charged without Umiting its traffic; hence this study of Panama tonnage and tolls should start with the tabulation and comparison of distances by way of the Isthmian Canal and other routes between Atlantic and Pacific ports. The economy resulting from the shortening of ocean routes is measured by the saving in the time vessels take to carry freight or passengers from one port to another. ToUs will be paid by ocean carriers to reduce the time and expense of performing specific transportation services; and, theoretically, the toUs charged for the use of the canal may be made equal, or nearly equal, to the saving effected by the canal. Distance and time of voyage between the ports of departure and destination are not the only factors deter- mining the selection of routes. The longer of two routes may be the more profitable one if there be a larger volume of desired traffic to and from intermediate ports. Of two competing routes, the longer one may be selected if it has the larger number of coaling stations and the lower costs for fuel. When the choice is between the Panama and Suez routes, the relative toUs charged by the competing canals may determine the direction of traffic. Lower insurance rates may influence carriers to select the route that exposes the ship or cargo to the least risk. In calculating the volume of traffic that will use the Panama Canal, and particularly in discussing the effects which toUs may have in diverting sliipping from the canal, due consideration wiU be given to the forces, other than length and steaming time of alternative ocean routes, that give direction to the currents of ocean commerce. The factors other than distance and time are merely mentioned in tliis coimection to indicate that they are not to be overlooked, although this chapter is devoted solely to a comparison of the Panama and other routes as regards chstances and the time required for ocean voyages. The Hydrograpluc Office in the Department of the Navy courteously suppUed aU figures for distances contained in the foUo%ving tables. A blank form for each of the first 10 tables was submitted to the Hydro- graphic Office which compiled the figures and checked them up with special care. The distances as stated may be accepted as reliable and as revised to date — the end of 1911. The 14 tables presented in this chapter are intended to show three tilings: (a) The distances in nautical miles for fuU-powered steamers, between large commercial ports, inclucUng calls en route at designated points. The purpose has been to give the length not of the shortest navigable course, but of a route by way of one or more of the commercially important ports at which vessels ortlinarily call. No attempt has been made to include all intermediate ports and coaling stations at which steamers call. Some ships stop at many, some at but few places on the way between distant ports. In the case of each route, the tables state what, if any, intermediate ports are included. (b) The net reduction (stated in nautical miles) effected by the Panama Canal in the length of ocean routes. The comparison, in each instance, is between the Panama and the shortest alternative route; but when a course longer than the most direct one is largely used by commerce — as that from Europe to Austral- asia around the Cape of Good Hope instead of the one \aa Suez — the discussion accompanying the table com- pares the distances by way of each possible traffic highway. (c) The net saving in days of steaming time that vessels of chfferent speeds can make by using the Panama Canal. Having calculated the number of days a vessel can save by taking the canal route and having ascer- tained how many dollars a day's reduction in the time of a voyage is worth to the owners or operators of a vessel, it is possible to determine the maximum toUs that may be levied without preventing the ship from using the canal. The tables in this chapter, showing the number of days that vessels can save by using the canal are made the basis of much of the reasoning in Chapter XI upon "The relation of tolls to the volume of traffic through the canal." 5 PANAMA CANAL TRAFFIC AND TOLLS. In the tiiblni of dktiiiui'b all figuii« are fur uuutictil inilt« ((i,()SO fc«t) niul uot in statute or land mile« (5,2K0 fwt). Fur routioi vin Paimuiu ih« Im^ftli uf llm tranal — 41 nautical mile* — i»i indudml, Tlio Suoa C^nal ib rtM'ktuittil at K7 natitii at uultv, that bt-ing tlu^ ilititance via tht' raiml uikI lak(« between the MetUter- ranean and the Ued Sea. Tlio figuif« fur diotaai'tvi, ait given in thiia aat-tion, do not quite af^rt-e with thoae in the n^jHirt of the letlaaian Canal C'ouimieieiun uf 1001, upon "The Indutitrial and Coninuni-ial Value of thn iHtluuian Canal," which in r«|irinted a^ Appendix 1 of thid report. In the report of I'JUl, th« length of the Panama Canal waa taken to bu 43 nautical inih-ts, itiul of iht^ .Suez Canal HS niilei). However, the Ifitgth of an ocean route docM not necru>«arily remain constant frtun year to year. The dreilging of a new harbor entrance — ah the Anibroae Channel at New York — may uliglitly shorten a route; or experience in navigation may cauae Mtcamei^ to modify their regular cimi^e from one port to another. The tliiitance from New York to .San Fraiicihco via Panama, for iiutance, wan btated upon the llydrographic (Hhce chartji in 18'J'J to be 5,2t)9 milea, wliile the 1911 editioo of the chart make>> the v.,.. Und biO vie Sen :>,24:5 aeo Uiego 2,M3 8eQ 4.«lt Hono- lulu iibliS «4tt OUI^&r (Uteo 1.348 l4Ul- 2,l« V«l[*- nueo 2.610 1.431 Del PorUkiul, He /Faaama... \Ua«eUan. 6,?T6 6,M 6,Im U,M» U,7t7 i.a* U.137 U,74i |,IU« S.lli ll,S2ii 11,240 6, 914 13,314 16,217 l.(7t 8,616 4,216 8,116 4,84» 8,383 g:S B«euuk ll-iilU.ll.it .. \Ui.«eUaU.. 6,ttta 6, an 6,010 S,43u U,lu> 12,714 3,611 3,U7I 6,S70 2,»7« 1I,4S6 ; U,2Ua 13:263 IO,ltB 3,631 «,fe4 4.172 8,114 4.801 8,361 6,007 8,108 New York. {M>«iaUil'' 2,017 o.!M7 14,07 6,(B2 U,7U S,»2 u.ias 4,(60 12,743 3,443 ll,&24 2,(D3 11,238 «,702 13,312 2,816 10,216 8,»t »,6I3 4,004 8,143 4,633 8,3M1 4,iM 3.ia» PhiUdslphta ,,,„,„,,.,„„,,;,,,,. {tiS^.: I4,4»4 \ ■- M,l»2 4,»32 I2,7«U 3.41S 11,671 2,tl7S II, 2U 6,674 i3,3»a 2.782 10,262 3,336 8,660 3,876 8,186 4.606 8,427 4,811 Bkltiiuon (Usfeitan.. 1,^4 1,Wli 6,4«1 14, Ml ii.j.j II.ITJ i.lSB 4,7« 12.W7 3,370 U,aM 2,liao 11,312 6,620 U,3tt 2.737 10,28» 3,280 8,687 3,831 8,217 4.680 8,4&4 4,7«8 8,208 NwMk jl'alMli.li . . \kla£taKUl.. S,U7 S,717 13.787 S,(li7 U,UI7 4,665 12,e«6 3,24!l 11,470 2,7<« il,l«0 6,W I3,a>4 2,616 10,167 3,168 8,»>6 3,8M 8,086 4,138 8,332 4,61« 8,081 Cbwteiitoii t-iuuuiia . . l>,M8 6,1S4 14,38i »,6» $,$02 13,7il6 4,«&2 4,4a0 12,6!M 3,oas ll,47i 2,4W I1,1IM 6,202 13,203 2,400 10.l« 2.8U «.»4 3,684 8,084 4.223 8,331 4.4» 8.08* tevuuukh ,,,,,,.,,,,,,,, {hSSS.-.: l,t>«B 14;4aft 1 : 4,449 12,726 3,032 11,507 2,402 11,221 6,2»l , 2,390 13,266 10,108 2.862 8,606 8,126 4.222 8,863 J::5 \Us«elUa.. l.&M ! 6,106 li.,-..-. o,;^. i.iM 4,402 12,713 2,«a6 11, 484 2.44J ll,2U3 6,'M4 2,362 13,282 IU,l(t6 2,806 8,6a3 3,6«§ 8,113 4,176 8,360 «.1U Fwl TwiiiM 7,0dS S,Z7S is,«a3 4,iflS 13,263 4,103 i2,aBi 2,rA) 11,642 2,146 ll.3iA S,M6 1 2,063 13,430 1 10,333 2, 60) »,73l 3,247 8,261 3,870 8,e« ^:^ t'^flSTri^flm , {uacellui'.! 7.(70 14,760 14,108 4,637 4,2as )3,06ti 2,tU U,M7 2.278 ii.a>i 6,077 U,6» 2,186 10.638 2,7« 8,«ai 3,378 8,*« 4,008 8.7«a 4.218 UbtUb ,.. {u«ariiwi.. 1.416 S.9t>6 S,4M i,3U 14,14« 4,««4 I3,4«3 *.*2 13,106 2,tM£ 2.306 11,601 6,104 13,676 2,212 10,678 2.766 8,876 3.406 8,606 4,(66 8.743 4.2U rPwuma.. 1,43» ! S.MS i,4S3 6,aS3 14,201 4,6U l3,iiU 4,Sfcl i.mt ll,Uu 2,324 11,664 6,123 13,728 2,231 10,631 2.784 10,028 3.426 8,668 4.064 8.786 «.M Q)iiv«frtoii . {iUi^i^u.'. l,»42 e.Otti i,W ■l,6» 1 U.Ote j 14,4»7 i.437 14,177 4,787 11,727 4,3U 13,3iu 2,i6s 12,116 2.4ai 6,227 ll,UO 13,Mt4 2.336 10,807 2,888 10.208 3.628 8,736 4.IM 8.872 V^ PANAMA CANAI, TKAKKIC AND 'I'OLI/S. Tlio firHl, (jildo Hl.iif.dM IJk^ hI. coaHl. cilicH Hclcclcd iiichidd iSillui, lint cliicf poll, of AIiimIui, INii'I. 'rowiiHi'iid, al. t\)o ^,'ii((^wiiy Id l'ii;,'(>l. Sound, I'drllund, I lid porl, (if liid Colnniliia Vidl(>v, Sun l''iii,iicirico and San Diof/o for C(Mitral and Hoiitli(«rii California, Acii.|iiilco, an iinporlaiil, Mexican porl, ( iiiiiyiu|nil and Cidliio, llin cliicf Iradc C(Mi(,(^rH (if IO(pia(lor and I'ciii, l(pii(pic, oi f I lie two \n\y,ii nili'iil(« Hliippini^ poiiiln in iiorllicrn < 'liilc, Valpariiimi, llid main ncapdi'l, of lli(> ccnliid a;^iiciill iiiiil portion of ( 'liilc, and ( 'oronci ('i'ldcnliiiiino), Mic (inly MliU.ion on Ml(^ wchI. c(iaMl, of SoiiMi AnKM'icii al< vvliicli lar^^c (|uaiii.il'i(^H of local coid can lie oliliiincd ('(ii-iincl in i(icar(M| al, IM" A'i,' hoiiIIi liil.iriide. Alioiil. '..'()() niili (IIU.K I'olCI'H d!'' 'Clll'; IINriKIl H'I'ATKH '!'(» I'oiiT.s (IN 'I'lii'; u K.-i'i' coAM'i'H OI'' Nuirni, (1';n'I'I(AI,, anh hoiiiii amijiica, I'll.fL.W. I ,r, ..,,, Bun KruiKilwii) Bon Juwi ilu (iunUiiiinlii., Iqultiua VtlpaniM OoioimI. .......... ...... I'ni " nw ViitU vlii N.illolk vl» Now dilTOim via (1»IV«lll«fl vl»- MuhkIIiui, I'nhiiniii, MitKallftli, t'nilnlllit, MoHollnii, I'mittiiiH, Mitenlltill, n,ii;i',( i;i,iKir< /i, KXI i:i,iw? ft.m l4,.rJI fi, DM 14,411'/ K'm i:i, \\v< (i, nn; ri.iiiiv 4, mm i;i,riiii • 4, W 1 ;!,'/■// i(,(Kt;i n.aiiH K, yiw ll,IU(| %WH ll,W)4 %m ii,b;i(i 4,IKH u, u» :i, will «,ii«n %m V,AM a, Am tt,?»0 4,ia;i H,»IK) <, ill W/i 4,1104 H,7IW 4, IM N,(i7a 4,IW1) M, l;ir, 4, ^M n,!*? 4,JKI0 »,M1 4, ,1114 n, •/■/■/ Tlir» rediiclion en'ect,ed hy Ihe I'aiiama Canal in (he Icn^Mh (if idl whIim' runl.eM hel.ween (he Adanl.ic fJiill' H(!al)(iard (if IIk) United ,S(,ii,(,eH and I'acilic, pdr(,H iw hIiowii heldw in deliiij in 'I'ahle XI. 'f'he diidiinee f/dni New York (,(» San KnuiciHCd, hy way of (he S(,rail,H of Mu{^'lhui, \h j.'j.l.'in iiaiilical mileii, hy way df I'anama tt;M\'l iriilcH, Ui((c,anal rdiii.e hein^^; 7,H7.'{ milen Hh(irl,er. TheHaviii!^ he(,w(»ni New Orleaim and San iM'iuiciMc.d in f/realiM' S,H(iH miii(,ical milcM (he MaiM-lian ronl.e heinp; \u\\\'y\- and (he canal niiidi itlidr((^r frum New Orleium Uiaii from Ni!W Yurk. The ciuial will reduce (,he diiilance from New Ynrk In (he Chilian iiilraUi porl,, hpiirpie, n,!.')!) nan(,ieal niilcH, (,d ValjiaraiHd .'J, 7-17 milcH, (,d Cdniiiel .'!, '„",)(!, and ViJdivia ahoul, '/.DOO imlcii, I'or New Oileann and dllier (iiilf porl.H, (,li'! rediic.(,ion w ^!;rea(,(•l■, Since (he \)i\\.r\\\\\\\\y> of |<)()7, (rallic hel.ween New York and I'acilic pdrlii of (he Cni(i'(| S(a(ci) fiiichidmj/ Hawaii) liaH herm handled in increiiMinii; vdliime hy way of l.he lMl,limn)4 (if 'ri^hnanlcpec. The American Hawaiian Sl,eamHhi|» Cd. operal.rtH a (le(d, df veimelM he(,we.(!n New Vdrk and \'wxU> Mexicd and and(.lier llce(, he(,ween iSalina Cniz and San KranciHco and I'lij^el, Sdimd, and Ixttweeii Salina (!rii/- and Hawaii, A railrdad WVI uladiln inilcH Cl(i7 miiil.ical milcHj in Icnt^'lh c()nnec,(,M l'iier(,d Mr^xic(i and Salina <'\\v/,. TIki Teliiiati(,epec, rdiif.e and id* railroad now rt(imp(;(,e wi(,li (he niiil.e via (ho lM(,lijriim df ranania and (he railniad from Cdlon (,d (he l'dr(. of Balhda n'anaina). Holli of (lieHo (ranw- litlhmian railwayn are now liandlins^ a ri-lalively lar|.v (dtina.t^e of tlirduj.';!! (,ra(Iic,. AfI.er (he canal in dpened, (Iki Teliiianl.epec, rdii(,«) will he a, powiihle, (hdiit/li iiol, a prohahhr, Cdmpe(,i(,dr of (,lie I'anama ('anal. The ciimparal.ive diuduicen via (,lie, (,wd roidc;! from New Yoii, and N'l w Oi'lcuiiH to Sati Kraneimid and lloiidliilii are, Mlwiwii in Tahio III, PANAMA CANAL TRAFFIC AND TOLLS. Table III. -DISTANCES (IN NAUTICAL MILES) FROM NEW YORK AND NEW ORLEANS TO SAN FRANCISCO AND HONOLULU VIA THE ISTHMUS OP TEHUANTEPEC AND VIA PANAMA. To- San Francisco vis- Honolulu via— Isthmus of Tehuan- tepec. 167 Panama. Isthmus of Tehuan- tepec. 167 Panama. 4,246 3,110 5,262 4,683 5,691 4,555 6,702 6,123 The distance from New York to San Francisco is 1,016 nautical miles less via Tehuantepec than by way of Panama, and from New Orleans 1,573 nules shorter. To Honolulu, the distance via Tehuantepec is 1,011 nautical miles less from New York and 1,568 miles less from New Orleans. These differences in distance will not enable the Tehuantepec route to compete with the Panama Canal. The average cost of transferring freight from the hold of a ship on one side of the Isthmus of Tehuantepec to the hold of a sliip on the other side could hardly be brought below $2.50 per cargo ton — the present costs are said to be more than this. A toll at Panama of $1.20 per vessel-ton, net register, would amount to about $0.60 a ton on cargo; and, thus, the cost of getting cargo from ocean to ocean would be about $2 per ton greater at Tehuantepec than at Panama. The double handling of commodities, with the unavoidable breakage and damage incident thereto, would further place the Tehuantepec route at a disadvantage in competing for traffic against the through sei-vice without breaking bulk, by way of the canal. Moreover, the time required to handle freight from New York to San Francisco would be but httle less via Tehuantepec than via the canal. As vessels require about two days to discharge and two to load, the average detention of traffic, due to transfer from ocean to ocean across the Isth- mus of Tehuantepec, will be about four days. At Panama, a ship can pass through the canal in less than half a day; and, should another half day be taken for coaling, the total detention will not exceed one day. The Tehuantepec Railway may possibly have a fair volume of traffic after the canal is opened. Coastwise trade for some distance up and down the two seaboards will center at SaUna Cruz and Puerto Mexico, and goods will be transferred across the Isthmus, in part, for sale in nearby markets and in part for shipment across the sea. The Tehuantepec Railway will assist the development of southern Mexico and northern Central America, and the railroad will, in consequence, handle an increasing tonnage. Table IV.— DISTANCES (IN NAUTICAL MILES) FROM EUROPEAN PORTS TO PACIFIC PORTS OF AMERICA VIA PANAMA AND STRAITS OF MAGELLAN. Sitka via San Francisco Port Townsend via San Francisco Portland via San Francisco San Francisco San Diego Acapulco San Jose de Guatemala Honolulu Guayaquil Callao Iquique Valparaiso Coronel 7,836 7,434 6,017 5,477 9,276 5,384 5,937 6,578 7,207 7,413 Panama. Magellan. 4,691 7,314 14,804 14,272 14, 152 13, 502 13,110 11,891 11,605 13, 679 10,582 9,510 8,747 8,502 Panama. Magellan. 5, 110 7, 695 9,657 9,125 9,005 8,355 7,953 6,536 5,996 9,795 5,903 6,456 7,097 7,726 7,932 15,185 14,653 14,533 13,883 13, 491 12, 272 11,986 14,060 10,963 10,361 9,891 9,128 6,274 5,734 9,533 5,641 6,194 6,835 7,464 7,670 Panama. Magellan. 4,848 7,433 14,923 14,391 14, 271 13,621 13,229 12,010 11,724 13, 798 10, 701 10,099 Bordeaux via— 8,536 7,886 7,484 6,067 5,527 9,326 5,434 5,987 6,628 7,257 7,463 Panama. Magellan, 4,641 7,074 14,564 14,032 13, 912 13,262 12,870 11,651 11,365 13,439 10,342 9,740 9,270 8,507 8,262 Panama. Magellan. 4,376 6,383 8,391 8,271 7,621 7,219 5,802 5,262 9,061 5,169 5,722 6,363 6,992 7,198 13,873 13,341 13,221 12,571 12,179 10,960 10,674 12,748 9,651 9,049 8,579 7,816 7,571 PANAMA CANAL TEAFFIC AND TOLLS. 9 The relative distances via the Panama Canal and the Straits of Magellan from Europe to the 13 selected American Pacific ports are indicated in Table PV. Instead of giving distances from Plymouth, as is customary in compiling such tables, the figures state the number of miles from four important ports so located that dis- tances from them represent the distances from the leading commercial districts of northwestern Europe. The eflFect of the canal upon the length of the routes from southern Europe to Pacific America is illustrated by stating the distances from Gibraltar, the sentinel at the Mediterranean gateway. The reductions which the Panama Canal will make in the length of ocean routes from Europe to Hawaii and the west coast of North and South America are stated in Table XII. The canal will bring San Francisco Portland, and Puget Sound ports, and British Columbia, 5,666 nautical miles nearer to Liverpool, 5,528 miles closer to Antwerp and Hamburg, and will make Gibraltar 4,950 miles less distant. To Iquique, tlae principal ship- ping point for nitrate — the tonnage of which is and will be larger than that of any other single item of traffic — the canal route will be shorter than the Magellan route by 2,932 nautical miles for Livei-pool, 2,794 miles for Hamburg and Antwerp, 2,642 miles for Bordeaux, and 2,216 miles for Gibraltar and the Mediterranean ports generally. To Valparaiso, the canal reduces the distance from Liverpool 1,540 miles; from Hamburg and Ant- werp, 1,402 miles; from Bordeaux, 1,250 miles; and from Gibraltar, 824 miles. Valparaiso and Coronel are on the margin of the canal's zone of influence. The forces that will determine whether the traffic between central Chile and Europe will move by way of the canal or through the Straits of MageUan are analyzed in Chapter XI in connection with the discussion of the tolls the Panama traffic will bear. Table V.— DISTANCES (IN NAUTICAL MILES) FROM ATLANTIC PORTS OF THE UNITED STATES TO YOKOHAMA, SHANGHAI, AND HONGKONG VIA PANAMA AND SUEZ. Yokohama via — Panama, San Fran- cisco, and Great Circle. 7,781 Panama, and Hono- lulu. 8,079 Suez, Colombo, Singa- pore, Hong- kong, and Shanghai, 10,371 Panama, San Fran- cisco, and Great Circle. 8,632 Panama, Hono- lulu, and Yoko- hama. 9,120 Suez, Colombo Singa- pore, and Hong- kong. 9,330 Hongkong via- Panama, San Fran- cisco, Yoko- hama, and Shanghai. 9,674 Panama, Hono- lulu, Yoko- hama, and 9,972 Panama, Hono- lulu, Guam, and Manila. 10,159 Suez, Colombo, and Singa- pore. 8,478 Portland Boston New York . . Philadelphia Baltimore. . . Norfolk Charleston. . . Savannah Jacksonville. Port Tampa. Pensacola..., Mobile New Orleans Galveston . . , 2,229 2,185 2,017 1,989 1,944 1,822 1,607 1,606 1,559 1,260 1,392 1,419 1,438 1,542 2,992 3,030 3,195 3,337 3,470 3,348 3,592 3,665 3,740 4,255 4,460 4,500 4,553 4,729 9,770 9,725 9,603 9,340 9,041 9,173 9,200 9,219 9,323 10,308 10,264 10,096 10,068 10,023 9,901 9,638 9,339 9,471 9,498 9,517 9,621 13,363 13,401 13,566 13,708 13,841 13,719 13,963 14,036 14,111 14,626 14,831 14,871 14,924 15,100 10,861 10,817 10,649 10,621 10.576 10,454 10,239 10,238 10,191 9,892 10,024 10,051 10,070 10, 174 11,349 11,305 11, 137 11,109 11,064 10,942 10,727 10,726 10,679 10,380 10,512 10,539 10,558 10,662 12,322 12,360 12,525 12,667 12,800 12,678 12,922 12,995 13,070 13,585 13,790 13,830 13,883 14,059 11,903 11,859 11,691 11,663 11,618 11,496 11,281 11,280 11,233 10,934 11,066 11,093 11,112 11,216 12,201 12, 157 11,989 11,961 11,916 11,794 11,579 11,578 11,531 11,232 11,364 11,391 11,410 11,514 12,388 12,344 12, 176 12,148 12, 103 11,981 11,766 11,765 11,718 11,419 11,551 11,578 11,597 11,701 11,470 11,508 11,673 11,815 11,948 11,826 12,070 12, 143 12,218 12,733 12,938 12,978 13,031 13,207 The distances by way of the Panama Canal and alternative routes between the North Atlantic and the ports of eastern Asia and of Australasia are stated in a series of six tables, V to X. The tables are of especial significance, because in Australasia and the countries along the Pacific coast of Asia, the traffic zones of the Suez and Panama Canals touch or overlap. It is in these countries that the two great highways will compete for the commerce of the eastern part of the United States and, to some extent, for the trade of Europe with the Orient, the East Indies, and Australasia. Table V states the distances via the two canals from the 14 selected ports of the Atlantic-Gulf coast of the United States to Yokohama, Shanghai, and Hongkong, i. e., to Japan and China. The table is so con- structed as to state, first, the number of nautical mUes from each of the 14 ports to Panama and to Gibraltar; 10 PANAMA CANAL TKAFFIC AND TOLLS. second, the distances from those points to Yokohama, Shanghai, and Hongkong via designated routes; and third, the through distances from the several 14 ports to Yokohama, Shanghai, and Hongkong via designated ports of call. Distances are given for two courses from Balboa across the Pacific, one via San Francisco and the Great Circle, so modified as to keep the course south of the Aleutian Islands, the other via Honolulu. The route from Balboa (Panama) to Yokohama by way of San Francisco and the Great Circle, it wUl be observed, is 298 miles shorter. The lengtlis are given for three routes from Panama to Hongkong, one via San Francisco^ Yokohama, and Shanghai (which is the shortest of the three named), another via Honolulu, Yokoliama, and Shanghai, and a tliird by way of Honolulu, Guam, and Manila, the third course being 485 miles longer than the one by way of San Francisco, Yokohama, and Shanghai. The routes for which distances are given in Table V, and also 'in succeeding tables, are by way of tlie larger ports at which vessels regidarly call. WliQe not all of the ports at wliich vessels may, or frequently do, stop are included, enough intermediate ports are designated to make the distances, as stated in the tables, consid- erably gi-eater than tiie lengths of the shortest possible routes between the ports of departure and ultimate destination. Commercial, rather than theoretical, routes have been chosen, both via the Suez Canal and via Panama. The differences in the distances by way of Panama and via Suez from the Atlantic-Gulf seaboard of the United States and Yokohama, Shanghai, and Hongkong are stated in Table XL Yokohama and Shanghai are well within tlie Panama traffic zone. The distance from New York to Yokohama is 3,768, and to Shanghai 1,876, miles less via Panama than via Suez. In the case of cities south of New York the advantages of the Panama route are still gi-eater. New Orleans being 5,705 miles nearer Yokohama, and 3,813 miles nearer Shanghai via the Panama route. Hongkong is almost equally distant from New York via the Panama and Suez routes as designated in the tables; and for the Atlantic ports of the United States south of New York the advantage of the Panama over the Suez course is relatively slight. For the GuK ports, however, the saving by the American Canal to Hongkong is substantial— 1,919 miles for New Orleans and nearly 2,000 miles for Galveston. Table VI. -DISTANCES (IN NAUTICAL MILES) FROM THE ATLANTIC PORTS OF THE UNITED STATES TO MANILA VIA THE PANAMA AND SUEZ ROUTES. To Manila via— From — Panama, San Fran- cisco, and Yokohama. 9,531 Panama, Honolulu, and Yokohama. 9,829 Panama, Honolulu, Yokohama, Shanghai, and Hongkong. 10,603 Panama, Honolulu, and Guam. 9,528 Suez, Colombo, and Singapore. 8,394 Portland '. 11,760 11,716 11,548 11,520 11,475 11,353 11,138 11,137 11,090 10,791 10,923 10,950 10,909 11,073 12,058 12,014 11,846 11,818 11,773 11,651 11,436 11,435 11,388 11,089 11,221 11,248 11,267 11,371 12,832 12,788 12,660 12,592 12,547 12,425 12,210 12,209 12, 162 11,863 11,995 12,022 12,041 12, 145 11,757 11,713 11,545 11,517 11,472 11,350 11,135 11,134 11,087 10,788 10,920 10,947 10,966 11,070 11,386 11,424 11,589 11,731 11,864 11,742 11,986 12,069 12,134 12,649 12,864 12,894 12,947 13,123 Boston New York PhUadelphia Baltimore Norfolk Charleston Savannah Jacksonville Port Tampa Pensacola Mobile New Orleans Galveston The distances from the Atlantic-Gulf seaboard of the United States to Manila via Panama and Suez are stated in Table VI. Manda, like Hongkong, is about the same distance from New York by each of the competing canals, the advantage being slightly in favor of the Panama route. New Orleans and Galveston are about 2,000 PANAMA CANAL TRAFFIC AND TOLLS. 11 miles nearer Manila via the Panama than via the Suez Canal. Four routes across the Pacific from Panama to Manila are designated in the table; and it will be noted that the distances via San Francisco and Yokohama and by way of Honolulu and Guam are practically equal. Probably the route most followed by lines of freight vessels bound for Manila will be by way of San Francisco, Yokohama, Shanghai, and Hongkong, the distance from New York to Manda by this route being 12,055 miles. Table VII.— DISTANCES (IN NAUTICAL MILES) FROM THE ATLANTIC AND GULF PORTS OF THE UNITED STATES TO AUSTRALIA AND NEW ZEALAND VIA PANAMA, THE CAPE OF GOOD HOPE, AND THE STRAITS OF MAGELLAN. Adelaide via — Tahiti, Sydney, and Mel- bourne. 8,SS7 St. Vin- cent and Cape of Good Hope. 9,736 Melbourne via — Panama, Tahiti, and Sydney. "8,375 St. Vin- cent, Cape of Good Hope, and Adelaide. 10,248 Panama and Tahiti. 7,794 of GOOQ Hope, Adelaide, and Mel- boimie. 10,829 Wellington via — Panama, and Tahiti. 6,834 St. Vin- cent, Cape of Good Hope, and Mel- bourne, 11,527 Portland Boston New York... Philadelphia Baltimore. . . Norfolk Charleston . . Savannah... Jacksonville. Port Tampa. Pensacola... Mobile New Orleans Galveston. . . 2,804 2,819 2,914 3,013 3,093 2,973 3,110 3,169 3,199 3,549 3,754 3,794 3,847 4,023 11, 116 11,072 10,904 10,876 10,831 10,709 10,494 10,493 10,446 10, 147 10,279 10,306 10,325 10,429 12,540 12,555 12,650 • 12,749 12,831 12,709 12,846 12,905 12,935 13,285 13,490 13,530 13,583 13,759 10,604 10,560 10,392 10,364 10,319 10, 197 9,982 9,981 9,934 9,635 9,767 9,794 9,813 9,917 13,052 13,067 13, 162 13,261 13,343 13,221 13,358 13,417 13,447 13,797 14,002 14,042 14,095 14,271 10,023 9,979 9,811 9,783 9,738 9,616 9,401 9,400 9,353 9,054 9,186 9,213 9,232 9,336 13,633 13,648 13,743 13,842 13,924 13,802 13,939 13,998 14,028 14,378 14,583 14,623 14,676 14,852 9,063 9,019 8,851 8,823 8,778 8,656 8,441 8,440 8,393 8,094 8,226 8,253 8,272 8,376 14,331 14,346 14,441 14,540 14,622 14,500 14,637 14,696 14,726 15,076 15,281 16,321 15,374 15,550 11,346 11,315 11,344 11,391 11,418 11,296 11,295 11,327 11,314 11,462 11,667 11,707 11,760 11,936 Vessels from the Atlantic-Gulf seaboard of the United States to Austraha now round the Cape of Good Hope, the distance by that route being about the same as the one via the Suez Canal. After the Panama Canal is opened, the choice mil be between the Good Hope and Panama routes. Table VII states the distance from the 14 selected Atlantic-GuK ports of the United States to the three principal ports of Australia — Adelaide, Melbourne, and Sydney. These three Australian ports are located on the southern and southeastern coasts of the continent and vessels from the United States (and also from Europe, whether the approach be via the Cape of Good Hope or via the Suez Canal) pass along the southern coast of Austraha. Line vessels regularly call at Adelaide and Melbourne, and are certain to proceed to Sydney, which is the largest city of Austraha and is near the Newcastle coal fields. Sydney is also visited by most chartered vessels engaged in the Aus- trahan trade. Thus, the effect of the Panama Canal upon the length of the commercial routes from the eastern part of the United States to Austraha is to be measured mainly by comparing the cUstances via the Cape of Good Hope and by way of Panama to Sydney. As is show^i below in Table XI, the Panama Canal mil bring Sydney about 4,000 miles nearer N^ew York and the other north Atlantic ports of the United States, somewhat more than 4,500 miles nearer to Cliarleston and other southern Atlantic cities, and 5,500 miles closer to New Orleans and Galveston. The cUstance from New York to Melbourne is 2,770 miles less, and to Adelaide 1,746 miles less, by way of Panama and Tahiti and Sydney than via St. Vincent and the Cape of Good Hope. For the Gulf ports the difference in favor of the Panama route is about 1,500 miles greater. At present the shortest all-water route to New Zealand from the eastern part of the United States is through the Straits of Magellan. The distance from New York to Welhngton via the straits is 11, .344 miles, as com- pared with 14,441 miles via St. Vincent, the Cape of Good Hope, and Melbourne. By way of the Panama Canal and Tahiti the distance from New York to Wellington will be S,S51 miles, or, as shown in Table XI, 34998°— 12 2 12 PANAMA CANAL TKAFFIC AND TOLLS. practically 2,500 miles less than by way of the cape. From New Orleans and Galveston the Panama route to Wellington \vill be 3,500 miles shorter than the Magellan route. Table VIII.— DISTANCES (IN NAUTICAL MILES) FROM LIVERPOOL VIA THE PANAMA AND SUEZ ROUTES TO AUSTRALIA, NEW ZEALAND, THE PHILIPPINE ISLANDS, CHINA, AND JAPAN. From Liverpool via— Suez route. (To Aden 4,608.) In favor of Suez — , Adelaide... Melbourne. Sydney Wellington Manila Hongkong. Tientsin... Yokohama. 6,634 7,046 7,627 8,381 5,093 5,177 6,769 Aden, Colombo, and Singapore. Aden, Colombo, Singapore, Hongkong, and Shanghai. 11,142 11,654 12,235 12,989 9,701 9,785 11,377 Panama, Tahiti, and Sydney . Panama and Tahiti 13,478 12,966 12,385 11,425 14, 122 13,957 13,822 -2,336 -1,312 - 150 + 1,564 -4,421 -4, 172 -2,445 Panama and San Francisco.. All of Asia and all of Australasia, with the exception of New Zealand, will be nearer Europe by way of the Suez Canal than by way of the Panama route. The distances from Liverpool via alternative routes to Aus- traha, New Zealand, the Pliihppines, Cliina, and Japan are stated in Table VIII. The table is so constructed as to show (1) the distances from Aden to each of the eight designated Pacific ports, (2) the distances from Liverpool to Aden, (3) from Liverpool to Panama, (4) the entire distance from Liverpool to the designated Pacific ports via the Suez Canal, (5) the through distances from Liverpool via Panama to each of the trans" Pacific destinations, and (6) the difference in the distance via the Suez and Panama routes. In the case of each route the intermediate ports of call are designated. It will be noted that wliile all of Australia is nearer Europe via the Suez Canal, the distance from Liverpool to Sydney, the principal port of Australia, is but slightly greater via Panama than via the Suez Canal. A line connecting all points in the Pacific equally distant from Liverpool via alternative canal routes runs some- what east of AustraUa, weU to the east of the Pliilippines, and passes east and slightly north of the island of Nippon, Japan. WeUington, New Zealand, is 1,564 miles nearer Liverpool via Panama than via Suez; however, the com- petition for the trade of Europe with New Zealand will not be mainly between the Panama and the Suez routes. At the present time most freight vessels outbound from Europe to Australia and New Zealand go via the Cape of Good Hope, wliile passenger and express steamers take the Suez route. Vessels leaving New Zealand \vith fuU cargoes for Europe regularly proceed via the Straits of Magellan wliich route to Liverpool is 1,014 miles shorter than the route via Melbourne, Colombo, and Suez. After the Panama Canal is opened there will be active competition between the Panama and Magellan routes for much of the traffic between Europe and New Zealand. The distance between Liverpool and New Zealand via the Straits of Magellan will be only 500 miles greater than via the American Isthmus. From Liverpool and Europe generally to the Pliilippine Islands, to Cliina and Japan, the Suez route will be much shorter than the Panama route. From Liverpool to Manila and Hongkong, the Suez route will be over 4,000 miles shorter than the route via Panama. Northern Cliina via the Suez Canal will be 2,500 miles nearer to Europe, and Yokohama about 700 miles nearer. For European ports south of the EngUsh Channel the advantages of the Suez route are still greater. PANAMA CANAL TRAFFIC AND TOLLS. 13 Table IX.— COMPARATIVE DISTANCES (IN NAUTICAL MILES) FROM NEW YORK AND LIVERPOOL TO NEW ZEA- LAND, AUSTRALIA, PHILIPPINES, CHINA, AND JAPAN, VIA SUEZ AND PANAMA CANALS. To- New York via Panama Canal. 2,017 Liverpool via Suez Canal. 4,608 Differ- ence in favor of Ports of call. Distance. Ports of call. Distance. Suez -, Panama +■ 8,851 9,811 10,904 11,548 11,383 10,839 11,248 9,798 Aden, Colombo, King George Sound, and Melbourne. Aden, Colombo, King George Sotmd, Adelaide, and Melbourne. Aden, Colombo, and King George Sound. Aden, Colombo, and Singapore do 12,989 12,235 11,142 9,701 9,785 10,637 11,377 11,678 +4,138 +2,424 ...do Adelaide Panama, Tahiti, Sydney, and Mel- bourne. Panama, San Francisco, and Yoko- hama. do + 238 -1,847 -1,598 do . . Aden, Colombo, Singapore, and Hong- kong. Aden, Colombo, Singapore, Hongkong, and Shanghai. do 202 ....do +1,880 The conditions under which American and European merchants will compete for the trade of Australasia, the Philippines, China, and Japan, after the opening of the Panama Canal, are indicated in Table IX, wliich compares the distances from New York via the Panama Canal with the distances from Europe via the Suez Canal to the eight most important Pacific ports of Australasia and Asia. The Panama Canal will bring Austra- lasia much nearer to New York than to Liverpool. The distance from Liverpool to Sydney via Suez, Colombo, King George Sound, Adelaide, and Melbourne will be 2,424 mdes greater than from New York to Sydney via Panama and Taliiti. Liverpool will be 4,138 miles farther than New York will be from Wellington, New Zea- land. In the Philippine Islands and in southern and central Cluna, however, the situation will be the reverse. The PhUippine Islands, after the opening of the Panama Canal, will stiU be 2,000 miles nearer to northwestern Europe than to the eastern part of the United States. Northern China will be slightly nearer to the north Atlantic seaboard of the United States than to northwestern Europe, while Yokohama will be 1,880 miles nearer New York than Liverpool. Plate 2, in the pocket at end of this report, locates the points equally distant from New York and from Liverpool via the Panama and Suez routes. In discussing the probable movement of traffic after the Panama Canal has been put into operation, attention will be called to the fact that the line equally cUstant from a European port via the eastern and western canal routes will not necessarily be the boundary between the Suez ami Panama Canal traffic zones. For reasons that are discussed at length in succeeding chapters of this Report there wiU be much overlapping of traffic routes on the Pacific shore of Asia. Table X. -DISTANCES (IN NAUTICAL MILES) FROM ATLANTIC (AMERICAN AND EUROPEAN) PORTS TO PACIFIC PORTS. New York. . . Charleston... New Orleans Liverpool Hambiu'g Gibraltar Via Panama Canal to — San Fran- cisco. 3,245 5,262 4,852 4,683 7,836 8,355 7,624 Iquique. 1,987 4,004 3,594 3,425 6,578 7,097 6,366 Valparaiso. 2,616 4,633 4,223 4,0.54 7,207 7,726 6,995 Honolulu. 4,685 6,702 6.292 6.123 9,276 9,795 9,064 Yokohama. 7,660 9,677 9,267 9,098 12, 251 12, 770 12,039 11,190 10. 780 10,611 13,764 14,283 13,552 Manila. 9,370 11,387 10, 977 10,808 13,961 14,480 13, 749 Sydnev via Tahiti. 7,794 9,811 9,401 9,232 12,385 12,904 12, 173 Wellington via Tahiti. 6,834 8,851 8,441 8,272 11,425 11,944 11,213 14 PANAMA CANAL TRAFFIC AND TOLLS. For convenience of reference, the distances from three ports of the United States located in the northern, middle, and southern parts of the Atlantic-GuK seaboard and from three European points of commanding loca- tion to nine selected ports on the eastern and western shores of the Pacific are stated in summary form in Table X. The table gives, first, the distances from Panama to the Pacific ports; and, second, the through distances from the six Atlantic American and European commercial centers to the nine designated Pacific termini. From the foregoing tables, the saving in ocean distances that can be made by using the Panama Canal instead of the shortest alternative commercial routes has been calculated. Table XI states the reduction, in nautical miles, effected by the Panama Canal in the length of all-water routes between ports of the Atlantic- Gulf seaboard of the United States and ports on both sides of the Pacific Ocean. Table XII gives the reduction, in nautical mUes, effected by the Panama Canal in distances from five distributed European ports to fourteen important Pacific commercial centers. As has already been pointed out. New Zealand is the only trans-Pacific country from wlxich tUstances to Europe will be sliortened by the Panama Canal. In the columns headed "remarks," the routes contrasted in Tables XI and XII are designated and the intermediate ports of call included in each route are named. Table XI REDUCTION (IN NAUTICAL MILES) EFFECTED BY THE PANAMA CANAL IN LENGTH OF ALL-WATER ROUTES BETWEEN PORTS OF THE ATLANTIC-GULF SEAB.OARD OF THE UNITED STATES AND PACIFIC PORTS, AMERICAN AND FOREIGN. Port- land (Me.), PhUa- del- phia. Port Port Townsend Portland, Oreg San Francisco San Diego Acapulco San Jose de Guatemala. Honolulu Guayaquil Callao Iquique Valparaiso Coronel Yokohama Shanghai . 7,663 7,663 7,663 7,673 7,871 8,125 6,400 7,195 6.040 4,929 3,537 3,086 3,353 7,676 7,676 7,676 7,686 7,884 8,138 6,413 7,208 6,053 4,942 3,550 3,099 3,435 7,873 7,873 7,873 7,883 8,081 8,335 6,610 7,405 6,250 5,139 3,747 3,296 3,768 8,020 8,020 8,020 8,030 6,757 7,552 6,397 5,286 3,894 3,443 4,116 8,020 8,020 8,020 8,030 8,228 8,482 6,757 7,552 6,397 5,286 3,894 3,443 4,110 8,234 8,234 8,234 8,244 8,442 8,696 6,971 7,766 6,611 5,500 4,108 3,657 4,575 8,267 8,267 8,267 8,277 8,475 8,729 7,004 7,799 6,644 5,533 4,141 3,690 4,049 8,301 8,301 8,301 8,311 8,509 8,763 7,038 7,833 6,678 5,567 4,175 3,724 4,771 8,748 8,748 8,748 8,758 8,956 7,125 6,014 4,622 4,171 5,585 8,821 8,821 8,821 8,831 9,029 9,283 7,558 8,353 7,198 6,087 4,695 4,244 5,058 8,834 8,834 8,834 8,844 9,042 9,296 7,571 8,366 7.211 6,100 4,708 4,257 5,671 8,868 8,878 9,076 9,330 7,605 8,400 7,245 6,134 4,742 4,291 5,705 8,940 8,940 8,940 8,950 9,148 9,402 7,677 8,472 7,'317 6,206 4,814 4,363 5,777 Via San Francisco. Differ- ence between Panama and Magellan routes. Do. Do. Do. Do. Do. Do. Do. Difference between routes ria Panama, San Francisco, and Great Circle, and via Suez, Colombo, Singapore, Hongkong, and Shanghai. Difference between routes via Panama, San Francisco, Yokohama, and via Suez, Colombo, Singapore, and Hongkong. Difference between routes via Panama, San Francisco, Yokohama, and Shanghai, and via Suez, Colombo, and Singapore. Difference between routes via Panama, San Francisco, and Y'okohama, and via Suez, Colombo, and Singa- pore. Difference between routes via Panama, Tahiti, Sydney, and Melbourne, and via St. Vincent and Cape of Good Hope. Distance less via Suez. PANAMA CANAX, TRAFFIC AND TOLLS. 15 Table XI — ^REDUCTION (IN NAUTICAL MILES) EFFECTED BY THE PANAMA CANAL IN LENGTH OF ALL-WATER ROUTES BETWEEN PORTS OF THE ATLANTIC-GULF SEABOARD OF THE UNITED STATES AND PACIFIC PORTS, AMERICAN AND FOREIGN— Continued. From— To— Port- land (Me.). Bos- ton. New York. Phila- del- phia. Balti- more. Nor- folk. Charles- ton. Savan- nah. Jack- son- viU« Port Tampa. Pen- sacola. Mo- bUe. New Orleans. Gal- ves- ton. Remarks. 2,448 3,610 2,283 2,507 3,669 2,296 2,770 3,932 2,493 2,897 4,059 2,568 3,024 4,186 2,640 3,024 4,186 2,640 3,376 4,538 2,854 3,436 4,598 2,887 3,513 4,675 2,921 4,162 5,324 3,368 4,235 5,397 3,441 4,248 5,410 3,454 4,282 5,444 3,488 4,354 5,516 3,560 Panama Tahiti, and Syd- ney, and via St. Vincent, Cape of Good Hope, and Adelaide. Panama and Tahiti and via St. Vincent, Cape of Good Hope, Adelaide, and Mel- bourne Panama and Tahiti and via Straits of Magellan. Table Xn REDUCTION (IN NAUTICAL MILES) EFFECTED BY THE PANAALA CANAL IN DISTANCES FROM EURO- PEAN PORTS TO THE PORTS OF THE WEST COAST OF AMERICA AND TO NEW ZEALAND. Less via Pan- ama. Less via Pan- ama. Less via Pan- ama. Less via Pan- ama. Less via Pan- ama. Sitka Port Townsend Portland, Oreg San Francisco San Diego Acapulco San Jose de Guatemala. Honolulu Guayaquil Callao Iquique Valparaiso Coronel Wellington Magellan. Panama.. Magellan. Panama.. Magellan. Panama. Magellan. Panama.. Magellan. Panama. Magellan. Panama.. Magellan. Panama. Magellan Panama. Magellan Panama. Magellan Panama. Magellan Panama. Magellan Panama. Magellan Panama. Suez Panama. 10,582 5,384 5,666 5,666 5,666 5,666 5,676 5,874 6,128 4,403 5,198 4,043 2,932 1,540 1,089 5,528 5,528 5,528 5,528 5,538 5,736 5,990 4,265 5,060 3,905 2,794 1,402 13,353 11,944 9.629 6,835 13,091 11,682 5,528 5,528 5,528 5,528 5,538 5.736 5,990 4,265 5,060 3,905 2,794 1,402 951 13. 439 9,326 5,376 5,376 5,376 5,376 5,386 5,584 5,838 4,113 4,908 3,753 2,642 1,250 799 4,950 4,950 4,950 4,960 4,960 5,158 5,412 3,687 4, 482 3,327 2,216 824 Via San Francisco. 12,732 11,475 Suez route via Aden, Colombo, King George Sound, and Melbourne. Panama route via Tahiti. 16 PANAJVIA CANAI^ TRAFFIC AND TOLLS. The time and fuel costs wliich vessels can save by using the Panama Canal instead of some other route are the measure of the canal's service to commerce. The saving in time of voyage resulting from the reduction which the canal may make in the length of an ocean route will depend upon the speed of the vessel and upon the number of hours required to make the passage through the canal. In Tables XIII and XIV the number of days that may be saved by using the Panama Canal is calculated for vessels of five different speeds- — for steamers of 9, 10, and 12 knots, wliich ai-e the speeds at which freight vessels are operated, and for ships of 14 and 16 knots, the speed of most passenger .vessels. A half day is deducted in each instance to allow for the detention of the vessel in making the transit through the canal. When the comparison is between Panama and Suez, it is assumed that the passage through the Suez Canal will delay a vessel a haK day. It will be understood that the length of each route through the Panama or Suez Canal (as from New York via Panama to San Francisco or from New York via Suez to Hongkong) includes the length of the canal— 41 nau- tical miles for the Panama Canal and 87 miles for the Suez — and that the half-day taken from the "number of days saved," as stated in the following tables, is the deduction made to allow for the longer time required to make the distance between the canal terminals than would be required to steam the same number of mUes at sea. Table XIII — NUMBER OF DAYS SAVED, FOR VESSELS OF DIFFERENT SPEEDS, BY THE PANAMA CANAL ROUTE BETWEEN THE ATLANTIC-GULF PORTS OF THE UNITED STATES AND PACIFIC PORTS, AMERICAN AND FOREIGN. From— To- New York , tor vessels of— Charleston , for vessels of — Port Tampa, for vessels of— New Orleans, for vessels of— Galveston, for vessels of— 1 1 o 1 1 1 49 i 1 o 1 42 1 42 1 42 1 42 1 o 1 42 1 1 1 42 1 o 42 1 42 43 1 1 1 o 42 1 1 42 1 Sitka Port Townsend 35.9 35.9 35.9 35.9 30.0 36.9 38.0 30.1 33.7 28.4 23.3 16.8 14.7 16.9 8.1 32.3 32.3 32.3 32.3 32.3 33.2 34.2 27.0 30.3 25.5 20.9 15.1 13.2 15.2 7.3 26.8 26.8 26.8 26.8 26.8 27.5 28.4 22.4 25.2 21.2 17.3 12.5 10.9 12.6 6.0 22.9 22.9 22.9 22.9 22.9 23.5 24.3 19.1 21.5 18.1 14.8 10.6 9.3 10.7 5.1 20.0 20.0 20.0 20.0 20.0 20. f 21.2 16.7 18.7 15.7 12.9 9.2 8.1 9.3 4.4 37.6 37.6 37.6 37.0 37.6 38.5 40.2 31.7 35.4 30.1 25.0 18.5 16.4 20.7 11.9 3.1 3.4 10.4 15.1 20.5 12.7 33.8 33.8 33.8 33.8 33.8 34. 35.7 28.5 31.8 27.0 22.4 16.6 14.7 18.5 10.7 2.8 3.0 9.3 13.5 18.4 11.4 28.1 28.1 28.1 28.1 28.1 28.8 29.7 23.7 20.5 22.4 18.6 13.7 12.2 15.4 8.8 2.2 2.4 7.7 11.2 15.3 9.4 24.0 24.0 24.0 24.0 24.0 24.6 25.4 20.2 22.6 19.2 15.8 11.7 10.4 13.1 7.6 1.9 2.0 6.6 9.5 13.0 8.0 20.9 20.9 20.9 20.9 20.9 21.5 22.1 17.7 19.7 16.7 13.8 10.2 9.0 11.4 6.5 1.5 1.7 6.6 8.3 11.3 6.9 40.0 40.0 40.0 40.0 40.0 40.9 42.1 34.1 37.8 32.5 27.3 20.9 18.8 25.3 16.6 7.8 8.1 14.0 18.7 24.1 15.1 35.9 35.9 35.9 35.9 35.9 36.8 37.9 30.7 34.0 29.2 24.5 18.7 16.9 22.8 14.8 7.0 7.2 12.5 16.8 21.7 13.5 29.8 29.8 29.8 29.8 29.9 30.6 31.5 25.5 28.3 24.2 20.4 15.6 14.0 18.9 12.3 5.7 5.9 10.4 14.0 18.0 11.2 25.5 25.5 25.5 25.5 25.5 26.) 26.9 21.8 24.1 20.7 17.4 13.2 11.9 16.1 10.4 4.8 5.0 8.8 11.9 15.3 9.6 22.2 22.2 22.2 22.2 22.3 22.8 23.5 19.0 21.1 18.1 15.2 11.6 10.4 14.0 9.1 4.2 4.3 7.7 10.3 13.4 8.3 40.5 40.5 40.6 40.5 40.6 41.6 42.6 34.7 38.4 33.0 27.9 21.4 19.4 25.9 17.1 8.4 8.6 14.6 19.3 24.6 15.6 36.4 36.4 36.4 30.4 36.4 37.3 38.4 31.2 34.5 29.7 25.0 19.2 17.4 23.3 15.4 7.5 7.7 13.1 17.3 22.2 14.0 30.2 30.2 30.2 30.2 30.3 31.0 31.9 25.9 28.7 24.7 20.8 10.0 14.4 19.3 12.7 6.2 6.4 10.8 14.3 18.4 11.6 2.5.9 26.9 25.9 25.9 25.9 20.5 27.3 22.1 24.5 21.1 17.7 13.6 12.3 16.5 10.8 5.2 5.4 9.2 12.2 15.7 9.9 22.0 22.6 22.6 22.6 22.6 23.1 23.8 19.3 21.4 18.4 16.4 11.8 10.7 14.4 9.4 4.6 4.7 8.0 10.7 13.7 8.0 40.8 40.8 40.8 40.8 40.9 41.8 43.0 3.5.0 38.7 33.4 2S.3 21.8 20.6 26.2 17.4 8.7 9.0 14.9 19.6 26.0 16.9 36.7 36.7 36.7 36.7 36.8 37.6 38.7 31.5 34.8 30.0 25.3 19.6 17.7 23.6 16.7 7.8 8.0 13.3 17. r 22.4 14.3 30.5 30.5 30.6 30.6 30.5 31.? 32.1 26.2 28.9 24.9 21.0 10.2 14.0 19.6 13.0 :; 11.0 14.6 18.6 11.8 26.1 26.1 26.1 26.1 26.1 26.7 27.6 22.4 24.7 21.3 17.9 13.8 12.5 16.7 11.1 5.4 5.6 9.4 12.4 15.9 10.6 22.7 22.7 22.7 22.7 22.8 23.3 24.0 Honolulu Guayaquil Callao 19.5 21.6 18.5 15. fi Valparaiso 12.0 10.9 14.fi 9.fi 4.7 4.8 7.5 12.3 17.7 11.0 6.7 11.0 15.8 9.9 5.6 9.1 13.1 8.1 4.6 7.7 11.2 6.9 4.0 6.7 9.7 0.0 8.1 10.8 Sydney 13.8 8,7 PANAMA CANAL TRAFFIC AND TOLLS. 17 Table XIV.— NUMBER OF DAYS SAVED, FOR VESSELS OF DIFFERENT SPEEDS, BY THE PANAMA CANAL ROUTE BETWEEN EUROPEAN PORTS AND PORTS OF PACIFIC AMERICA AND OF NEW ZEALAND. Liverpool, for vessels of— Sitka 25.7 Port Townsend Portland, Oreg San Francisco San Diego Acapulco San Jose de Guatemala. Honolulu Guayaquil Callao Iquique Valparaiso Coronel Wellington Hamburg, for vessels of — s s 22.5 18.7 22.5 18.7 Antwerp, for vessels of— 18.7 15.9 18.7 15.9 18.7 15.9 18.7 15.9 19.4 16.6 20.3 17.3 14.3 12.2 17.1 14.6 13.1 11. 5 9.2 7.8 4.3 3.5 2.8 2.3 4.4 3.7 Bordeaux, for vessels of— Gibraltar, for vessels of- 20.1 16.7] 14.2 14.2 14.2 14.2 14.2 14.8 15.6 10.4 12.8 12.3 12.3 12.3 12.3 12.4 12.9 13.6 Southern Cliina and the Pliihppines — Hongkong and Manila — are near the center of the section whose commerce with New York and the other north Atlantic ports of the United States may use the Panama or Suez Canal with equal advantage, as far as distance and time of voyage are concerned. Relative tolls and coal prices via the alternative routes, and the traffic possibilities at intermediate ports, as will be explained in Chapters X and XI, rather than the days to be saved by taking one route rather than the other will determine whether the Panama or the Suez Canal wiU be used by vessels bound to or from that part of the Orient. Of the commerce of the western side of the Pacific with Europe, only the trade of New Zealand can save time by using the Panama instead of the Suez or some other alternative route. The point on the west coast of South America equally distant from a port of Europe via the Panama Canal and the Straits of Magellan is some- what south of 40° south latitude. Coronel, the most southerly port mentioned in Table XIV, is about 37° south of the Equator, CHAPTER II. TONNAGE OF THE VESSELS EMPLOYED IN THE COMMERCE THAT MIGHT HAVE ADVANTAGEOUSLY USED THE PANAMA CANAL IN 1909-10. 19 CHAPTER II. TONNAGE OF THE VESSELS EMPLOYED IN THE COMMERCE THAT MIGHT HAVE ADVANTAGEOUSLY USED THE PANAMA CANAL IN 1909-10. INTRODTJCTION. In the report made by the Isthmian Canal Commission in 1901, it was stated that in the 3-ear 1899, 4,891,075 net register tons of sliipping would have used an Isthmian canal had it then been open to traflic. That sum was ascertained by an anah'sis of the entrances and clearances, at the ports of the United States and European countries, of the vessels employed in the commerce that might have advantageously used a Panama canal. A stud}^ was also made of the figures collected by the New Panama Canal Co., which had, for a number of years, kept a record of the movements or voyages of all vessels whose routes were such that the vessels would naturally have passed tlirough a Panama canal. (See Appendix I. chapter XIX.) The records kept by the French company presented separate tonnage totals for vessels (1) moving between Europe and Pacific- America, (2) between Europe and the Orient, (3) between Atlantic and Pacific America, and (4) between Atlantic-America and the Orient. Most of the tonnage of the vessels movmg between Europe and the Orient (Group 2) was excluded from the total because it belonged to the Suez, rather than to the Panama, route. There were added 336,998 tons for the commerce crossuag the Isthmus of Panama, because the records kept bj' the French company could not have included that traffic. These changes havmg been made in the total tonnage of vessel movements as recorded by the Panama Canal Co., it was found that their records indicated an available Panama traffic in 1899 of 5,001,798 tons net register — a total but slightly larger than that ascertained by the stud}' of recorded entrances and clearances. (Appendix I, cliapter XX.) To determine what tonnage of vessels would have used a Panama canal in 1910, had it then been available, an analysis has been made of the records of the leading commercial nations concernmg the entrances and clear- ances of vessels. Tlie figures here presented are for the latest available year, m most instances for the year 1910. In the case of some foreign countries, figures for 1909 were the latest obtainable. The years covered by the figures are stated in the statistical tables. Tlae tables contained in this report have been so constructed as to show (1) total entrances and clearances; (2) the tonnage of vessels with cargo as distinct from those in ballast; and (3) the tonnage of sailing vessels separately from the tonnage of steamships. It is important to know what share of the vessels using the Panama Canal will probably move in ballast, because the tolls are ordinarily made less for empty than for loaded vessels. The tonnage of sailing vessels needs to be known to ascertain to what extent traffic wUl need to sliift from sail to steam, for sailmg vessels will not use the Panama Canal. The statistics of vessel entrances and clearances have certain limitations wliich make it impossible to accept them without careful anah'sis. Different countries follow dissimilar rules in making their records. There are unavoidable duplications m some instances; and in other cases there are serious understatements due to the fact that the records of vessel movements do not, and can not, correspond to the actual movements of commodities in international commerce. In analyzing entrance and clearance statistics, the following facts are to be kept in mind: 1. The methods or rules followed in recording entrances and clearances in the various nations are not uniform. Tlie regulations of the United Kingdom provide that vessels bringing cargo from more than one foreign port are to be recorded as entering from the first port at which cargo for the United Kingdom was embarked; and that loaded vessels departing from the United Kingdom for more than one foreign port are listed as clearing for the last port to wliich their cargo is consigned. Vessels in ballast are recorded as entering from the last foreign port at which they touched before reacliing the United Kingdom, and as clearing to the 21 22 PANAMA CANAL TRAFFIC AND TOLLS. first foreign port to which they are bound. Tlie rules of France, Belgium, Germany, and Austria are essentially the same as the British. The Italian regulations, howev-er, provide that when vessels with cargoes come from, or go to, more than one foreign country, each country is credited with the tonnage. The rules in force in the United States state that "in tabulating clearances to foreign ports, the tonnage is credited to the country in which is located the first foreign port at which the vessel will enter for discharge of cargo; but if the bulk of the cargo is to be discharged at some other foreign port, the tonnage wiU be cred- ited to the country in which that port is located. In cases of entrances, the first foreign port from which the vessel sailed with cargo for the United States is that to which the entered tonnage will be credited." The American rule for entrances is, therefore, like the rules of Great Britain, Germany, Belgium, France, and Austria, but the American rule for clearances is different. 2. The records of vessel entrances and clearances often include duplications. This is especially the case in the trade between Europe and the west coast of South America, the Orient, and Oceania. The cause of these duplications wiU be explained in discussing what deductions from the recorded figures are to be made to eliminate the duphcations. 3. The records of the vessel movements between some sections, as between the eastern coast of the United States and the Orient and Oceania, understate the tonnage of shipping actually employed in the commerce; and, for reasons that will be stated later, it is necessary to increase the recorded figures. 4. For the commerce between some sections, as between Europe and Pacific-Mexico and Central America, the records are incomplete, in that they do not state the tonnage at Atlantic and Pacific ports separately. It is thus necessary to subject entrance and clearance statistics to a careful analysis and to ascertain whether they tally with the known facts as regards vessel movements and commercial exchanges; but, when so tested and corrected, they enable one to determine, with approximate accuracy, the actual vessel tonnage at present available for the Panama Canal. Vessel Tonnage of European Trade With the West Coast of South America, 1909. The tonnage of shipping recorded by European countries as having cleared to, and entered, from the west coast of South America, in 1909, is stated in Table I. There were 2,007,857 net tons of European entrances and 2,177,600 net tons of European clearances, a total of 4,185,457. Table I. -EUROPEAN ENTRANCES AND CLEARANCES, NET REGISTER TONNAGE OF VESSELS TRADING BE- TWEEN EUROPE AND THE WEST COAST OF SOUTH AMERICA (1909). Entrances. Clearances. Total entrances and Countries. ChUe. Peru. Ecuador. Bolivia. Total cargo and baUast. Chile. Peru. Ecuador. BoUvia. Total cargo and ballast. Cargo. Bal- last. Cargo. Bal- last. Cargo. Bal- last. Car- go- Bal- last. Cargo. Bal- last. Cargo. Bal- last. Cargo. Bal- last. Car- go. Bal- last. ances. 197,270 368,445 219,085 84,616 1,153 1,860 173,148 79,323 6,969 9,851 1,512 359 15,726 9,684 387,656 457,452 227,566 101, 168 585,681 113,409 20,674 6,552 1,143 12,234 2,188 261,558 131, 130 177,943 48,596 3,002 908,069 247,541 200,705 6,552 1,143 1,295,725 428,271 107,720 The Netherlands 2 4,841 P) (=■) (') (?) 4,181 4,181 44 178,888 5,502 193,670 61,026 44 211,907 21,063 353,343 227,233 191,226 21,025 194,589 215, 962 no 4,203 445 16,506 2,518 210, 250 21,135 215,897 382.552 11,310 585 85,840 21,709 14,976 29, 179 152,374 422,157 Italy' 42,198 Spain , 153.182 17, 105 38, 155 5,286 13,833 1,213 569.240 12,963 609,785 Total 1,496.399 7.771 438,979 21,494" 43,214 2,007,857 1,166,489 112, 157 788,869 38,155 70,717 1,213 2,177,600 4, 185, 457 1 Year 1910: cargo and ballast separated according to ratio obtained from remaioing countries, except in case of clearances to Peru. 2 Including Venezuela and Colombia. " Included under Peru. < Year 1908. * Cargo and baUast separated according to ratio obtained from remaining countries, except in case of clearances to Peru. PANAJVIA CANAL TRAFFIC AND TOLLS. 23 The figures in Table I contain certain rather large duplications because of the fact that — (1) Vessels outbound from German and British ports and recorded in the German and British clearances may call at Belgium, The Netherlands, France, Spain, or Portugal; and, under then- rules as to clearances, be again recorded as cleared from one or more of those countries. (2) Vessels inbound at German and British ports and recorded in the German and British entrances may have called en route at one or more of the above-named countries and have been recorded in their entrances. (3) The Spanish and Portuguese entrances and clearances may, in addition to possible British and German dupUcations, contain some tonnage that has been included in French or Itahan records. The recorded entrances and clearances of the United Ivingdom, German^-, Norway, and Sweden may be accepted without change, for those countries are so situated as to be the European termini of vessel movements between Europe and the west coast of South America. In the case of Belgium, however, there are dupUca- tions, because steamers both outbound from and mbound to German and British ports call at Belgium with cargo. Under the Belgian as well as the British and German rules vessels with cargo are entered from the first port and cleared to the last port at which they loaded or discharged cargo during their voyage. Belgian entrances from the west coast of South America are one-half of those of Germany and within 160,000 tons of those of the United Kingdom; although the imports of Belgium from Pacific South America are small, as compared \vith those of Germany or Great Britain. The Belgian entrances of saihng vessels amount to 109,723 tons, and may be accepted without change, because they are for chartered vessels which usually bruig in and discharge full cargoes. The entrances ha ballast — 1,512 tons — may also be accepted; because, under the entrance rules of Belgium, Great Britam, and Germany, vessels in ballast are entered from the last point at which they touch. Owing to the smalhiess of Belgian imports, as compared ■ndth those into Germany and Great Britain, and the comparative magnitude of Belgian vessel entrances, it was thought that not more than three-fourths of the remaming steam entrances should be included in the revised figure of entrances. This makes the net Belgian entrances 198,483 net tons. Belgian clearances of sailing vessels contain no duphcations, Init amount to only 21,055 tons. The clear- ances of vessels in ballast (2,188 tons) may also be accepted ^nthout change. The exports from Belgium to the west coast of South America are considerabty less than those from Germany; yet the recorded clearances from the two countries are not ver}- far apart. It should also be noted that British exports to the west coast of South America do not require so much vessel tonnage as clears from British ports, and sliips from Great Britain are known to call at Belgium en route. It is probable that the duphcations are greater m the recorded clearances of Belgium than in the entrances. In Belgium, Holland, France, Spain, and Portugal many sliips cleared ft-om Great Britain take on cargo, and a smaUer number of German vessels call at Belgium to complete their cargo for the west coast of South America. It is thought that the steamship clearances from Belgium should be reduced one-half, or to 136,311 tons. This credits Belgium with a total vessel tonnage to and from Western South America of 334,784 net tons. A portion of the tonnage recorded by the Netherlands as to and from the west coast of South America is also included in the tonnage recorded as entering and clearbig at ports of the United Kingdom and Germany. The situation as to the Netherlands entrances is similar to that of the Belgian, and the same method of avoiding duphcations may be adopted. The recorded entrances of sailmg vessels (31,007 tons) and those of vessels m ballast (1,860) may be accepted ^\-ithout change, and tliis sum added to three-fourths of the remainmg steam tonnage makes the total entrances 84,093 tons. The recorded clearances of the Netherlands are so small that they may be accepted mthout change. The total vessel movement between the Netherlands and western South America aggregates 90,645 tons of entrances and clearances. The recorded vessel entrances into France from the west coast of South America are almost as large as those of Great Britam, although the value of French imports from that section is much less than the value of the imports either of Germany or of Great Britam. The discrepanc}- must be due to duphcation m the vessel entrances. Vessels bound for the United Kingdom or Germany sometimes caU at French ports to discharge a portion of their cargo and in that way are recorded both m France and in the British or German ports where their voyages end. As in the case of Belgium and the Netherlands, France's recorded entrances of saihng vessels (109,370 tons) contam few duphcations; and the figures for vessels m baUast (445 tons) contain none. Probably one-half of the steamsliip entrances, as recorded by France, should be deducted to allow for the duph- cation of tonnage in the German and British figures. Thus corrected, the total French entrances from western South America become 246,183 net tons. 24 PANAMA CANAL TRAFFIC AND TOLLS. The value of the French and German exports to the west coast of South America do not differ greatly m value, and their vessel clearances to the two countries are sunilar in amount. The exports from the United Kingdom to western South America are of large value; but the British clearances are disproportionately large in comparison with the exports. Ships from Great Britain call at French ports, partly loaded, and are thus recorded in France as well as in Great Britain. This is true to a less extent of vessels clearing from German ports. Probably one-half of the recorded French clearanoes to the west coast of South America should be deducted, leaving a total of 113,616 tons. This makes the aggregate net vessel movement, inbound and outbound, between France and western South America 359,799 tons. There are no clearances of sailing vessels or steamers in ballast from France to the west coast of South America. The duphcations in the Spanish tonnage figures are very pronounced. The value of the combined import and export trade of Spain with the west coast of South America is less than $3,000,000; yet the vessel entrances in this trade, as recorded by Spain, are over one-half those of Germany or Great Britain, and the clearances exceed those of Germany. The greater portion of this recorded tonnage is also included in the British, German, and French figures. The entrances of sailing vessels, vessels in ballast, and of steamers flying the Spanish flag may be accepted without deduction. Probably one-fourth of the remaining recorded entrances may properly be retained. This reduces the net entrances to 93,104 tons. The Spanish clearances of saihng vessels, of vessels in ballast, and of steamers flying the Spanish flag aggregate 125,208 tons. Tliis analysis credits the commerce of Spain mth western South America with 218,320 net tons of vessel entrances and clearances, of which 145,303 tons consist of vessels moving in ballast. The trade of Portugal with the west coast of South America is so small that most of the abnormally large vessel tonnage recorded consists of duplications. As in the case of Spain, however, the total tonnage of sailing vessels and of vessels ui ballast may be regarded as free from duplications, and doubtless about one-fourth of the remaining entrances may conservatively be retained. By this reasoning Portugal is credited with entrances of 61,600 tons and clearances of 34,966, an aggregate of 96,566. Vessels of Portuguese nationality engaged in the trade with western South America are so few in number that they are not separately specified in the official reports. The trade of Italy with the west coast of South America is sufficiently heavy to account for the small vessel tonnage recorded by Italy. The same is true of Himgarian tonnage. In both cases the figures may be accepted without change. The total net entrances into Europe of vessels engaged in the trade with the west coast of South America are reduced by this analysis to 1,553,887 tons and the clearances to 1,594,513, a combined total of 3,148,400. This reduction from the total toimage as recorded is relatively greater than was made in the report of 1899-1901 ; but it is beheved that the duplications have become more numerous because of the increased use of steamers instead of sailing vessels and because of the growth of line as compared with chartered traffic. Though the entrances here given are sUghtly less than the clearances, it is to be noted (1) that 150,312 tons of the clearances consist of vessels in ballast and that a considerable portion of the remaining tonnage clears hghtly laden; (2) that the recorded tonnage statistics show a similar relation between entrances and clearances; and (3) that the clearances from Great Britain are unusually large and consist partly of vessels which clear from British ports for South America later to return with cargo destined to continental European ports. Such vessels appear in the clearance returns of Great Britain and in the entrance records of other European countries. Some ships after discharging on the west coast of South America proceed to the Pacific coast of the United States or of British Columbia. Such vessels are recorded b^^ Great Britain as having cleared for western South America and as having entered from the United States or British Columbia. The tonnage of the sailing vessels in the trade between Europe and the west coast of South America in 1909 was 1,054,917 tons, or 25 per cent of the total recorded tonnage and 38 per cent of the tonnage after the deductions to eliminate duplications. The percentages for 1898-99 are not known, but must have been much larger. The net tonnage of the vessels that entered and cleared the ports of Europe in 1909-10 in the trade with the west coast of South America was 3,148,400. The details as regards loaded vessels, vessels in ballast, sail and steam vessels, are presented below in Table XI. PANAMA CANAL TRAFFIC AND TOLLS. Vessel Tonnage of Eueopean Trade with Western Central America and Mexico, 1909. 25 The statistics of the vessel movements between Europe and the western ports of Mexico and Central America via the Horn and the Straits of Magellan are incomplete. The German figures alone distinguish between the eastern and western ports of Mexico and Central America, although Mexico and all the Central American coimtries, except San Salvador, have ports on both seaboards. Only France and Spain have separate entries for San Salvador. The total recorded European entrances and clearances for the trade with western Mexico and Central America, as stated in Table II, amounted to only 99,751 net tons. Table II.- -NET REGISTER TONNAGE OF VESSELS OPERATED BETWEEN EUROPE AND WESTERN CENTRAL AMERICA AND PACIFIC MEXICO (1909). Central America. Pacific Mexico. Total. Countries. Vessels in ballast. Vessels with cargo. Total vessels. Vessels in ballast. Vessels with cargo. Total vessels. En- trances. Clear- ances. En- trances. Clear- ances. En- trances. Clear- ances. En- trances. 1 Clear- En- trances. Clear- ances. En- trances. Clear- ances. En- trances. Clear- ances. 18,754 12,667 18,754 12,667 8.973 57,533 8,973 57,533 27,727 12,667 57,533 1,824 1,824 1,824 Total 31,421 1,824 31,421 1 1,824 8,973 57,533 8,973 57,533 40,394 59,357 1 1 Most European countries trade with the west coast of Mexicio and Central America, but the tonnage of shipping employed is not known. The importance of Great Brit am in the commerce with tliis part of America is such that the above figures for Germany and the partial figures for France and Spain ought to be doubled to secure a total equal to the probable actual European entrances and clearances of vessels emploj^ed in the commerce with the west coast of Central America and Mexico. By doing tliis, the total entrances become 80,788 tons and the clearances 118,714, the combined total being 199,502 tons. A portion of the trade of Europe with the western ports of Mexico and Central America is handled via the Istlmaus of Panama, and is discussed later. The tonnage included in Table II is that which moves by all- water routes around South America. In Table XI is a classified summan,' of this vessel tonnage. Trade of Europe with the West Coast of the United States, British Columbia, and Hawaii, 1910. The recorded statistics of the tonnage of vessels moving between Europe and the west coast of the United States contain few dupUcations, because the figures are taken almost entirely from the American navigation reports and not from the separate records of the various European countries. The figures for Hawaii are taken from the same source, and contain no duphcations. The tonnage credited to British Columbia, M-ith the excep- tion of the tonnage of vessels from and to Great Britain, is taken from the Canadian records, and there may be some duphcations, because vessels en route between Europe and British Columbia may call at Pacific ports of the United States. It is beheved, however, that 118,407 tons of vessel movements were required for the trade between British Columbia and Europe, and that the amount of duphcations must be smaU. The tonnage of vessels that entered Great Britain from British Columbia and that clearetl thence from Great Britain was obtained from the British Navigation Report for 1909, and there could be no duphcations in the figures. The total entrances into Europe from the Pacific ports of the United States, Hawaii, and British Columbia in 1910 were 419,865 tons, and the clearances 269,853, the combined total being 689,718. The detailed sta- tistics are shown in Tables III and XI. 26 PANAIVIA CANAL TEAFFIC AND TOLLS. Table HI.— NET REGISTER TONNAGE, ENTRANCES AND CLEARANCES, VESSEL MOVEMENTS BETWEEN EUROPE AND WESTERN COAST OF UNITED STATES, BRITISH COLUMBIA, AND HAWAII (1910). Countries. Vessels i a ballast. Vessels with cargo. Total. Entered.! Cleared.2 Entered.! Cleared." Entered.! Cleared.' 12,213 586 331,319 88,546 208,453 29,275 19,326 331,319 88,546 220,666 19,326 12,799 419,865 257,054 419,865 269,853 ! Entered Europe from Pacific United States, British Columbia, and Hawaii. 3 Cleared from Europe to Pacific United States, British Columbia, and Hawaii. ' Data of United Kingdom for year 1909; total divided between cargo and ballast, according to figures of the United Kingdom. It should be noted that "Clearances" ha the above table comprise clearances from Europe to the Pacific United States, Hawau, and British Columbia. Vessel movements are heaviest toward Europe, for it is in this direction that grain, lumber, and flour, requiring heavy vessel tonnage, are carried. Vessel Tonnage of European Trade with the Orient East of Singapore and with Oceania, 1909. In the foregoing analysis of the entrances and clearances of the vessels emploj'ed in the trade between Europe and the west coast of South America, Central America, Mexico, and the United States and of the trade of Europe \vith British Columbia and Hawaii, the sole problem has been to ascertain from the records of entrances and clearances the correct tonnage of vessel movements. The saviiig in distance effected by the Panama Canal wUl be sufficient to cause all this trade, with the possible exception of a part of that to and from central and southern Cliile, to use the canal. For the trade of Europe with the Orient and Oceania the Panama Canal will compete with the Suez Canal and the Cape of Good Hope route. In the following table. No. IV, the net register tonnage of all the vessels that entered and cleared European ports ui 1909 in the trade between Europe and oriental countries east of Singapore is included; but, for reasons that are iuWy stated below, only a small share of this tonnage is to be included m the available Panama traffic. T.^.BLE IV.— NET REGISTER TONNAGE, EUROPEAN ENTRANCES AND CLEARANCES OF VESSELS TRADING BETWEEN EUROPE AND ORIENTAL COUNTRIES EAST OF SINGAPORE AND COUNTRIES OF OCEANIA (1909). Entrances. Countries. China.! Japan. Australia. New Zealand Philippine Islands. Korea. Other Paclflc countries. Total Cargo. Bal- last. Cargo. BaUast. Cargo. Bal- last. Cargo. Bal- last. Cargo. BaUast. Cargo. Bal- last. Cargo. Bal- last. and ballast. 62,313 10,046 70,002 95,221 3,999 567,618 239,034 616,670 89,507 2,462 134,934 1,104,237 301, 514 71,271 387,099 2 65,024 8,104 3,361 3,547 8 2,224 '49,508 2,402,266 584,473 100,737 1,274,506 285,465 6,702 47, 139 47,164 67,587 2,000 143,488 2,908 36,835 119,417 50,595 52,072 457,552 Italy' 209,642 16,498 2,853 73,567 523,843 445,021 8 757 1,093,783 Finland Total. 462,6.37 3,999 2,201,024 134,934 2,749,864 71,271 286,244 16,498 6,400 52,489 6,372,459 1 Including Hongkong and foreign spheres of infl 2 Including Guam. > Other British Pacific possessions. * Other British and French Pacific possessions. 6 Year 1910. All vessels classed as vessels with cargo, except clearances to Japan and Australia. 8 Port of Fiume. ' All vessels classed as vessels with cargo, except clearances to Australia. 8 Other Oceanic Islands. PANAMA CANAL TRAFFIC AND TOLLS. 27 Table IV.— NET REGISTER TONNAGE, EUROPEAN ENTRANCES AND CEEARANCES OF VESSELS TRADING BETWEEN EUROPE AND ORIENTAL COUNTRIES EAST OF SINGAPORE AND COUNTRIES OF OCEANIA (1909)— Continued. Clearances. Countries. China.' Japan. Australia. New Philippine Zealand. | Islands. Korea. Other Pacific countries. Total cargo and ballast. Total entrances and clear- ances. Cargo. Bal- last. Cargo. Bal- last. Cargo. Ballast. Cargo. Bal- last. Cargo. Bal- last. Cargo. Bal- last. Cargo. Bal- last. 63,425 53,574 70,615 74,858 652,305 136,277 196,567 678,760 96.965 953,771 196,388 202,181 65,108 65,486 60,341 119,266 12,209 20,422 409,330 168 5,768 •17,914 42,522 »3,948 '39,536 2,404,526 498,442 1,068,943 161,206 127,345 62,521 56,576 47,869 393,187 170,890 462,957 2,180 4,806,792 1,112,648 2,343,449 21,240 50,367 ' 1 446,671 11,492 134,047 2,180 1,999 62,521 47,826 47,869 3,843 2,908 103,715 99,941 137,551 1,134 24,153 2,180 200,643 20,267 34,726 165,543 850,739 4,213 138,852 309,658 292,951 7,001 1,556,740 2,180 Total 431,669 190,657 221,091 42,522 43,484 5,456,642 11,829,101 ' > Including Hongkong and foreign spheres of influence. - Including Guam. 3 Other British Pacific possessions. < Other British and French Pacific possessions. ^ Year 1910. All vessels classed as vessels with cargo, except clearances to Japan and Australia. fi Port of Fiume. ' AU vessels classed as vessels with cargo, except clearances to Australia. The distance tables in Chapter I show that the route from Europe to China, Hongkong, Korea, and the Philippines via the Suez Canal is so much shorter than that via the Panama Canal that the Suez route will retain most of the traffic between Europe and Pacific Asia, although the toUs and the fuel costs may be lower via Panama. New Zealand and that part of Oceania east of Australia are nearer northern Europe by way of Panama. Wellington will be 1,564 miles nearer Liverpool by the Panama Canal than via the Suez route, and 500 imles less distant via Panama than bj' way of the Straits of Magellan. The distances to Liverpool from the leading groups of South Pacific islands wiU be from 500 to 5,500 rmles less via the American Canal than by way of Suez. The European entrances from New Zealand and the Pacific islands in 1909 aggregated 439,588 tons and the clearances 458,750. A portion of this tonnage ^vill doubtless continue to move via the Straits of Magellan, because the distance saved is sufficient to warrant the payment of only a light toll. Line steamers and vessels carrying perishable products may be expected to use the canal. There are some small duplications in the New Zealand tonnage, because vessels to and from New Zealand make calls at Austrahan ports, but there is but little tonnage recorded twice, because the larger share of the trade is handled by chartered vessels. It is thought to be a conservative assumption that about 50 per cent of the vessel tonnage between Europe and New Zealand may advantageously use the Panama Canal. This credits the European trade with New Zealand ^vith vessel entrances of 219,794 tons, and clearances of 229,375 ,an aggregate of 449,169 tons. The distances from Sydney, AustraUa, and from Yokohama, Japan, to Europe via the Suez route are shorter than via the Panama Canal, but the differences are not great. Some vessels outbound from Sydney and Yoko- hama wiU doubtless take the Panama route. The reasoning of the report of 1899-1901 on tliis matter is, for the most part, as vahd now as it was then. It was then stated that ' — The distance from Liverpool to Sydney, Australia, by way of the Panama Canal and Tahiti will be 150 miles greater than via the Suez, Colombo, Adelaide, and Melbourne, but this disadvantage of the westerly course will be partially, if not quite, offset by two facts favoring tlie American canal route. From Liverpool the distance via the Cape of Good Hope, Adelaide, and Melbourne and Sydney is 582 miles greater than by way of the Panama Canal and Tahiti. The use of the westerly route wUl enable vessels engaged in the European- Australian trade to avoid the excessive heat of the Gulf of Aden and the Red Sea and the storms of the tempestuous Indian Ocean. The American route also will be favored by the fact that a vessel on its way between Liverpool and the Isthmian Canal will ha^•e to go but 500 miles out of its course to call at New York, next to the greatest port of the world, whence outbound cargoes are practically always 1 The figures for difference in distance have been revised to correspond with the tables contained in the final report. 34998°— 12 3 28 PANAMA CANAL TRAFFIC AND TOLLS. obtainable. With the advantages oi cheaper coal, a cooler passage in the Tropics, quieter seas, and the attractive force of America's heavy tonnage, the American Isthmian route will be used, instead of the course through the Suez Canal, by some of the vessels departing from Europe for Australia or other regions on that side of the Pacific Ocean. Vessels proceeding from Europe by way of American ports and the Isthmian Canal to Oceania and the East will have the choice of returning to Europe by way of the Suez or by way of the American route. By whatever route the European vessels reach the oriental and other countries of the western Pacific, the route by which they return to Europe will be determined by the relative opportunities for obtaining cargo by way of the Suez and American routes, respectively. The reasons for believing that a portion of Europe's imports, from the western half of the Pacific, will come by way of the American route are stronger than the reasons just cited regarding the use of the American Canal for the European export trade. A vessel fLuding itself in the East Indies, Japan, China, or Australia may either take on cargo for Europe and for intermediate points along the Suez route or it may load with such cargo as may be available for Europe and American countries and proceed— in most cases but partially loaded — across the Pacific to the western coast of the United States, where a great abundance of cargoes destined for Europe may be obtained, or the ship may go to Central America and West Indian ports, where a fair amount of freight for Europe will usually be available, or the vessel may proceed to Chile or some other west South American country, where there is always a heavy amount of out-bound traffic. Besides being certain of securing freight from South America or North America for Europe a vessel returning from the Orient by the American canal will also have the advantage above referred to of being able to secure coal more cheaply than it can be obtained along the Suez line. It would seem probable, upon a priori grounds, that vessels leaving Europe, whether by way of the Suez or by way of the American canal, will frequently find the return trip via America more profitable than by the route in the opposite direction. This general propo- sition, moreover, seems to accord with the evidence regarding the present round-the-world movement of vessels. The entrance and clearance statistics of the vessels engaged in the foreign trade of the west coast of North and South America indicate that a large number of vessels now going out from Europe toward the East return from the West. At the present time some vessels cross the Pacific to secure cargo on the west coast of the Americas for transportation to Europe via the Straits of ]\Iagellan or Cape Horn. The tendency for vessels outbound from Austraha or Japan to seek cargo in North or South America will be stronger after the Panama Canal is opened. If it be assumed that but 10 per cent of the tonnage of the Austrahan trade and only 5 per cent of the tonnage of the commerce of Japan with Europe will move through the American canal, the European entrances of vessels coming from Austraha via Panama would be 282,113 tons and the clearances 222,752; the European entrances of ships coming from Japan via Panama would be 116,797 tons and the clearances 103,754. The combined European tonnage moving through the canal in the trade with Australia and Japan would be 725,416 tons. The above analysis credits to the Panama Canal, of European entrances in the trade with New Zealand, the Pacific islands to the north, Austraha and Japan, 618,704 tons, and of the clearances 555,881, an aggregate of 1,174,585 tons, distributed between vessels with cargo and those in ballast as sho-WTi in Table XL It is pos- sible that this tonnage is entirely too small, because it includes none of the trade of Europe with China, Hong- kong, Korea, the PMUppines, and tlie East Indies, and but a small proportion of the trade with Austraha and Japan. On the other hand, it allows fully for the distance advantage which the Suez Canal has over the Panama route. The causes affecting the choice of routes taken by vessels saihng for Europe and for the eastern seaboard of the United States from Australasia and Asiatic ports north and east of Singapore are considered at length in discussing the relation of tolls to the volume of traffic that may advantageously use the Panama Canal — Chapter XL Vessel Tonnage of the Trade of the Atlantic-Gulf Seaboard of the United States with the West Coast of South America, Pacific Mexico, and Hawaii, 1910. The traffic between the Atlantic-Gulf seaboard of the United States and tlie west coast of North and South America, including Hawaii, will practically all take the Panama route. The onh* possible exception will be a slight tonnage to and from the southern part of Cliile. At present the commerce between the United States and western South America is relatively small; but it should be much larger after the canal has had time to exercise its influence. The vessel entrances into the Atlantic-Gulf ports of the United States from the west coast of South America in 1910 amounted to 300,909 tons, and the clearances to 166,686, a total of 467,595 tons. This does not include the present traffic across the Istlimus of Panama, which is considered on a later page. PANAMA CANAL TRAFFIC AND TOLLS. 29 Table v.— NET REGISTER TONNAGE, ENTRANCES AND CLEARANCES, VESSEL MOVEMENTS BETWEEN THE UNITED STATES ATLANTIC-GULF COAST AND PACIFIC -SOUTH AMERICA, PACIFIC MEXICO, AND HAWAII (1910). Countries. Entrances. Clearances. Total en- With cargo. In ballast. With cargo. In ballast. clearances. Chile 272,601 18,004 99,015 2,595 14,482 20,544 29,666 384 372,000 20,599 14,482 Peru Ecuador Pacific Mexico Hawaii' 10,304 39,970 Total 300,909 166,302 384 467,595 ' Fiscal year 1911; all clearances classed as vessels with cargo; entrances from original abstracts. The figures in Table V may somewhat understate the actual tonnage; because, under the rules of the United States as to recording clearances, vessels are cleared to the first foreign port at which they discharge cargo, unless the bulk of the cargo is destined to some other foreign port. This partly accounts for the great difference between the entrances and clearances in trade between the eastern seaboard of the United States and Pacific- American countries. The actual vessel entrances into our eastern ports from Pacific America, however, are much in excess of the clearances; because our imports from the west coast of the Americas are greater, both in value and bulk, than our exports to that part of the world. Some addition might possibly be made to the recorded clearances, as stated in Table V, but it has been thought best to accept the figures without change. Entrances and Clearances in the Trade of the Atlantic-Gulf Seaboard of the United States with Oceania and the Orient East of Singapore. It is especially difficult, for the following reasons, to obtain accurate statistics of the vessel movements made in carrying on the trade between our Atlantic-GuK Seaboard and the Orient and Pacific Oceania: (1) A portion of the commerce is handled indirectly by way of Europe, and the cargoes there transshipped are credited to our commerce with Europe instead of to our trade with the Orient and Oceania. (2) Some vessels engaged in our trade with points east of Singapore load and discharge freight en route at points in southern Asia. Our records of entrances and clearances may thus credit to countries west of Singapore tonnage that should be credited to countries beyond Singapore. (3) The recorded entrance and clearance statistics of the vessel movements between the eastern seaboard of the United States and Oceania and the Orient east of Singapore are so small in comparison with the known volume of tliis trade that the figures for vessel movements can not be accepted at their face value. The tonnage of slnpping recorded as having entered and cleared at American ports could not possibly have transported the traffic that was exchanged. Table VI.— NET REGISTER TONNAGE, ENTRANCES AND CLEARANCES, VESSEL MOVEMENTS BETWEEN THE UNITED STATES ATLANTIC-GULF COAST AND ORIENTAL COUNTRIES EAST OF SINGAPORE AND COUNTRIES OF OCEANIA. Countries. Entrances. Clearances. Total en- trances and clearances. Cargo. BaUast. Cargo. Ballast. China 43,651 26,885 108,633 5,677 69,756 4.308 123,708 62,817 93,008 192,580 130,272 Hongkong 89, 702 215.550 198,257 200,028 Japan 3,609 10,300 Australia and Tasmania PhiUppine Islands French Oceania German Oceania ; 1,478 15,769 6,228 New Zealand 15,769 6,228 Korea Total 258, 910 3,609 625,860 10,300 898,679 30 PANMIA CANAL TRAFFIC AND TOLLS. The recorded entrances and clearances of 898,679 tons, as stated in Table VI, should be increased by the vessel tonnage required to handle the trade carried on between the eastern seaboard of the United States and Pacific countries indirectly by way of Europe. The Panama route from New York to Yokohama via San Francisco and the great circle is 3,768 miles shorter than the Suez route; to Shanghai the distance via Panama is 1,876 miles less. Hongkong and Manila are almost equally distant from New York via the Panama and Suez routes. Sydney, Austraha, is 3,932 and Wellington, New Zealand, 5,590 miles nearer New York via the Panama Canal than via the Good Hope route; and WeUington is 2,493 miles nearer New York Ada the Panama Canal than by way of the Straits of Magellan. With the possible exception of a portion of the tonnage moving to and from Hongkong and the Philippines, the bulk of the trade of our Atlantic and Gulf ports with the Orient east of Singapore and with Australasia and Oceania will use the Panama Canal. Some vessels engaged in the trade with Hongkong and the Pliihppines will continue to take the route via the Suez Canal and the ports in southern Asia. Likewise, some vessels will sail from Europe for Hongkong and Manila via the Suez and will return to Europe via the west coast of the United States and the Panama Canal. According to the statements of exporters, steamship agents, and navigation companies, a considerable portion of the imports into our Atlantic and Gulf ports from Oceania is handled indirectl}- by way of Europe. Our records state that but 9,985 tons of vessels entered directly from Oceania, whereas our imports would have required a larger tonnage of shipping had all the imports been brought directly from Oceania. Our imports from the Orient, however, are nearly all brought to us directly. They do not reach us, in large amounts, by way of Europe. It is estimated by those engaged in the trade that about 90 per cent of our imports from Oceania and 5 per cent of our imports from the Orient east of Singapore reach the United States in vessels that are not recorded as entering from the countries of Oceania or the Orient. The portion of the export trade from our Atlantic-Gulf coast to Oceania that is handled indirectly probably does not exceed 25 per cent. The percentage of the exports to the Orient shipped indirectly is about the same as in the case of imports. The total imports credited to the Atlantic and GuK ports of the United States from Oceania and the Orient east of Singapore, in 1910, were valued at $66,483,000. Some of these imports entered by way of our Pacific coast ports. Indeed, in 1910, the Atlantic and Gulf ports received by rail from the Pacific ports imports valued at $9,770,073. Moreover, the New York customliouse reports state that, in 1911, imports appraised at $3,715,619 were received at New York by way of the Canadian Pacific Railroad and the ports of British Columbia. The ratio of New York's 1911 to its 1910 imports from Oceania and the Orient, applied to the 1910 imports from those sections into the other ports than New York on the Atlantic seaboard of the United States, would make the approximate value of all imports at the Atlantic and Gulf ports received through Pacific coast ports in 1911 about $13,927,900. This sum deducted from the total value of the imports of the Atlantic and Gulf ports from Oceania and the Orient east of Singapore, leaves $52,555,000. If it be assumed, as it probably may safely be assumed, that 90 per cent of the imports from Oceania and 5 per cent of the imports from the Orient to our eastern seaboard are at present received indirectly, then the indirect imports aggregate about $18,418,700, or 35 per cent, of the total I'eceived by water. If it, also, be assumed that 25 per cent of the exports from our Atlantic and Gulf ports to Oceania and 5 per cent of those to the Orient east of Singapore are handled indirectly, the indirect exports would aggregate about $8,996,000, or 12 J per cent, of our total exports to the trans-Pacific sections under consideration. These ratios have been adopted after advising with some of the principal steamsliip companies engaged in our oriental trade. A portion of the tonnage of sMps that enter the Atlantic ports of the United States from southern Asiatic countries should be added to the recorded entrances from the Orient east of Singapore and Oceania. The Bureau of Statistics reports the entrances from southern Asia to be 339,429 tons, or 29 per cent in excess of the entrances from countries east of Singapore, whereas the imports of the Atlantic and Gidf seaboards from southern Asia exceed those from the remainder of the Orient and from Oceania by only 23 })er cent. The recorded entrances, as given in Table VI, maj^, therefore, properly be increased by about 6 per cent in order to include the tonnage now accredited to southern Asia. The additions that need to be made to the recorded tonnage, as stated in Table W, in order to account for the indirect trade by way of Europe, increase the clearances by 12^ per cent, or 79,520 tons. The entrances need to be increased 35 per cent, or 91,881 tons, to cover the imports via Europe, and 6 per cent, or 15,751 tons, because of the fact that vessels bringing goods from the Orient to the eastern part of the United States may be entered from southern Asia. These changes would make the clearances of the Atlantic-Gulf ])orts in PANAMA CANAL TEAFFIC AND TOLLS. 31 the trade with Oceania and the Orient east of Singapore 715,680 tons, and the entrances 370,151 tons, a total of 1,085,831 tons. In view of the known volume of trade between the Atlantic and Gulf seaboards of these countries, a vessel tonnage of 1,085,831 tons must be regarded as too low. In the reasoning in the above paragraphs hberal allow- ances were made for the trade handled indirectly by way of Europe, but it is evident that the tonnage recorded by the Bureau of Statistics as having entered cUrectly from, or as having cleared for points beyond, Singapore must be much below the actual vessel movement. The value of the total trade between the Atlantic and GuK seaboards of the United States and Oceania and the Orient east of Singapore in 1910 was $130,444,945; and, after deducting the imports by rail from the Pacific ports, the trade by water was valued at about $116,517,000. The trade of the same countries with the United States via our Pacific ports and by way of the northern border ports of the United States was, in 1910, valued at $101,418,178; and if the in-transit import trade through our Atlantic and GuK ports to the west coast of the United States be added, the total value becomes $115,346,170. This sum is less than the value of the trade between the eastern ports of the United States and Oceania and the Orient. Moreover, our imports from those foreign sections via Europe are credited to our commerce with Europe, not to our trade with the Orient and Oceania. Were this trade via Europe added to the recorded trade of the Atlantic and Gulf ports, the difl'erence between the value of the trade with Oceania and the Orient via the east and west coasts of the United States would be still greater. Though the value of the trade at the eastern ports of the United States with Oceania and tlic Orient east of Singapore was greater, in 1910, than the value of our trade carried on with those trans-Pacific sections at the Pacific and northern border ports of the United States, the Bureau of Statistics recorded entrances and clearances of 2,512,697 tons at the Pacific ports of the United States. The toimage of vessels engaged in the trade between the Pacific ports of the United States and Oceania and the Orient would be somewhat larger than the corresponding tonnage at our Atlantic and GuK ports, because the exports from our Pacific ports include bulkier products, and also for the reason that more of the traffic across the Pacific moves in regular steamship lines carrpng passengers as well as freight; but the difference between 2,512,697 and 1,085,831 tons is excessive. The records kept by the New Panama Canal Co. showed that, in 1899, there were 1,271,357 tons of vessel movements between the Atlantic and GuK seaboard and Oceania and the Orient; but' their records were for a somewhat wider area in the Orient than is included in the above analysis. The report of the Isthmian Canal Conmiission in 1901, after discussing the statistical problem here under consideration, accepted for the total entrances and clearances between the Atlantic-Gulf ports of the United States and Oceania and the Orient east of Singapore double the tonnage of the recorded clearances. If the same method were now followed the total entrances and clearances for the trade under consideration would be 1,272,320 tons. It was stated in the report of 1899-1901 that the total of entrances and clearances was probably more than double the recorded clearances, and it is doubtless true that the actual vessel movements to-day are in excess of double the tonnage of the recorded clearances from our Atlantic-GuK coast directly to Oceania and oriental countries beyond Singapore. It would hardly be possible to handle the volume of trade now carried on between the Atlantic-Gulf ports of the United States and Oceania and the Orient beyond Singapore w^th vessel entrances and clearances at our Atlantic-GuK ports of less than 1,500,000 tons, and this tonnage is believed to be a conservative estimate. In accepting this as the probable tonnage, no allowance has been made for the probable diversion, after the opening of the Panama Canal, of an appreciable volume of trade between the United States and the Orient from the present routes via the Pacific ports of the United States to routes via the Atlantic and GuK ports. Unquestionably some of the trade of the eastern and middle sections of the United States with trans-Pacific countries wiR be diverted from the transcontinental railroads and the routes across the Pacific to the railroads leading to the Atlantic and GuK ports and to the steamship hues from those ports through the Panama Canal to and from the Orient. The total tonnage of vessel movements between the eastern part of the United States and Oceania and the Orient east of Singapore is apportioned by Table XI between the tonnage of vessels with cargo and of vessels in ballast. In order to do this it was necessary to adopt an arbitrary ratio, and it was assumed that the ratio for tins tonnage was the same as that of the recorded entrances and clearances for the trade in question. In dividing the total of 1,500,000 tons between entrances and clearances, it was assumed that the clearances must have exceeded the entrances by 300,000 tons, because the commodities exported are more bulky in char- acter than those imported. 32 PANAMA CANAL TRAFFIC AND TOLLS. Vessel Tonnage Engaged in the Present Traffic Across the Isthmus of Panama. The tonnage of vessels entering and clearing at Colon and Panama is exceptionally large in comparison with the amount of freight actually loaded and discharged. The following table, Number VII, shows that the ton- nage of entrances and clearances at Colon, in 1909-10, amounted to 3,716,573 tons, and at Panama to 777,959 tons. Table VII. -NET REGISTER TONNAGE, ENTRANCES AND CLEARANCES OF VESSELS AT COLON AND PANAMA. 1909-10. Entrances. Clearances. Total. 1,870,063 388,060 1,846,510 389, 899 3,716,573 777,959 2,258,123 2,236,409 4,494,532 The Panama EaUroad in 1909-10 carried 236,241 tons of through freight from Colon to Panama and 145,017 tons from Panama to Colon. Twenty-eight per cent of the total freight moving from Colon to Panama was through freight, and of the total moving from Panama to Colon, 45 per cent was through freight. If these ratios be applied respectively to the vessel entrances at Colon and at Panama they produce a total of 698,244 tons. It is assumed that this tonnage of shipping was required in 1909-10 to bring to Colon and Panama the 381,258 cargo tons of through freight that crossed the Isthmus. Panama, and more particularly Colon, are ports of call, and vessels entering and clearing them have cargo for many other places. The tonnage of vessels used to carry to and from the Isthmus the 381,258 tons of freight that was taken across Panama in 1909-10 can not be regarded as the tonnage which would have been required if the canal had been in existence. It is assumed that most of tliis freight would in that case have been carried by vessels that passed through the canal and not by ships using Colon and Panama as ports of call. In estimating how great this vessel tonnage would have been, the Colon entrances and clearances must be disregarded because of the large amount of Isthmian Canal Commission freight and because Colon is a port of call for a large number of ocean lines that carry passengers as well as freight. The entrances and clearances at the port of Panama are likewise to be accounted for in part by the fact that vessels call there en route, but the tonnage of such vessels as well as the shipping employed to carry freight to Panama for the Canal Commission is much less than is the corresponding shipping entering and clearing Colon. It may apparently be assumed that one-third of the clearances from Panama are either of vessels that have called en route or are of ships that have brought goods to be used on the Canal Zone, and that the remaining two-thirds of the clearances, 259,932 tons of shipping, were employed in transporting from Panama the 236,241 tons of through freight that reached Panama from Colon for shipment to points beyond. The tonnage of through freight moving by rail from Panama to Colon is 61 per cent of the tonnage moving in the opposite direction, and it is probable that the tonnage of vessels that entered Panama to bring in the 145,017 tons of through freight mo^Hng northward across the Isthmus is approximately 61 per cent of the tonnage of vessel clearances at Panama, or 158,558 tons. By this reasoning the total tonnage of entrances and clearances to be credited to the trade via the Isthmus in 1909-10 becomes 418,490 tons. The figures used in the above estimate are based upon the traffic of 1909-10. The trans-Isthmian trade in 1910-11 was larger than during the previous year, but in the estimate here made the data for 1909-10 were taken because the 1910-11 figures for vessel entrances and clearances were not obtainable, and because most of the statistics in this chapter are for 1909-10. Vessel Tonnage of the Trade of Eastern Canada with Alaska, Chile, and Australia. No direct vessel movements between eastern Canada and the ports of the Pacific coast of the United States are recorded for the year 1909-10. There may have been some traffic by way of the Isthmus of Panama, but this would be included in the tomiage of the Panama traffic. PANAMA CANAL TRAFFIC AND TOLLS. 33 Table Vm NET REGISTER TONNAGE, ENTRANCES AND CLEARANCES, VESSEL MOVEMENTS BETWEEN EASTERN CANADA AND ALASKA, CHILE, AND AUSTRALIA (1910). 1 Countries. Vessels in ballast. Vessels with cargo. Total. Entered.' Cleared.2 Entered.i Qeared.! Entered.i Cleared.! Alaska 3,243 1,478 10, 177 13,608 2,836 4.326 13,410 IS, 086 Chile 2,836 4.326 Total 3,233 1,478 10,177 20,770 13,410 22.243 1 Entered eastern Canada from .\Iaska, Chile, and Australia. 2 Cleared from eastern Canada to Alaska, Chile, and Australia. ' All clearances recorded as with cargo. Table VIII shows that in 1910, 35,658 tons of vessels moved directly from eastern Canada to Alaska, Chile, and Australia.' As in the case of shipments from the eastern to the western seaboard of the United States, this tonnage may be accepted without change. The Australian tonnage ia Table VIII is small, because the trade of eastern Canada with Australia has not been developed. There may be a sUght traffic between eastern Canada and Australia via Europe, but this would be rucluded in the tonnage of vessels moving between Europe and Australia. The Amkrican-Hawaiian Steamship Co.'s Addition to the Tonnage of the Panama Canal. Since 1907 the American-Hawaiian Steamship Co. has maintained a ser%T,ce between New York, San Fran- cisco, and Hawaii by way of Tehauntepec and the railway across that Isthmus. The entrances and clearances of the vessels employed in that trade during the fiscal years 1910 and 1911 are shown in Table IX: Table IX.— NET REGISTER TONNAGE, ENTRANCES AND CLEARANCES, AMERICAN-HAWAIIAN STEAMSHIP CO.'S FLEET, 1910 AND 1911. Entrances at New York from Puerto, Mexico.. Clearances from New York for Puerto, Mexico. Entrances at San Francisco from Salina Cruz.. Clearances from San Francisco for Salina Cruz. Entrances at Hawaii from Salina Cruz Clearances from Hawaii for Salina Cruz 215,683 243,943 218,530 244,887 218,181 263,038 97,014 124,796 138,261 157,339 135,422 129,824 To accept without analysis these clearances and entrances as a measure of the tonnage which the American- Hawaiian fleet would have caused to pass through the Panama Canal in 1910 and 1911 would exaggerate the tonnage. The vessel movements between New York and Puerto Mexico, can not, however, be taken as the ton- nage which would have used the canal; because if the vessels had been operated through a Panama Canal to San Francisco and Hawaii, they would have made fewer trips than they made between New York and Puerto Mexico. A better measure of the vessel tonnage to be credited to the available canal traffic on account of the present trade by way of the Isthmus of Tehauntepec may be obtained by estimating the number of runs each vessel of the American-Hawaiian Co.'s fleet would make in a year from New York to the west coast and back via a Panama Canal. Had the fleet in sei-vice during 1910 been operated through the Panama Canal, it would have added 363,426 tons to the tonnage using the waterway. Five additional vessels of 4,250 tons each were then being constructed for service between New York and the Pacific coast of the United States and they, had they been operated, would have added 110,712 tons to the canal's traffic. ' The Alaskan tonnage is taken from the report of the United States Bureau of Statistics, and the Chilean and Australian tonnage from the ofScial publication of Canada. 34 PANAMA CANAL TRAFFIC AND TOLLS. Tonnage of Vessels Moving Between the Eastern and Western Seaboards of the United States VIA THE Straits of Magellan. The coasting trade between the two seaboards of the United States by way of the Straits of Magellan and Cape Horn, in 1910, amounted to 172,655 tons, 117,147 of which were entrances at Pacific ports and 55,508 clearances therefrom. Over 50 per cent of the vessels moving from the Atlantic to the Pacific ports of the United States clear from our west coast to Europe, from whence they return to the United States. Summary. The foregoing detailed statistics of the vessel tonnage that might have used a Panama Canal in 1910 are summarized ia Tables X and XI. Table X states the entrances and clearances above considered just as they were taken from the tonnage reports of the United States and of various foreign countries. As far as possible, separate figures are given for clearances and entrances, for vessels with cargo, for vessels in ballast, for sailing vessels, and for steamships. Table X SUMMARY OF RECORDED NET REGISTER TONNAGE OF VESSELS EMPLOYED IN COMMERCE THAT WOULD HAVE USED THE PANAMA CANAL IN 1909-10. TOTAL ENTRANCES AND CLEARANCES, AS STATED IN ABOVE TABLES, WITHOUT DEDUCTIONS. Entrances. Clearances. Total en- trances. Total clear- ances. In total entrances and clear- ances are included— Total en- With cargo. In bal- last. With cargo. In bal- last. Sail en- trances. Sail clear- ances. Total sail tonnage. trances and clearances. Europe with— 1 1,978,592 40,394 419,866 (') 6,145,757 300,909 (') 215,683 258,910 (') (') 10, 177 2 29,265 (■) 226,702 (') 3,609 (') (') 3,233 8 2,027,288 59,357 257,054 (') 5,023,132 166,302 (') 218,539 625,860 (') C) 20,770 4 150,312 12,799 0) 433,510 384 W 10,300 (•) (') 1,478 6 2,007,857 40,394 419,865 (') 6,372,459 300,909 117,147 215,683 262,519 388,060 1,870,063 13,410 6 2,177,600 59,357 269,853 (') 5,456,642 166,686 55,508 218,539 636,160 389,899 1,846,510 22,248 7 586,191 6,494 193,587 8 468,726 59, 448 160,454 9 1,054,917 65,942 354,041 10 4,185,457 99,751 689,718 158,000 11,829,101 467,595 172,655 434,222 898,679 777,959 3,716,673 35,658 201,579 10,304 247,552 6,686 (■) 449,131 16,990 Eastern United States coast with— Pacific coast of United States and Hawaii (via American- 31,715 42,924 ■ 74,639 Panama tra£Qc — 8,618 1,915 8,225 2,096 16,843 4,011 Eastern Canada with— 9,370,287 262,809 8,398,302 608,783 n2, 008, 306 < 11,299,002 1,040,403 996,111 2,036,514 •23,465,368 1 Not reported whether with cargo or in ballast, but the totals are entered under " Total entrances " and " Total clearances," with the exception of the 158,000 tons, " Pacific coast of United States via Suez Canal," which can be included only in the final column, " Total entrances and clearances." In the entrance and clearance figures for the Pacific coast of the United States via Cape Horn, steam and sail tonnages are not separated. 2 Not including Hawaiian traffic. > Entrances and clearances at New York from and to Puerto Mexico. For tonnage at Salina Cruz, Hawaii, and San Francisco, see Table IX. 4 The "Total entrances" and "Total clearances" exceed the sum of the entrances and clearances "with cargo" and "with ballast" by the amount of the tonnage not subdivided into "with cargo " and "in ballast." Moreover, the final column of " Total entrances and clearances " Includes 158,000 tons— Pacific coast of United States via Suez Canal— not comprised in the preceding columns PANAMA CANAL TRAFFIC AND TOLLS. 35 The entrances and clearances after the duplications, shortages, and overstatements of the recorded tonnage have been eliminated are presented in Table XI. The total tonnage of vessels that might have advantageously used the Panama Canal in 1910 was 8,328,029 tons. Table XI,— NET REGISTER TONNAGE OF VESSELS THAT MIGHT HAVE ADVANTAGEOUSLY USED A PANAMA CANAL IN 1909-10. TOTAL ENTRANCES AND CLEARANCES, AS STATED IN ABOVE TABLES. WITH PROPER DEDUCTIONS. Entrances. Clearances. Total en- trances. Total clear- ances. In total entrances and clear- ances are included— Total en- With cargo. In bal- last. With cargo. In bal- last. Total sail tonnage. trances and clearances. Europe with— 1 1,524,622 80,788 419,865 0) 604,831 300,909 (') 181,713 591,600 (■) (') 10,177 2 29,205 (') 13,873 (') 8,900 (') (') 3,233 3 1,444,201 118,714 257,054 (•) 522,078 166,302 (') 181,713 885,600 (') 0) 20,770 4 150,312 12,799 (') 33,803 384 (') 14,400 (') (•) 1,478 6 1,553,887 80,788 419,865 (•) 618,704 300,909 117,147 181,713 600,000 158,558 6 1,594,513 118,714 269,853 (') 555,881 166,686 55,508 181,713 900,000 259,932 7 586,191 12,988 193,587 8 468,726 118,896 160,454 9 1,054,917 131,884 354,041 10 3,148,400 199,502 Pacific United States, British Columhia, and Hawaii 689,718 158,000 1,174,585 467,595 172,655 24,934 10,304 (■) 32,072 6,686 (') 57,006 16,990 Eastern United States coast with— Pacific coast of United States and Hawaii (via American- 31,715 42,924 74,639 1,500,000 Panama trafiBc- 418,490 Eastern Canada with— 13,410 22,248 1,915 2,096 4,011 35,658 3,714,505 54,771 3,596,432 213,176 3 4,044,981 3 4,125,048 861,634 831,854 1,693,488 '8,328,029 ' Not reported whether with cargo or in ballast, but the totals are entered under "Total entrances" and "Total clearances," with the e.xception of the 158,000 tons " Pacific coast of the United States via Suez Canal," which can be included only in the final column, "Total entrances and clearances." In the entrance and clearance figures for the Pacific coast of the United States via Cape Horn, steam and sail tonnages are not separated. * Not including Hawaii. • The "Total entrances" and "Total clearances" exceed the sum of the entrances and clearances "with cargo" and "in ballast" by the amount of the tonnage not subdivided into "with cargo" and "in ballast." Moreover, the final column of "Total entrances and clearances" includes 158,000 tons— Pacific coast of United States via Suez Canal — not reported in the preceding columns. Separate figures for vessels with cargo and in ballast are not available in every case. The official reports distinguish between cargo and ballast vessel movements as regards 7,578,884 tons, or 91 per cent of the aggre- gate. Of this total, 7,310,937 net tons were for vessels with cargo, and but 267,947 tons were for vessels in ballast. Thus, 96 per cent of the tonnage which might liave used the canal in 1909-10 was made up of vessels with cargo. In the same year 95.7 per cent of the tonnage of the Suez Canal consisted of vessels with cargo. The statistics distinguishing between sail and steam tonnage include 8,155,374 tons, or 97^ per cent of the total. Of this tonnage, but 1,693,488 tons, or 20^0 per cent were for sailing vessels. The recorded tonnage of sailing vessels aggregated 2,179,951 tons. In revising the figures so as to avoid duplications, overstatements, and shortages, the recorded sail tonnage between Europe and western South America, Pacific United States, British Columbia, and Hawau v/as accepted without change, because the sailing 36 PANAMA CANAL TRAFFIC AND TOLLS. vessels are chartered ships that usually carry full cargo for a single destination. The tonnage of sail entrances and clearances for the trade between Europe and western Central America, Mexico, Oriental countries east of Singapore, and Oceania was revised according to the methods previously applied to the combined tonnage of sail and steam vessels. The sail tonnage between the eastern United States and the Orient and Oceania was ac- cepted as recorded, because the indirect shipments via Europe are not made in sailing vessels. The sail tonnage for the trade between the eastern United States and western South America, Pacific Mexico, and Hawaii was also accepted without change. No sail toimage was allowed for the shipments across the Isthmus of Panama, because none was recorded at the port of Panama in 1910. The sail tonnage moving between eastern Canada and Alaska, Chile, and Australia was accepted without change. It may be contended that this sail tonnage should not be included in the tonnage of available canal traffic, because sailing vessels will not use the canal. The sail tonnage should, however, be included, because the ad- vantages of the canal in the trade of the various regions considered are so manifest that the very certainty that sailing vessels will not use the canal will cause steamers to be shifted to the canal routes and cause sailing vessels to be employed elsewhere. Sailing vessels account for but a relatively small share of the total tonnage of vessels employed in the commerce of the regions tributary to the canal. After the canal is completed, these sailing vessels will be employed on other routes. The opening of the Panama Canal will necessarily hasten the substitution of steamers for sailing vessels in the world's commerce; but the effect will simply be to quicken a change now in progress. The world's seagoing sail tonnage declined from 14,185,836 tons in 1873-74 to 11,636,289 in 1888-89; to 8,693,769 in 1898-99; and to6,412,211 in 1910-11; while steam tonnage increased from 4,328,193 in 1873-74 to 41,061,077 in 1910-11. CHAPTER III. INCREASE IN AVAILABLE CANAL TRAFFIC 1899 TO 1914-15. 37 CHAPTER III. INCREASE IN AVAILABLE CANAL TRAFFIC 1899 TO 1914-15. The investigation of traffic statistics in accordance with the metliods explained in the preceding chapter shows that had tlie Panama Canal been in existence during the fiscal year ending June 30, 1910, it might advan- tageously have been used by vessels with an aggregate net register tonnage of 8,328,029. The purpose of meas- uring, with all possible accuracy, the traffic available for the use of a canal waa to find an answer to the much more important question of what the available tonnage will be in 1914, at the time of the opening of the Panama Canal. Intelligent action Ln fixing the canal tolls requires a knowledge of the volume of traffic upon which charges may be levied. The purpose of transit dues is to secure revenue, and the receipts at the canal will be the product of the rate of tolls and the volume of traffic. In the report of the Isthmian Canal Commission,' published in 1901, an account was given of two investiga- tions that were made to determine the net register tonnage of the traffic that might advantageously have used an isthmian canal during the year 1899. It was found that the statistics of entrances and clearances indicated an available traffic of somewhat less than 5,000,000 tons net register — 4,891,075 tons; while the records of vessel movements that had been kept by the New Panama Canal Co. showed an available traffic of somewhat over 5,000,000 tons, the exact figures being 5,001,798 net register. In the following table the Panama Canal traffic of 1910, as determined by the investigation of entrance and clearance statistics, is compared item by item with the corresponding statistics for the year 1899. Three items appear in the 1910 column that are not to be found in the 1899 column. Thus the figures for the two periods are not entirely comparable, but the table is of especial value because it shows the rapid increase in the commerce of Europe and the United States with western South America, and because it indicates the comparatively small volume of traffic now moving between the west coast of the United States and the Atlantic seaboards of the United States and Europe. Table I.— VESSEL TONNAGE, ENTRANCES AND CLEARANCES, AVAILABLE PANAMA CANAL TRAFFIC, 1899 AND 1910. Item. Europe with— Western South America Western Central American and Mexico Pacific United States, British Columbia, and Hawaii Pacific United States via Suez Canal Oriental countries east of Singapore and Oceania Eastern seaboard of United States with— Western South America, Pacific Mexico, and Hawaii Pacific coast of United States via Cape Horn Pacific United States and Hawaii via American-Hawaiian Steamship Co . Oriental countries east of Singapore and Oceania Panama traffic Eastern Canada with Alaska, Chile, and Australia Total 1,771,858 140,000 642,180 166,364 109,312 908,140 336,998 3,148,400 199,502 689,718 158,000 1.174,585 467,595 172,655 363,426 1,500,000 418,490 35,658 The tonnage of traffic available for the use of an American isthmian canal Ln 1899 was 5,001 ,798 tons according to the record kept by the New Panama Canal Co. The tonnage that might have used a canal to advantage in 1910 was 8,328,029 tons, the increase during the 11 years having been 66^ per cent, or at the rate of 58.96 per 'See Appendix I. 40 PANAMA CANAL TRAFFIC AND TOLLS. cent per decade.' If the rate of increase that prevailed during the decade ending in 1910 shall continue during the five year's ending in 1914-15, the growth for the five 3"ears will be 26.08 per cent, and the tonnage in 1915 will be 10,499,799— practically 10,500,000 tons. Is it safe to assume this rate of increase during the five years ending in 1915? This question can best be answered by ascertaining what the actual rate of increase has been in the commerce of the world and of the leading sections of the world during the past decade. If it be found that the increase in the available canal traffic from 1S99 to 1910 is no greater, or is less, than the rate of growth prevailing in the commerce of the leading sections of the world, it will presumably be safe to conclude that the increase in the available canal traffic of less than 60 per cent per decade during the 15 years, 1900-1915, win result in a conservative estimate of the traffic that may advantageously annually use the Panama Canal during the first years of its operation. A study has been made of the increase in the value (1 ) of the foreign trade of the 22 leading countries of the world, (2) of the trade of the United States Avith foreign countries, (3) of the commerce of the United States with non-European countries, (4) of the commerce between the Atlantic- Gulf seaboard of the United States and Pacific countries, and (5) of the commerce between European and Pacific countries and the west coast of South and North America. An analysis has also been made of the growth in the volume of traffic using the Suez Canal. The results of tliis study are summarized in the foHowing paragraphs. The investigation here made of the growth in the value of international commerce is to assist in deciding whether the rate of increase in the volume or tonnage of available canal traffic from 1899 to 1910 may be pre- dicted for the five-year period ending in 1915. Such bemg the problem, it becomes necessary to reduce all percentages of increase in the value of commerce sufficiently to eliminate the effect of rising prices upon the value of commerce. The effect of rising prices upon the percentages of increase in commercial values can be offset by reducing value increases by the percentage that prices have risen during the decade. The rise in general prices from 1899 to 1910 may be computed from the index numbers compiled by the London "Econo- mist," by Sauerbeck, by the United States Bureau of Labor, and by " Bradstreet." Most of the figures cited in the following pages refer to the decade 1900-1910, but masmuch as a few of the figures are for the 10-year period endmg in 1909, the percentages of price increases for two decades, one ending in 1909 and the other ending in 1910, are stated in Table II. ' To determine the rate of increase for one or more years when the total percentage of increase for a period of years is known, the following formulas may be used: Formula to find rate per annum. A=p(l+r)» A= amount after n years= 8,328,029 A r= rate per annum p=amount at first date= 5,001,798 D= number of years after first date=ll. Formula to find amount in tenth year. A=pCI+r)» .\=amoimt in tenth year B p=amount in first year=5,001,79S r=rate per annum n= number of years after first date=10. Formula to find rate of increase for decade. A-p ■=per cent increase C A= amount in tenth year ' p= amount in first year. PANAMA CANAL TRAFFIC AND TOLLS. 41 Table II PERCENTAGES OF INCREASE IN PRICES DURING THE DECADES ENDING IN 1909 AND IN 1910. 1899-1909 1900-1910 EcOTiomiH Sauerbeck United States Bureau of Labor Bradatreet Average Great Britain (Economist and Sauerbeck) Average United States (Bureau of Labor and Bradstreet) General average Per cent. 12.2 12.6 24.5 23.6 Per cent. 13.7 14.4 12.6 12.4 24.05 18.2 13.5 11.17 The relatively low prices of 1899 compared with the high prices of 1909 give a large percentage of increase in prices for that decade, particularly in the United States. Prices in 1910 were not so much above those of 1900 as were the prices of 1909 in excess of those prevailing 10 years earlier; but even during the decade ending in 1910 there was, particularly in the United States, a relatively large increase in average prices. In order to secure a percentage wliich represents as nearly as possible the actual increase in average prices, the mean has been taken of the percentages shown by the two English price indexes and the mean of the two American price indexes. The value of the international commerce of the 22 leading countries of the world has increased 58.4 per cent during the decade 1900 to 1910. The following table, compiled from the reports of the United States Bureau of Statistics, shows the increase during this decade in the imports and exports of these countries. Table III INCREASE IN THE FOREIGN TRADE OF TWENTY-TWO LEADING COUNTRIES, 1900-1910.' Year. Imports. Exports. Total. Per cent increase. 1900 2 $9,532,615,165 15,199,868.105 $8,485,860,991 13,357,891,025 818,018,476,156 28,557,759.130 1910 » 58.4 ' Argentina, Australia, AustriarHungary, Belgium, Brazil, Bulgaria, Canada, China, France, Germany, British India, Italy, Japan, Mexico, Netherlands, Norway, Bussia, Spain, Sweden', Switzerland, United Kingdom, and United States. 2 Not including Brazil. 3 Including Mexico, Netherlands, and Sweden as in year 1909. The general average of British and American price increases for the decade ending in 1910 shows a rise in average prices of 11.17 per cent; accordingly, the increase in the volume of the commerce of the 22 countries included in the preceding table was presumably but 88. 8.3 per cent of 58.4 per cent, or 51.9 per cent. This rate of increase applies to the commerce of practically all important commercial countries and includes the trade of the older sections of the world, where the rate of growth is relatively slow, as well as of the newer parts of the world, where the increase in commerce is relatively rapid. For this reason the rate of mcrease ought to be less than that of the available commerce of the Panama Canal, which will be used by the commerce of the Pacific coun- tries, whose trade is growing at a relatively rapid rate. The total foreign trade of the Unitetl States increased 47.1 per cent in value during the decade ending in 1910. To eliminate the effect of the rise in prices, this rate should be decreased 13J per cent, or to 40.7 per cent. The foreign commerce of the United States during the decade ending June 30, 1911, mcreased 54.9 per cent in value. After reducing this 13J per cent, the increase representing the presumable growth in volume of trade 42 PANAMA CANAL TRAFFIC AND TOLLS. becomes 47.4 per cent. The following chart shows graphically the increase in the value of the imports and exports and total foreign commerce of the United States from 1900 to 1911: 4000 3500 3000 2500 2000 1500 1000 500 Chart A. Fore/gn Trade: of United States, / 90 0-/9/ I. //7 /Hi/ /ions of Do//an5. ^ ^ ^ y ^o^ ^ ^ _^ -^^ Year Imports Exporls Total 1900 1910 1911 849.941.184 J.5S6.947.43? ISZ7.226./OS 1.394.483082 1.744 984.720 2049.320,199 2.24d.4?4.?66 3.301.93?. ISO 3576S46.304 The only commerce which the United States will have via the Panama Canal with European countries will be that between the Pacific coast of the United States and Europe. For this reason, the increase in trade of the United States with non-European countries is more indicative of the probable growth m the available canal traffic than is the growth in the total foreign commerce of our country. The value of the commerce of the United States with non-European countries rose from $763,689,189 in 1900 to $1,359,747,319 in 1910, the growth having been 78 per cent. This percentage reduced by \2,\ per cent, to elimuiate the effect of advance m prices in the Unitetl States, leaves a net growth in the commerce of the United States with non-European countries of 67J per cent during the 10 years ending in 1910. This is an appreciably higher rate of mcrease than is predicted for the available Panama Canal traffic for the decade preceding 1915. A stiU closer indication of the probable rate of increase in available canal traffic is the growth in the commerce between the Altantic-Gulf seaboard of the United States and Pacific countries, American and Asiatic. The growth in this trade by imports and exports and by Pacific countries is shown in detail in Table IV. PANAMA CANAL TRAFFIC AND TOLLS. 43 Table IV.— TRADE OF ATLANTIC AND GULF PORTS OF UNITED STATES WITH WESTERN SOUTH AND CENTRAL AMERICA, BRITISH COLUMBIA, AND PACIFIC COUNTRIES EAST OF SINGAPORE.' Imports. Exports. Imports. Exports. Per cent in- crease 1910 over 1900. Western South America: Bolivia Chile Ecuador Peru Salvador. British Columbia Hawaii Orient (east of Singapore): Leased China Korea Hongkong Japan Asiatic Russia Phihppines Oceania: Australia and Tasmania. New Zealand Other foreign Oceania. . . Total 22 i, 271, 078 ,336,224 1,122,543 247,633 94,914 1,591,415 951,032 8,697,449 230 5,385,078 4,712,022 (<) 43,972 59,223 2,873,063 1,048,367 1,441,586 376,025 5,630 1,493,793 12,367,357 256,484 4,174 2,518,247 15,969,694 2,379,887 23,018,716 11,433 59,245 9, 144, 141 2,384,591 3,564,129 623,658 100,544 11,085,208 23,400,501 256,484 4,279 3,469,279 24,667,143 2,380,117 6,093,962 27, 730, 738 (') 55,405 16,841,788 2,049,120 7,128,595 93,700 5 208,957 24,029,997 17,671,079 1,268,602 2,777 1,614,811 14,181,303 1,075,535 12,910,296 13,633,048 3,992,593 133,025 590,481 7,552,423 1,956,602 3,039,976 808,278 490, 118 3,683,174 13,600,922 532, 102 316,407 1,614,199 9,483,811 545,320 8,869,930 24,004,591 4,912,693 82,001 590,670 24,394,211 4,005,722 10, 168, 571 901,978 699,075 27, 713, 171 31,272,001 1,800,704 319, 184 3,229,010 23,665,114 1,620,855 21,780,226 37,637,039 8,905,180 215,026 897.0 166.7 68.0 185.5 44.5 596.6 33.6 603.1 7,497.0 '7.4 S4.2 «46.2 257.4 67.8 288.0 50,486,861 64,532,563 115,019,424 116,835,415 82,082,928 198,918,343 1 Not including Alaska, western Mexico, western Central America except Salvador, and Pacific coast of United States. ' Not accounting for S27,456, which is not distributed by ports. 8 Decline. < Included under Australia. The value of the commerce between the Atlantic-Gulf ports of the United States and the countries on both sides of the Pacific rose 72.9 per cent during the 10 years ending in 1910. To indicate the increase in volume of trade, this percentage should be reduced 13J per cent, or to 63.1 per cent. This again is a higher rate of growth than is credited to the available canal traffic prior to the opening of the canal. The details presented in Table IV are especially instructive. The commerce between the eastern part of the United States and the west coast of South America, as a whole, advanced 158.4 per cent in value during the decade ; this rate, decreased by 13§ per cent, becomes 137 per cent. The commerce of our eastern seaboard with Hawaii increased 150 per cent in value; the trade with the Philippines, 257.4 per cent, with Australia and New Zealand, 67.8 jier cent; and with other parts of Oceania, 288 per cent. The growth in the value of the commerce between Europe and Pacific countries, other than British Co- lumbia, during the decade 1900—1910 is shown by the following table: Table V.— INCREASE IN EUROPEAN TRADE WITH PACIFIC COUNTRIES EAST OF SINGAPORE, 1900-1910. Year. . Imports. Exports. Total. Per cent increase. 1899-1900 $508,309,000 756,536,000 1297,118,000 468,695,000 $805,427,000 1,225,231,000 1909-1910 52.1 34998°— 12- 44 PANAIIA CANAL TKAFFIC AND TOLLS. In spite of the large value of the trade of Europe with Pacific countries in 1900, the percentage of increase durin'T the decade ending in 1910 was 52.1 per cent. To offset the effect of rise in prices, this rate of increase has been reduced 12.9 per cent, or to 45.4 per cent. It was thought that the mean between the increase in British prices, 1899-1909, and the increase in American prices from 1900-1910 — 12.9 per cent — should be taken as the factor to be applied in offsettmg the effect of the rise in prices in the commodities composing the trade of Europe -svith the two sides of the Pacific. The traffic of the Suez Canal rose from 9,738,152 tons, net register, in 1900, to 16,581,898 net tons in 1910, the increase for the decade being 70.26 per cent. During the year 1911, the traffic of the Suez Canal amounted to 18,324,794 net tons, the growth for the decade ending in 1911 having been 69.3 per cent. A striking fact regarding the Suez traffic is the continued high rate of growth in spite of the large total tormage already attained. The Suez Canal is used largely not only by the commerce of Europe but by the trade of the eastern seaboard of the United States with the countries of southern and eastern Asia, with the East Indies, and with Australasia. This traffic thus includes the sliipping employed in a large share of the world's trade. The traffic of the Suez Canal is diversified and stable, and its growth represents the normal increase of a large part of the world's international trade. The increase in the net tonnage of the Suez Canal is graphically shown by the f ollo^ving chart : Chart B. Net Tonn/ise of Suez Canal ISOO-1911. Met Tons /8,000,OQO n.ooaooo 16,000,000 15,000.000 14,000.000 15,000,000 12.000.000 11,000,000 10,000,000 3,000,000 "■ / / / / / ^ \ / \ / \ / ^^^ / ' / / Year Net Tons °/o Increase over 1900 / 1900 1905 /9I0 /9/I 9. 738./ 52 /3. 134, 105 16.581898 18. 324794 34 8 70.26 88.17 / ^ / / 1900 1901 1902 1903 1904 1905 1906 1907 1908 1909 1910 1911 The details in the foregoing discussion of the increase in the value of the commerce of the world, the United States, Europe, and the Suez Canal, may be summarized in the following tabular form. PANAMA CANAL TRAFFIC AND TOLLS. Table VI — PERCENTAGES OF INCREASE IN THE VALUE OF COMMERCE, 1900-1910. 45 Commerce of — Twenty-two leading countries , United States with foreign countries United States with non-European countries Atlantio-Gulf seaboard of the United States with Pacific coontries. Europe with Pacific countries , Suez Canal Percentage of increase after reduction to offset rise in prices. 51.9 40.7 67.5 63.1 45.4 170.26 In tonnage. Most of the details presented in Table VI are represented giapliically in the f oUo%ving chart : Dollars 1.400.000000 1.200.000.000 J.000.D0O.OO0 800,000,000 600,000.000 400.000,000 200,000.000 Chart C 78% 52.1% 72.9°/, A Trade of Europe with Pacific coun fries. B Trade of United States with Foreign Pacific countries. C Trade of United Slates with non- European countries. D Net tonnage of Suez Canal. E Nel tonnage aval table fo Panama Canal in 1898-9 and 1909- fO and probable -fonn^jge in / 9 14 -15. .Net ton 5 ^^-^^y- 16,581,898 -10,000,000- 1899 1909 1900 1910 t900 1910 /900 J9/0 ABC It is beUeved that the facts presented in the foregoing discussion and summarized in Table VI and in Chart C indicate that the increase of 58.96 per cent in available canal traffic during the decade ending in 1910 does not err on the side of overstatement, and that a continuance of that rate of growth in the available canal tonnage may conservatively be predicted for the five-year period ending in 1915. It is, of course, possible that a period of business depression may precede 1915; however, the economic conditions prevaihng in 1912 give no indication of an early decline in business activity. Indeed, the United States and the world at large is still slowly over- coming the effect of business interruption during the years 1907-1909. The world is apparently still within the 46 PANAMA CANAL TRAFFIC AND TOLLS. first half of a period of general business expansion. Unless some entirely improbable event occurs, prosperity may not be expected to give way to general business depression for some years to come. The facts presented in this chapter indicate an available Panama Canal traffic in 1914-15 of 10,500,000 tons, net register. It is however, not probable that this entire tonnage wiU immediately abandon present routes upon the opening of the canal; a period of possibly two years may be required by merchants and carriers to arrange for doing business by the canal route; the transfer of traffic to the canal route, however, -mil be accom- plished in a comparatively short time. Steamsliip companies are already laying their plans; terminal facihties are being sought; sliips are being constructed; and arrangements with rail carriers are being made. The Suez Canal traffic increased slowly during the first five years, because the traffic between Europe and the East was handled almost entirely in saUing vessels at the time of the opening of the Suez Canal. Steamers had to be built to use the canal. The total tonnage of steamers in 1869 was relatively small; to-day the situation is different, most of the world's seagoing fleet consisting of steamers. The Panama Canal will not have to wait for sliips to be budt to handle its available traffic. The increase in the available Panama Canal traffic up to 1915 wiU be at the rate of about 60 per cent per decade. How rapidly the traffic of the canal ^\•ill increase after the waterway has been put in operation can, of course, merely be conjectured. The assumption of an increase of 60 per cent during the first decade, from 1915 to 1925, would unquestionably be conservative, because such an estimate would assume merely the con- tinuance of the rate that has prevailed during the 15 years preceding the opening of the canal. The Panama Canal will unquestionably stimulate and accelerate the growth of the commerce it serves, particularly the trade between the two seaboards of the United States and between the eastern part of the United States and South America. The influence of the canal upon the commerce between Europe and the west coast of the United States, and between Europe and western South America, can hardly fail to be important. It is probable that the traffic of the canal will advance more than 60 per cent between 1915 and 1925. If, however, it be assumed that the growth will be but 60 per cent during this decade, the traffic of the Panama Canal will reach 17,000,000 tons, net register, m 1925. Tliis figure may seem large but it will be small in com- parison with the traffic which the Suez Canal vnM have secured by 1925. Indeed, the traffic of the Suez Canal in 1915 will be considerably in excess of 20,000,000 tons, net register, and unless the traffic of that waterway should increase at a much slower pace than it is now advancing, the tonnage passing the Suez Canal in 1925 will be nearly double 17,000,000 net tons. CHAPTER IV. THE RELATION OF THE PANAMA CANAL TO THE TRAFFIC AND RATES OF AMERICAN RAILROADS. CHAPTER IV. THE RELATION OF THE PANAMA CANAL TO THE TRAFFIC AND RATES OF AMERICAN RAILROADS. INTBODUCTION. Since the opening of the first railway to the Pacific, in 1869, shippers have had the choice of rail and water routes for the transportation of their freiglit from coast to coast, and, in spite of artificial restraints upon the competition of the water routes with the transcontinental railroads, the rates by rail between the two seaboards have been affected by those charged by the carriers by water. The Panama Canal will shorten and improve the intercoastal water route and will greatly increase the influence which the coastwise lines will be able to exert upon the railroad services and rates. The volume of traffic moving coastwise will be greatly enlarged by the canal. Some goods now handled all-rail will move by water or by rail and water lines, and there will neces- sarily follow a modification of rail rates and a readjustment of the relation of the charges of rail and water lines. What the actual freight rates between the Atlantic and Pacific seaboards will be, by rail and water lines, after the opening of the Panama Canal, and what shares of the total traffic will mo^^e coastwise and by rail, can not be predicted in advance ; but inasmuch as the division of intercoastal traffic between the water and raU carriers and the rates charged by the competing ocean and raU routes may be affected by the tolls charged for the use of the Panama Canal, it is desirable that before fixing the tolls as complete information as it is practicable to secure should be obtained concerning the existing traffic and rates of both the water and the rail lines con- necting our two seaboards. Accordingly, it is the purpose of this chapter: (1) To state the volume and explain the nature of the traffic now carried by water routes between the two seaboards; (2) to present the available information concerning the tonnage and character of the trans- continental railroad traffic; (3) to compare present coast-to-coast rates by rail and water carriers; (4) to explain the rates now prevailing at inland points in the eastern and western sections of the United States on trans- continental traffic that is carried by combined rail and ocean routes, and to state what the railroads have done to retain and develop the direct all-rail movement of traffic between the eastern and western portions of the United States; (5) to indicate in general terms how the railroads may be expected to adjust rates so as to enable the Middle West to continue to compete successfully with the Eastern States in the markets and for the trade of the Pacific Coast and Rocky ^Mountain States ; and (6) to summarize the probable effects of the Panama Canal upon transcontinental traffic and rates. It is well known that only partial information regarding the traffic by rail between the eastern and western sections of the United States is obtainable, but enough facts are known as to the total transcontinental rail tonnage and as to the seaboard and inland origin and destination of that tonnage to give some indication of the probable effects of the Panama Canal upon the traffic and upon the rate policies of the eastern, southern, and transcontinental railroads. It will be possible to present in sufficient detail the traffic and rates of the coast-to-coast carriers by water and to compare the present intercoastal rates by water and rail lines. It wiU be understood that the conclusions as to the efl'ects which the Panama Canal will have upon the transcontinental traffic and rates of the railroads must be only tentative. I. RotTTE.s AND Traffic by Water Between the Atlantic and Pacific Seaboards of the United States. Sliipments between the two seaboards of the United States may move by tliree water routes that compete with tlie rail lines connecting the two coasts, (1) the all-water route around South America via Cape Horn for sailing vessels and tlirough the Straits of Magellan for steamers; (2) the route b}' way of Panama with the trans- fer of traffic by rail across the Isthmus; and (3) the route via the Isthmus of Tehuantepec, across which, from Puerto Mexico on the Gulf to SaUna Cruz on the Pacific, freight is handled by a railroad owned by the Mexican Government. Plate 3, in the pocket at the end of this report, charts these routes. 49 50 PANAMA CANAL TRAFFIC AND TOLLS. TraflBc carried by rail lines between the Atlantic and Pacific seaboards may move coastwise for a short distance on each seaboard — as from New York to Norfolk or from Portland, Oreg., to San Francisco at the begin- ning or end of the railroad haul across the continent. The only railroad controlling a tlirough route between the Atlantic and Pacific seaboards is the Southern Pacific, which operates the Morgan Line of steamers between New York and New Orleans and Galveston. The steamers of the ^Morgan Line extend the Southern Pacific route from the Gulf termini of the railroad to New York, and thus enable the Southern Pacific to compete both with the other transcontinental railroads and with the intercoastal water routes around South America and across the Isthmuses of Panama and Tehuantepec. This combined rail and water line of the Southern Pacific is called the "Sunset-Gulf Route." 1. The oldest route between the two seaboards of the United States is the one taken by sailing vessels around Cape Horn. Prior to 1849, however, only an occasional vessel, which was in most instances a whaler, undertook the voyage between the Atlantic and Pacific, but with the discovery of gold at the close of 1848, and for a few years thereafter, there was a very large use of this route. In 1849, 775 vessels cleared from the Atlantic seaboard for San Francisco and all but 12 of them were sailing vessels. The opening of the Panama Railroad early in 1855 caused most of the traffic between the seaboards to abandon the long route around South America, but a considerable number of sailing vessels were annually dispatched between the two seaboards by way of Cape Horn, and a small amount of steam tonnage made use of the Magellan route. The superiority of steamers over sailing vessels for handling most classes of freight, even for such a long route as that between the two seaboards of the United States around South America, became evident during the 1890's and caused the company wliich was then operating the principal line of sailing vessels between our two seaboards by way of Cape Horn to sell its sailing vessels and to inaugurate, in 1899, the American-Hawaiian line of steamers run by way of the Straits of Magellan. Early in 1907 the American-Hawaiian line shifted to the route via the Isthmus of Tehuantepec, and since that date" practically all of the shipping moving between our two seaboards around South America has consisted of chartered sailing vessels and steamers that handle such bulky cargoes as can be economically shipped by that circuitous route. Table I shows the approximate tonnage of freight handled between our two seaboards via Cape Horn and the Straits of Magellan and by way of other routes during the siix j^ears from 1906 to 1911, inclusive. It will be seen that there was a sudden decline in the tonnage via Cape Horn and Magellan after the withdrawal of the American-Hawaiian line from the Magellan route, and that the volume of tonnage around South America has fluctuated largely during recent years. Table I VOLUME OF INTERCOASTAL WATER TRAFFIC, 1906-1911. [Tons of freight.] Total coastwise traffic of Panama Railroad.' Coastwise trafDc of Pana- ma Railroad Steam- ship Line.2 Coastwise traffic of Pacific MaU.2 California-Atlantic Steamship Line (Pacific service).^ California-Atlantic Steamship Line (Atlantic service).^ Years. .\tlantic to Pacific. Pacific to -\.tlantic. Total. New Yorlc to Colon. Colon to New Yorli. Total. Atlantic to Pacific. Pacific to .Atlantic. Total. Atlantic to Pacific. Pacific to -Atlantic. Total. Phila- delphia to Colon. Colon to Phila- delphia. New Orleans to Colon. Colon to New Orleans. Total. 25,914 26,944 23,258 38,095 48,394 96, 420 24,937 15,285 IS, 162 8,728 33,482 115,508 50,851 42,229 38,420 46,823 79, 876 211,928 25,866 26,859 23, 131 37,910 46,394 66,922 24,937 15,285 15, 132 8,700 33,482 105,577 50,803 42,144 38,263 46,610 79,876 172,499 25,866 26,859 23,131 37,910 46,394 29,080 24,937 15,285 15, 132 8,700 33,482 47,892 50,803 42,144 38,263 46,610 79, 876 76, 972 1911 67,332 67,213 134,545 28, 488 5,487 1,002 4,041 39,018 1 Annual Reports of Panama Railroad Co. 2 Statement of E. A. Drake, vice president Panama Railroad Co. PANAJVIA CANAL TRAFFIC AND TOLLS. 51 Table I. -VOLUME OF INTERCOASTAL WATER TRAFFIC, 1906-1911— Continued. [Tons ol freight.] American-Hawaiian SteamsMp Line.' Tonnage via Cape Horn and Straits of Magellan .2 Total line traffic (excluding Hawaiian sugar).' Total tramp- vessel traffic.6 Total water traffic (excluding sugar). 6 Years. New York to Pacific ports. Pacific ports to New York. Hawaiian sugar. Total (excluding Hawaiian sugar). Vessel tonnage (entrances plus clearances). Approxi- mate freight carried.3 Total water traffic (including Hawaiian sugar). Atlantic to Pacific. Pacific to Atlantic. Total. 1906 IW.fOO 131,900 117,200 229,200 247,100 32,000 14,000 27,000 83,200 91,700 198,300 242,700 248,100 146,900 145,900 144,200 312,400 169,787 191,432 159,725 52,873 117,147 117,007 140,243 82,343 56,182 32,821 55,508 40,601 310,030 273,775 215,907 85,694 172,655 157,608 271,276 239,653 188,918 74,982 151,073 137,907 197,703 188,044 182,463 359,010 386,576 669,817 271,324 239,638 89,075 75, 195 151,073 138,318 469,027 427,682 371,538 434,205 537,649 808, 135 1907 1908 1909 1910 1911 ' statement of .Vmerican-Hawaiian Steamship Co. 'U. S. Commerce and Navigation Reports, 1906-1911. ' Assuming 1} tons of freight for 1 net vessel ton, and dividing by 2, as In the vessel toimage each ship is counted twice— once as an entrance and once as a clearance. < Traflic of Panama Railroad Steamship Line, Pacific Mail, CaUfomia-Atlantic, and .\merican-nawaiian Line. ' Total water traffic less total line traffic. « Coastwise Panama Railroad traffic plus .Vmerican-Hawaiian traffic plus traffic via Horn and Magellan. 2. The Panama route between our two seaboards was opened for traffic at the close of 1S4S, at the time of the rush to the California gold fields. With the completion of the railroad from Colon to Panama, early in 1855, most of the traffic between our two seaboards moved by wa}" of Panama; and this continued to be the principal highway for transcontinental traffic until 1869, when the comiection of the Missouri River with the Pacific coast by the Union and Central Pacific Railroads established the first rail line across the United States. The traffic by way of Panama rapidly fell oft' after 1869; and, though varjnng from year to year, remained comparatively small until 1911, when there was a sudden increase in the volume of traffic by water between our two seaboards. Several causes account for the relative unimportance of the Panama route since 1869. The transconti- nental railroads, until recently, have maintained a relentless competitive warfare against the Panama route. The through rail rates between the Atlantic and Pacific seaboards are lower than the rates for shorter hauls to and from the intermediate points m the Rocky Mountain territory; and, until the Government regidation of railroads became effective, the railroad companies quoted shippers such rates as were necessary to keep traffic from taking the Panama route. Moreover, the transcontinental railroads were able to restrict the use of the Panama route through their close relations \Yith the Pacific ^lail Steamship Co., which has, for most of the time, been the only regular line between the west-coast ports of the United States and Panama. For a period of 20 years, ending in 1893, the railroads, through the Transcontinental Association, paid the Pacific Mail Steamship Co. a fixed monthly sum, or rental, for the freight space available in its steamers, and thus completely con- trolled the Pacific Mail as a competitor. From 1900 to the present, the Southern Pacific Co. has owned a major- ity of the stock of the Pacific Mail Steamship Co. The history of the relations of the Pacific Mail to the trans- continental railroads and to the Panama Railroad need not be presented in tliis account of the traffic and rates by the various routes connecting the two seaboards of the United States." It is sufficient to state that the transcontinental railroads by active competition and by artificial restraint have, until recently, kept the traffic via the Panama route comparatively small. The development of traffic via Panama has been hampered, not only by the competition and restraint of the transcontinental railroads, but also by two other causes. While the French company was eno'aced in construction work on the Isthmus from 1882 to 1889, the use of the Panama Railroad by commercial freic^ht was restricted by employment of the railroad for the transportation of materials and supplies used in construc- tion work. Likewdse, since 1904, the construction of the canal has limited the volume of commercial freight 1 For the history of the relations of the Panama Railroad to the Pacific Mail Steamship Co. and for an accoimt of the connection of the Pacific Mail with the transcon- tinental railroads, the following references may profitably be consulted: (1) Opinion of the Interstate Commerce Commission in Railroad Commission of Nevada !■. Southern Pacific Company et al. (June 22, 1911), 21 1. C. C. Reports, 329-384. (2) Statement by Edward A. Drake, vice president Panama Railroad, to the Committee on Interoceanic Canals, United States Senate, Feb. 11, 1910. (3) Report of Joseph L. Bristow, special Panama Railroad commissioner, to the Secretary of War, June 24, 1905, upon the Pohcy to be Pursued in Management of the Panama Railroad Co. (Government Printing Office, Washington); also report of Jan. 20, 1908, on the .\dvisabiUty of the Establishment of a Pacific Steamship Line by the Isthmian Canal Commission (S. Doc. No. 409, 62d Cong., 2d sess.). (4) Statement by R . P. Schwerin, vice president and general manager Pacific Mail Steamship Co., to the Committee on Interoceanic Canals, United States Senate on Senate bill 428, Mar. 10, 1910. Also statement by Mr. Schwerin before same committee, on House bill 21909, Mar. 1, 2, and 3, 1912. (5) Statement by Wilham R. Wheeler, representative of San Francisco Chamber of Commerce, to Senate Committee on Interoceanic Canals, on House bill 21969 Mav 27, 1912. 52 PANAJVIA CANAL TRAFFIC AND TOLLS. that could be handled across the Isthmus. The other cause that has checked the growth of traffic via Panama has been the competition of the Tehuantepec route, which, since the beginning of 1907, has afforded a shorter and better transportation route than the one hy way of Panama for the traffic between the two seaboards of the United States. The volume of traffic handled via Panama between our two seaboards during recent years is shown in Table I. For several j^ears preceding 1910 the tonnage was small and tended to decline. 3. The Tehuantepec route was opened for traffic early in 1907, when the American-Hawaiian Steamship Co. took its steamers off the route via the Straits of Magellan and established regular line services on the Atlantic between New York and Puerto Mexico and on the Pacific between Salina Cruz and Hawaii and the west-coast ports of the United States. In 1906 it made an agreement with the Tehuantepec National Railway, which is owned by the Mexican Government, stipulating that the railway company should receive one-third of the through rate. This agreement also included a guaranty on the part of the Tehuantepec National Railway that the net earnings of the steamship company, per sliip ton, should not be less than the earnings had been in 1904, when the steamship company was operating by waj^ of the Straits of Magellan. This guaranty, however, did not require the Tehuantepec National Railway to reduce its share of the gross receipts of the steamship company to less than 25 per cent. The American-Hawaiian line has been very successful. The fleet of the American- Hawaiian Steamship Co. increased from 3 steamers in 1899 to 9 steamers in 1904, and to 17 in 1911. Five new steamers were ordered in 1911. The rapid growth in the traffic of the company has been made possible by the sugar tonnage from Hawaii to the eastern ports of the~United States. The freight shipments westbound between our two seaboards are larger than those eastbound, but the exports of Hawaiian sugar have enabled the American-Hawaiian Steamship Co. to run its steamers loaded in both directions. Indeed, the exports of sugar from Hawaii have been much larger than the American-Hawaiian Co. could handle. The growth in the traffic handled by the American-Hawaiian Steamship Co. between our two seaboards and the tonnage of Hawaiian sugar transported by the company from 1906 to 1911, inclusive, are stated in Table I. The through route between the two seaboards via the Southern Pacific Railroad from the Pacific coast to Galveston and New Orleans and from those cities to New York by the Southern Pacific Co.'s steamers (the Morgan Line) was estabhshed in 18S3. The Sunset-Gulf route immediately began an active warfare against its competitors by rail and by water lines, and secured a large share of the traffic from coast to coast. The transcontinental railroads, other than the Southern Pacific, ran from the Mississippi and Missouri Rivers to tlie Pacific coast and were primarily interested in the development of traffic between the Middle West and the Pacific coast. The rates by the Sunset-Gulf route from New York to San Francisco were made the same as the rates b}' the transcontinental lines from St. Louis and Missouri River crossmgs to the Pacific. Gradually the rates by the through all-rail lines from the Atlantic to the Pacific were made the same as the rates from Chicago, St. Louis, and Missouri River crossings to the Pacific seaboard. Tliis system of blanket rates was v\'orked out by 1896, and has since prevailed on west bound traffic. The establishment of the same rates by the Sunset-Gulf route and by the all-rail lines between the two seaboards allied the Sunset-Gulf route with the all-rail lines as common competitors against the water routes around South America and ^-ia the Isthmuses of Panama and Tehuantepec. The control of the Pacific Mail Steamship Co. by the transcontinental railroads since 1874, and the ownership of the Pacific Mail by the Southern Pacific from 1890 to the present, enabled the transcontinental railroads, as has been explained, to keep the traffic by the water routes within small proportions, until a few years ago, when the American-Hawauan Steamship Co., and later the California- Atlantic, developed a relatively large tonnage coastwdse via the Tehuantepec and Panama routes. This devel- opment of the coastwise business durmg the last few years has not been seriously opposed by the railroads, doubtless because of the rapid development of the rail tonnage consequent upon the industrial progress of the Intermountain and Pacific Coast States. The volume of traffic handled between the Atlantic and Pacific ports of the United States by the several water routes, not including the Sunset-Gulf route, each year from 1906 to 1911, mclusive, is shown in detail in Table I. The total tons of freight, not including Hawaiian sugar, rose from less than 500,000 tons m 1906 to over 800,000 tons in 1911. If the tonnage of Hawaiian sugar be included, the increase during the six years n total traffic was from 560,000 to 1,104,000 cargo tons. The increase durmg the four years ending in 1911 was steady and rapid. The decline during 1907 and 1908 is to be accounted for mainly by the San Francisco earthquake and fire. An important fe/iture of Table I is the separation of total traffic into that handled by regular steamship lines and that carried by individual vessels owned or chartered by the shippers. The traffic handled by the PANAMA CANAL TRAFFIC AND TOLLS. 53 regular lines more than trebled during the six-year period, while that carried by individual vessels decreased more than 50 per cent. In 1911, 82.8 per cent of the entire traffic, other than Hawaiian sugar, was carried by the regular lines, whereas in 1906 only 42.1 per cent was shipped by the established steamship lines. The volume and varietur of the traffic between the two seaboards of the United States have so expanded as to render the services of estabhshed steamship lines having regular and frequent sailings more economical than the services of indi^^dual vessels carr^-ing full cargoes of single commodities. The traffic manager of the American-Hawaiian line stated to the Interstate Commerce Commission, on Januar}' 16, 1907, that — We carry practically everything. In the course of a year I think we have at least 90 per cent of the articles that may be named in the tran.scontinental tariffs and a great many articles not on any tariff that are continually offered and carried. The traffic carried by way of the Panama route also includes a large variety of commodities. The west- botmd freight tariff of the Panama Railroad Steamship Line requires 25 pages to enumerate the several articles upon which individual rates are quoted. The east-bound tariff of the Cahfornia-Atlantic Steamsliip Co. is-a typewritten document of 20 pages. The freight carried between om- two seaboards bj' way of Panama and Tehuantepec originates and termi- nates not only at the Atlantic and Pacific ports, but also at interior points. Manifests of the shipments by the American-Hawaiian line enumerate commodities shii^ped from eastern New York, eastern Pennsylvania, Massachusetts, New Jersey, Vermont, Connecticut, Rhode Island, Maine; also commodities from SjTacuse and Buffalo, N. Y., from numerous cities in Ohio, from certain cities in !Micliigan, and from Chicago, Milwaukee, and St. Louis. These same manifests show that this freight is destined not only to Pacific coast ports, but to inland points, such as Sacramento, Stockton, The Dalles, Oreg., Spokane and Everett, Wash., and Reno, Nev. Most of the bulk cargoes handled in vessels owaied or chartered by shippers now move by the disadvan- tageous routes around Cape Horn or tlirough the Straits of Magellan. The opening of the Panama Canal mil make it possible for the indi^-idual sliip to engage in intercoastal traffic under much better conditions. It is not probable, however, that the percentage of the total traffic handled by individual vessels will increase in the future. It"is more probable that the percentage of the entire business handled by lines will increase. Most of the traffic from our Pacific to Atlantic ports carried in individual vessels owned or chartered by the shipper will necessarily consist of cargoes of gi'ain, lumber, and sugar. The sugar traffic is already large and may be expected to become heavier. The sliipments of gi-ain from the west coast, especially from Puget Sound ports, to Europe through the canal will be large, but it is not probable that the grain from the northwestern part of the United States wdll fuid very much market at the Atlantic seaboard. That section of the United States will in all probability be supplied from the grain fields of the Middle West. Barley from the Pacific Coast States will be required in the Mississippi Valley and Atlantic coast sections of the United States, and may be shipped in vessel cargoes as charter traffic. However, such commodities as wheat, barley, wool, canned sahnon, and others of a like character that might advantageously be shipped as full cargoes in chartered vessels will prob- ably be carried eastbound mainly by line vessels, because of the fact that the tonnage of traffic westbound is normally heavier than the tonnage eastbound. Line vessels will seek these bulk commodities as supplemental cargoes eastbound and at low rates. As was stated above, the American-Hawaiian line has develoi:)ed a profit- able business by secm'ing a heavy eastbound tonnage of Hawaiian sugar. In 1911 the Hawaiian fine trans- ported 295,800 tons westbound, but only 162,500 tons, other than sugar, eastbound. The lumber shipments from the Pacific coast tlirough the canal will comprise a large tonnage, but the desti- nation of most of the traffic will be Europe and not the eastern part of the United States, which will continue to be supphed mainly from the forests in the Southern States. The southern pine and liardwood forests consti- tute the largest lumber-producing district in the United States at the present time. Shipments are made economically and expeditiousty both by all-rail routes to northern markets and also by rail to southern seaports and thence by coastwise vessels. Upon the opening of the Panama Canal it is probable that manufacturers and other large shippers wiU employ their own or cliartered vessels for slupments of some heavy commodities to Pacific markets. Undoubt- edly there will be a good deal of coal sliipped westbound in chartered vessels. Fertilizers, heavy iron and steel, and some other commodities may be sent as bulk cargoes in indi^'idual shijss from time to time. It is probable, however, that most commodities, other than coal and fertihzers, will be sliipped by line steamers. The fact that most of the traffic through the canal between the two seaboards of the United States will be handled by regular steamship fines and that only a minor, and probably a decreasing, percentage of the total will be transported in individual vessels owned or chartered by shippers should be given careful attention in consid- 54 PANAMA CANAL TRAFFIC AND TOLLS. ering, (1) what the policy of the United States should be concerning the prohibition of the use of the canal by vessels controlled bj' raOroads, and (2) concerning the remission or omission of tolls upon vessels engaged in the coastwise business. 1. The poUcy of denying the use of the canal to vessels owned or controlled by, or affihated with, raUroad companies is advocated bj^ those who favor the pohcy mainly for two reasons, (a) that the competition between the railroad-controlled and the independent steamship lines will be disastrous to the independent lines, and (b) that the Government regulation of the rates and services of ocean carriers is impracticable and undesirable. If coastwise traffic through the canal were to be handled mainly by individual vessels owned or chartered by shippers, Government regulation would, mdeed, be impracticable; but the service of steamship lines operating over estabhshed routes is not essentially different from the transportation service of the railroads. Moreover, when several steamship lines operate over the same route or over competing routes they have fixed schedules of rates estabhshed by agreement and their rate policy differs in no marked degree from that of competing railroads. The rates charged by steamship lines differ fundamentally from charter rates, which are highly competitive and fluctuate with the supply of and demand for chartered tonnage. Charter rates fluctuate according to business conditions and could not be and ought not to be subject to Government regulation. The rates of steam- ship lines, however, are not only made in conferences of the competing lines, but also in many cases are fixed with reference to the rates charged by the railroads with which the steamship lines must comj^ete for traffic. It is thus at least doubtful whether it is good pubHc policy not to regulate the rates and services of coastwise steamship lines. Whether such regulation is wise or unwise, it is at least not impracticable. 2. The question of exempting coastwise shipping from the payment of Panama Canal tolls should be decided mth reference to the parties that would be benefited by that policy. This subject is discussed in Chapter XII of this report in considering "The principles that should control in fixing tolls," and need onh' be referred to in this connection. If the tolls charged coast^vise ships using the canal are added to the rate of freight paid by shippers, the remission of tolls wiU benefit the shippers and possibly, to some extent, the general public. On the other hand, if the freight rates are not any higher because of the tolls, the exemption of slups from the payment of tolls will not affect the freight rates, and the exemption of the payment of tolls will benefit the steam- ship company and not the shippers. Charter rates, as has just been stated, are liighly competitive and the rates which a shipper must pay to secure the use of a vessel for a trip through the canal will undoubtedly be increased by the amount of tolls paid. Shippers using vessels which they own or charter wiU receive the benefit of the exemption of canal tolls. On the other hand, the rates charged by steamship lines, being regidated by agreements among competing companies and being fixed -mih reference to what the traffic -will bear, will presum- ably be as high as traffic conditions warrant regardless of canal tolls. If the toUs are charged, the operating expenses of the steamship companies mil be increased by the amount of the tolls and their net profits will be lessened by the same amount. In other words, free tolls vnW be a gratuity or a subsidy to the coastwise steam- ship lines. The reasons for believing that the rates of the coastwise steamship lines, wliich will handle from four-fifths to nine-tenths of the water traffic between the two seaboards of the United States, will not be affected by the pohcy of the United States Government as regards free tolls are presented in Chapter XII, above referred to. II. VOLLTHE AND NaTURE OF TRANSCONTINENTAL RaILROAD TrAFFIC. The tonnage of transcontinental railroad traffic can not be accurately stated, because the railways in report- ing their traffic do not distinguish between transcontinental and local freight. Estimates made by the traffic officials of the transcontinental lines in 1909 placed the total volume of westbound transcontinental tonnage moving by rail and water at approximately 3,000,000 tons.' The westbound tonnage of the water lines that year (see Table I) was 313,558 tons. In round numbers, therefore, 2,686,000 tons, or 89.5 per cent moved west- ward by rail and 10.5 per cent by water. The total thi-ough and local traffic of the six leading transcontinental railroads ^ increased 11.2 per cent from 1909 to 1911. That rate of growth would bring the westbound through transcontinental rail traffic up to about 2,987,000 tons in 1911. The tomiage moved westward coastwise in 1911 was 494,600 tons and the total west- bound transcontinental rail-and- water tonnage aggregated about 3,481,600 tons. This would indicate that ' Railroad Commission of Nevada d. Southern Pacific Co. et. al. (21 1. 0. C. Reps., 351). ! Northern Pacific; Great Northern; Union Pacific; Chicago, Milwaukee & St. Paul; Southern Pacific; and .\tcliison, Topeka & Santa Fe. PANMIA CANAL TRAFFIC AND TOLLS. 55 •85.8 per cent of the total volume in 1911 moved by rail and 14.2 per cent by water. The higher percentage of the total rail-and-water traffic carried by the water hnes in 1911, as compared with 1909, is explained by the fact that during 1911 there was a slight decline in rail tonnage and a large gain in the traffic of the coast-to-coast water carriers, the tonnage of the six leading transcontinental railroads decreasing 3.9 per cent and that of all of the railroads in the United States, 3.7 per cent. The volume of westbound water traffic, however, was 24.9 per cent in excess of what it was in 1910. During the two-year period, 1909-1911, there was a net increase of 11.2 per cent in the total" tonnage of the six leading transcontinental raih-oads, but the gain during those years in the westbound tonnage of the coast^to-coast water lines was 57.7 per cent. The westbound rail tonnage comprises a wide range of commodities, the manufactures, prepared food, stuffs, and merchandise shipped to the Pacific coast by rail being of great variety. Table IX, pages 63-65, contains a hst of the more important commodities, with the freight rate for each article. Several tabulations have been made to indicate roughly the origin of the westbound railroad traffic. Table II shows the origin of the shipments to the Pacffic coast over one of the transcontinental hnes during a period of four months.' Only 22 per cent of the through traffic of this fine originated in "Atlantic coast and common point territory;" 35 per cent came from points in the east, including Pittsburgh, Buffalo, and common points; 62 per cent originated west of Pittsburgh-Buffalo common points; and 54 per cent was shipped from the Chicago territory and points west of Chicago. Table II — ORIGIN OF WESTBOUND RAIL SHIPMENTS TO PACIFIC COAST TERMINALS. New York-Boston and common points. Pittsburgh-Buffalo and common points Cincinnati-Detroit and common points. Chicago and common points Mississippi River and common points.., Missouri River and common points Southeastern points ■Colorado points This agrees substantially \vith tho statement made by Mr. G. W. Luce, assistant to the vice president of the Southern Pacific, before the Interstate Cormnerce Commission. He stated tliat not over 20 per cent of the eastern traffic destined to the Pacific terminals originated east of Buffalo and Pittsburgh. Of this 20 per cent he estimated that over half moved by water. Various compilations were filed by the transcontinental railroads with the Interstate Commerce Commission at its request, during the hearings of the transcontinental rate cases, for the purj^ose of showing the origin of transcontinental traffic received at Spokane, Wash., and Reno, Nev. Table III contains an estimate of the westbound shipments received at Spokane, via the Northern Pacific, in 1906. The percentage of freight originating at or near the Atlantic seaboard was smaller than was true of the shipments to the Pacific Coast terminals. Indeed, only 12.09 per cent originated in "New York-Boston and common points," and but 5.82 per cent in the Pittsburgh-Buffalo district. Four-fifths of the traffic originated west of Pittsburgh and Buffalo and seven-tenths at Chicago and points west of Chicago. Tho Intermountain States of the West receive their supplies mainly from the Mississippi Valley, and not from the Atlantic seaboard States. October, 1909, and January, April, and July, 1910. 56 PANAJVIA CANAL TRAFFIC AND TOLLS. Table III. -ESTIMATED TONNAGE OF INTERSTATE WESTBOUND TRANSCONTINENTAL FREIGHT RECEIVED AT SPOKANE VIA THE NORTHERN PACIFIC RAILWAY, 1906. Carload , (pounds). Less than carload (pounds). New York-Boston and common points. Pittsburgh-Buflalo and common points Cincinnati- Detroit and common points. Chicago and common points Mississippi River points Missouri River points Colorado points Southeastern points 12,262,5(M 8,001,972 10,589,274 24,717,180 10, S67, 710 34,230,210 28,880,268 3,607,368 5,736,954 658, 788 1,886,370 2,776,542 ' 1,881,684 1,903,344 325,734 437,820 17,989,458 8,660,760 12,475,644 27,493,722 12,749,394 36, 133, 554 29,206,002 4,045,188 12.09 5.82 8.39 18.48 8.57 24.29 19.63 2.73 133,146,486 15,607,236 148,763,7 100.00' Table IV contains a statement, made by the Great Northern Eailway, of the origin of the westbound freight dehvered at Spokane, Wash., during 1906. Table IV.— ESTIMATED TONNAGE OF INTERSTATE WESTBOUND TRANSCONTINENTAL FREIGHT RECEIVED AT SPOKANE VIA THE GREAT NORTHERN RAILWAY, 190G. New York-Boston and common points. Pittsburgh-Buffalo and common points Cincinnati-Detroit and common points. Chicago and common points Mississippi River points Missouri River points Southeastern points Carload, (pounds). 6,005,112 17,307,306 5, 184, 192 13,797,918 6,2.59,806 7,748,922 145,200 56,448,456 Less than car- load (pounds). 3,208,248 694,038 596, 886 1,406,778 260, 130 485,736 9,213,360 18,001,344 5.781,078 15,204,696 6,519,936 8,234,658 145,200 63,100,272 14.61 28.52: 9.16- 24.09 10. 33. 13.05 Table V contains a statement of the origin of the westbound tonnage carried to Reno, Nev., via the Ogden gateway, in 1908. The figures were compiled from the waybills of the Southern Pacific by the Nevada Rail- road Commission. Groups B and C comprise the territory east of Chicago. Only 24.48 per cent of the traffio reaching Reno westbound originates east of Chicago. Table V. -WESTBOUND TRANSCONTINENTAL FREIGHT RECEIVED AT RENO, NEV., VIA OGDEN GATEWAY (1908), IN TONS. Carload. Less than carload. Total. Per cent. Originating in group— 183 2,030 2,207 1,970 1,891 1,666 619 70 685 507 173 89 11 44 253 2,715 2,714 2,143 1,980 1,677 663 2. OS 22.40 22.40 E 17.64 F 16.30 13.88 5.30 10,566 1,579 12,145 11,177 100.00 23,322 PANAMA CANAL TRAFFIC AND TOLLS. 57 Commissioner Lane ' of the Interstate Commerce Commission, in discussing the origin of the trafHc received from the east at Reno, stated: Whatever the reason, the fact stands forth throughout this record that the soiwce of supply upon which the far western communities largely draw their manufactiu-es has within half a century moved westward from the Atlantic seaboard, so that, as was found by the Rail- road Commission of Nevada from an analysis of the billing of actual shipments into Reno, 75 per cent of their tratiic coming from the east originated no farther east than the longitude of Chicago. There are cotton mills as far west as Kansas City; mining, milling, and farming machinery is produced more largely in and about Chicago than in any other section of the country; boots and shoes, hats and clothes, cook- ing utensils, and the multitudinous articles of domestic use may be secured in large part without coming east of the Alleghenies; in fact the center of those industiies which supply the far West apparently is not far removed from the center of population of the country. This is a pregnant fact. It was announced by the Santa Fe officials, when they opened their through line from Chicago to Los Angeles, that they thought it the part of wisdom to make their rates lower, or as low, from Chicago than from New York, so that the industries of the Middle West might develop. They would make their line independent of their eastern connections in so far as that was possible, and instead of bidding against the sliippers of the seaboard for traffic destined to the Pacific coast they would develop industries close to their own eastern terminus which would supply the western demand, and thereby develop a traffic for the lines west of Chicago which need not be divided with the carriers east of that city — an exclusive traffic, one which could be carried at rates more compensatory than any that could be had out of the division of a through coast-to-coast rate. The share of the traffic received at interior points, such as Spokane and Reno, originating east of Chicago is now perhaps slightly larger than in 1906 to 1908, when the railroads began making blanket rates to these points on certain commodities. However, the interior to^vns receive a smaller share of their total receipts from the east than do the Pacific coast terminals, because lower rates are generally maintained to the interior intermountain towns from the Central West than from the eastern part of the United States. In considering the possible effect of the Panama Canal upon the traffic of the transcontinental railroads it is important to know the destination of the westbound rail traffic. The following statement was made by the Southern Pacific to the Interstate Commerce Commission to show the destinations of the freight moving west- ward through the Ogden gateway during the three years 1906-7 to 1908-9: Table VI.— TOTAL TRAFFIC MOVING WESTWARD THROUGH THE OGDEN GATEWAY (IN TONS).' To- 1906-7 1907-8 1908-9 330,195 56,779 17,305 32,037 59,239 27.216 54,747 367,311 281,413 46,895 13,200 43,302 46,903 24,258 28,842 454,629 238,426 Oakland 12,914 26,427 19,924 24,P32 Total 944,829 939,442 Per cent. 61.1 41.2 34.9 38.9 Per cent. 61.7 34.9 29.9 48.3 Per cent. 1 I. C. C. Docket 1665, Exhibit No. 29 of Traffic Bureau of Southern Pacific (Mr. Butler), Oct. 25, 1909. During the tliree vears included in the statement presented in Table VI, from 49.9 per cent to 61.1 per cent of the westbound traffic through the Ogden gateway was destined to the various Pacific coast terminals, and from 38.9 to 50.1 per cent to nonterminal points. The foregoing evidence tends to show that only a small portion of the westbound transcontinental traffic of the railroads is strictly transcontinental in the sense that it moves between the seaboards. The different statements vary, but indicate that but 20 to 22 per cent of this traffic originates east of Pittsburgh and Buffalo, and that but 50 per cent to 55 per cent is destined to Pacific coast terminals. A general estimate has been made of the eastbound transcontinental traffic. It is apparently about equal to the volume of the westbound tonnage but may be less. A greater volume of freight is sliipped out of the 1 Railroad Commission of Nevada v. Southern Pacific Company et al. (21 1. C. C. Reps., 364). 58 PAX.A3IA CANAL TRAFFIC AND TOLLS. Pacific coast States than is received; but most of the traffic goes to foreign countries and to the Middle West, and not to the eastern part of the United States. The heaviest items of the outbound tonnage — lumber, grain, and oil — are not sold largely in our eastern markets. The water-borne traffic eastbound from our Pacific to our Atlantic ports in 1910 aggregated about 141,600 tons. In 1911, after the Cahfornia-Atlantic Line had entered the field and the traffic of the Pacific Mail and American-Hawaiian had suddenly increased, the total was about 313,500 tons. According to a rehable esti- mate, the total eastbound transcontinental traffic in 1910 and in 1911 — by coastwise and by rail lines — was 3,000,000 tons per annum, which was the amount of the westbound tonnage in 1909. The railroad share was about 2,858,400 in 1910 and about 2,686,500 in 1911. The tonnage of the transcontinental railroads is known to have been somewhat less in 1911 than in 1910. The estimate shows that the raih'oads carried nearly 95 per cent of the eastbound transcontinental traffic in 1910, and 89.5 per cent in 1911; and the share of the water carriers was respectively 5 per cent and 10.5 per cent. The leading commodities transported eastbound by the transcontinental railroads are listed in Tables X and XI, pages 66-68. Fresh, dried, and preserved fruits and vegetables, fresh, frozen, dried, smoked, salted, and canned fish, fish oil, hides and skins, leather, twine and cordage, wool, barley and malt, wine, earthenware, and spices are among the leading articles shipped to eastern markets. To the Central West these articles and, in addition, a certain amount of sugar are sliipped, some sugar also reacliing New York via the Sunset-Gulf route. The Central West likewdse purchases some Pacific coast lumber, wood products, and barley. The percentage of traffic moving by water is less in the eastbound than in the westbound business, chiefly because fresh fruits and vegetables are not at present handled by the water carriers, and because some of the- bulky commodities, such as lumber, do not find a ready market east of the Central West. Westbound water-borne traffic originates throughout a comparatively wide area extending from the Atlantic seaboard to Cliicago; but the nature of eastbound water-borne cargoes is such that they are not carried inland in large amounts from the eastern ports of destination. Sliipments from the Pacific coast to the Central West are almost entirely by rail. The eastbound transcontinental railroad traffic has not been classified by destinations, but it may be safely assumed that, as in case of the westbound business, only the smaller portion is strictly transcontinental. From 20 to 22 per cent of the westbound tonnage originates east of Bufl"aIo and Pittsburgh, but the percentage of the eastbound tonnage destined to points east of Buffalo and Pittsburgh is probably smaller. III. Transcontinental Rail and Water Rates. A. transcontinental railroad rates. The present rate systems of the transcontinental railroads have been largely influenced by the rates charged by coastwise carriers. An analysis of the present rates from coast to coast charged by the railroads and by the competing water carriere must necessarily precede an intelligent consideration of the probable effects of the Panama Canal upon the traffic and rates of the transcontinental railroads. It will be well to begin this analysis with a brief description of the transcontmental rate structure. In a volume on Railroad Traffic and Rates the main features of the transcontinental rate system are described as follows:' 1. Blanket or common rates are charged on westbound tranacontinental traffic from most points east of the Missouri River. Thia is true of both class and commodity tariffs, but, as will appear as the discussion proceeds, there are numerous exceptions made to the general policy of blanketing rates from the territory east of the Missouri. Upon some commodities the rates eastbound from the Pacific coast are the same to all places east of the Missouri, and on more articles common rates prevail to places east of the Mississippi, but the blanketing of rates is less general upon eastbound than upon westbound shipments. 2. Upon eastbound traffic, and to a less extent upon that toward the west, graded zone tariffs have been established. The places east • of the Rocky Mountains are classified in 10 "rate groups," A to J. Upon the higher classes of freight and upon numerous commodities the rates to all groups are the same, but upon the lower classes and upon most commodities the tariffs vary by rate groups. Class rates westbound are practically identical with those eastbound, i. e., graded for classes below the third; and in westbound commodity tariffs there are numerous instances of grading by groups, but this grading of commodity tariffs westbound is an exception to the more general rule of blanketing rates from points on and east of the Missouri River. 3. The rates westbound to the intermediate points east of the Pacific seaboard terminals are, as a rule, higher than the through tariffs, the higher charges being fixed by the addition to the through rates of either fixed arbitraries or the local rates back from the terminals, as will be explained presently. The rates eastbound from the intermediate points are usually higher than from the terminals, although many intermediate towns are given the same rates as the terminal cities enjoy. ' E. R. Johnson and G. G. Huebner, "Railroad Traffic and Rates," Vol. I, pp. 459-460. PANAJMA CANAL TKAFFIC AND TOLLS. 59 The 10 rate groups A to J referred to are defmed in the accompanying Plate A. Eastbound, and to a less extent westbound, the rates from and to the Pacific coast are graded according to these rate groups. The rates on all articles not so graded are blanketed, i. e., they are the same to all points east of the Missouri River on commodities shipped to and from Pacific coast terminals. The rates to intermediate pomts such as Spokane and Reno are generally higher than to the Pacific Coast terminals, and are, for the most part, not blanketed. Recently, however, the rates on some commodities to these interior points have also been blanketed and have, in some cases, been made equal to the charges granted to the coast terminals. The system of charging higher rates to the interior towns than to the coast terminals has long been opposed by the intermountain cities, and relief was sought of the Interstate Commerce Commis- sion, which rendered decisions regarding Spokane,' Wash., rates in 1910 and 1911, and Reno,^ Nev., rates, in 1909, 1910, and 1911. The Spokane and Reno decisions announced June 22, 1911, are especially important in that the commission then attempted to change the system according to wliich rates to intermediate points are made. Five territorial zones were established by the commission, as shown in Plate B, and it was ordered that in shipments from zone 1 to intermediate points no higher rate may be made than to coast ter- minal points, that from zone 2 the rates to intermediate points may not exceed those to the coast terminals by more than 7 per cent, that from zone 3 the rates to intermediate points were not to be more than 15 per cent, and from zone 4 not more than 25 per cent, above the through rates to the coast terminals. No opinion was expressed as to zone 5, because the rates from that territory were not involved in the proceedings. These orders of the commission have been appealed to the United States Supreme Court for review, but they indicate the attitude of the commission with respect to the extent to which transcontinental railroad charges may prop- erly be allowed to be affected by the competition of the coastwise water lines. Table ^T!I tabulates the westbound transcontinental class rates now in effect and shows the extent to which they are blanketed. The various groups A to J are those defined by Plate A. Table VIII gives the eastbound class rates. Class rates, however, are of but slight importance in the transcontinental shipments, for but few articles are sliipped under the class tariffs. Commodity rates are quoted, in the transcontinental tariffs, on over 3,000 different articles to the coast terminals, and on a somewhat less number from those terminals. The westbound commodity rates on selected, leading articles shipped to the Pacific coast terminals are shoASTi in Table IX, and the eastbound commodity rates on articles of similar importance shipped from the Pacific are given in Table X. They are quoted to and from the various rate groups A to J defined in Plate A, so as to show the extent to which they are blanketed and graded. The transcontinental eastbound railroad rates on lumber are fixed in accordance with a different plan than is followed in making other commodity rates, and are published in separate tariff books. Table XI states the lumber rates from the Pacific Coast States to various indicated eastern and central western markets. The terms coast rates, Spokane rates, Montana-Oregon rates, Truckee rates, etc., refer to cHfferent lumber shipping districts. The rates quoted in columns A to F, in the case of the charges from the northwestern area, and in colimms 1 and 2 under California rates are the charges on different kinds of lumber products as defined in the footnotes of the table. 1 City of Spokane et al. v. Northern Pacific Railway Co. (21 1. C. C. Reps., 400-427). = Railroad Coinmission of Nevada v. Southern Pacific Co. et al. (21 1. C. C. Reps., 329-384). 34998°— 12 5 60 PANAMA CANAL TRAFFIC AND TOLLS. PANAJVIA CANAL TEAFFIC AND TOLLS. 61 62 PANAMA CANAL TRAFFIC AND TOLLS. Table VII.— WESTBOUND TRANSCONTINENTAL RAILROAD CLASS RATES. [Rates in cents per 100 povmds.J To north Pacific coast termin als from groups— To California terminals from groups— A. B. C. D. E. F. G. H. I. J. A. B. C. D. E. F. G. H. I. J. Class I 300 260 220 190 300 260 220 190 300 260 220 190 300 260 220 190 165 100 123 100 100 95 300 260 220 190 165 160 125 100 100 95 300 260 220 190 160 160 125 100 95 85 300 260 220 190 160 160 125 100 95 85 300 260 220 190 160 160 125 100 95 85 300 260 220 190 160 160 125 100 95 85 300 260 200 175 160 140 120 95 85 80 f \ 1 '. 300 300 200 200 220 220 190 190 165 165 160 160 123 123 100 100 100 100 95 95 300 300 260 260 220 220 190 190 300 300 260 260 220 220 190 190 30O 300 260 260 220 220 190 190 165 165 160 160 125 123 100 100 100 100 95 300 300 260 260 220 220 190 190 165 165 160 160 123 125 100 100 100 100 95 300 300 260 260 220 220 190 183 163 160 160 160 125 123 100 95 100 93 95 85 300 280 260 242 220 203 190 170 165 150 160 150 125 115 100 90 100 87 95 78 300 280 260 242 220 205 190 170 165 150 160 150 123 115 100 90 100 87 93 78 300 Class II 260 260 ClassIII. 225 200 Class IV. 19U 175 160 160 140 120 fl.'i 85 80 80 I I'pper line=class rates via gateways 10 to 16; lower line=class rates via gateways 1 to 9 and via 17. Table VIII.— EASTBOUND TRANSCONTINENTAL RAILROAD CLASS RATES. [Rates in cents per 100 pounds.] Classes. From north Pacific coast terminals to groups — From California terminals to groups— A. B. C. D. E. F. G. H. I. J. A. B. C. D. E. F. G. H. I. J. 370 330 263 210 370 330 265 210 370 330 265 210 340 300 240 190 170 175 155 120 105 95 320 280 230 185 165 167 148 115 100 90 300 260 220 ISO 160 160 140 110 95 85 300 260 220 180 160 160 140 110 95 85 300 260 220 180 160 160 140 110 95 85 300 260 220 ISO 160 160 140 110 95 85 300 260 190 155 130 140 120 95 85 80 300 260 220 190 300 260 220 190 300 260 220 190 300 260 220 190 165 160 125 100 100 95 300 260 220 190 165 160 125 100 100 95 300 260 220 190 165 160 125 100 100 95 300 260 220 190 163 160 125 100 100 95 300 260 220 190 165 160 125 100 100 95 300 260 220 190 165 160 125 100 100 95 300 260 200 17,'i 160 140 120 95 85 80 PANAMA CANAL TRAFFIC AND TOLLS Table IX.— WESTBOUND TRAN, 63 SCOXTINENTAL COMMODITY RAIL AND WATER' RATES. [Rates in cents per 100 pounds.] Railroad rates to North Pacific terminals from groups— Commodities. A. ] 3. C. D. E. F. G. H. I. J. L.c.l. C.I. L.C.I. CI. L.c.l. C.l. L.C.I. C.I. L.C.I. C.l. L.c.l. C.l. L.C.I. C.I. L.c.l. C.l. L.c.l. C.l. L.C.I. C.l. Harvesters, reapers, etc. (24,000 pounds), . 125 123 100 275 125 125 100 275 125 125 100 260 100 140 150 200 140 160 220 160 150 185 125 175 100 150 175 150 120 110 110 125 125 100 45 90 100 150 75 110 150 150 110 95 • 160 90 200 80 85 60 65 125 140 85 80 150 90 75 75 90 250 "lOO 140 150 200 140 160 220 160 150 175 125 175 100 150 175 150 120 110 110 120 120 100 115 115 100 115 115 115 115 Plows, harrows, etc.(24,000 pounds) Beer, malt extract in glass or stone, packed or in wood Boots and shoes, n. o. s. boxed 275 Cement, building and paving, in 45 90 100 150 75 95 150 150 110 90 160 100 140 150 165 140 160 220 160 150 40 90 100 150 75 95 1.50 150 110 85 160 100 140 150 165 140 40 90 100 150 75 100 50 100 50 100 35 Cereal breakfast foods in packages. . 140 150 200 140 160 220 90 100 150 80 110 150 150 110 95 160 90 220 SO So 140 150 200 140 160 220 160 150 200 125 175 90 100 150 SO 110 ISO 150 no 95 160 90 220 SO So 140 150 200 140 160 220 160 150 200 125 175 125 150 175 150 130 110 110 90 100 150 80 110 150 150 110 95 160 90 220 80 85 65 70 125 140 85 90 150 95 75 75 90 Chinaware, not including orna- ments, in boxes, barrels, or casks 150 165 140 100 150 150 165 140 100 150 75 150 165 140 160 100 150 75 95 Underwear, boxed (20,000 poimds) Coffee (roasted) in boxes, barrels, nr (inims Crackers, etc., in boxes, barrels, baskets, or tubs, or cases (24,000 poimds) chinery (24,000 poimds) . . " Cotton sheets and sheetings, etc. . . Earthenware, stoneware, and crockery (packed) (24,000 pounds) 160 150 160 110 160 110 160 110 160 110 Electrical goods, trolley wire, line Chairs, cane, carpet or leather seated, boxed (20,000 pounds) . . . 200 125 175 Glass, common window, boxed 90 200 80 85 60 65 125 140 85 80 150 90 75 75 90 125 175 100 150 175 150 115 110 110 90 125 90 125 90 125 90 125 90 Mechanics' tools, boxed Harness and saddlery, n. o. s. (20 000 pounds) 200 80 85 60 65 125 140 85 80 150 85 75 75 90 200 200 200 200 Iron and steel rails, girders, bars, plate No. 11 and heavier, etc. j (30,000 pounds) Boiler plate, n. o. s., Nos. U to 16, not bent or punched (40,000 Billets, blooms, ingots, and scrap steel (60,000 pounds) 100 Pipes, fittings, and connections. . . 150 175 70 125 140 85 90 150 95 75 75 90 150 175 150 130 110 110 70 125 140 85 90 150 95 75 75 90 Whisky, in bulk, in barrels, or drums (24,000 pounds) 150 140 85 150 140 85 150 140 85 120 140 80 Condensed milk in tin, glass, packed in boxes or in wood (40,000 150 Nails, spikes, and wire (40,000 Oil-well supplies (24,000 pounds). . Paints (40,000 pounds) 130 110 110 115 85 115 85 110 75 90 110 ParaflOne wax 90 90 75 > See also pages 64 and 65. 64 PANAMA CANAL TRAFFIC AND TOLLS. Table IX.— WESTBOUND TRANSCONTINENTAL COMMODITY RAIL AND WATER RATES— Continued. [Rates in cents per 100 pounds.] Commodities. Railroad rates to North Pacific terminals from groups- Pickles, n. 0. S- Soap, in packages (40,000 pounds). Stamped ware Stoves (cast iron), cooking, heat- ing, etc. (24,000 pounds) Tin plate or sheet metal for trunks. 125 Tobacco, unmanufactured , in cases or bogheads (20,000 pounds) 175 Commodities. Harvesters, reapers, etc. (24,000 pounds) Plows, harrows, etc. (24,000 pounds) Beer, malt extract in glass or stone, packed or in wood Boots and shoes, n. o. s. boxed Cement, building and paving, in packages (40,000 pounds) Cereal breakfast foods in packages. . Chinaware, not includiug orna- ments, in boxes, barrels, or casks (24,000 pounds) Underwear, boxed (20,000 pounds) Cotlee (green), in sacks Railroad rates to California terminals from groups- Crackers, etc., in boxes, barrels, baskets, or tubs, or cases (24,000 pounds) Creamery and cheese factory ma- ctiinery (24,000 pounds) Cotton sheets and sheetings, etc... 160 Earthenware, stoneware, and crockery (packed) (24,000 pounds) Chairs, cane, carpet or leather seated, bo.Ked (20,000 pounds). . Glass, common window, boxed (24,000 pounds) Mechanics' tools, boxed. Harness and saddlery, n. o. s. (20,000 pounds) Iron and steel rails, girders, bars, plat* No. 11 and heavier, etc. (30,000 pounds). Water rates to Pacific coast ports from New York (Panama Linc).i Water rates to Pacific coast ports from New York (Hawaiian Line). Panama Railroad Steamship Co. PANAJVIA CANAL TRAFFIC AND TOLLS. 65 Table IX — WESTBOUND TRANSCONTINENTAL COMMODITY RAIL AND WATER RATES— Continued. [Rates in cents per lOO pounds.] Commodities. Hailroad rates to California terminals from groups — Water rates to Pacific coast ports from New York (Panama Line). ' Water rates to Pacific coast ports from New York (Hawaiian Line). Boiler plate, n, o. s., Nos. 11 to 16, not bent or pmiched (40,000 pounds) Billets, blooms, ingots, and scrap steel (60,000 pounds) Pipes, fittings, and connections... Whisky, in bulk in barrels or drums (24,000 pounds) Gas and gasoline engines Condensed nailk in tin, glass packed in boxes, or in wood (40,000 pounds) Nails, spikes, and wire (40,000 pounds) Oil-well supplies (24,000 poimds) . Paints (40,000 pounds) Paper, news Paper, building Paraffin wax Pickles, n. 0. s Soap, in packages (40,000 pounds) Stamped ware Stoves (cast iron), cooking, heat- ing, etc. (24,000 pounds) Tin plate or sheet metal for trunks. Tobacco, unmanufactured, in cases or hogsheads (20,000 pounds) ' Panama Railroad Steamship Co. 2 Manufactured smoking. 66 PANAMA CANAL TRAFFIC AND TOLLS. Table X.— EASTBOUND TRANSCONTINENTAL COMMODITY RAIL AND WATER i RATES. [In cents per 100 pounds.) Railroad rates from North Pacific coast terminals to groups— Commodities. A. B. C. D. E. F. G. H. I. J. L.c.l. C.l. L.c.l. C.l. L.c.l. C.l. L.c.l. C.l. L.c.l. C.l. L.c.l. C.l. L.c.l. C.l. L.c.l. C.l. L.c.l. C.l. L.c.l. C.l. Dried fruits (raisins, prunes, and figs) in boxes, barrels, casks, or 220 ISO 110 75 220 ISO 110 75 100 120 120 220 180 110 75 100 115 115 220 165 110 100 100 100 75 220 165 110 75 100 100 100 75 220 155 110 75 f 85 t 100 r 85 \ 100 f 85 t 100 1 65 \ 70 220 155 } } } } 110 75 ( 85 \ 100 1 85 \ 100 f 85 \100 / 65 \ 70 220 155 } } } } 110 75 100 100 100 75 220 155 110 75 100 100 100 75 220 155 110 Preserved fruit in bulk in wood — 75 f 85 \ lOO ( 85 \ 100 ( 85 \ 100 / 60 1 65 ! 150 125 65 60 75 125 85 85 120 70 125 95 125 100 150 135 200 150 125 125 250 170 145 150 125 65 60 75 125 85 85 120 70 125 95 125 100 150 125 200 150 125 125 250 170 145 150 125 60 55 75 125 85 85 120 125 125 125 125 60 55 Sugar-beet seed in packages 150 200 75 150 200 75 150 85 85 120 70 125 150 200 150 150 125 250 170 75 150 85 85 120 70 125 135 200 150 125 125 250 170 145 150 125 200 150 125 125 75 125 85 85 120 125 200 150 125 125 75 150 85 85 120 125 200 150 125 125 75 150 85 85 120 125 200 150 125 125 75 Fish, fresh or (rozen, in refrigerator 112} Fish.canned, boxed (40,000 pounds). Fish, dried, smoked, or salted, in packages 1. c. 1. and in boxes or 150 160 125 85 85 120 70 125 150 150 125 250 170 85 85 Leather, various kinds, in boxes or rolls Hides, dry, in bales or loose (20,000 120 Skins, various kinds, in boxes or 250 Fishoil 70 125 95 125 100 150 170 145 70 125 95 125 170 145 70 125 95 125 170 145 70 125 95 125 140 145 70 Spices, n. o. s. (24,000 pounds) 170 125 95 135 100 150 150 135 100 150 150 135 100 150 100 Wool, in grease, in bales (24,000 150 Wool, scoured, in bales (24,000 1 1 See also page 67. ' From fruit-shipping centers specified in tariffs; : deciduous fruit rates applying to other destinations. I case of Cahfomia terminal rates on grapes and peaches, those shown apply only to certain destinations, regular PANAIVIA CANAL TRAFFIC AND TOLLS. 67 Table X EASTBOUND TRANSCONTINENTAL COMMODITY RAIL AND WATER RATES— Continued. (In cents per 100 pounds.) Railroad rates from California terminals to groups — Water rates from Pacific coast to New York (Panama Lines).' Water rates from Pacific Commodities. A. B. C. D. E. F. G. H. L J. coast to New York (.\merican- Hawaiian Line). L.c.1. C.l. L.cJ. C.l. L.cX C.l. L.c.1. C.l. L.cJ. C.l. L.cJ. C.l. L.cJ. C.l. L.cJ. C.l. L.cJ. C.l. L.cJ. C.l. Any quan- Any quan- tity. Dried fruits (raisins, prunes, and figs) in boxes, barrels, casks, or 220 150 110 85 no 220 150 110 85 110 220 150 110 85 110 220 150 110 85 110 220 150 110 85 110 220 130 210 85 110 220 150 210 85 no 220 150 210 85 110 220 130 210 85 110 220 150 210 85 110 45-50 45 45 Preserved fruit in bulls in wood 45 125 fllO \115 }-■ 100 75 115 115 100 75 113 115 95 115 115 95 75 95 115 lis 95 73 115 115 95 115 115 115 140 123 65 60 115 140 125 115 (120 \140 (120 il2o }- ] 115 113 Grapes and peaches (20,000 pounds)'. 1 65 60 75 135 63 60 75 125 60 55 75 125 60 55 75 125 68 63 75 85 60 40 40 55 75 Sugar-beet seed in packages 130 130 75 150 75 145 125 75 125 75 Fish, fresh or frozen, in refrigerator 150 l>75 \8S 85 130 70 125 95 135 70 150 125 115 250 170 145 100 130 150 f75 \85 85 130 70 125 95 135 70 }l50 125 115 250 170 145 100 130 125 85 85 130 70 125 95 135 62i 65 70 150 125 115 250 170 145 100 130 125 85 85 130 70 125 95 135 62i 65 70 75 150 126 115 250 170 145 100 130 200 125 85 85 130 70 125 95 135 55 55 60 75 150 125 115 250 170 145 100 130 200 125 85 85 130 70 125 95 135 55 55 60 75 150 125 115 250 170 145 100 130 200 125 85 85 130 70 125 95 135 55 55 60 75 150 125 115 250 170 145 100 130 200 125 85 85 130 70 125 95 135 55 55 60 75 150 125 115 250 170 145 100 130 200 125 85 85 130 70 125 95 135 55 55 60 75 Fish, canned , bo.xed (40,000 pounds) . Fish, dried, smoked, or salted, in packages 1. c. 1. and in boxes or 150 125 115 85 85 130 70 125 95 135 65 150 125 115 250 170 145 100 130 45 50 75 60 UOO 45 60 50-55 45 Leather, rarious kinds, in boxes or Hides, dry, in bales or loose (20,000 65 Skins, Tarious kinds, in boxes or 250 FishoU .. 45-50 Spices, n. 0. s. (24,000 pounds) 170 145 Wool, in grease, in bales (24,000 100 130 40 40 35 40 40 40 40 Wool, scoured, in bales (24,000 40 35-42^ 35-42i Malt, in sacks 70 75 75 200 75 75 200 35-42} 200 75 1 200 75 1 200 40 1 1 Panama R. R. S. Co.; Pacific MaU S. S. Co.; CaUfomia-Atlantic S. S. Co. 2 From fruit-shipping centers specified in tariffs; In case of California terminal rates on grapes and peaches, those shown apply only to certain destinations, regular deciduous fruit rates applying to other destinations. ! Minimum carload weights for salmon 60,000, in order to get rate of 75 cents. < Sealed in piclde, in barrels or casks. 68 PANAMA CANAL TRAFFIC AND TOLLS. Table XI.— EASTBOUND TRANSCONTINENTAL RAILROAD RATES ON LUMBER. [In cents per 100 pounds.] Albany Baltimore New York and Boston Norfolk Philadelphia Richmond Rochester Syracuse Utica Chicago ' From points in Oregon, Washington, Idaho, Montana, Alberta, and British Columbia." ^™" P"'"'^ ^°- CaUfornia, Nevada, Oregon, and A. B. C. D. A. B. C. 84 84 84 74 81 81 81 82 82 82 72 79 79 79 85 85 85 75 82 82 82 82 82 82 72 79 79 79 83 83 83 73 80 80 80 82 82 82 72 79 79 79 81J 81i 81J 71J 78J 78i 785 81} 81i 81J 71J 785 78J 785 83 83 83 73 80 80 80 65 65 65 55 62 62 62 52 A. B. C. 81 81 81 79 79 79 82 82 82 79 79 79 SO 80 80 79 79 79 785 785 785 785 785 785 80 80 80 62 62 62 52 Coast, Spokane, Montana- Oregon rates. Propor- tional rates applying from Al- bina, East Portland, Portland, and St. Johns, Oreg. Group F. Group Group Tmckee rates. Group Group 57 62 Beckwith rates. Group Group 57 62 1 Group A rates apply to shingles. Group B rates apply to lumber (including creosoted lumber), and timbers (including creosoted timbers), of cedar, single-car lengths, and the following articles manu- actured from cedar: Blocks (base, comer, and head), box shooks, columns, cross arms, eave troughs, guttering, ladder material, match blocks, match splints, molding (carpenters'), paving blocks (creosoted or not creosoted). picture backing, pipe material, sash (knocked down), staves, heading and bolts, tank material, telegraph and telephone brackets, ties, tubing (pump), window frames (knocked down). Group C rates apply to long timbers, poles, piling, or lumber requiring two or more cars for transportation. Group D rates apply to lumber (including creosoted lumber), poles (including cedar poles), piling (including cedar piling), and timbers (including creosoted timbers) of Cottonwood, fir, hemlock, larch, pine, and spruce, single-car lengths, and the following articles manufactured therefrom: Bark (hemlock), blocks ^ base, comer, and head)- box shooks, columns, cross arms, eave troughs, guttering, ladder material, lath (including cedar lath), match blocks, match splints, mine wedges, molding (carpenters') paving blocks (creosoted or not creosoted), pickets (including cedar pickets), picture backing, pipe material, posts (including cedar posts), sash (knocked down), staves, heading and bolts, tank material, telegraph and telephone brackets, ties, tubmg (pump), window frames (knocked down). Group E rates apply to articles manufactured from cedar, Cottonwood, fir, hemlock, larch, pine, redwood, or spruce' lumber, as follows: Sash, doors and blinds; door, window, and screen frames; inside finishings; panel frames (used as backing for keyboards for pianos); stairwork and veneering, in straight carloads, or in mixed carloads with any or all of the following named articles, viz, carpenters' moldings in the white for door frames and for inside finishing, columns, eave troughs, guttering, ladder material match blocks, match splints in packages, pickets, picture backing, pipe material, including iron bands and wooden or iron connections for wooden pipe, consisting of ells, tees, crosses, and reducers; porch balusters and spindles, pump tubing, tank material. Note.— Cottonwood, fir, hemlock, larch, pine, redwood, or spruce lumber, and lath may be shipped in mixed carloads with the above-mentioned articles at the rate named, except that the rate on cedar liunber and articles enumerated above, when shipped in mixed carloads, will be the Group B rate, but not less than SO cents per 100 pounds. Group F rates apply to articles manufactured from cedar, Cottonwood, fir, hemlock, larch, pine, redwood, or spruce lumber, as follows: Backing (picture), blinds, blocks (base), blocks (comer), blocks (head), box material, carpenters' moldings, in the white for door frames and for inside finishing, columns, cross arms, doors, eave troughs, forest waste, frames (door), frames (panel used as backing for keyboards for pianos), frames (screen, k.d.), frames (window), gut- tering, heading, inside finishings, ladder material, lath, logs, lumber, lumber (cedar), lumber (redwood), match blocks, match lumber, match splints (in packages), match strips, pickets, pipe material, poles (telegraph), poles (telephone), posts (fence), sash, sawmill refuse, shingles, stairwork, staves, tank material, ties, timbers (mining), tubing, tubing (pump), veneering. Note.— Cottonwood, fir, hemlock, larch, pine, or sprace lumber, and lath may be shipped in mixed carloads with the above-mentioned articles at the rate named. 2 Group 1 rates apply on lumber (except woods of value, viz, cocobolo, ebony, lignum-vitae, and rosewood), and the following articles manufacttu'ed therefrom: Blinds, blocks (base, comer, and head), box material, columns, cross arms, doors, finishings (inside), forest waste, frames (door, window, and screen, plain or wired), guttering, heading, lath, logs, lumber, match blocks, match splints', match strips or match lumber, moldings (carpenters') in the white, for door frames or inside finishing, pipe material, poles (telegraph and telephone), posts (fence), sash, saw-mill refuse, staves, tank material, ties, timber (mining), tubing. Straight or mLxed carloads, minimum weight 30,000 poimds, except that minimiun carload weight for imglazed sash in straight carloads will be 24,000 poimds. Group 2 rates apply on shingles, in straight carloads, or in mixed carloads with articles taking Group 1 rates (see above), minimum carload weight 30,000 pounds. 3 Via Chicago, Milwaukee & St. Paul Railway. Minimum carload weight, when in cars 34 feet or less in length, 24,000 pounds; in cars over 34 feet in length, 30,000 pounds. Minimum carload weight when in cars 34 feet or less in length 24,000 pounds; in cars over 34 feet in length, 30,000 poimds. PANAMA CANAL TRAFFIC AND TOLLS. 69 B. RATES COAST TO COAST BY WATER. The water rates between Atlantic and Pacific ports may now be described and compared with the charges by rail. The re^lar hnes operating via the Panama and Teliuantepec routes have tariffs or schedules of rates, and a comparison of water and rail charges may readily be made. In Tables IX and X eastbound and west- bound rates via the Panama and American-Hawaiian Lines are stated side by side with corresponding rail charges on commodities transported both by the railroads and by the water lines. Direct comparison can be made between the water rates given in the table and the rail rates quoted to and from territorial groups "A" and "C" in wliich the port of New York is located. The relation of aU-rail rates to rail-and-water'rates to and from interior points is explained below. The water rates on lumber from the Pacific coast to New York via the Panama and Tehuantepec routes are given in Table XII. They vary from 40 to 60 cents per 100 pounds ($8 to $12 per ton) by way of Panama. Via Tehuantepec the rates range from 40 cents per 100 pounds (.$8 per ton) to $20 per thousand feet of lumber. The railroad rates from the North Pacific coast to New York vary from 75 to 85 cents per 100 pounds on dif- ferent lumber products, and from the California coast from 75 to 80 cents per 100 pounds. Table XII EASTBOUND TRANSCONTINENTAL WATER RATES ON LUMBER. Eand of lumber. Panama Line,i from Portland, Astoria, Oreg.; Grays Harbor and Puget Sound jorts, San Francisco and East San Pedro, Cal., to New York. Estimated weight per 1,000 feet b. m. Rate per 100 pounds. Pounds. 3,300 $0.45 3,000 .55 2,500 .55 2,000 .55 3,300 .45 3.000 .55 2.000 .55 Fir lumber: Rough green Rough dry , Finishing surfaced Flooring Spruce or cedar: Rough green Rough dry Finishing surfaced. Siding Lath: Dry Green Shingles: Extra "A" Perfection Eureka Clears Drv- Green. $0.50 Dry. $0.60 I Rates via California Atlantic Line. The Pacific Mail does not cater to the lumber traffic. ! Per 1,000 lath. Notes applying to shipments via Panama: 1. Lumber exceeding 35 feet in length or 12 inches in width or less than 1 inch thick will not be accepted for transportation except that the smaller pieces will b© taken when put up in secure bundles. 2. All shipments of lumber, shingles, and lath will be accepted and charges collected on basis of estimated weights shown opposite each item. 3. All small pieces of lumber to be put up in secure bundles. 4. We reserve the privilege of carrying all shipments of green lumber and shingles on deck 70 PANAilA CANAL TRAFFIC AND TOLLS. The rates by the water lines on different commodities range from 20 to 60 per cent below the raiboad tariffs. Upon some articles the difference is greater, while for othere it is less. There is no general relation or fixed differential between the water and rail charges, the water rates upon each commodity being sufficiently below the rail charges to enable the steamsliip lines to secure the traffic desned. The rates over the Sunset-Gulf route have, since 1909, been the same as the all-rail rates. Southern Pacific traffic agents route freight over the Morgan Line steamers as their comiection between the Gulf and New York; and by getting freight through from New York to San Francisco within an average time of 15 days and 5 hours * and by absorbing the rail rates to and from interior points, they obtain a large tonnage of freight for then com- bined rail and water line. When freight is shipped via the Sunset-Gulf rou te from an interior point such as Pitts- burgh, the rate is the same whether the freight moves direct by all rail from Pittsburgh to the West Coast or to New York and is then forwarded via the Sunset-Gulf route. The Southern Pacific absorbs the rail rate to New York.^ There is no fixed or definite relationship between the rates via the Panama and Tehuantepec routes. Origi- nally the rates were practicaUy the same by both routes; then, for a time, the Panama charges were generally less, especially eastbound, the Panama line being the differential or longer route as compared with that via Tehuantepec. At present, many rates are the same by the two routes; on numerous commodities the Tehuan- tepec rates are slightly less; and on some articles the charges are less via the Panama route. In makhig com- parisons, however, it is important to bear in mind the difference in the service rendered by the Panama Line and the American-Hawauan Line. As hereafter explained, the rates of the latter are to and from coast terminals, while the Panama line absorbs raih-oad rates from interior points to the extent of 20 cents per 100 pounds on westbound shipments, and the entire rail rate from the Pacific Coast to certain interior points in California. In Table X, a small number of the eastbound water rates are quoted. The information contained in Table X is supplemented by the detailed list of commodity rates westbound and eastbound via the Panama route and via the American-Hawaiian Steamship Line, presented in Table XIII, A and B: Table XIII A.-WESTBOUND WATER RATES VIA PANAMA AND TEHUANTEPEC ROUTES, NEW YORK TO PACIFIC COAST TERMINALS. [In cents per 100 pounds.] Commodities. Panama Line, Agricultural implements Bath tubs, iron-porcelain lined . Belting, leather or rubber. Bicycle8 Binders' boards Books, blank, including school comjwsition books. Brass and copper heavy goods Calcium chloride Candles, wax, grease Canned goods Chemicals and drugs.. Clothes pins Clothes wringers Copper wire Dry goods Food, animal Glucose Glycerine 1 G. F. Richardson, Supt. of Transportation of Southern Pacific, in U. S. v. Union Pacific et al., evidence Vol. X, i J. C. Stubbs, Trat. Director Harriman System, in U. S. v. Union Pacific et al., Evidence Vol. I, p. 295. PANAJVIA CANAL TRAFFIC AND TOLLS. 71 Table XIII A.— WESTBOUND WATER RATES VIA PANAMA AND TEHUANTEPEC ROUTES, NEW YORK TO PACIFIC COAST TERMINALS— Continued. [In cents per 100 pounds.] Panama Line. Horseshoes, per keg Insulators, glass or porcelain. Iron, band, bar, or plates IroB, sheets Iron, blooms and billets Lampblack, in barrels Lawn mowers Machinery, n. o. s., K. D Milk, condensed Nuts, edible Nuts, kernels and meats Oil, lubricating Paint Paper bags Paper, book Paper, building Paper tickets, sales, transfer.. Paper, writing...; , Plaster Preserves Pumps Badiators Rubber goods Soda, ash Soda, caustic Stamped ware Starch Stove polish Tapioca Tobacco, manufactured smoking.. Toys Trunks Varnish Wax Wliiaky Wire, barbed or plain Wire rope Wire cloth Wine 110-360 150-200 70 70-88 72 PANAilA CANAL TRAFFIC AND TOLLS. Table XIII B.— EASTBOUND WATER RATES VIA PANAMA AND TEHUANTEPEC ROUTES— PACIFIC COAST TERMINALS TO NEW YORK. [In cents per 100 pounds.] Commodities. Asphaltum Barytes Beans Barley Beans, vanilla Books Beeswax Canned goods Fruit, dried Grain and mill stuffs. Hides, dry Hops Household goods Junk Liquors Lumber and shingles Machinery Matting Metals Nuts, edible Nuts, kernels Oils Reels Tea Wool 45-60 35-40 35- 60 40-100 1 Forty cents per 100 pounds to S20 per M feet. As is sho^vn by Table XIII, A and B, the coast-to-coast rates via the Panama and Tehiiantepcc routes, while similar, are not absolutely alike. Some are identical by both routes, and others less via Panama, but the greater number are slightly lower via Tehuantepec. In shipments to and from the interior, however, the rates of the Panama line are lower because of its absorption of part or all of the rail rate. There is no traffic agree- ment covering the rates by the two routes; but, naturally, the rates over the two routes are made A\'ith reference to each other and to the rates of the transcontinental raihoads. The general level of charges by each of the water routes is so fixed as to enable each of the water lines to obtain sufficient traffic in competition mth the other and with the rail lines. C. INTERRELATION OF INTERCOASTAL WATER RATES AND TRANSCONTINENTAL RAIL RATES. The extent to wliich the transcontinental railroad tariffs are affected by the coast-to-coast water rates has long been a disputed question; but it is indisputable that the rail charges are influenced by water competition. The Interstate Commerce Commission in 1911 reiterated its former findings as follows: (City of Spokane et al. V. Northern Pacific Railway, 21 I. C. C. Reps., 416.) "This question of fact has been often considered in the past, and Anth but one unvarying result. The Circuit Court of the United States has twice found, once in a proceeding concerning these very rates to Spokane, that active water competition does exist which controls the coast rates." "The manifests of steamships," says the commission, "proves more conclusively than any mere statement that almost every article which is the subject of ordinary commerce between the coasts can and does move from New York to San Francisco by water at rates materially lower than those mentioned by the PANAMA CANAL TRAFFIC AND TOLLS. 73 defendants by rail. We have used San Francisco as the destination port upon the Pacific coast, and in some instances rates from New York to San Francisco are a trifie lower than to the other coast cities; but, generally speaking, the San Francisco rate is maintained at Los Angeles, Portland, Seattle, Tacoma, and other points on the coast. Passing for the time being the extent and effect of this competition at interior points, it must be found as a fact that there is real and active water competition between New York and San Francisco, between the Atlantic and the Pacific coasts, which does limit the rate of transportation which can be charged by rail between those points upon nearly every article wliich moves by rail." The fact that the water lines have at times been controlled by the rail carriers does not alter the conclusion that water competition is a factor influencing the transcontinental rail rates. The traffic by water is now increasing, and the water rates are materially lower than the rail tariffs, iforeover, potential ocean competition influences the charges fixed by the railways. As was stated by Commissioner Prouty in the Spokane decision: It is said that the amount of the movement bywater is so insignificant that it should be disregarded. The amount is not insignificant. If reference be had to the traffic which actually originates upon the Atlantic seaboard a considerable percentage moves by water, but the significant thing is not the amount of the movement, but the ever-present possibility of that movement. As was said by the Supreme Court in the Alabama Midland case, speaking of the effect produced upon rail rates to Montgomery by the Alabama River: * * * "WTien the rates to Montgomery were higher a few years ago than now, actual, active water-line competition by the river came in, and the rates were reduced to the level of the lowest practicable paying water rates, and the volume of carriage by the river is now comparatively small; but the controlling power of that water line remains in full force, and must ever remain in force as long as the river remains navigable to its present capacity." So here the ocean is ever present. The possibility of using it as an avenue of transportation is ever open, and the fact that it will be used, if for any considerable length of time the defendants maintain rates which are so high, or so adjusted as to render it profitable for shippers to resort to that means of transportation, is never doubtful. The system of blanketmg the transcontinental rates from pomts east of the Missoin-i River is the result of this water competition, active and potential; and so, too, is the difference between the through rates to and from the Pacific coast terminals as compared with the charges to and from the mtermecUate points in the West. The rate percentages estabhshed in the Reno and Spokane decisions by the Interstate Conunerce Commission, to apply upon westbound transcontinental traffic, express the judgment of the commission as to the force that may well be allowed water competition in controUmg the railroad tariflfs.' As the evidence just presented clearly indicates, the transcontmental railroad tariffs have been, and now are, influenced by the rates charged by the coast-to-coast water Imes; but it is equally true that the rates of the steamship fines operating via Tehuantepec and Panama are to a large extent made with reference to the tariffs of the transcontinental railroads. The competition of the water routes with the rail Imes, and the recur- ring rate wars have, in the past, forced the transcontinental railroads to adopt the sj^stem of rate making now in force; but during recent years rate wars have been avoided; the transcontmental railroads have not been under pressure to fight against the water lines for traffic; the tonnage moving by rail has been large and has rapidly increased; and the policy of the railroads has been to maintam, and where practicable, to raise the established level of rail tariffs. Since 1907, when the American-Hawaiian Line began its service via Tehuantepec, there has been a large increase in the water-borne intercoastal tonnage; but there has been no consequent general decline in the charges by the transcontinental railroads. It was stated by the Interstate Commerce Commission in 1911, in the Reno decision,^ that "Out of 1,535 commodity rates compared by the carriers, it appears that no change has taken place since December 1, 1906, as to 696 of such commodities, reductions have been effected in 287, advances and reductions as to 132, and advances as to 418. Of the items increased, the rates on 318 commodities were increased from the whole eastern blanket." The relation that has recently prevailed between the rates of the mtercoastal water lines and the trans- continental rail tariffs is indicated by a statement made by the assistant to the vice president of the Southern Pacific in the testimony taken by the Interstate Commerce Commission in the Reno case. The statement, which was an answer to the question whether the water Imes controlled the transcontijiental rates, was "I befieve the rail Imes control the makmg of their own rates, and when we say to-day that we do not wish to go any lower, that incUcates our disposition m that regard m maldng the rates." The same official also stated, "I have never seen a tariff of the American-Hawaiian Lme, because they have never been pubfished. They are simply based on our rates as the basis of theirs." 1 See above, p. 59; also PI. B above. ' Railroad Commission of Nevada v. Southern Paciflc Co., et al., 21 1. C C. Reps., 354. 74 PANAMA CANAL TKAFFIC AND TOLLS. The president of the American-Hawaiian Line, in testifj-mg before the Senate Committee on Interoceanic Canals in 1910, spoke as follows:' "We are friendly with them (the railroad trafl&c managers). We discuss rates. I don't know of any other business m the world where competitors don't get together and talk matters over. We are not tied up; we are not committed. We do as we please, absolutely untrammeled. * * * Our traffic manager doesn't attend the conferences of the railroads, but he goes to Chicago and gets his ear pretty close to the ground. That's liis business." In answer to the question, " To-day, as I understand it, you frankly admit that you follow more or less what the transcontinental railroads deterrmne?" he said: "Certainly," but expressed the view that the water lines would dominate rates after the canal is open and after they carry the bulk of the strictly transcontinental traffic." It is also the opinion of the Interstate Commerce Commission, expressed in the Spokane decision, that "Since the advent of the American-Hawaiian Line there has been, not perhaps a definite agreement between it and the I'ail lines, but a general understanding that such rates should be maintained b}" water as compared with rates by rail as would give to the vessels a reasonable amoimt of traffic from the immediate vicinity of New York." That the intercoastal water lines should now tend to adjust their rates with reference to the established level of railroad tariffs is in accordance with a general economic law. In any business or industry where the major share of the business is handled by one group of concerns the smaller individual competitors normally make their charges with reference to the prices established by the concerns doing the larger share of the business. More than four-fifths of the transcontmental traffic westbound and eastbound, until 1911, was handled by rail and less than one-fifth by the water carriers; and it naturally follows that the level of rail rates influences the charges of the carriers by water. Though the fact may seem paradoxical, it is not to be inferred fi'om the preceding analysis either that the railroad rates are not or are not to be influenced by the charges of the water lines, or that there is now or is to be no effective competition among the intercoastal carriers by water. The transcontinental rail and inter- coastal water rates are and will be made with reference to each other. There will probably be no fixed percentage, or general differential, relation between the rail and water charges. Under present conditions the rates via Panama and Tehuantepec are from 20 to 60 per cent below the transcontinental rail tariffs, and the opening of the canal will so reduce the costs of transportation by the water lines and wiU so increase the number of carriers and the volume of coastwise shipping as to make a still greater difference between the rail and water rates. The future level of rail tariffs must necessarily be estabhshed with reference to the rates charged by water. Moreover, while it is to be expected that the competition among the coast-to-coast steamship lines will be regulated by conferences, formal or informal, of the interested lines, there ■will none the less be an incentive on the part of each steamship company to increase its tonnage. There will be the regulated competition among the steamship lines that generally exists among rival carriers, and rates vnl\ thereby be kept below the maximum charges that the traffic ■nill bear. For a part of the water-borne traffic the cost of shipping by chartered vessels will regulate the rates charged by the regular steamship lines, but for most of the traffic shipped by water the rates will be such as the regulated competition of the steamship lines or as Government control (if the coast- to-coast water carriers should be made subject to the Interstate Commerce Commission) may estabhsh. The level below which, and with reference to which, the rates charged by the coast-to-coast steamship lines will be fixed will be the stable tariffs of the transcontinental railroads. » Senate Hearings on bill 3428, Feb. 10, 1910, p. 90. ' Ibid., p. 97. panajma canal traffic and tolls. 75 IV. — Transcontinental Rates to and from Interior Points: Effect of Water Competition. A. rates by rail and water to and from interior points in the east and west. The steamship lines now engaged in the coast-to-coast business obtain a part of their freight from interior points in the Eastern States for shipment to the Pacific coast. The manifests of cargo show that a small tonnage is obtained from places as far west as Chicago and St. Louis, and also state that some of the westbound freight shipped by water is destined to interior points in the western part of the United States. The great bulk of westbound freight, however, originates at the eastern terminals of the water lines — at New York and points not far distant therefrom — and is destined to the Pacific coast terminals and to places not far inland. The evidence secured by the Interstate Commerce Commission in the Spokane and other cases led the commission to state that "The principal movement by water is from the Atlantic seaboard itself, from New York and from points having water communication with New York, and from interior territory immediately contiguous. There is a considerable movement as far inland as Buffalo and Pittsburgh, and an occasional movement from Detroit, Chicago, and similar points. A movement of starch from Cedar Rapids, Iowa, of considerable proportions was shown, but generally speaking, up to the present time, comparatively little traffic originating west of the Buffalo- Pittsburgh zone has reached the Pacific Coast by water." ' The present eastbound freight of the steamship lines, to a larger degree than is true of their westbound tonnage, originates and terminates near the seaboard. The competition of the intercoastal water lines with the railroads has benefited the sections near the Atlantic and Pacific seaboards more than the interior section; because, for most shipments to and from interior points via a combined rail and water route, the thi'ough rate is the sum of the rail rate to or from the coast and the rate by water from coast to coast. There are also transshipment or rehandling charges. Table XIV, compiled by the division of tariffs of the Interstate Commerce Commission, contains a tabulation of the rail rates from Philadelphia, Pittsburgh, Cincinnati, Indianapolis, Chicago, St. Louis, Kansas City, St. Paul, and Omaha to New York on the same commodities as are listed in Table IX, in which the transcontinental coast- to-coast rates of the railroads and the water lines are quoted. Though the rail rates are not in direct proportion to distance, the charges between the interior points and the seaboard are greater the farther the inland place of origin or destination is from New York. For points west of the Pittsburgh-Buffalo zone the rail rates to New York soon become so high that most goods move directly to the Pacific coast by rail at rates which are usually the same from all places east of the Missouri River. On some commodities the rail rates to the Pacific are less from the Central West than from the Eastern States. The addition of the rail rates from the interior to New York to the intercoastal — if always made m fixing through rates — would have prevented interior pomts beyond Pittsburgh and Buffalo from making as many shipments as have been made via the water lines between the Atlantic and Pacific coasts. Fortunately for the interior eastern shippers, the coastwise steamship lines sometimes absorb all or a part of the rail rates to and from the seaboard on westbound sliipments. 1 City of Spokane et al v. Northern Pacific Railway Company et al, 21 1. C. C. Reps., 420. 34998°— 12 6 76 PANAMA CANAL TRAFFIC AND TOLLS. TvBLE XIV -STATEMENT SHOWING CLASS AND COMMODITY RATES TO NEW YORK, N. Y., FROM PHILADEL- PHIA, PITTSBURGH, CINCINNATI, INDIANAPOLIS, CHICAGO, ST. LOUIS, K.\NSAS CITY, ST. PAUL, AND OiLVH \. (Rates are in cents per 100 pounds, except as noted.] ToNew York, N. Y. Classes: First Second Third Fourth Fifth Sixth COMMODITIES. Harvesters and reapers, k. d..: plows and harrows, k. d.: Carload Less than carload Beer: Carload Less than carload Boots and shoes: Carload Less than carload Cement (building): Carload Less than carload Cereal breakJast foods: Carload Less than carload Chinaware (value, 120 per hundredweight): Carload Less than carload Cotton underwear: Carload Less than carload Green coffee: Carload Less than carload Roasted coffee: Carload Less than carload Crackers: Carload Less than carload Creamery and cheese factory machinery: Carload Less than carload Cotton sheets and sheetings (cotton piece goods): Carload Less than carload Stoneware and crockery (in boxes or barrels): Carload Less than carload Philadel- phia, Pa. Pitts- burgh, Pa. Cincin- nati, Ohio. 30i 56i Chicago, 37J 32J Kansas City, Mo. 147J 121 935 54i 91J 54i 91i PANAMA CANAL TRAFFIC AND TOLLS. 77 Table XIV STATEMENT SHOWING CLASS AND COMMODITY RATES TO NEW YORK, N. Y., FROM PHILADEL- PHIA, PITTSBURGH, CINCINNATI, INDIANAPOLIS, CHICAGO, ST. LOUIS, KANSAS CITY, ST. PAUL, AND OMAHA— Continued. [Rates are in cents per 100 pounds, except as noted.] To New York, N. Y. 30J 32} 43i 46} 56} 60} 97} 104i 32} COMMODITIES — Continued. Trolley wire (copper): Carload Less than carload 15 30 ' 43} 46} 50 58} Cane-seated chairs (boxed): Carload Less than carload Common window glass: Carload Less than carload Mechanics' tools (boxed): Carload 12 21 30} 32} Less than carload 15 30 43} 46} Harness and saddlery: Carload Less than carload Girders, bars and plates, No. 11 or heavier: Carload Less than carload Steel rails: Carload Less than carload Iron and steel blooms, billets, and ingots: Carload ' Less than carload Plate' and sheet (boiler) Nos. 11 to 16: Carload Less than carload Pipe and fittings: Carload Less than carload 12 19 30} Whisky (in wood): Carload 12 21 30} Less than carload Condensed milk: Carload 12 21 30} Less than carload 15 30 43} Nails and spikes: Carload Less than carload Oil-well supplies: Carload Less than carload • In cents per 2,240 pounds. ' Plate from Philadelphia 9 cents; from Pittsburgh, C. I., 16 cents; and from Pittsburgh, L. c Philadel- i Pitts- Cincin- Indianap- Chicago, phia, Pa. , burgh. Pa. nati, Ohio, oils, Ind. St. Louis, Kansas St. Paul, Omaha Mo. City, Mo. Minn. Nebr. ' 191J 147} 882^ 118} 1., 19 cents per 100 pounds. 78 PANAMA CANAL TRAFFIC AND TOLLS. Table XIV — STATEMENT SHOWING CLASS AND COMMODITY RATES TO NEW YORK, N. Y., FROM PHILADEL- PHIA, PITTSBURGH, CINCINNATI, INDIANAPOLIS, CHICAGO, ST. LOUIS, KANSAS CITY, ST. PAUL, AND OMAHA— Continued . [Rates are in cents per lOO pounds, e.xcept as noted.] To New York, N. Y. COMMODITIES — continued. Paints (dry) in wood: Carload Less than carload Paints (in oil): Carload Less than carload Building paper: Carload Less than carload ParaiEne wax, carload Paraflfine wax (in wood), less than carload Pickles, carload Pickles (in wood), less than carload Sewing machines, boxed or crated: Carload Less than carload Soap: Carload Less than carload Stamped ware, carload Stamped ware (nested solid), less than carload Stoves (cooking and heating): Carload Less than carload Tin plate: Carload Less than carload Tin, sheet: Carload Less than carload Tobacco, unmanufactured, in hogsheads, barrels, or cases: Carload Less than carload Malt extract, carload Malt extract (in wood), less than carload Philadel- Pitts- Cincin- Indianap- Chicago, St. Louis, Kansas St. Paul, Omaha, phia, Pa. burgh. Pa. nati, Ohio, oils, Ind. 111. Mo. City, Mo. Mmn. Nebr. 17J 18} 34S 37} 24 25} 43J 46} 23} 34} 46} 81} 32 49 58} 93} 35 57 58} 82 58} 93} 87} 147} 34} 81} 51* 1471 93} Tariff authority; Class rnfes.— Philadelphia to New York, P. R. R., G. O., I. C. C. 553; Pittsburgh to New York, P. R. R., G. O., I. C. C. 3107; Chicago and Cincinnati to New York, C, C, C. & St. L. Ry., I. C. C, 5893; St. Louis to New York, Cameron's I. C. C. D-62; Indianapolis to New York, C, C, C. & St. L,, I. C. C. 5893; Kansas City and Omaha to New York, C, C, C. & St. L., I. C. C. 5893, Cameron's L C. C. D-62, and Hosmer's I. C. C. A-243; and St. Paul to New York, Hosmer's I. C. C. A-244 and C, C, C. & St. L., I. C. C. 5893. Commodity rates.— To New York, from Philadelphia, P. R. R., G. O., I. C. C. 553, 3794, and G-2994; from Pittsburgh, P. R. R., G. O., I. C. C. 3107 and O. 0. 1277; from Cincinnati, Indianapolis and Chicago, Big 4, I. C. C. 5893 and 5891; from St. Louis, Cameron's D-62; from Kansas City and Omaha, Hosmer's A-243, Cameron's D-62, and Big 4, 5893; from St. Paul. Big 4, 5893 and Hosmer's A-244. Note. — Rates from St. Louis and points east of Mississippi River governed by Official Classification; rates from Kansas City, St. Paul, and Omaha made on Mis- sissippi River and Chicago Combinations; proportions west of Chicago and Mississippi River governed by Western Classification. PANAilA CANAL TRAFFIC AND TOLLS. 79 The Panama Railroad Steamship Line, which makes the westbound rates applying over its line and Pacific coast connections, deals as follows with charges from interior eastern points. From its New York pier to Pacific coast points the following "minimum rates" apply: Per 100 pounds. To East San Pedro, Cal $0. 50 To Los Angeles, Cal 55 To Oakland, Cal 50 To Portland, Oreg '. 52J To Sacramento, Cal 55 To San Francisco 50 To Stockton, Cal 55 To all other Pacific coast ports 60 The tariff then provides that, except in case of special rates from New York pier or of rates which do not exceed the above minima, the water rates quoted "may apply from interior points, and when a rate is at least 20 cents higher than the minimum, the Panama Rail Road Co. will assume the charges from shipping point to New York pier not exceeding 20 cents per 100 pounds, any excess over this absorption to be shown on biU of lading as 'advance charges' to be paid by shippers or consignees as the case may be. When a freight rate is not at least 20 cents higher than the minimum, the Panama Rail Road Co. will assume the difference between the minimum and said rate." For example. Table XIV shows that the carload rate on harvesters and reapers, knocked down, from Philadelpliia to New York is lOM cents, which is absorbed hj the steamship fine ; because the water rate on harvesters and reapers from New York pier is 88 cents, or more than 20 cents above the theoretical minimum charge of 50 cents on any commodity from New York to San Francisco. So also is the 18-cent rate from Pittsburgh absorbed; but the Cincinnati rate of 26 cents is absorbed olily to the extent of 20 cents, the shipper or consignee being obhged to pay the excess. The 28-cent Indianapohs rate is absorbed only to the amount of 20 cents, and the same is true of the 30-cent Chicago rate, etc. When the water rate on the com- modity in question does not exceed the theoretical minimum water rate by 20 cents, the Panama Rail Road Co. absorbs the rail rate only to the extent of the excess of the actual water rate over the minimum water rate, and if the actual rate is only equal to, or is less than, the minimum, the shipper or consignee is obhged to pay the entire rail charge from the inland point to New York. The pohcy of the American-Hawaiian Steamsliip Co. is to "make its rates from the terminals." ' It does not absorb any of the rail rates to New York; but as the rates of this company are not published it is probable that traffic of large sliippers from interior points is soUcited at such rates from New York to the Pacific coast as to allow the inland sliippers to j)ay the rail charges to New York and j'et enjoy a favorable through rail-and-water rate. At the Pacific destination of westbound traffic the Panama Line and connections absorb the rates to certain points not on the coast. The tariffs apply ahke to the following points: San Francisco, Sacramento, Stockton, Oakland, Berkeley, Los Angeles, San Diego, Santa Barbara, San Pedro, Redondo, Vancouver, Portland, Astoria, Seattle, Tacoma, Port Townsend, Everett, Anacortes, New Whatcom, and Victoria. As is shown above, differ- ent minima water rates prevail from the Atlantic seaboard to these points on or near the Pacific coast; but upon any particular commodity the same actual rates are quoted from New York to all the above-named Pacific destmations. The actual rate on any given article sliipped from an interior point near the Atlantic via New York to any one of the Pacific destinations will depend both upon the amount of rail charge from the interior point to the Atlantic seaboard absorbed by the steanisloip fines and also upon the nunimum water rate from New York to the Pacific destination. The minimum bill of lading for single shipments, fikewise, varies from $1 to $1.50. The American-Hawaiian Line does not absorb the rail rates from the Pacific coast terminals to any interior destinations. Table XV states the raU rates, on the same hst of articles as is iacluded in the former tables of westbound rates, from San Francisco to Sacramento, Stockton, Fresno, Reno, Salt Lake City, and Denver. Since no interior rates beyond Sacramento and Stockton are absorbed by any line, most of the traffic that reaches the west coast by water does not go far inland, although some freight is carried to points as distant as Reno, Nev. Table XVI gives the rail rates from Seattle to Spokane and WaUa Wafia, Wash., and to Butte and Helena, Mont. The eastbound freight movement vin combined rail-and-water from and to interior points in the West bemg relatively light, it has not been thought necessary to present a detailed compilation of rail rates between inland points and other Pacific seaboard terminals. 1 G. S. Dearborn. Testimony, Jan. 24, 1912, in Hearings on Panama Canal by House Committee on Interstate and Foreign Commerce. 80 PANAJMA CANAL TRAFFIC AND TOLLS. The Sunset-Gulf Line from New York to the Pacific coast takes traffic from interior eastern points via New York and New Orleans or Galveston at through rates equal to the all-rail rate from the Ulterior eastern points to the Pacific coast. It thus absorbs the rail rate to New York in that the rate is paid out of the through charge. The Sunset-GuK route, however, is to be classed with the transcontinental rail lines, and not with the inter- coastal water lines — because its rates are the same as those by the all-rail carriers. Table XV.— STATEMENT SHOWING CLASS AND COMMODITY RATES FROM SAN FRANCISCO TO SACRAMENTO, STOCKTON, FRESNO, RENO, SALT LAKE CITY, AND DENVER. [Quoted by Division of Tariffs, I. C. C. Rates are in cents per 100 pounds except as noted.] To— From San Francisco. Sacramen- to, Gal. Stockton, Cal. Fresno, Cal. Reno, Nev. Salt Lake City, Utah. Denver, Colo. Classes. First 24 21 18 16 13 13 13 11 9i 9J 13 18 13 18 13 18 13 24 11 16 13 16 13 24 1 '' 10 10 9 9 7 1120 Ulo 1110 1105 9 7 9 9 10 10 Ills 9 9 7 10 10 55 51 47 44 ■720 1670 1460 1405 1350 1295 1670 47 1670 47 1720 47 1720 55 55 1405 44 1720 44 1720 55 65 97 81 73 59 50J 50J 41 35 31 27 50J 73 SOi 73 50 73 50J 97 97 35 59 50i 59 50§ 97 97 154 131 115J 96 79J 79i 62 56 46 38i 79J 1155 79i IISJ 55 115J 794 154 154 56 96 44 96 79i 154 154 300 260 Third 200 175 Fifth.. 160 A 140 B 120 C 95 D . 85 E 80 COMMODITIES. Harvesters and reapers; Plows and harrows: 125 20O Beer: 100 150 100 150 Boots and shoes: 275 Cement (building): 95 175 Cereal breakfast foods: 90 175 Chinaware (val. $20 per cwt.): 160 300 Cotton underwear: Less than carload 200 Per 2,000 pounds. PANAMA CANAL TRAFFIC AND TOLLS. 81 Table XV STATEMENT SHOWING CLASS AND COMMODITY RATES FROM SAN FRANCISCO TO SACRAMENTO, STOCKTON, FRESNO, RENO, SALT LAKE CITY, AND DENVER— Continued. Tc From San Francisco. Sacramen- to, Gal. Stockton, Cal. Fresno, Cal. Reno, Nev. Salt Lake City, Utah. Denver, Colo. COMMODITIES— continued. Green coffee: 13 16 13 16 16 21 13 21 24 24 13 16 16 21 18 24 13 16 24 1 » 13 16 13 16 9i 16 13 16 7 9 7 9 9 10 7 10 10 10 9 1 120 9 10 9 10 9 10 10 7 9 9 1 110 9 9 1720 44 1720 44 44 51 >670 SI 55 55 I 460 44 44 51 47 55 1720 44 55 65 1720 44 1 720 44 1350 44 1720 44 60^ 59 50i 59 59 81 50J 81 97 97 41 59 59 81 73 97 50i 69 97 97 5 800 59 605 69 31 59 50J 59 79i 96 79J 96 96 nsi 79i 131 154 154 62 96 96 131 70 154 70 96 154 154 3 1,025 96 62 96 46 96 62 96 75 120 Roasted coffee: 75 120 Crackers: 175 260 Creamery and cheese factory machinery: 150 260 Cotton sheets and sheeting (cotton piece goods): 110 160 85 150 Trolley wire (copper): 175 260 200 300 125 175 Mechanics tools (bo.xed): 300 300 Steel rails: 160 175 160 175 Iron and steel blooms and billets: 85 175 160 175 I Per 2,000 pounds. ' In lots of not less than 5,000 poimds, per 100 pounds, SI. 15. ' Per 2,240 pounds. 82 PANAMA CANAL TKAFFIC AND TOLLS. Table XV.— STATEMENT SHOWING CLASS AND COMMODITY RATES FROM SAN FRANCISCO TO SACRAMENTO, STOCKTON, FRESNO, RENO, SALT LAKE CITY, AND DENVER— Continued. To— From San Francisco. Sacramen- to, Cal. Stockton, Cal. Fresno, Cal. Reno, Nev. Salt Lake City, Utah. Denver, Colo. COM MODiTiES — cont inued . Pipe and fittings: 13 16 21 21 13 16 13 16 13 24 13 16 134 18 13 18 13 16 18 24 13 16 16 18 13 18 13 16 16 9 10 10 9 7 9 7 10 9 7 9 7 9 7 9 9 10 9 9 9 7 9 9 9 1720 44 51 51 1720 44 1720 44 1670 55 1720 44 1720 47 1720 47 1720 44 47 55 1720 44 44 47 1720 47 1720 44 44 50i 59 81 81 50i 59 50J 59 50i 97 50i 59 50J 73 60S 73 50J 59 73 97 50J 59 59 73 50J 73 50J 59 59 f =55 1 3 60 I 96 100 131 96 62 96 79J 154 79i 96 52 115J 60 115i 77 96 115J 154 63 96 96 115i 79i 115 J 79J 96 96 »75 »160 Whisky (in wood): 175 Condensed milk: Nails, spikes, and wire: Paints (in oil): Building paper: Paraffine wax: PicMes (in wood): Sewing machines (boxed or crated): Carload 200 Soap: 175 Stoves (cooking and heating): Carload 160 200 Tin plates and sheets: 175 175 1 Per 2,000 poimds. = Applies on pipe, iron or steel. ' AppUes on pipe fittings. Authority: San Francisco to Sacramento and Stockton per Sou. Pac. Co. I. C. C. 2631; to Fresno per Sou. Pac. I. C. C. 2622; to Reno, Nev., Sou. Pac. I. C. C. 3432; to Salt Lake City Gomph's I. C. C, 57; and to Denver T. C. F. B. I. C. C, 926. PANAMA CANAL TRAFFIC AND TOLLS. 83 Table XVI.— STATEMENT SHOWING CLASS AND COMMODITY RATES FROM SEATTLE TO SPOKANE, WALLA WALLA, BUTTE, AND HELENA. [Quoted by Division of Tariffs, I. C. C. Rates are in cents per 100 pounds, except as noted.] From Seattle, Wash. Spokane, Wash. WaUa Walla, Wash. Butte, Mont Helena, Mont. Classes: First Second Third Fourth Fifth A B C D E COMMODITIES, Harvesters and reapers, plows and harrows Beer Malt extract Boots and shoes Cement (building) Cereal breakfast foods Chinaware, value $20 per hundredweight Cotton underwear Green coffee Roasted coffee Crackers '. Creamery and cheese factory machinery Cotton sheets and sheetings Stoneware and crockery Trolley wire (copper) Cane-seated chairs (1. c. 1., boxed) Common window glass Mechanics' tools (boxed) Harness and saddlery Steel rails Girders, bars, and plates. No. 11 or heavier Iron and steel blooms and billets Boiler plate and sheet, No. 11 to 16 Pipe and fittings Whisky s.. Condensed milk Nails, spikes, and wire Oil-well supplies (I. c. I., n. o. s.) Paints Building paper ParaiBne wax Pickles (I. c, I., in wood) 84 PANAJMA CANAL TRAFFIC AND TOLLS. Table XVI STATEMENT SHOWING CLASS AND COMMODITY RATES FROM SEATTLE TO SPOKANE, WALLA WALLA, BUTTE, AND HELENA— Continued. From Seattle, Wash. Spokane, Wash. Walla Walla, Wash. Butte, Mont. Helena, Mont, COMMODITIES— continued . Sewing machines (boxed or crated) Soap Stamped ware Stoves (cooking and heating) Tin plates and sheets Tobacco (unmanufactured) Authority: From Seattle to Spokane and Walla Walla, per N. P. Ry., I. C. C. to Butte and Helena, per N. P. Ry., I. C. C. 4961 B. EFFECT OF WATER COMPETITION ON KATES TO AND FROM INTERIOR POINTS. Neither the trunk hue nor the transcontinental railwaj^s have favored the shipment of commodities from the Middle West to the Atlantic seaboard for carriage thence by water to the Pacific coast. The poUcy of the railway's, generally, under the leadership of the western Unes, has been to hold to the all-rail lines the traffic to the Pacific coast both from the Atlantic seaboard and from interior points. The rivalry of the railways from the Central West to the Atlantic with those from the Central West to the Pacific, and the industrial competition of the Mississippi Valley with the Eastern States, which can ship to the Pacific coast b}' water lines, brought about the system of blanket rates for most of the traffic to the west coast from the entire section east of the Missouri. The competition of the rail and water fines at the Atlantic seaboard controlled transcontinental rail rates from the Eastern States, and the railroads and the industries of the Middle West insisted upon reaching the Pacific coast on equal terms with the railroads and mdustries of the eastern section. Upon some articles the rates from the Central West are lower than from the Atlantic seaboard, there being some grading downward of rates by successive lettered rate groups westward from the Atlantic coast. The poficy of the carriers interested in the transcontinental rail traffic from the East and from the Middle West, and the influence upon rail rates exercised by the intercoastal water Unes is concisely explained by the Interstate Commerce Commission m the decision in the Spokane case. The commission, speaking through Mr. Prouty, says: ' Carriers maintain the same transcontinental rate from Chicago as from New York, not by reason of the direct effect, but rather as an indirect result of water competition. The reason for this will be best understood by an actual illustration. Assume that a building requiring the use of a large amount of structural steel is to be erected in San Francisco. That steel is manufactured both at the seaboard and in Chicago. That which is made at the seaboard can be taken by water from the point of origin to the point of destination, and the rate at which it can move is therefore determined by water competition. The cost of producing steel is the same at both points. In order, therefore, that the producers may stand an equal chance in com- peting for this business it is necessary that the rate from both points should be the same, and the business can not move from Chicago unless the rate from that point is as low as from the seaboard. The Atchison, Topeka & Santa Fe Railway begins at Chicago. If this steel is bought at Chicago and moves by that line, the entfre freight money is retained by it; if, upon the other hand, the steel is bought at New York, moved by some line to Chicago, and there de- livered to the Santa Fe, that line receives only a part of the through charge. The service performed by it is the same in either case, but the amount of its compensation is larger when the freight originates at Chicago. It is therefore for the interest of that line to name a rate from Chicago which will originate the business at that point instead of allowing it to originate upon the seaboard. The interest of the line from New York to Chicago is that the business should be taken up at New York, and as a compromise it is finally agreed to apply the same rate from both these points. This clearly shows how water competition, if it does not actually extend to the interior point, may and does dictate the rate from that point. ^\^lat would be true of the steel entering into the construction of this building is true also of almost everj^ article of commerce which moves between the East and the West. The Middle West to-day manufactures nearly everything which is produced upon the Atlantic seaboard, and the effect of this policy of the railroads has been to make the Middle West the almost exclusive market of origin for the inter- mountain country and largely for the Pacific coast itself. The effect of water shipments upon the interior has, as Commissioner Prouty states, been indii'ect rather than direct. The tonnage of transcontinental traffic carried from the Mississippi Valley to the Atlantic seaboard for 1211. C. C. Reps., 422. PANAMA CANAL TRAFFIC AND TOLLS. 85 shipment thence by water to the west coast has been relatively small, but the actual or possible shipment of a relatively large volume of commodities by water from the Atlantic coast has controlled the rail rate from the Central West to the Pacific. Water competition has exercised less influence upon eastbound rail rates from the western section to the Middle West and the East, but even on eastbound traffic most rates are blanketed over the entire region east of the Missomi River. There is more grading by distance of eastbound than of westbound rates, but the difl^erence between the eastbound and westbound transcontinental rate systems is one of degi-ee, not of kind or of principle. Such has been the past efl^ect of intercoastal water transportation upon the rates of the transcontinental all-rail lines. There remains for consideration the influence that the Panama Canal may be exjjected to exercise upon the rates and rate policies of the transcontinental railroads. V. — Peobable Adjustment of Transcontinental Rail Rates Resulting from Canal Competition. The railroad rate system that has been worked out by the transcontinental railroads is a complicated struc- ture that has been evolved slowly. It is the resultant of the interaction of numerous forces, of the competition of rival sections, of rival industries, and of rival carriers. As these forces of competition change, from time to time, the rate system is mocUfied in detail to keep transportation charges adjusted as closely as practicable to economic conditions. The opening of the Panama Canal will so greath' change the industrial relations of different sections of the United States and the competition of the transcontinental railroads and the intercoastal water hues as inevitably to recjuire many changes in the present system of transcontinental rates. Just what rate pohcies the railroads will adopt to meet the situation created by the Panama Canal can not be precUcted in advance of experience. The railroad companies wall solve the problems as they arise and will cross no bridge until it is reached. It is possible, however, to indicate the rate problems which the canal will probably create and to point out the possible policies open to the railroads. Sucli an anal_ysis of the prol)able effect of the canal upon transcontinental railroad rates may, moreover, enable the Panama tolls to be fixed wiih. a clearer understanding of their effects. 1. The railroad rates most completely subject to the competition of the intercoastal lines using the canal will be those westbound to the Pacific coast from the section of the United States between the Buffalo-Pittsburgh district and the Atlantic seaboard. Even under present conditions, the transcontinental rail rates between the two seaboards are largely affected by the competition of the routes via the Isthmuses of Panama and Tehuan tepee, and it is estimated that one-half of the traffic carried from this eastern section of the United States to the Pacific coast now moves by the water routes. Is it probable that the railroads will endeavor to meet the rates of the intercoastal water lines witli the view to holding to the all-rail routes the traffic between the two seaboards? It is hardly to be expected, for the followuig reasons, that the railroads will make a desperate effort to hold tliis traffic against the water lines. In the first place, the tonnage involved constitutes, at the present time, a comparatively small percentage — only 20 to 22 per cent — of the total traffic carried to the Pacific coast by the transcontinental roads — those running from Cliicago to the west coast. Only 35 per cent of the tlu'ough business of these lines origuiates in this eastern section and in the Buffalo-Pittsburgh territory. In other words, more than two-tliirds of the through traffic of the transcontinental Imes now comes from the Central West. In the second place, the s^'stem of blanketmg rates from the Atlantic seaboard westward to the Missouri River — a system that will probably prevail — will carry through to the Missouri River any rate reductions which the railroad lines may make on traffic from coast to coast, and it is hardly to be expected that the rail- roads will reduce rates unnecessarily upon two-thirds to four-fifths of their traffic in order to compete more successfully for the remaining minor portion of then- possible tonnage. It will be more profitable for the trans- continental rail lines to lose the major portion of then- traffic from the Atlantic seaboard section in order to maintain paying rates on the westbound traffic from the middle section of the United States. In the thu'd place, it is probable that the eastern trunk Imes as weU as the Pacific lines originating at Chicago and central western points will be opposed to the policy of reducing coast-to-coast all-rail rates to the lowest possible noinimum in order to meet the competition of the water lines. It will be to the advantage of the eastern trunk lines to haul traffic from points within 500 mUes of the Atlantic to the seaboard for shipment by water rather than to prorate with theh western con^iections low, through all-rail rates from the Atlantic to the Pacific. 2. The transcontinental railroads may be expected to endeavor to hold as much as possible of the traffic from the eastern seaboard States to intermediate points in the Rocky Mountain States. The steamship lines 86 PANMIA CANAL TRAFFIC AND TOLLS. through the canal, with the cooperation of the Pacific coast jobbers, will endeavor to supply the cities within a thousand miles of the Pacific coast with supplies handled by way of the canal and the Pacific gateways. Up to the present time, the railroads interested in transcontinental traffic have adhered to the policy of charging higher rates to intermediate points in the mountain States than to Pacific coast terminals and have thus assisted in maintaiifing the Pacific coast cities as the jobbing centers from which many of the supplies required by the mountain States are obtained. After the canal is opened the railroads ^dll be obliged to decide whether it is wiser to continue to favor the Pacific coast jobbing trade, or, by reduction of rates from the east to the mtermountain cities, to cause those cities to secure their suppfies directly from the east and not by way of the Pacific. While it is impossible to predict which of these two pohcies will be deemed wiser, it would seem a priori that the railroads will prefer to supply the mtermountain States directly from the eastern sources of supply. 3. The principal eastern termini of the transcontinental railroads are St. Paul, Duluth, Chicago, St. Louis, Kansas City, and Omaha, and these railroads are concerned first of all with the effect which the Panama Canal may have upon the westbound rates from the central section of the country. The rates to the Pacific coast from Chicago and other points as far east as that city, after the opening of the Panama Canal, must meet the through rates by rail-and-water fines via Atlantic and Gulf ports. It is the expectation of the trunk lines that they wiU be able to divert to the Atlantic seajiorts transcontinental traffic originating at points as far west as Cleveland and Indianapofis. It will also jirobably be possible for the railroads to the GuK to attract some west- bound transcontinental traffic to Guh ports from points as far north as St. Louis. This indicates that the trans- continental fines must reckon with the canal route in making rates from the eastern and southern parts of the MississipprVaUey to the Pacific coast. 4. At the jiresent time the transcontinental railroads have a relatively large and a lughly profitable traffic from the Central West to intermediate points in the mountain States. The rates generally being the same from the Middle West as from the Atlantic seaboard to the States in the iutermountain section of the far West, the manufacturers and other producers of the Middle West have secured most of the trade of the mountain States. Formerly traffic moved from the Atlantic seaboard around to the Pacific coast and from there inland to the intermountain States. Now it moves mainly by direct rail haul from the Middle West. With the opening of the Panama Canal, an effort will doubtless be made by eastern producers to regain a greater or less portion of the trade of the intermountain States by shipping commodities at low rates tlirough the canal to the Pacific coast for distribution thence tlirough the intennountain States. The Pacific coast jobbers interested in this trade wiU be able to secure commodities either from eastern producers by way of the canal or from ^Middle West producers by way of the railroads. It has thus far been deemed profitable by the transcontinental fines to make tlu'ough rates to the Pacific coast much lower than to intermediate ])oints and thus favor the jobbing trade of the Pacific coast. Tins poficy has been justified by the fact that the low through rates were, at least, sfightly profitable, and that the distribution of traffic by rail from the Pacific coast through the mountains at high local rates was highly profitable. It seems probable that the Panama Canal will cause the through rates to the Pacific coast to be so low as to make it more jirofitable for the railroads to carry traffic from the Middle West directl}' to intermediate points than to haul it to the Pacific coast for subsequent distribution. This view has been expressed in the following words by the traffic manager of one of the transcontinental railroads: The railroads have maintained normal rates to these interior points and have resisted the natural demand for rates insuring direct move- ment of these commodities from eastern sources of supply, because they knew that they were carrying 85 per cent of the tonnage to Pacific coast terminals, and for that reason their revenue on eastern manufactured goods shipped from Seattle to Walla Walla, Spokane, etc., was not measured by the rate charged for that final movement of the traffic, and so far as the competition of water-borne com m odities, including imported merchandise, was concerned, there was consolation in the fact that we were getting a comparatively high rate from Seattle to these interior points. But we should ask ourselves, what would have been the adjustment of rates to interior points in the absence of these compensating conditions? If the town of Walla Walla uses 10,000 kegs of nails per annum, it is the duty of the railroad traffic manager to make that business contribute as much as possible to the earnings of his railroad. Heretofore we have not worried when we saw these nails coming in from Portland or Seattle, for the reasons above stated, but when we stop carrying the original shipments to Seattle, and when the business from Portland begins to seek the open river route, then we will realize that we must make rates from the east which will insure the direct movement of these commodities to these interior points. As to the ability of the railroads to do this, I don't see how there can be any question so far as the territory east of the Cascade Moun- tains is concerned; they may be driven out of the Pacific coast business, but they, will stay in the business east of the Cascade Mountains, because they must stay in it so long as it represents any rate over and above the actual cost of the service when considered as additional traffic within the capacity of the railroad, and that is just exactly what it will be. PANAMA CANAL TKAFFIC AND TOLLS. 87 5. The probable effect of the canal upon eastbound transcontinental rail rates may be brieflj' considered, because much of the prececUng analysis of the relation of the canal to westbound rates is applicable to eastbound charges. The tonnage carried by rail from the Pacific coast thi-ough to the Atlantic section east of Pittsburgh and Buffalo is relatively light and consists, in large part, of perishable freight, of wliich green fruits constitute an important item. It is possible that the steamship lines through the canal ^^•ill handle some of the green fruits from the west coast to the eastern markets, but in all probability the present methods of shipping and marketing fruit ^vill prevail, and the traffic, in spite of somewhat liigher rates, will continue to move mainly by rail. The principal markets for all the products of the west coast are in the Rockj^ Mountain section and the Mississippi Valley, and the transcontinental railroads will be concerned chiefly in maintaining eastboimd rates from the west coast to those sections and \vill hardly decide to reduce rates on traffic destined to points thi'oughout the eastern haK of the United States in order to hold against the steamshiji lines a portion of the comparatively small tonnage which the railroads haul tlu-ough from the Pacific to the Atlantic seaboard section. 6. The rates on fi-uits, barley, fish, lumber, and other west coast products to the Mountain States and to the Mississippi Valley are of prime importance to the transcontinental railroads. The traffic taken from the west coast by rail to the southern and eastern portions of the Mississippi Valley must be secured in competition ■with the combined water and rail routes by way of Panama and the Gulf or Atlantic ports, but for the major share of the eastbound traffic from the Pacific coast over the mountains the railroads will not be seriously affected by canal competition. 7. The traffic from the mines and ranches of the intermountain States eastbound to the Atlantic coast section comprises a comparatively small tonnage. The rail rates on wool and some other products will, after the opening of the canal, necessarily be influenced by the tlirough rate by rail to the Pacific coast and on by steamsliip lines through the canal. It is not probable, however, that much traffic will move from jioints east of the Sierra Nevadas to the Pacific coast for transshipment eastbound through the canal. 8. The prmcipal markets for the productions of the Rocky Mountam States are in the Mississippi Valley. It wiU not be possible for the canal to divert fi-om the railroads the traffic from the western Mountain States to destinations west of Buffalo and Pittsburgh, nor will the canal have much effect upon the rates wliich the railroads may charge for this traffic. 9. The general effect of the canal will be to lower transcontinental railroad rates. If the foregoing analysis proves to be sound, it will be the policy of the railroads to allow a portion of the traffic that might be held to the rails to be shipped coastwise through the canal and to maintain rates upon the traffic winch can readily be prevented from taking the canal route. It is probable that the railroads ^vill adopt the general policy of surrendering without serious struggle the minor portion of their traffic in order to maintain profitable charges upon the major share of their tonnage. The immediate efl'ect of the canal will be to lessen railroad profits; the ultimate effect may be the enhancement of the prosperit}' of the railroads. The canal will aid the industries and trade of the United States. Like other transportation facilities, it will create the need of other means of transportation; and, should the transcontinental railroads be obliged to face reduced profits for a period of years, they need have no serious apprehension as to their future prosperity. The railroads connecting the Mississippi Valley and the Pacific coast are among the most profitable lines in the United States. The country they serve is certain to have a large development during the next quarter century, a development that will unquestionably be appreciably aided by the Panama Canal. VT. Summary of the Probable Effects of the Panama Canal upon Transcontinental Traffic and Rates. The probable influence of the Panama Canal upon the trade of the eastern and of the central sections of the United States with the western part of the country, and the anticipated effects of the canal upon the car- riers interested in that trade may be broadly summarized as follows : 1 . The Atlantic section of the United States wiU obtain a somewhat larger share of the trade of the Pacific coast, and %vill secure more benefit from the cheap water route than will the Middle West. 2. The inroads upon the trade now possessed by the middle section of the country vnH, however, probably not be serious; because (a) the Middle West now has a firmly established hold upon the west coast trade; (b) the Middle West producers, aided by their rail carriers to the Pacific coast, will probably be able to compete successfuUy with eastern producers not located in or near the Atlantic ports. The Mddle West wiU lose a 88 PANAilA CANAL TRAFFIC AND TOLLS. part but not all of the trade of the Pacific coast seaboard cities, but may be expected to hold nearly all of the trade of the cities in the intermountain States; (c) the trunk lines to the Atlantic seaboard will doubtless aid producers just west of the Alleghenies by making low through rates from places as far west as Cleveland and Indianapolis to the Pacific via the Atlantic ports and the canal. The rail lines to the Gulf likewise will draw trade from Memphis and St. Louis and possibly Kansas City to the Gulf for shipment through the canal to the Pacific coast; (d) the transcontinental rail lines running west fi-om St. Paul, Cliicago, St. Louis, and the cities on the IMissouri River may be expected to assist in buildmg up the direct trade from the ilississippi and Mssouri Valleys to the cities in the intermountain States, and thus to limit the entry of goods fi-om the eastern part of the United States via the Pacific coast into the inland markets of the intermountain States. The intermountain States will probably secure lower freight rates for their trade with the eastern sec- tion of the country and with the Middle West. Instead of cutting deeply into the rates between the eastern part of the United States and the Pacific coast terminals, and thereby, under the ruling of the Interstate Com- merce Commission in the Spokane and Reno cases, automatically depressing all rates to mtermediate points, the railroads will more probably decide to maintain fairly remunerative through rates to the west coast, to suffer the major share of the coast-to-coast trafhc to be supphed by eastern producers and to be carried through the canal, and to make only such reductions in the rates to and from the intermountain territory as may be required to cause that section to continue to trade mainly with the Middle West. The pohcy of the railroads will probably be to make it advantageous for the intermountain cities to trade less through Pacific coast jobbers and more, without the intervention of middlemen, directly with the central and eastern sections of the country. 3. The canal will assist the Pacific Coast States in tradmg with the eastern and southern parts of the United States. Much trade not now possible will develop. The importance of the west coast cities as job- bing centers may be lessened by the growth of direct trade between the intermountain States and the sections east of the mountains, but this loss will be more than compensated for by the growth of new trade. 4. The effects of the canal upon American trade and upon rail rates will not be much affected by the exemp- tion of coastwise ships from the payment of Panama tolls. If the nonpajTuent of tolls were to reduce freight rates by the amount of tolls, the freight rates — which will be from S6 to $20 a ton — might possibly be 60 cents a ton lower. That would be of some assistance to the Pacific coast jobbers and large shippers, and would some- what increase the advantage which the canal will give the East over the Middle West in tradmg with the west coast. It is not probable, however, that the exemption of the payment of tolls will appreciably affect the rates charged by the regular steamship lines. The nonpayment or remission of tolls will chiefly aid the owners of the coastwise marme and not the shippers. Most traffic will be handled by the regular lines which will charge common rates fixed in conference, and competition, while not elinunated, will be so regulated as to enable the carriers to keep charges well above the lowest rates at which traffic can profitably be carried. Whether there be tolls or no tolls, the line steamship rates will not be based on cost of service, but will be such as the traffic will bear and increase. Canal tolls, being a part of the cost of service, will not make line steamship rates higher, nor win the omission of tolls cause the freight rates to be lower. This is not true of the rates payable on bulk cargoes of traffic handled in mdividual vessels operated under charters. Charter rates are competitive, and the few large shippers who can use a chartered vessel will be benefited by being relieved of the payment of canal tolls. As is explained in Chapter XII, it is probable that the payment of tolls by sliips engaged in our coast- to-coast trade would affect neither the rates of the regular steamship lines nor the charges of the transconti- nental railroads. CHAPTER V. THE SUEZ CANAL: ITS DIMENSIONS. AND ITS FINANCIAL AND TRAFFIC HISTORY. CHAPTER V. THE SUEZ CANAI: ITS DIMENSIONS, AND ITS FINANCIAL AND TRAFFIC HISTORY. In planning for the operation of the Panama Canal and in fixing tolls for its use, the Suez Canal may well be studied as regards past and present dimensions, its traffic, tolls, operating and maintenance expenses, and methods of operation. The Suez Canal has now been operated for about 4.3 years, and the history of its man- agement ought to be of assistance in the administration of the Panama Canal. I. Past and Present Dimensions of the Suez Canal. The Suez Canal was opened for the passage of vessels, November 17, 1869. Its length was 161 kilometers (87 nautical miles), its depth 8 meters (26 feet .3 inches) and its bottom width 22 meters (72 feet 2 inches). The maximum vessel draft authorized was 7. .50 meters (24 feet 7 inches). These dimensions were sufficiently large for the time; indeed, the actual draft of the vessels using the canal did not reach the authorized maximum until 1880. The location and main features of the Suez Canal are shown on Plate 4 at the end of tliis volume. Two decades passed before the general dimensions of the canal were materially changed, although numer- ous improvements had meanwliile been carried out. Between 1870 and 1882, various curved sections were straightened; and the "stations" or basins in the canal at wliich vessels may pass each other were enlarged and their number increased to 13. Tliis work of straightening curves has continued, and the canal has now been so widened through a large part of its length as to render unnecessary many of the former passing "stations." The policy of increasing the general dimensions of the canal was inaugurated in 1887. Its depth had been increased, by 1890, to 9 meters (29 feet 6 inches) and the authorized vessel draft had become 7.80 meters (25 feet 7 inches). By 1902 the canal depth was increased to 9.50 meters (31 feet 2 inches), and on January 1 of the next year the authorized vessel draft was made 8 meters (26 feet 3 inches). An extensive program calling for a gradual deepening to 10 meters and then to 10.50 was adopted in 1901 ; then, in 1906, when it was found that the canal depth actually available every^vhere exceeded 9 meters, the authorized vessel draft was increased to S.23 meters (27 feet). By 1908, a depth of 10 meters (32 feet 9 inches) was attained and a maximum vessel draft of 8.53 meters (28 feet) was authorized. In 1909, before the program of 1901 had been fully carried out, new plans were adopted calling for a depth of 11 meters (36 feet 1 inch), and the company expects to attain that depth in 1915. At present the minimum depth is 10 meters. The original bottom width of 22 meters (72 feet) remained unchanged, except at certain places, until the policy of enlarging the canal was adopted in 1887. By 1898, a bottom width of 30 meters (98 feet 5 inches) was attamed; under the program adopted ui 1909 the width is being increased to 41 meters (134 feet 6 inches) at the bottom and to 45 meters (147 feet 7 inches) at a depth of 10 meters. At certain points the width will be greater. The successive cross-section dimensions of the canal from 1884 to the present are shown, on Plate 5 in the pocket at the end of tliis volimie. The increase in the depth and width of the canal has been accompanied, as is shown in Table I, by a grad- ual increase in the draft, beam, and length of the vessels using the waterway. Since 1880, the maximum draft of some of the vessels passing through the canal has been equal to the maximum draft authorized by the canal company, although the majority of the vessels have had less than the authorized draft. In 1910, 94 per cent of the vessels had a draft of less than 8 meters (26 feet 3 inches), 4 per cent of 8.01 to 8.23 meters (27 feet), 1 per cent of 8.24 to 8.38 meters (27 feet 6 inches), and but 53 vessels, or 1 per cent had a draft of 8.39 to 8.53 meters (28 feet). Wben the depth of 11 meters shall have been established, vessels drawing 31 or 32 feet of water can navigate the canal. The growth m the size of the vessels using the canal has kept pa.ce with the increase in the dimensions of the waterway. The average net tonnage of the vessels passing through the canal advanced from 898 tons in 1870 to 3,688 tons in 1911. 34998°— 12 — -7 91 92 PANAMA CANAL TRAFFIC AND TOLLS. Table I.— MINIMUM DIMENSIONS OF SUEZ CANAL, AND MAXIMUM DIMENSIONS OF VESSELS. Bottom width of canal. Maximum draft of vessels. Ma.Timiim width of vessels. Maximum length of vessels. Maximum authorized draft of vessels. Average time of transit. Meters. Meters. Meters. Meters. Meters, H. m. 22 6.76 6.76 13.60 13.60 117 117 7.50 7.50 22 48 58 22 7.21 14.93 120 7.50 40 58 22 7.19 14.93 120 7.50 42 34 22 7.39 14.93 124.90 7.50 42 52 22 7.39 14.93 124.90 7.50 41 15 22 7.39 14.93 128.01 7.50 40 00 22 7.49 14.93 126. 15 7.60 38 41 22 7.49 16.76 126. 15 7.60 39 14 22 7.49 15.32 126. 15 7.50 37 01 22 7.49 15.32 126. 15 7.50 36 36 22 7.50 15.40 135. 78 7.50 38 46 22 7.50 15.40 135.78 7.50 45 53 22 7.50 15.40 138.99 7.50 53 46 22 7.50 16.40 135. 78 7.50 48 36 22 7.50 15.40 138.91 7.50 41 53 22 7.60 20.11 138.91 7.50 43 00 22 7.50 20.11 140.20 7.50 36 11 7.50 15.91 141.93 7.50 34 03 7.50 20.11 142. 79 7.50 30 45 7.50 20.11 142.79 7.50 26 44 7.80 17.45 147.53 7.80 24 06 7.80 18.59 147.53 7.80 23 31 (•) 7.80 16.28 147.53 7.80 21 16 7.80 16.28 147.53 7.80 20 44 7.80 21.34 148.13 7.80 19 55 '7.80 20.42 148. 13 7.80 19 18 7.80 20.42 159.41 7.80 18 38 7.80 22.45 100. 45 7.80 17 44 30 7.80 22.86 160.45 7.80 18 02 30 7.80 20.73 160.46 7.80 18 38 30 7.80 22.99 170.86 7.80 18 32 30 7.82 23.32 170.86 7.80 18 41 30 8.00 23.77 170.86 8.00 18 02 30 8.00 23.10 170.86 8.00 17 48 30 8.00 21.84 170.86 8.00 18 18 30 8.15 22.86 170.86 8.00 18 35 30 8.23 23.85 170.86 8.23 18 06 30 8.23 22.86 170.86 8.23 17 58 30 8.53 22.00 170.86 8.53 17 24 f 8.53 23.47 179.50 8.53 17 13 (') 8.63 22.80 179.50 8.53 16 54 [ 8.53 22.99 179.50 8.53 17 01 1869. 1870. 1871. 1872. 1873. 1874. 1875. 1876. 1877. 1878. 1879. 1880. 1881. 1882. 1883. 1884. 1885. 1886. 1887. 1888. 1889. 1890. 1891. 1892. 1893. 1894. 1895. 1896. 1897. 1898. 1899. 1900. 1901. 1902. 1903. 1904. 1905. 1906. 1907. 1908, 1909, 1910, 1911 ' Program of widening canal gradually carried out. 2 Gradual deepening to 10 meters with program calling for 10.50 meters. 8 11-meter project adopted 1909. * Widening of canal at certain places with program calling for minimum width of 41 meter.'> at bottom and 45 meters at a depth of 10 meters. PANAMA CANAL TRAFFIC AND TOLLS. 93 The growth in canal dimensions, together with the increase in the number and size of passing stations or "lay-bys," the straightening of curves, and the improvement in facilities have also had a marked effect upon the average time required to pass through the canal, which declined from 48 hours and 58 minutes in 1870 to 17 hours, 1 minute in 1911. The average transit time of vessels equipped with electric searclilights was 16 hours and 42 minutes in 1910; and for the comparatively few sliips not so equipped, and consequently not permitted to pass through at night, the average duration of the passage was 26 hours and 20 minutes. For 25 years the Suez Canal Co. has been almost constantly enlarging and improvuig the waterway. The project now being carried, which will give the canal a depth of 36 feet, a minimum bottom width of 137 feet, and a much greater breadth tlirough a large part of the waterway, is well advanced. Plate 4 at the end of tliis volume shows in detail what will be the dimensions of the canal when the enlargements have been com- pleted. The extensive improvements are being paid for mainly from current revenues, the progressive policy of the company having been made possible by the large revenues resulting from the rapid increase in traffic. II. Finances of Construction. « The Suez Canal was constructed and has been enlarged and managed by a private corporation, which, as the following figures will show in detail, has invested, from the beginning of construction up to the present time, about $127,000,000, of wliich about two-thirds have been secured from the sale of securities and about one-third has been taken from earnings. The original capital of the Suez Canal Co., issued m 1859, was 400,000 shares of 500 francs each. These shares partake of the nature of both bonds and stock, for they are entitled to interest at 5 per cent, untd redeemed, as well as to participation in the company's profits. Provision is made for their redemption, but when redeemed they continue to share in the profits, and merely lose the interest-bearuig feature. December 31, 1911, 378,231 of these shares were in circulation. In 1875, the British Government, through Lord Beaconsfield, purchased the 176,602 shares held by the Kliedive of Egypt, paying £4,000,000 for them. The British Government does not own a majority of the shares, and the Suez Canal is controlled and operated by a French company. The annual dividends and interest paid on the shares have increased from 23.5 francs per share of 500 francs, during the first five years, to 165 francs per share paid in 1911, or from 4.7 per cent to 33 per cent. The shares are closely held, and trading in them is light, but sales are occasionally made on the Paris Bourse. The stock sells at a premium of over 1,000 per cent. The original shares were sold at par and jielded the company 200,000,000 francs. This did not provide the company with all the funds required, and to secure more capital 333,333 5 per cent notes were sold in 1867-68. Of these notes 99,994 are stUI outstanding. There were 100,000 shares given to the "founders." These shares are not stock, but are rather certificates of obligation requiring the company to pay 10 per cent of its profits to the promoters and founders of the original company and their heirs and assigns. Table II.— SECURITIES OF THE SUEZ MARITIME CANAL CO., ISSUED AND OUTSTANDING, TO DEC. 31, 1911. Nature and number of securities issued. Price at which issued. Number in circulation in 1911. 1859. . . . 1867-6S. 1871.... 1874.... 1880.... 1887 400,000 shares 333,333 notes, 5 per cent 120,000 thirty-year bonds 400,000 debenture bonds, 5 per cent 73,026 notes, 3 per cent , first series 238,964 notes, 3 per cent, second series. . 13,276 notes, 3 percent, third series ^... Francs. 500.00 300.00 100.00 S.5.00 369. 73 418.47 Francs. 200,000,000.00 99,999.900.00 12,000.000.00 34,000,000.00 26,999,961.85 99,999,537.31 6,278,966.00 378,231 99,994 372,531 62,944 232,592 12,543 1 Obtained from a part of a loan of 50,000,000 francs , authorized by the general meeting of stockholders in 1901 and 1906. The general meeting in 1911 authorized the administrative council to increase the amount of this loan from 50,000,000 to 150,000,000 francs, but this privilege has not yet been made use of. 94 PANMIA CANAL TRAFFIC AND TOLLS. As is shown in Table II, the company has at various times issued notes and bonds. Up to December 31, 1911, the company reahzed 279,278,365.16 francs from the issue of these notes and bonds. In order to cany out the canal improvement plan adopted in 1909, the stockliolders, in 1911, authorized the administrative counci of the company to increase its third series 3 per cent notes from 50,000,000 to 150,000,000 francs, but the notes had not been issued up to the end of 1911. The at^o-regate fimds realized from the sale of securities — stock, notes, and bonds — up to December 31, 1911, was 479,278,365.16 francs. There is included in this sum secured from the sale of securities the 34,000,000 francs of borrowed funds that were used in 1874 to pay the interest which the company was unable to pay from earnings during the first five years of canal operation. The total net cost of the canal up to December 31, 1911, as shown in the company's balance sheet (Table III), was 662,033,560.33 francs. Of the total invested funds 445,278,365 francs (479,278,365 francs -34,000,000 francs) were secured from the sale of securities, and 216,755,195 francs were taken from earnings. The total assets of -the company are given as 842,919,971.54 francs (Table III). The earnings and profits of the company are large. The portion of the net profits severally received by the stockliolders, the Egyptian Government, the "founders," the administrative officers, and the employees are stated at the bottom of Table III. Table HI.— ASSETS AND LIABILITIES OF SUEZ MARITIME CANAL CO., DEC. 31, 1911. Amounts representing net cost of the Suez Maritime Canal to Dec. 31, 1911: Total investment ucoording to annual statement. Dec. 31, 1910. . Investments in enlargement and improvements of the canal during 1911 Fluctuating and fixed assets: Headquarters — Offlce building of company at Francs. Paris 1, 174, 921. 74 Furnitiu^ Inventory. Francs. 1,174,921.74 Lands- Lands, value Inventory. Chattels Inventory. Buildings 13,487, 396. 29 Supplies and implements 106,518. 19 13,593,913.48 Transit and navigation — Chattels, etc Inventory. Materials and tools in use 2,415,962.77 2,415,962.77 Repairs, materials, and ware- houses — Chattels Inventory. Materials and tools in use 43, 241 , 418. 54 Miscellaneous supplies 4, 141, 230. 02 47,382,648.56 Waterworks at Port Said, Ismailia, and Suez- Miscellaneous Inventory. Conduits, reservoirs, and appa- paratus (suppUes) 5,450,663.83 ^ ^ 1-1- ' 5,450,663.83 Buildings tmder construction 670, 243. 66 Work under way 2; 578, 856. 33 3,149,099.99 Cash and available resources: Ca,sh, bank balances, and credits 21,763,207.76 Amoimts brought foraard 6, 463, 628. 35 Bills, acceptances, and long-term investments. . 65,015,306.81 Main agency in Egypt 2, 057, 932. 22 Various amounts due 13, 120, 848. 05 Checks 308,277.65 662,033,560.33 842,919,971.54 Capitalstock, 400,000 shares, at500francsofwhich— Francs. 378,231 are in circulation 189, 115, 500. 00 21,769 are redeemed 10,884,500.00 ConsoUdation of arrears of interest, 400,000 deben- tin'e bonds, at 85 francs: 372, 531 are in circulation 31, 665, 135. 00 27,469 are redeemed 2, 334, 865. 00 Loan of 1867, 68,333,333 bonds issued, at 300 francs: 99,994 are in circulation 29, 998, 200. 00 233, 339 are redeemed 70, 001, 700. 00 Loan of 1871, 120,000 30-year debentuiB bonds, at 100 francs, redeemed Loan of 1880, 73,026 3 per cent bonds, first series, issued at various amounts: 62,944 are in circulation 23,272,335.86 10, 082 are redeemed 3, 727, 625. 99 Loan of 1887, 238,964 3 per cent bonds, second series, issued at various amounts: 232, 592 are in circulation 97, 333, 039. 21 6, 372 are redeemed 2, 666, 498. 10 Loan of 1909, 13,098 3 per cent bonds, third series, - issued at various amounts: 12,543 are in circulation 5,932,289. 13 733 are redeemed 346, 676. 87 Sinking fund 62, 223, 935. 63 Insurance and contingent fimd 1 , .'iOO, 000. 00 Applied to construction or improvement of canal Statutory reserve Extraordinary reserve Sundry credits: Interest, dividends, and redemptions- Mattu-ed before Dec. 31, 1911 2,353,;58. 14 Matured on Jan. 1, 1912 29, 320, 298. 78 31,673,456.92 Societe Civile for the payment of 15 per cent, Egj'ptian Government 4, 430,619. 72 Bills 'of exchange payable 48, 694. 39 Checks payable '. -. 2,618,289.84 Sundry credits and accounts 6, 375, 905. 65 Profit and loss: Net profit of operations, 1911 87,075, 492. 96 Dividends already paid for year 29, 577, 464. 78 Carried over to 1911 Francs. 200,000,000.00 99,999,900.00 12,000,000.00 479,278,365.16 694,176,608.09 37,762,887.12 8,000,000.00 45,152,866.52 1 Balance to be paid. Tonnage 25,000,000 JO.OOC.OOO 15.000,000 10,000,000 5,D0a000 iiei oiei 6061 80GI 1.061 9061 soei fOei coei tOGl loei OOGl 6691 9681 1.691 9691 se9i ve9i C6B1 IG91 1681 0681 6891 8981 1.881 9881 ;eei »89l egsi 2881 1891 0981 6:81 81.81 1.^91 91.81 9181 wei £1.81 U8I ILBl ^O^BI 2 o 00 -J < < u N UJ in Ul X 1- X z> o cr X 1- o z if) I/) s^ _l Ul CO to UJ > u. o UJ < z 2 1- z Q z < I/) , .- /- X, \ ^ ^ \, \ \ / /' i ', \ V, •*, ^ \. "•^ - ; '\^ \ \ \ \ N \ '^N \-^ \ \ \ \ \ \ \ \ y.,^ \. I S o § ° 3- § § §- § PANAMA CANAL TRAFFIC AND TOLLS. 95 STATUTORY DIVISION OF PROFITS. Francs. 71 per cent to stockholders 61, 823, 600. 00 15 per cent to the Egyptian Government 13,061, 323. 94 10 per cent to the founders of the company 8, 707, 549. 29 2 per cent to the administrative officers .'. 1, 741,509. 86 2 per cent to the employees 1, 741, 509. 86 Total 87,075,492.95 III. Traffic History of the Suez Canal. The traffic of the Suez Canal during the first two j^ears was relatively small, for the reason that'the Suez route is not a practicable one for sailing vessels. At the time of the opening of the canal most of the freight between Europe and the countries on and beyond the Indian Ocean was carried in sailing vessels. Steamers had to be built for the Suez route, and, bemg much less efficient than freight steamers are to-day, they but gradually took the traffic with the Far East and Australasia from the sailing vessels and the Cape of Good Hope route. The increase in the traffic of the Suez Canal, however, was relatively large during the first decade, the net tonnage of the vessels that passed through the canal amounting to 2,000,000 in 1875 and to 3,000,000 m 1880. (Table IV and Chart I.) During the following 10 years the traffic rose to 6,800,000 net tons, the gain for the decade being 126 per cent. This was a decade of rapid expansion of the commerce of Great Britain and other European countries with India, the Orient, and Oceania; and the Suez Canal secured, in competition with the Cape route, a steadily increasing share of that commerce. Table IV TRAFFIC OF THE SUEZ CANAL, 1870-1911. Net tonnage. Number of vessels. Mean net tonnage per vessel. Mean gross tonnage per vessel. 480 898 1,348 765 995 1,493 1,494 1,345 1,969 2,026 1,509 2,144 3,624 1,748 2,479 3,389 2,033 2,877 3,434 2,460 3,446 3,441 2,830 3.9S1 4,116 3,191 4,449 3,975 3,383 4,732 4,267 3,452 4,816 3,795 3,592 5.035 4,239 3,635 5,072 4,533 3,658 5,086 4,969 3,685 5,115 1870. 1871. 1875. 18S0. 1885. 1890. 1895. 19(». 1905. 1906. 1907. 1908. 1909. 1910. 1911. 054,915 1,142,230 2,940,708 4,344,519 8,985,411 9, 749, 129 11,833,637 13,699,237 18,310,442 18, 810, 713 20,551,982 -19,110,831 21,500,847 23,054,901 25,417,853 436,609 761,467 2,009,984 3,057,421 6,335,752 6,890,094 8,448,383 9, 738, 152 13, 134, 105 13,445,504 14,728,434 13,633,283 15,407,527 10,581,898 18,324,794 26,758 48,422 84,446 101,551 205, 951 161,352 216, 938 282,511 252,691 353,881 243,826 218,967 213, 122 234,320 275, 651 The third decade of the operation of the Suez Canal, 1890-1900, was one of only moderate traffic develop- ment. Serious business depressions in difl^erent parts of the world during tliis decade checked the rate of com- mercial expansion. From 1890 to 1900 the Suez traffic, net vessel tonnage, rose from 6,800,000 to 9,738,000 tons, the absolute increase being less than 3,000,000 tons and the rate of increase 43.2 per cent — only a third of the rate that had prevailed from 1880 to 1890. Since 1900, the traffic of the Suez Canal has risen rapidly. The net tonnage in 1910 was 16,581,000, 70.2 per cent above the figures for 19p0. In 1911, the net tonnage advanced to 18,324,794 tons, or to 69.3 per cent above the figure for 1901. Europe and the eastern part of the United States are building up a large com- merce with the countries east of the Suez Canal. The countries of the Indies, Oceania, and the Orient are entei-ing upon the development of their resources and industries with the increasing assistance of western capital; and the consequent expansion of the commerce of those countries is indicated by the rapid growth of the traffic of the Suez Canal. 96 PANAJVIA CANAL TRAFFIC AND TOLLS. The frequent enlargements in the dimensions of the canal have permitted the use of larger ships and have favored the growth of traffic. The draft aUowed vessels in the canal was increased in 1890 from 24 feet 7 inches to 25 feet 7 inches, in 1902 to 26 feet 3 inches, in 1906 to 27 feet, and in 1908 to 28 feet. By 1915, when the present improvements shall have been completed, vessels drawing between 31 and 32 feet will be permitted to use the canal. The average size of the vessels that passed through the Suez Canal in 1911 was more than four times the average in 1870 and more than double the average in 1885, the mean tonnage per vessel being 898 net tons in 1870, 1,509 tons in 1880, 2,033 tons in 1890, 2,830 tons in 1900, 3,658 tons in 1910, and 3,685 tons in 1911. The number as well as the size of the vessels has increased rapidly each decade, with the exception of the 10 years from 1890 to 1900 when the growth in the worltl's commerce was at a slackened pace. In 1911, nearly 5,000 vessels — 4,969 — made use of the canal, an average of nearly 14 per day for each of the 365 days of the year. The number of passengers through the Suez Canal varies from year to year. The total for 1911 — 275,651 — was somewhat less than the figures for 1900. The maximum for any one year was reached in 1906, when, at the time of the war with Japan, Russia took a large number of naval vessels and troops through the canal. The figures as to passenger traffic are given in Table IV. Table V shows how the present traffic of the Suez Canal was distributed, in 1909, 1910, and 1911, among the various destinations east of the canal, wliile Table VI distributes tliis traffic among the leading regions east of the canal for a period of 16 years. Table VII, compiled from various sources, subdivides the Suez traffic among North-Atlantic countries; it covers a period of 16 years and shows the rate of increase in the traffic to and from the countries named. Table V SUEZ CANAL TRAFFIC DISTRIBUTED BY REGIONS BEYOND THE SUEZ, IN N^ET TONS. 1911 1910 1909 528,000 710,000 324,000 3,723,000 4,639,000 1,657,000 674,000 1,467,000 2,584,000 1,904,000 106,000 368,000 510,000 223,000 3,359,000 4,300,000 1,287,000 700,000 1,385,000 2,592,000 1,704,000 154,000 361,000 454,000 191,000 3,114,000 4,214,000 1,121,000 534,000 1,264,000 2,464,000 1,645,000 155,000 18,325,000 16,582,000 15,407,000 Table VI.— GROWTH OF SUEZ CANAL TRAFFIC TO AND FROM REGIONS BEYOND THE SUEZ (1895-1911).' Years. East Alrica. Bombay and West India. Calcutta and East India. Straits, . Siam, Philippines, and Dutch East India. China, Cochin China, and Japan. Australia. other regions. Total. 1896.. 357,000 269,000 404,000 482,000 510,000 710,000 163.9 2,015,000 1,649,000 1,128,000 2,623,000 3,359,000 3,723,000 125.7 2,417,000 2,411,000 2,763,000 3,722,000 4,300,000 4,639,000 92.4 1,003,000 1,085,000 1,372,000 i,6n,ooo 1,987,000 2,331,000 114.8 1,400,000 1,578,000 2,756,000 2,943,000 3,977,000 4,060,000 157.2 840,000 871,000 864.000 995,000 1,704,000 1,940,000 118.5 416,000 697,000 451,000 698,000 745,000 958,000 37.4 8.448,000 8,560,000 1900 9,738,000 1905 13,134,000 1910 16,582,000 1911 18,325,000 114.7 1 See Aimual Report of Suez Canal Co., June 3, 1912, p. 17. PANAMA CANAL TEAFFIC AND TOLLS. 97 Table VII.— GROWTH OF SUEZ CANAL TRAFFIC (NET TONNAGE) TO AND FROM EUROPE, EASTERN UNITED STATES, AND OTHER COUNTRIES WEST OF SUEZ, 1895-1911.' Years. Great Britain. Germany . France. Belgium, Holland, Denmark, Sweden, and Norway. Greece, Turkey, and Egypt. Italy and Austria- Hungary. United States. Other regions. Total. 4,614,000 4,119,000 4,224,000 5,865,000 6,626,000 8,202,000 8,808,000 113.7 713,000 818,000 1,298,000 1,571,000 1,807,000 2,370,000 2,643,000 223.0 1,116,000 988,000 1,198,000 1,573,000 1,679,000 1,611,000 1,550,000 56.8 618,000 626,000 771,000 1,196,000 1,430,000 1,783,000 2,066,000 230.0 399,000 533,000 362,000 1,014,000 1,004,000 399,000 581,000 9.0 358,000 640,000 530,000 805,000 944,000 980,000 940,000 46.8 123,000 194,000 661,000 741,000 934,000 843,000 1,295,000 567.5 507,000 642.000 694,000 369,000 304,000 394,000 442,000 (») 8,448,000 8,560,000 1900 9,738,000 13,134,000 14,728,000 16,582,000 18,325,000 114.7 1 Compagnie UniverseUe du Canal Maritime de Suez, Le Canal Maritime de Suez, Tableau 7; British Documents "Commercial No. 3 (1911), The Suei Canal," p. 4; and Statement of Suez Canal Co., Mar. 29, 1912. * Decrease. During the period 1895 to 1911, the countries bej'ond Suez whose commerce through the canal increased most rapidly were East Africa, China, Japan, and Australia. India and southern Asia, however, make largest use of the canal, less than 40 per cent of the total Suez traffic being contributed by the commerce of the countries east and north of Singapore. The Panama Canal can not invade the main traffic field of the Suez route — the countries of southern Asia, East Africa, the Red Sea, and the Persian Gulf. Their conmierce will con- tinue to move via the Suez whatever the tolls of the Panama Canal may be. The competitive region of the two canals lies east of Singapore, and the major share of the commerce of that region with western Europe will continue to move via Suez. It was estimated in Chapter II that about 5 per cent of the trade of Europe with Japan and 10 per cent of Europe's trade with Austraha would use the Panama Canal. Table VIII.— NET TONNAGE OF THE SUEZ CANAL, DISTRIBUTED BY NATIONALITY OF VESSELS, 1870-1911.' Flags. 1870 to 1875 1876 to 1880 1881 to 1885 1886 to 1890 1891 to 1895 1896 to 1900 1901 to 1905 1906 to 1910 1911 Percent. 72.8 1.3 3.3 10.1 3.9 (») .7 .9 .3 .2 1.3 .5 1.1 .2 .1 1.3 Percent. 78.1 1.2 4.7 7.3 2.3 .1 .4 2.6 .5 1.7 .4 .1 .1 (') .5 Per cera. 78.3 2.6 3.9 8.0 1.8 .1 .6 2.2 .1 (') 1.4 .5 .1 <») (•) .4 Percent. T7.1 4.5 3.7 6.2 2.0 .1 .5 3.1 (') m 1.0 .8 .3 (') (') •1 Percent. 75.2 7.5 4.0 6.0 1.9 (') .8 1.7 (') (') 1.0 1.1 .5 .3 (') (•) Per cent. 65.3 11.4 4.6 6.6 2.6 1.7 2.0 2.1 .3 (') 2.5 2.0 .4 (') .3 .2 Percent. 62.3 15.4 4.5 6.5 3.5 1.2 2.3 1.5 .4 P) .7 .8 .i m .2 .2 Per cent. 62.3 15.9 5.0 5.5 3.4 2.0 1.7 1.4 .7 .4 .5 .5 .3 m .3 .1 Per cent. 64.0 15.2 5.3 4.5 3.4 2.0 1.7 Italian 1.1 .6 .5 .4 .3 .7 (») (») .3 1 From Compagnie UniverseUe du Canal Maritime de Suez, Le Canal Maritime de Suez, Tableau VI; British Documents, Commercial No. 3, (1911), p. 7; Statement of Suez Canal Co., Mar. 29, 1912. > Less than 0.1 per cent. 98 PANAJMA CANAL TKAFFIC AND TOLLS. The nationalitj' of the vesesls engaged in commerce via the Suez Canal is showm in Table VIII. Nearly four- fifths of the shipping is under the British and German flags, the British vessels comprising 64 per cent of the total in 1911. The Dutch flag is gaining and the French flag is losing in percentage of the total shipping. The only non-European nation whose shipping makes much use of the Suez Canal is Japan. While the volume of British shipping using the canal has increased absolutely, it includes a smaller percentage of the total tonnage than it cUd from ISSl to 1SS5, when 78.3 per cent of all the shipping was British. Tliis is due to the increase of German vessels and to the growth in the tonnage of ships flj-ing the flags of the Netherlands, Japan, and Sweden. The tonnage of French, Austro-Hungarian, Russian, Italian, and Norwegian vessels using the Suez has increased absolutely, but, as in the case of British vessels, has declined in percentage of the total. IV. Revenues and Expenses of the Suez Canal. The revenues of the Suez Canal Co. are derived mainly from toUs upon vessels and passengers. The minor sources of income are the charges for bertliing or anchorage of ships, for towage and pUotage, and the receipts from certain outside operations. The foUoming ' ' transit dues " and other charges are in force : 1. The tolls on vessels since January 1, 1912, have been 6.75 francs ($1,302) per ton net register for loaded vessels, with a reduction of 2.50 francs per ton for vessels in ballast. On the first of January, 1913, the rate becomes 6.25 francs ($1,206) per net ton for loaded vessels. The passenger toUs are 10 francs per passenger above 12 j-ears of age and 5 francs for each child from 3 to 12 years old. For vessels using the canal only between one of the termini and Ismailia, the point at which the raUroad from Cairo reaches the canal, the vessel and passenger toUs are one-half the regular thi-ough rates. The passenger toUs have remained unchanged since the beginning, but the vessel toUs have been reduced from time to time since 1874, when the maximum rate of 13 francs ($2.51) per net ton was put in force. The rates charged, and the changes made in the rates, from 1869 to the present are stated in Table IX. Table IX,— SUEZ CANAL TOLLS ON VESSELS. Dates. I Tolls per net vessel ton.i Dates. Tolls per net vessel ton.i 10 francs. 10 francs .2 10 francs plus 3 francs surtax. 10 francs plus 2.50 francs surtax. 10 francs plus 2 francs surtax. 10 francs plus 1.50 francs surtax. 10 francs plus 1 franc surtax. 10 francs plus 0.50 franc surtax. Jan. 1, 18S4 10 francs. Jan. 1, 1885 9.50 francs. Jan. 1, 1893 9 francs. Jan. 1 , 1903 8. 50 francs. Jan. 1, 1906 7.75 francs. Jan. 1, 1911 7.25 francs. Jan. 1, 1912 6.75 francs. Jan. 1, 1913 6.25 francs.3 1 Vessels in ballast pay 2.50 francs less per net ton than loaded vessels pay. ' On gross tonnage. ' Announced June 3, 1912, to become effective Jan. 1. 1913. The Suez Canal Co.'s concession provided that the toUs upon vessels should not exceed 10 francs per "ton of capacity," and the statute creating the company specified that whenever the rate of dividends paid exceeds 25 per cent, the rate of toUs should be reduced. The concession stipulated that the tolls should "be collected ■without exception or favor from all ships under like conditions. " As is explained in the volume upon "The Measurement of Vessels," ' there was a serious dispute during the first five years of the operation of the canal as to the meaning of "ton of capacity." The shipping world con- tended that net register tonnage was meant, while the officials of the company held that either the gross register tonnage or the cargo tonnage capacity of the vessel might be made the basis of toUs. The toUs were first charged upon the net register tonnage of vessels as stated in the sliip's papers. The company found this unsatisfactory, because dissimilar rules prevailed in different countries for determining net tonnage, and because the revenues of the company from the toUs upon net tonnage were insufficient. In 1872, the company began charging toUs of 10 francs per gross register ton. This was objected to by the shipping interests of the leading countries of Europe » Report by Emory R. Johnson, 1912, Government Printing Office, Washington. PANAMA CANAL TRAFFIC AND TOLLS. 99 and the question was made the subject of diplomatic negotiations. The canal company was also proceeded againsl in the French courts upon complaint of the leading steamship company in France. The Sultan of Turkey was called upon to rule upon the meaning of the term "ton of capacity," and, in the latter part of 1873, he convened the International Tonnage Commission at Constantinople to decide the question. This commission decided that the Suez tolls should be based upon net vessel tonnage, and formulated a set of rules for determining net tonnage. To enable the canal company to increase its income, the International Com- mission provided that the company might increase its rate of toUs of 10 francs per net ton by a "surtax" of 3 francs, the surtax to be reduced as the traffic of the canal increased. When the canal tomiage reached 2,100,000 tons annually the surtax was to decline to 2.50 francs, when the tonnage became 2,200,000 tons the surtax was to be reduced to 2 francs, each increase of 100,000 tons per year bringing about a decrease of 50 centimes in the surcharge. When the annual tonnage became 2,600,000 tons the surtax was to be abolished. Later, in 1876, in an agreement with Great Britain, which had become a large stock- holder, the company agreed that the first reduction of 50 centimes in the surtax should be made January 1, 1877, the second January 1, 1879, the third Januarj^ 1, 1881, the fourth on January 1, 1882, the fifth January 1, 1883, and the sixth January 1, 1884, on which date the surtax ceased and the toU became 10 francs per net ton. The growth of traffic since 1884, especially since 1900, has been so rapid and the revenues of the company have increased so largely that the tolls have been reduced every few years, 50 centimes at a time, until, effective Janu- ary 1, 1913, the rate, for loaded vessels, has become 6.25 francs ($1,206) per net ton. 2. Berthing or anchorage dues are collected at Port Said, Ismailia, and Suez at the rate of 2 centimes per net ton per day, not including the first 24 hours. 3. Towage. — When towage is compulsoiy a charge of 50 centimes per net ton, ^vith a maximum of 2,500 francs, is exacted of steamers whose engines assist, or are in readiness to assist, the tug; and, for steamers whose engines are unable to assist the tug and for sailmg vessels of over 400 tons gross register, the charge is 1 franc per net ton, with a maximum of 5,000 francs. \'\Tien towage is at the request of the vessel's captain the charges are 1 franc per net ton with a minimum of 1,200 francs for steamers whose engines are in readiness to assist the tug, and 2 francs per net ton with a minimum of 2,000 francs for vessels not desiring to assist the tug. For towing vessels one-half of the length of the canal, one-half of the foregoing towage dues are charged. The towage charges for sailing vessels of 400 gross tons or less, and for lighters, dredges, and other floating appliances are fixed by private agreement. For towing vessels to or from the roads, upon application, the charge is 10 centimes per net ton with a minimum of 25 francs; while the charge for greater distances is fixed by private agi-eement. If vessels require a tug to act as a tender, the charge is 1,200 francs per day for tugs of the first class and 800 francs per day for tugs of the second class. Ships towed or conveyed by approved private tugs belonging to the owners of the ships are required to pay 50 centimes per ton as towage dues. 4. Pilotage charges. — For entering or clearing Port Said pilotage is collected from vessels, not going through the canal, at the rate of 25 francs for steamers and 1 francs for sailing vessels by day, and at the rate of 50 francs and 20 francs respectively for steamers and sailing vessels by night. For vessels going tlirough the canal, there is no pilotage charge at Port Said by day; but hj night a charge of 25 francs is collected from steamers and 10 francs from sailing vessels. At Suez, no pUotage dues are charged. "When the pilot is kept on board beyond the time required for pUotage proper, a charge of 20 francs per day is due. " 5. Revenue from outside operations. — The canal company operates a waterworks plant for the filtration and distribution of water throughout the canal zone and at Port Said, Ismailia, and Suez. The company and the Egyptian Government are jointly interested in the improvement, renting, and sale of land in the canal zone, the profits of which are di\aded between the company and the Government. Some revenue, as is shown below in Table XI, is derived from lands held by the company as sole proprietor. The company receives an annuity paid by the Egyptian Government for the cession of the trolley line from Port Said to IsmaUia, and some interest is obtained from invested funds. Of the total gross receipts of the company in 1911 (138,038,224.74 francs), 134,763,053.95 francs were obtained from "transit and navigation dues," including steamship toUs, passenger toUs, sailing-vessel tolls, pilotage, towage, wharfage and berthing, lease of floating equipment, sundries, and lease of lands in the free zone of Port Said; wliile the income from all the remaining sources aggregated 3,275,170.79 francs. The receipts have reached this high level despite the frequent reduction in the rate of toUs. 100 Ipliil ilsg£p,i in ter zati ties by gs ngs, rat- in- III &^ if S|ll.s^ 11' p-ga g PANAJMA CANAL TRAFFIC AND TOLLS. KSooSSeC'-'oSMCOOtO-^OCTpi-HI-TOOiO SS2oo5ooO'*COOCDO»Ot~{MCMcO'-<0{N>0'^ ■^iooi'-HaiTjf5^-*'t--goo ^0»0000>-"0 [j^OSCOOO«OJC3s«"*OC«oBoeOOONt-tDTf»000 lO "3 --a^" lO "O lO lo' lO uf ■^' V" U3 «r CD «r «5" O Co' «D CO i-^ r^r-M-»»'0"*c>ico-^»0'Ocot~<:ooooooeo^»o^ cDtO'-'O'^^oioocpoi'^'^leiJtpciJecoodt^iooo aS5<»N^a)O0000C0'iM-^-'tNt-tOC0 ■^i£5C2gtpc»;*Q «Mi-"St^^O*00W00t-^00t~O»»'3C0— too yr-cg(OoocooS(65c>iio«D«5ecot^S«5o*0'«»'i^ M a-H»«oomi^oo'»ood"MNQC^'*">o«o«f«ororf2^ wS(O^S^tDiOM3r-'^^0QO»CQQ"^«e5CS0Q r~OtOO-^^iO»OeOU3eD«P'>t'«tOt--u3MM'oices.-^Various charges not directly connected with canal operation are made by the canal administration. For the use of the public loadmg and unloading docks at Hochdonn, Hohenhoern, Schafstedt, Oldcnbuettel, Luhnau, Westerroenfeld, Schestedt, Koenigsfoerde, Landwehr, Levensau, and the inner port of Holtenau, harbor dues are collected according to the following schedule: Pfennigs. For vessels of 6 to 10 cubic meters net capacity 10 For vessels of 11 to 30 cubic meters net capacity 20 For vessels of 31 to 50 cubic meters net capacity 40 For vessels of 51 to 75 cubic meters net capacity 60 For vessels of 76 to 100 cubic meters net capacity 80 For vessels of over 100 cubic meters net capacity 100 In case a vessel, without either discharging or loading cargo, remains at these harbors longer than one week, a ship's demurrage charge is collected for each month or fraction thereof, as follows: Marks. For vessels up to 50 cubic meters net capacity 1- 00 For vessels of 51 to 100 cubic meters net capacity 1-50 For vessels of over 100 cubic meters net capacity 2. 00 For the u.se of the docks at Holtenau, at the east entrance of the canal, port dues are collected as follows: A. 1. For vessels up to 12 cubic meters (inclusive) net capacity: . per vessel. On entering - ■ 10 On lea\-ing 10 If in ballast, or empty, or loaded vdih certain exempted articles Free. 2. For vessels of over 12 cubic meters and up to 170 cubic meters (inclusive) net capacity: Pfennigs per cubic meter, (a) When loaded— net capacity. On entering 1 On clearing 1 Pfennigs per eacli 2 cubic meters, (6) When in ballast or emptj — net capacity. On entering 1 On clearing 1 Pfeimigs 3. For vessels of over 170 cubic meters net capacity: ''mS^'^r," (a) When loaded— net capacity- On entering ■* On clearing ^ (6) When in ballast or empty — On entering - On clearing Pfermigs per cubic B. For lumber, rafts, etc.: m^te''. (a) Of oak timber and lumber 10 (6) Of other kinds of wood ^ PANAMA CANAL TRAFFIC AND TOLLS. 113 Certain exceptions are made to tliis general tariff. The tariff is printed in full, with exceptions, in Appendix V to this volume. For the public use of the inner harbor and wharves at Brunsbuettelkoog, the following charges, also subject to certain exceptions, as stated in Appendix V, are made: A. Harbor dues — For empty or bal- lasted vessels or vessels loaded mth bulk car- goes, or with other cargoes up to 2,000 kilo- grams, inclusive. II. For vessels loaded with other com- modities to extent of over 2,000 kilograms. 1. For all vessels in the Kiel Canal subject to dues: On entering, per cubic meter, net capacity On leaving, per cubic meter, net capacity Minimum for each vessel on entering and clearing . 2. For lumber rafts: Of oak timber and lumber, per cubic meter Of other woods 0.04 .04 1.00 B. Ship demurrage — 1. Ships which pay harbor dues, when using the harbor longer than one week, for the second week and each succeeding week, per cubic meter net 2. Ships which do not pay harbor dues, when voluntarily remaining in port longer than one day, for the second and each succeeding day, per cubic meter net 3. Barges (coal, etc.) remaining for some time, upon wish of the consignee, or which are assigned to a definite anchorage for a considerable time, shall pay such anchorage charges as the canal administration may impose. C. Wharfage dues — 1. For bulk cargoes for each 100 kilograms 2. For all other cargoes than those specified under 1 and 3 to 10, per each 100 kilograms 3. For firewood, per cord (cubic meter) 4. For lumber and timber, per cubic meter For a full vessel load, per cubic meter, net vessel capacity 5. For brick and roof tiles, per 1,000 6. For wagons of all kinds, per wagon 7. For horses, cattle, and cows, per animal 8. For colts, calves, sheep, goats, and hogs, per animal 9. For poultry and young pigs 10. For rough granite, per cubic meter, net \-essel capacity Minimum charge Marks. 0.02 .02 .02 .03 .045 .15 .15 .06 .70 .60 .30 .03 .03 .10 Small amounts are realized from the sale of gas by the canal gas plant, the sale of mineral water by the mineral-water plant, and from the operation of the laundry. Revenue is also derived from leases, rents, and police fines. IV. Receipts and Expenditures. Table V shows that the total receipts from canal operation — tolls and pilotage, towage, and other canal charges— rose from 971,992.50 marks m the fiscal year 1896 to 2,124,211.20 m 1900 and to 3,559,395 in. 1910, an increase of 266 per cent during the entire period and of 67 per cent during the last decade. It will be recalled that the net tonnage using the canal increased 312 per cent durmg the period 1896 to 1910 and 70.7 per cent during the last decade closing with 1910. The receipts fi-om towage charges rose 30 per cent during the period 1900 to 1910 and from toUs and pilotage 70 per cent, while the receipts from miscellaneous canal charges decreased 52 per cent. 114 PANAJ^IA CANAL TRAFFIC AND TOLLS. Table V KAISER WILHELM CANAL— CLASSIFICATION OF RECEIPTS AND EXPENDITURES (FISCAL YEARS). 1897 1900 1901 1902 A. RECEIPTS. 1. Canal tolls 2. Towage dues 4. Harbor dues. Marks. 620,735.09 43,823.35 1,616.62 706.76 Marks. 899,424.60 72,086.90 481.00 3,363.43 Marks. 1,171,594.50 89,275.60 S-6. Other receipts (rents, leases, fines, sales, etc.) 1,895.49 37,253.27 Marks. 1,477,713.30 3,669.60 2,954.76 Marks. 1,670,878.30 131,820.00 4,806.60 3,324.43 Marks. 1,975,834.60 142,954.10 5,422.50 4, 152. 14 Marks. 1,970,956.10 136,374.60 3,714.40 4,567.20 1,300,018.86 1,634,337.77 Kcceipts from canal operation (total receipts — harbor dues and "other receipts"). D. EXPENDITURES. Salaries, pensions, etc., of officials Wages of laborers (not employed on works of maintenance) 1,260,870.10 1,588,680.30 2,111,045.10 Taxes, rates, per diem, traveling ex- penses, sick and accident benefits. . Maintenance of buildings. Costs of dredging Materials for running the canal machinery and gas plant Maintenance of tugs Materials for running the tugs . Contingent ("unforeseen") expendi- tures 357,758.56 207,395.13 64,528.80 1,514.11 110,855.12 281,926.63 116,356.70 25,477.69 78, 763. 84 3,209.79 678,000.86 288,836.33 128,944.99 10,506.62 160,994.50 398,617.92 158,140.97 60,044.42 96,742.90 73,963.23 595,990.77 331,778.31 128, 106. 79 21,797.58 229,671.53 614,638.77 144,944.58 81,246.02 130,108.90 608,876.57 340,825.71 140,969.51 13,231.19 197,755.96 354,461.45 158,941.72 64,034.89 172, 733. 22 14,906.86 Total expenditures Net receipts (+), deficit (— ) . 2,278,283.25 -978,264.39 A. RECEIPTS. 1. Canal tolls 2. Towage dues. 3. Rents for tarill signals and other dues 4. Harbor dues. Receipts from canal operation (total receipts— harbor dues and "other receipts ") B. EXPENDITURES. Salaries, pensions, etc., of officials Wapes of laborers (not employed on works of maintenance) Taxes, rates, per diem, traveling ex- penses, sick and accident benefits . . . Maintenance of buildings Costs of dredging Maintenance of locks, bridges, and other structures 1903 Marks. 2,267,030.30 141,769.20 2,783.50 4,182.93 2,481,682.36 Materials for running the canal machinery and gas plant Maintenance of tugs Materials for running the tugs Contingent (''unforeseen*') expendi- Total expenditures Net receipts (+), deficit (— ). 742,263.11 370,949.67 176,524.46 16,843.00 249,059.55 186,390.91 80,945.47 246,491.94 1904 Marks. 2,420,798.78 146,604.90 3,725.80 4,092.02 186,399.97 21,911.29 233,250.88 177,291.25 76, 145. 78 194,513.56 2,448,097.-54 1905 Marks. 2,651,880.50 149,925.30 4,051.75 3,159.01 818,851.89 410,336.27 196,063.74 19,523.51 244,071.35 385, 701. 98 190,475.04 96,845.82 181,262.40 1906 Marks. 2,707,873.10 150,029.60 3,378.60 4,581.55 203, 472. 54 19,403.06 267,453.41 380,511.74 207,598.52 104,509.18 194, 448. 72 -1-247,982.33 641,016.71 352,965.86 147,860.55 20,651.57 196,607.37 337,163.36 158,992.88 76,917.32 231,728.75 4,6.32.96 684,444.99 355,830.90 163,741.12 29, 183. 15 198,967.71 373,233.76 176,309.45 91,976.57 388, 745. 79 27,295.11 699,751.52 354,237.45 163,122.35 20,301.57 174,821.20 364,729.80 183,435.40 83,452.61 422,220.15 5,218.86 1907 Marks. 2,937,973.40 166,160.80 2,594.20 4,940.76 881,676.65 435, 162. 40 209,617.77 16,946.24 252,044.55 209,995.51 114,173.45 245,723.56 Marks. 2,690,894.40 153,114.30 2,098.30 6,662.49 913,420.23 483,461.29 230,093.26 20, 158. 53 247,374.29 215,641.34 %,601.21 250,860.58 2,781,881.89 1 2,808,107.71 -1-128,965.47 1909 Marks. 2,961,567.00 183,672.70 2,515.50 10,257.54 1,052,122.18 475,358.63 213, 186. 33 14,893.95 211,006.74 216,514.49 116,202.21 233,144.72 16,907.71 2,880,214.13 Marks. 2,080,723.10 133, 107. 40 3,409.60 5,736.11 2,281,764.27 730,510.20 363,504.30 164,311.81 20,006.59 260,039.20 357,123.51 193,423.22 55,817.63 339,613.85 23,000.48 2,507,350.79 -225,686.52 1910 Marks. 3,370,835.60 185,991.60 2,567.90 12, 7%. 37 1,067,152.86 490,488.39 225,390.16 15,869.55 159,651.37 219,846.65 105,522.98 233,584.56 PANAMA CANAL TRAFFIC AND TOLLS. 115 The entire revenue of the canal administration from all sources — canal and otherwise — increased from 1,016,855 marks in the fiscal year 1896 to 2,174,641 m 1900 and to 3,684,572 m 1910, a gain of 262 per cent during the entire period and of 69 per cent during the last decade. The aggregate revenue for the fiscal year 1910 included the following items of income: Marks. Canal tolls and pilotage 3_ 370, 835. 60 Towage 185, 991. 50 Other canal receipts 2 567. 90 Harbor dues 12 796. 37 Receipts from sales 7 066. 72 Leases, rents, fines, etc 105,313. 84 3, 684, 571. 93 The expenditures of the canal increased from 1,954,793 marks in the fiscal year 1896 to 2,489,728 in 1900 and to 2,963,812 in 1910, an increase of 51.6 per cent during the period and 19 per cent during the last decade. It was not untn 1903 that the annual deficit was changed to a profit. Since that date there has been a growing surplus of revenues over operatmg expenses. Table VI itemizes the expenditures for the fiscal year 1910. There were 1,754,306.41 marks expended for personal services and 1,209,505.28 for materials and services not personal. Table VI.— KAISER WILHELM CANAL— EXPENDITURES DURING FISCAL YEAR 1910. Item. For personal services: 1. Salaries to statutory employees; At headquarters Construction department Operating department Allowance for quarters 2. Wages to workmen, and gratuities tor support ot workmen and their survivors. 3. Costs of sick, invalid, and accident insurance of workmen 4. Pensions 5. Other expenses For materials and services not personal: 1. Dredging 2. Maintenance of canal structures 3. Coal and other supplies used in operating canal machinery and gas plant 4. Maintenance of pilot tugs, towing tugs, lock boats, and service boats 5. Supplies for operating floating equipment and hire of outside towboats 6. Other expenses i, 822. 50 1,013.16 1,221.13 i, 944. 78 1,488.39 i. 231. 93 :,121.02 ;, 463. 50 1,551.37 1,652.40 1,846.65 i, 522. 98 1,584.56 1.346.32 Total expenses. Total receipts. . Net receipts 1,209,505.28 12.963,811.69 3,684,571.93 720,760.24 » Not including 61.311.74 marks expended as "nonrecurring" charges, for enlargement of the canal pilot house in Nuebbel, for the workingmen's quarters along the line of the canal, and for damages to the firm of Gegan & Wiegand, for earthwork in original construction oi the canal. Expenditures may be reclassified so as to bring out the total cost of certain services and materials. The cost of pilotage in 1910 was 435.590.22 marks, ferriage 154,671.44, telegrams and telephones 39,017;05, lighting of line 92,079.30, switch operation 59.321,59, dockyard 269,121.14, gas plant 8,231.59, emergency locking pontoons 1,707.90, accident damages 18,552.63, care of sick 55,742.22, and total supply of coal and briquets 849,556. The towage service is still very expensive, its total cost in 1910 being 623,604.96 marks, while the receipts from towage charges amounted to but 185,991.50 marks. 116 PANMIA CANAL TRAFFIC AND TOLLS. Since 1903 expenses have increased less rapidly than receipts, and the canal has been operated at a small profit amounting, in 1910, to 720,760 marks. After 1914, when the improvements now in progress have been completed, traffic will no longer be retarded by inadequate canal dimensions, and the annual surplus should increase. The net receipts are not sufficient to pay interest on the investment. No efTort is made to levy tolls that will provide for interest charges and for the amortization of the investment of 1.56,000,000 marks ($37,128,000). The Kiel Canal, unhke the Panama or Suez Canals, does not connect regions of vast trafiic, nor does it greatly shorten ocean routes. The sea routes between the Baltic Sea and the leading ports west of the canal are but 83.8 to 428.8 miles longer than the routes via the canal. The tolls are low because the traffic does not warrant heavier charges. For the miUtary services of the canal no charges are made. The canal has fully justified its construction. Indeed, it has been of such naval and commercial value to Germany that the Government is now spending 233,000,000 marks (S55,454,000), much more than the amount of the original investment, in doubling the size and capacity of the waterway. [Note. — For statute of German Empire concerning charges for the use of the Kaiser Wilhelm Canal see Appendix III; for schedule of tolls and other charges see Appendix IV; and for schedule of port charges and demurrage see Appendix V. For operating regulations of the Kaiser Wilhelm Canal see Appendix XX to volume on Measurement of Vessels.] CHAPTER VII. THE MANCHESTER CANAL: ITS HISTORY, FINANCES, AND TRAFFIC. 117 CHAPTER VII. THE MANCHESTEE CANAI: ITS HISTOEY, FINANCES, AND TEAFFIC. 1. Physical Featl-ees. Years of agitation preceded the construction of the Manchester Ship Canal. The project was a large one, and there was active opposition by the railways and by the industrial and commercial districts with which Manchester competes. Three hundred and twenty-six petitions were presented in Parhament before the authorizing act of 1885 was obtained. Construction was begun in November, 1887, at which time it was estimated that the total cost would be £8,262,936. The waterway was opened for traffic January 1, 1894, after the expenditure of £14,860,000. The total investment on capital account up to December 31, 1911, was £16,838,957, it having been found necessary to enlarge and deepen the canal and to add docks, warehouses, and other facihties. Of the total original cost up to 1894, £11,750,000 went toward construction expenses, £1,330,000 toward the purchase of land and for compensation, and £1,780,000 for the purchase of Bridgewater Canal property. The canal is 35^ miles long and extends from Eastham, on the south side of the River Mersey, about 6 miles from Liverpool, to Manchester. Its original depth of 26 feet has been increased to 28 feet. The bottom width is 120 feet; but at Weaver Outfall the width is ISO feet, at Runcorn Bend 150 feet, from Barton Aqueduct to Manchester 170 feet, and from Latchford Locks to Partington Coal Basin, for a distance of about 1 mile, 90 feet. The maximum dimensions of vessels permitted to use the canal are 550-foot length, 61-foot beam, 70-foot height, and 27-foot draft. A map of the canal is presented in Plate 7 in the pocket at the end of this volume. To overcome the difference of 58 feet 6 inches in level between Eastham and Manchester, there are five sets of locks, the dimensions of which are as follows: SmaU. Interme- t « diate. j Large. Rise. Distance from Eastham Locks. Eastham (tidal lock) Feet. 150 by 30 Feet. 350 by 50 350 by 45 350 by 45 350 by 45 350 by 45 Feet. 600 by 80 600 by 65 600 by 65 600 by 65 600 by 65 Ft. in. MiUi. 14 6 16 15 13 21 281 30i 333 The Manchester Canal has excellent connections with barge canals and with railroads, and Manchester hag been equipped with efficient port facihties. The Manchester Dock Railways, owned by the canal company, include SO miles of tracks on and about the Manchester docks and a total mileage, at docks and points along the canal, of 137 miles. The Manchester docks are connected ^vith the London & North Western Railway, the Lancashire & Yorkshire, the Great Northern, the Midland, the Great Central, and the Cheshire Railways. The canal and rail hues make connections at various points between Manchester and Eastham. The canal company quotes shippers through freight rates from aboard the ship at Manchester to interior towns and from interior to%vns to the ship at Manchester, the charges quoted including the freight rates and all terminal and transfer charges. 34998°— 12 9 . 119 120 PANAMA CANAL TRAFFIC AND TOLLS. The Manchester Canal Co. owns the Bridgewater Canal and makes connections with 13 other barge canals — the Leeds & Liverpool, Bolton & Bury, Rochdale, Ashton, Huddersfield, Stockport, Macclesfield, Calder & Hebble, Peak Forest, Aire & Calder, Trent & Mersey, Weaver Navigation, and Shropshire Union Canal. See Plate 8, in pocket. Direct connection is made by the Manchester Canal vfith numerous industrial establishments located on or near the waterway. The company ovms the Trafford Park estate near Manchester, and from this estate, 1,183 acres in extent, sites for industrial plants have been sold to a large number of firms whose factories are served both by the canal and by rail lines. The total surplus estate of the canal company includes 2,500 acres. The Manchester docks estate has an area of 406J acres, with a water area of 120 acres, and with quays 286* acres in area and 6^ miles in length. Eight large docks have been constructed and another planned, with dimensions as follows: Feet. No. 1 V 700 by 120 No. 2 600 by 150 No. 3 600 by 150 No. 4 560 by 150 No. 5> 980 by 750 I Not yet constructed. Feet. No. 6 850 by 225 No. 7 1,160 by 225 No. 8 1,340 by 250 No. 9 2,700 by 250 Dock No. 9, recently constructed, has a water depth of 28 feet, a water area of 151 acres, and sheds, quays, tracks, etc., covering 128* acres. Five transit sheds, with a total floor space of 22 acres, are located on the south side of this dock, and a large grain elevator is to be erected at the east end. The docks at the port of Manchester are equipped with 53 hydraulic, 61 steam, and 93 electric cranes capable of lifting from 1 to 10 tons each; with one 30-ton steam crane, a pontoon shears capable of lifting 250- ton weights, 6 floating pontoons, 46 locomotives, 37 transit sheds, one of which is a cold-storage shed, and 13 warehouses fitted with improved appliances. At Trafford Park there are four additional warehouses. All wharves are equipped with electric or steam capstans. There is a large grain elevator of 40,000 tons storage capacity, and another of the same size is to be constructed. Two large cattle wharves are provided for the coastwise and foreign cattle trade. AU wharves have rail tracks and rail connections, so that freight may be handled directly from cars to steamers and from vessels or sheds and warehouses to railroad cars. At various points between Manchester and Eastham the canal company provides dock and wharf facilities, and there are private facilities available at numerous places, as, for example, the Stuart Wharf for timber, cattle, etc.; the wharves of the Manchester Dry Docks Co. (Ltd.), of the Union Cold Storage Co. (Ltd.), and of various coal terminals. Many firms have private wharves. See Plate 9, in pocket. II. The Capital Invested in the Manchester Canal. The original cost of the Manchester Canal having reached £14,860,000, instead of £8,262,936, as had been estimated, the difference between the actual and estimated cost became so great that the company had much trouble in financing the project. The original capital was mainly subscribed locally by the business interests of the Manchester district, and later appeals to those interests failed to secure the additional funds required. The situation of the company became so acute that the corporation of Manchester finally made a loan of £5,000,000 and acquired control of the management of the canal company. Eleven of the 21 directors of the canal company are appointed by the city and 10 are selected by the shareholders. The total authorized capital of the company December 31, 1911, was as follows: Ordinary shares, £10 each X4, 000, 000 Perpetual 5 per cent preference sliares, £10 each 4, 000, 000 Manchester Ship Canal Corporation, 3^ per cent preference stock held by corporation of Manchester 1, OGl, 230 Perpetual 3i per cent first mortgage debentures 1, 359, 000 4 per cent first mortgage debentures (terminable 1914) 453, 000 4 per cent second mortgage debentures (terminable 1914) 600, 000 Debenture stock under act of 1904 2, 000, 000 New mortgage debentures (held by corporation of Manchester) 5, 000, 000 Mortgage of surplus lands 100, 000 Total £18,573,230 PANAMA CANAL TEAFFIC AND TOLLS. 121 The Manchester Ship Canal (finance) act of 1904 (sec. 12) provides that "all profits of the company after payment of the dividends on corporation preference shares and corporation preference stock shall, notwith- standing anything contained in any of the recited acts or other acts relating to the company, be divisable as follows: Two-thirds to the holders of the preference shares issued in pursuance of the powers of the acts of 1885 and 1887; one third to the ordinary shareholders. Provided that when the said two-thirds due to the holders of preference shares issued in pursuance of the powers of the acts of 1885 and 1887 shall in any year amount to £200,000 aU the remaining profits of that year shall be payable to the ordinary shareholders." The net income of the company is applied to the several accoimts in the following order: Interest on first and second debentures, interest on debenture stock, interest on mortgage of surplus lands, rent of No. 8 shed, rent of No. 9 dock and transit shed, and the balance to the city of Manchester on account of interest on its £5,000,000 loan. Until recently the company's earnings have been insufficient to pay the entire interest due on the city's loan. The holders of ordinary and preference shares (common and preferred stock) have as yet received no dividends on their investment. The total expenditure on capital account to December 31, 1911, amounted to £16,838,957, or shghtly less than $82,000,000, and was distributed as follows: 1. Construction of works (including plant and equipment) £10, 992, 463 2. Bridgewater canals 1, 268, 826 3. Land (purchase and compensation) 1, 504, 060 4. Engineering and surveying 196, 232 5. Interest on share and loan capital 1, 170, 734 6. Parliamentary expenses 197, 019 .7. General expenses 448, 393 8. Interest on debentures discharged by the issue of a like amount of preference stock to the corporation of Manchester 1,061, 230 Total capital expenditures 16, 838, 957 Total capital receipts 17, 065, 638 Balance 226, 681 As item S in the preceding table indicates, the canal company has not been able, until recently, to pay all the interest due on the debentures held by the city of Manchester. The interest deficit has been paid by issuing preference stock to the corporation of Manchester. This preferred stock is entitled to 3^ per cent dividends when the earnings warrant. It is to be distinguished from the debenture stock which resembles debenture bonds on which interest is regularly paid after the interest has been paid on the first and second mortgage debentures. III. Traffic of Manchester Ship Canal. Though the traffic of the Manchester Ship Canal has been less than was estimated, there has been a steady increase. Table No. I shows that in 1911, 5,217,812 tons of freight used the canal, as compared with 925,659 tons in 1894, the first year of operation. The gain during the decade 1900 to 1910 was 61.3 per cent, although the liigh figure of 1907, o%ving to the subsequent commercial depression, had not yet been reached in 1910. The increase during the decade ending in 1911 was 77.3 per cent, more freight being handled in that year than during any previous year in the history of the canal. Of the total traffic in 1911, 4,894,670 tons consisted of sea-borne traffic, this being an increase of 82.3 per cent over the year 1901. The barge traffic of the canal in 1911 totaled 323,142 tons, and was less than was carried during the later nineties. In view of the connection of the Manchester Canal with as many as 14 barge canals, the barge traffic is surprisingly small. The total number of vessels entering the canal in 1911 was 6,409 mth a net register tonnage of 2,869,641. Since the opening of the canal the annual number of vessels entering has increased 40.8 per cent, and the net tonnage 298.3 pier cent. During the last decade the number of vessels entering increased 27.9 per cent, and the net tonnage 97.2 per cent. The Royal Commission on Canals and Waterways (Vol. VII, p. 50) after reviewing the traffic from 1898 to 1905 concludes that "these figures show a rapid and satisfactory progress, and prove what can be done by energy and courage, and with a large expenditure of capital, in favorable cir- cumstances, to create trade." 122 PANAMA CANAL TRAFFIC AND TOLLS. Table I.— NUMBER AND NET TONNAGE OF VESSELS (INCLUDING REPEATED VOYAGES) USING THE MANCHESTER SHIP CANAL, AND TRAFFIC, SEA BORNE, BARGE AND TOTAL, JAN. 1, 1894 TO JAN. ], 1912. Years. Manchester (exclud- ing Runcorn). Runcorn. Total. Sea-borne traffic. Barge traffic. Total traffic carried. Vessels. Tons. Vessels. Tons. Vessels. Tons. Cargo, tons. Cargo, tons. Cargo, tons. 1,315 1,752 2,154 2,212 2,836 2,705 2,900 2,866 3,167 3,077 3,195 3,454 3,497 3,679 3,486 3,517 3,699 3,784 408,364 589, 159 787,218 839,167 1,028,188 1,135,074 1,230,784 1,214,617 1,417,155 1,526,491 1,506,260 1,647,774 1,767,017 1,942,228 1,823,294 1,818,626 1,918,515 2,452,647 3,236 3,009 3,002 2,920 2,973 2,477 2,462 2,142 2,383 2,205 2,570 2,588 2,507 2,683 2,872 2,781 2,765 2,625 311,791 290,045 307,619 300,566 322,240 260,627 261,536 240,382 289,834 275,707 296, 153 314,373 305,182 312,657 343,723 306, 175 343,301 416,994 4,551 4,761 5,156 5,132 5,809 5,182 5,362 5,008 5,550 5,282 5,765 6,042 6,004 6,362 6,358 6,298 6,464 6,409 720,425 879,204 1,094,837 1,13^733 1,350,428 1,395,702 1,492,320 1,454,999 1,706,989 1,802,198 1,802,413 1,962,147 2,072,199 2,254,885 2,167,017 2,124,801 2.261,816 2,869,641 686,158 1,087,443 1,509,658 1,700,479 2,218,005 2,429,168 2,784,843 2,684,833 3,137,348 3,654,636 3,618,004 3,993,110 4,441,241 4,927,784 4,317,965 4,290,765 4,618,070 4,894,670 239,501 271,432 316,579 365,336 377,580 348,940 275,673 257,560 280,711 290,259 299,574 260,244 259,683 282,975 264,531 272,636 319,561 323, 142 925,659 1,358,875 1,826,237 2,065,815 2,505,585 2,778,108 3,060,516 2,942,393 3,418,059 1903 3,846,895 1904 3, 917, .578 1905 . . . 4,253,354 1906.. 4,700,924 5,210,759 1908 4; 582, 496 4,563,401 1910 4,937,631 5,217,812 The officials of the canal company have, however, repeatedly expressed dissatisfaction with the growth of traffic which so far as facilities are concerned might have been more rapid. The chairman of the board of directors at the general meeting of the company on February 17, 1910, spoke as follows: If more patriotism could somehow be infused into the mercantile and manufacturing community of this district we should soon have a large expansion of traffic. What I mean with regard to imbuing the mercantile and manufacturing community with local patriotism is this: That they should be determined in every case to back up their own port. If shipowners were made to believe that when they take the risk of running lines of steamers to and from Manchester they would have the wholehearted sympathy and support of the whole mercantile community we should go ahead very much faster. Self-interest is the dominant factor in business, and it is on that ground that I mainly appeal to the mercantile and manufacturing community. It is sheer folly to send their goods by the rival routes merely because they, for the time being, in competition with the Ship Canal, come down to the Manchester Ship Canal cost. But I appeal also on higher grounds. Siu'ely the men of Manchester are not going to incur the stigma of being unable to put the finishing hand to their great work. They have attained celebrity all over the world for converting their inland town into one of the great seaports of the Kingdom. Are they going to clinch their effort by showing the whole world they are determined that their own port, and not rival ports, shall have every ton of traffic they can influence? Manchester men are generally believed to be too farseeing and thorough to do things by halves; and the eerioas question for our undertaking is "are they going to live up to their reputation?" The chairman's words point to the chief traffic difficulty of the canal. From the very beginning it has had to compete with the railroads which previously carried nearly all the freight to and from the Manchester district. During the promotion of the canal their policy was to block its construction; and, failing in this, their policy has been to cut their rates to the basis of canal charges in order to hold as much of the traffic as possible and to compel the canal company to operate as a losing venture to its stockholders. The cliief competition centers about the traffic to and from the points arountl Manchester not directly on the canal. Upon such traffic, the canal charges, plus railroad rates, plus handling charges, must compete with the through railroad rate to Liverpool and the handling charges at that terminal. Shipments directly to and from Manchester are sometimes handled by rail from and to coast ports, when the railways are able to provide shippers and consignees with sidings and to offer them favorable through rates. PANAMA CANAL TRAFFIC AND TOLLS. 123 This competition with rail carriers indicates, however, that the commercial value of the canal is not fully measured by the extent of its traffic. The favorable railroad rates to the coast ports are directly due to the ship canal, and much of the industrial growth of the Manchester district is directly due to the canal. The Royal Commission on Canals and Waterways (Vol. VII, p. 69) asserts that "it is true that this undertaking has not as yet proved sufficiently reuumerative to enable dividends to be paid on ordinary share capital. It has, how- ever, fulfilled the object of greatly increasing the commercial prosperity of Manchester. The trade of Man- chester was, in the period immediately before the construction of the canal, in a depressed condition. Works were being closed, there was no extension, and the value of property was going dowTi. Since the canal was opened there has been a large increase in the net annual ratable value in Manchester, and there are other signs of increased wealth and prosperity." The report also states (p. 164) "this benefit or indirect return has already been sufficient abundantly to justify the great outlay on the canal. Moreover, the net revenue shows a steady increase, and provides a direct return on a growing proportion of the capital." The inland city, Manchester, has not only maintained itself as an industrial center, but has become the fourth port in England. The population of Manchester, not including the increase due to the extension of its area to surrounding towns, rose from 644,873 in 1901 to 714,427 in 1910, or 10.79 per cent. The population of Liverpool meanwhile increased from 704,134 to 746,566, or 6.03 per cent. The shipping of Manchester (entrances and clear- ances) increased from 3,001,000 tons in 1900 to 4,564,000 in 1910, or 52 per cent; those of Liverpool grew from 18,477,000 to 21,828,000, or 18.1 per cent; thoseof Hull from 6,732,000 to 9,885,000, or 46.8 per cent, and those of London from 30,500,000 to 36,030,000, 18.1 per cent. The shipping using the port of Manchester consists mainly of freight vessels, as the large ocean-going passenger ships dock at coast ports. Nevertheless the increase during the decade 1900-1910, of 65.8 per cent in the seaborne traffic of the Manchester Ship Canal and of 55.8 per cent in the net tonnage of vessels annually entering and clearing the port of Manchester through the canal, does not compare unfavorably with the gain in the shipping at the other great ports of Great Britain. It will be recalled that the traffic of the Suez Canal during that decade increased 70.2 per cent. It is significant that during the decade ending in 1911 the net tonnage of shipping using the Suez Canal increased 69.3 per cent, while during the same period the total freight traffic of the Manchester Canal increased 77.3 per cent, and its seaborne traffic made a gain of 82.3 per cent. IV. Manchester Canal Tolls and Other Charges. The receipts of the Manchester Canal Co. are derived from several sources : 1. From ship dues. — AH vessels using the canal are required to pay "ship dues." These charges are on the net register tonnage of the vessels and upon any space occupied by tleck cargo as defined in the merchant shipping acts of Great Britain. The "dues" payable by vessels vary', first, according to the section of the world to or from which the ship using the canal is bound; and, second, according to the section of the canal in which the vessels load or discharge cargo. Vessels bound to and from distant points are obliged to pay higher dues than those entering and clearing the canal ports from or to near-by countries. The canal is divided into tliree sections, section A including the canal below Runcorn Swing Bridge, section B the canal as far as Latchford Locks, and section C the canal as far as the Manchester Docks. Vessels passing through the entire length of the canal to and from Manchester are charged lower dues than are imposed on ships that load or discharge at ports in sections A or B, the schedule of charges being intended to encourage the trade of Manchester and the utiliza- tion of the extensive dock and warehouse facilities there provided. 124 PANAMA CANAL TRAFFIC AND TOLLS. The schedule of "ship dues" is as follows: Schedule of ship dues per net register ton, payable on vessels using the Manchester Ship Canal. Upon vessels trading between— Eastham or any of the other River Mersey Estuary Locks and Ruucom Swing Bridge. Eastham or any of the other River Mersey Estuary Locks and places be- yond Runcorn Swing Bridge up to the entrance to Latch ford Locks. Eastham or any Qf the other River Mersey Estuary Loc :s and Latchford Locks (includ- ing locks) and places above up to Man- chester Docks. Period a ves- sel may re- canal, after which rent will be charged. Section A. Section B. Section C. Between St. David's Head and the Mull of Galloway, including the Isle ol Man and the island of s. d. 2 4 5 9 1 1 3 s. d. 2 3 4 7 9 10 .■!. d. 2 2 2 4 6 7{ Days. Between the Mull of Oalloway and Duncan's Bay ITead, including the Orkney Isles and all the Islands on the western coast of Scotland: and between St. David's Head and the Land's l':nd, including the SciUy Islands and the east coast of Ireland from Cape Clear to MallinR Head All parte of the east and southern coasts of Great Britain between Duncan's Bay Head and the Land's End, includins; the islands of Shetland; and all parts of the west coast of Ireland from 14 14 All parts of Europe to the northward of Cape Finisterre, and to the westward of the North Cape, and without the Cattegat and Baltic Sea, and including the islands of Guernsey, Jersey, Aldemcy, 28 All parts within the Caltegat and Baltic, including the whole of Sweden, the White Sea, and all parts to the eastward of the North Cape; all parts in Europe to the southward of Cape Finisterre without the Mediterranean, Greenland, Davis Straits, Canaries, Western Islands, Madeira, and 28 All parts of the east coast of North America, Newfoundland, the West Indies, the east coast of Sonth America to the northward of Rio La Plata, inclusive; all parts of the west coast of Africa, and islands to the northward of the Cape of Good Hope, and all parts within the Mediterranean, includ- ing Giliraltar, the Adriatic, the Black Sea and Archipelaizo, the islands of St. Helena, Ascension, and the Cape de Verde Islands; and all parts in South America to the southward ol the Rio La Plata; in the Pacific Ocean; and in Africa and Asia to the eastward of the Cape of Good Hope . . , . 56 Vessels loading and dischai^ing cargoes consisting exclusively of certain kinds of commodities are charged "differential ship dues," equal to one half the regular rates. Likewise, vessels entering in ballast and loading certain specified commodities, or entering with certain articles and leaving in ballast, are charged the differential ship dues. Small steamers, yachts, launches, and all noncargo-carrying craft are charged "lockage tolls" in lieu of ship dues at the rate of 5s. per lock each way and a minimum lockage charge of £1 Is. Vessels remaining in the canal longer than the maximum free time allowed are required to pay 1 penny per net ton per week, and double this in case they remain longer than six months. The complete Schedule of Ship Dues, together with the rules explaining them, is reproduced in Appendix VI. 2. Towage charges. — In case towage is necessary the company furnishes tugs upon request, the charges for towage being according to the following schedule: Towage charges per tug and conditions for use of the Manchester Canal Co.'s tugs assisting steamers and towing sail vessels within the ship canal For steamers: £ 1. From Eastham locks or any point in section A or B direct to any point in section C, or vice versa 7 Note. — Steamers stopping at Partington to take on coal on returning from Manchester to Eastham locks will not be con- sidered as breaking the direct journey. 2. From Eastham locks direct to any point in section A or B, or vice versa; also from one point to another in these sections. .1 3. From Manchester docks direct to any point in section C, or ■vice versa; also from one point to another in this section ) 4. Waiting at Eastham locks, per tide 2 a. d 10 10 10 PANAMA CANAL TRAFFIC AND TOLLS. 125 Towage cluxrges per tug and conditions for use of the Manchester Canal Co.'s tugs assisting steamers, etc. — -Contimied. EXCEPTIONS. For steamers: £ s. a. 5. From Manchester docks direct to any point below Mode Wheel locks and above Barton Aqueduct, or vice versa 2 10 6. From one point direct to another between Mode ^Tieel locks and Barton Aqueduct ) 7. From one point direct to another in Manchester docks I 2 8. From one point direct to another within the canal at Ellesmere Port, or at Runcorn | 9. From Eastham locks to Dolphins within the canal at Eastham, or vice versa 10. From one tip to another at Partington coal basin Note. — As regards services Nos. 6, 7, 8, 9, and 10, when tugs are occupied for more than one hour, an additional charge of 10s. per hour or part of an hour per tug will be made, the service to be calculated from the time the tug is in attendance, as ordered, until the time the ser\'ice is finished. For sailing vessels: From Eastham locks direct to any point in section A, B, or C in the canal, or vice versa, or when proceeding from one point direct to another in the canal, or in the Manchester docks: If light, 2d. per net registered ton. If loaded, 3d. per ton upon the weight of the cargo, with a minimum as when light. These rates will operate until the higher scale under the preceding table for steamers is reached by the charges payable on the tonnage of the vessel, if light, or on the weight of cargo on board, if loaded, when the charges as per the said table will apply. Detention of tugs attending steamers and sailing vessels. Per hour or part of an hour, lOs. per tug. Note. — If tug assistance or towage services other than those named above are required, the charges will be by special arrangement. 3. Tolls on passengers. — The passenger traffic on the Manchester Canal is very Ught, because Manchester is an inland port; but tolls are collected on all passengers according to the following schedule: Manchester Canal tolls on passengers. When carried between Manchester docks and Eastham, Is. each single journey. 'UTien carried between Latchford locks and Eastham, 6d. each single journey. When carried between places not stated above, Jd. per mile per passenger. Maximum charge (single journey). Is. per passenger. Minimum charge (single journey), Id. per passenger. 4. Pilotage within the canal is not compulsory; but when desired, the company, being the official pilotage authority for the canal, furnishes licensed pilots at the following rates of charges: Manchester Canal pilotage charges. £ 3. d. Vessels up to 300 tons, net register 10 Vessels over 300 tons and up to 600, net register 1 Vessels over 600 tons and up to 1,200, net register 1 10 Vessels over l,200tons, net register 2 And in addition thereto a sum at the rate of Is. per mile, or portion of a mile, for the distance navigated when loaded, and 6d. per mile, or portion of a mile, when in ballast. Vessels moving from one point to another on the canal mthout leaving or entering the waterway pay one- half of the above pilotage charges and the full mileage rate of Is. per mile. Additional pilotage charges are collected for extra service or for the extra time pilots may be held by the detention of vessels. 5. Loading and unloading charges. — The canal company has the exclusive right to supply the labor required for loading and discharging vessels; but arrangements may be made by the master of the vessel with the canal company to allow the vessel's crew to load and discharge cargo under the regulations prescribed by the canal company. If the canal company supplies the labor, it is entitled to charge for such services " the actual cost of labor, a proportionate cost of the wages of foremen, of office expenses and material, and in addition a sum of 10 per cent on such amounts, and also a premium to cover liabilities for accidents and losses which until further notice will be after the rate of 5 per cent." If the work is performed by the company at cost plus 10 per cent, the vessel owner must reimburse the company for any damages payable for accident; if the work is done for cost plus 15 per cent, the company assumes all risks that may be incurred under the workmen's compensation act. 126 PANAMA CANAL TRAFFIC AND TOLLS, For the convenience of vessel owners fixed schedules of loading and unloading charges are quoted by the company. General commodities are grouped into seven classes with charges as follows: Manchester Canal rates for loading and discharging in ordinary working hours. Class of traffic. At per ton actual gross weight of 2,240 pounds. Dis- charging. Loading and trim- ming or stowing. s. 1 1 1 1 1 1 (') d. 7i 8 9 3 3 6 s. i. U 11 Class No. 3: 1 1 3 Class No. 4: 1 3 1 6 Class No. 5: 1 6 1 9 1 6 (') ' By arrangement. There are special schedules of loading and unloading charges for coal, lumber and wood products, grain, pig iron, salt, and pitch. Additional charges are also made for overtime, and for the issue of coal weight certifi- cates, for the use of hfts and cranes, and for whatever extra services may be performed. 6. Quayporter age charges. — The canal company has exclusive control of thehandling of freight on the wharves, and it publishes a fixed schedule of "quay porterage charges" payable by merchants. Appendix VI to this volume, which contains the entire "Schedule of rates of toll and wharfage payable by merchants," gives in detail the wharfage regulations and the porterage charges applicable to the various commodities hancUed on tlie wharves. January 1, 1912, because of increased labor costs, all the porterage charges were increased 10 per cent. No porterage charges are collected when freight is discharged from or to a vessel directly to or from freight cars, trucks, or barges. Such direct handling of freight is encouraged, but is not guaranteed by the company. 7. Tolls on cargo. — In addition to the ship dues, etc., levied on the vessel, the Manchester Ship Canal Co. charges tolls on the cargo payable by the consignees and shippers. These tolls upon commodities yield most of the company's revenues, the "ship dues" being made hght to induce vessels to come to Manchester. The tolls upon cargo shipped or received at points along the Manchester Canal are fixed with reference to two con- ditions: (I) The canal, as has been explained, is divided into three sections, and the toUs on cargo are chfferent for each of these sections. (2) Different commodities are charged different tolls. The canal company publishes a schedule of toUs on live stock, one for minerals and merchandise, and another applicable to minerals and merchandise not provided for in the previous schedule. The rates in the last of these schedules are based on the board of trade classification of minerals and merchandise and upon the general railway freight classification, the tolls varying according to the class of freight and the section of the canal in which the goods are loaded or discharged. PANMIA CANAL TRAFFIC AND TOLLS. 127 General schedule (ver ton) of Manchester Canal tolls applicable to minerals and merchandise not provided for in other schedules. Between Eastham and— Description of merchandise. Runcom. Latchford. Manchester A. B. C. Class A . s. d. 6 1 1 6 2 2 6 3 3 6 4 5. d. 9 1 6 2 3 3 3 9 4 6 5 3 6 s. d. 1 2 3 4 5 6 7 8 The tolls on live stock and on specified minerals and other commochties a/e stated in Appendix \1. 8. Miscellaneous charges. — There are various miscellaneous sources from which the canal company obtains revenue. A " transshipment charge " is collected when goods are transshipped from one vessel to another in com- pany cars or barges. Wlien imported goods are warehoused or yarded by the company at the docks, a "ware- housing charge" is collected in addition to the quay porterage charge; but if the company allows goods to remain where landed on the quay, the warehousing rate is substituted for the quay porterage rate. There is a special schedule for the storage of imported goods in the bonded warehouse, and another for the storage of dutiable imported goods in the "customs transit depot," wliile such goods remain at the docks. If the company is required to perform the service of transportation, it collects a "haulage charge" for use of its cars and dock railways, and for the haulage of the cars. If such cars are detained longer than 24 hours after arrival either in loading or unloading a "demurrage charge" is collected. Goods for export may be left at the dock at the owner's risk for one month free of charge, after which the company may store them and coUect for the extra services performed, as well as for storage in the warehouses.' Certain capital receipts are also secured from the sale of land and plants; about £2,200 is annually obtained for supplying water to vessels; and small amounts from renting lights to shipowners, who do not themselves provide lights and attendance. V. Receipts and Expenses of the Manchester Canal Co. The total gross receipts of the Manchester Canal, not including the income of the Bridgewater canals, as shown in Table III, have increased from £97,901 in 1894 to £580,841 m 1911. The mcrease during the decade 1901 to 1911 was 87.6 per cent, being in excess of the rate of growth in the volume of sea-borne traffic. Table III.— REVENUES AND EXPENSES OF THE MANCHESTER SHIP CANAL (SHIP CANAL DEPARTMENT), 1894-1911. Years. Gross re- ceipts. Operat- ing ex- penses. Net revenue. Years. Gross re- ceipts. Operat- j^gj ™?ii' revenue, penses. £97,901 137.474 182,330 204,664 236,225 264,775 290,830 309,517 358,491 £78,880 115.329 182,266 186,550 177,727 191,164 207,079 207,455 217,537 £19,022 22,145 64 18,114 58,498 73,611 83,751 102,062 140,954 1903 £397,020 £230.848 £166,178 1904 418,043 449,436 498,837 535,585 506,975 534,059 555,735 580,841 240,295 246,746 264,185 275,814 264,842 267,384 276,749 305,977 177,748 1905 202,690 1906 234,652 1907 259,771 1908 242,133 1900 266,675 1910 278,986 1911 274,864 (') For warehousing, transshipment, customs transit depot, and other schedules see Appendix VI. 128 PANAMA CANAL TRAFFIC AND TOLLS. Table III also states the total working expenses of the ship canal. From £78,880 in 1894, they mcreased to £305,977 in 191 1 , or 287 per cent ; and during the last decade they have risen 47.4 per cent. The net revenue, or difference between gross receipts and working costs, increased from £19,022 in 1894 to £274,864 in 1911, the gain being 169 per cent for the last decade. The working costs of the canal have, on the whole, increased at a less rapid rate than have the gross receipts, and the net revenue available for interest and dividends has gradu- ally risen. The operating expenses in 1911 were £29,227 in excess of what they were in 1910, because of the prolonged coal strike in Yorkshire, and the net revenue of the company was £4,122 less in 1911 than in the previous year. Table rV contains the gross income account for the calendar year 1911 of the ship canal and the Bridge- water Canals, separately stated; and states the relative amounts received from the various sources of revenue. On the ship canal but £40,780 was collected from the ship dues, as compared with £409,589 from tolls and wharf- age on merchandise, £61,053 on minerals and £1,636 on live stock. Table IV.— GROSS INCOME ACCOUNT OF MANCHESTER CANAL CO., 1911. SHIP CANAL. To maintenance TrafBe expenses General charges Working of locks,sIuices,swing bridges, ferries, etc Working of dock labor, railways, and foreign animal wharf Parliamentary expenses Compensation (accident and losses). Rates and taxes Rents Balance carried down . BRIDGEWATER CANALS. To maintenance TrafHc expenses General charges Law charges Rates and taxes Rents Balance carried dowm. . . 104,356 1 10 99,904 13 10 28, MS 15 8 22,720 13 9 1,479 11 8 4,718 4 4 135 16 4 6,973 1 11 16,537 11 5 18,904 11 4 3 580.841 7 6 11,812 4 3 209,354 5 3 8,308 10 11 365 17 1 8,344 18 1 14,575 5 1 252,761 8 24,373 19 SHIP CANAL. ' tolls and wharfage: Merchandise Minerals Live stock Passengers Ship dues, etc Water supplied to ships. Rents £ 5. d. 409,589 2 9 61,053 er 8 1,636 11 463 3 6 40,780 4 11 2,244 11 44,658 2 10 Balance brought down (ship canal account) BRIDGEWATEE CANALS. By freight and haulage Tolls, dockage, etc Porterage, cartage, wharfage, and sundiy receipts 209,271 4 56,424 2 6 29,909 4 8 513,521 18 9 580,841 7 6 295,604 7 6 28,737 4 6 PANAMA CANAL TKAFFIC AND TOLLS. 129 The company's heaviest items of expense are for maintenance and traffic. Table V divides the maintenance costs into their four leading accounts. Table V.— MANCHESTER CANAL, EXPENSES FOB MAINTENANCE OF WAY, WORKS, ETC. (SHIP CANAL), 1911. Salaries, office expenses, and superintendence Dredging Maintenance and renewal of canal and railways Repairs of hydraulic and electric lighting, installations, locks, roads, bridges, and works Total £ ». *(^Ci-*'-ly none of the trade between our eastern seaboards and the west coast of North, Central, and South America will take the indirect route after the Isthmus can be traversed by ocean vessels. The reciprocal nature of the trade that will be carried on thrcfligh the canal, between the eastern half of the United States and the western part of South America, is discussed in Chapter XI. That chapter, and the others dealing with the relation of the proposed canal to the trade and industries of the countries of the Pacific, should be read l)oth with reference to our own trade and with regard to the effect which the canal will have on the foreign countries discussed. The trade of the United States with Japan and continental Asia, the Indies, and Oceania is now carried in jwrt through the Pacific ports of the United States and British Columbia by means of the railways and steamship lines having termini there; but the larger share of the business is shipped by way of the Atlantic seaboard. Several firms run steamers via the Suez Canal between New York and eastern ports, and three regular lines of steamers and sailing vessels connect New York with Australia by way of the Good Hope route. There is also a large amount of traffic between our eastern seaboard and oriental countries in tramp steamers chartered for limited periods. The steamers going out from New York to the Indies, China, or Japan pass through the Suez Canal and usually return by the same route. Chartered steamers going out from New York to an oriental port frequently cross the Pacific to Chile to obtain nitrate cargoes for Europe. Steamers returning to our eastern seaboard from Australia more frequently come via Suez and call at Europe, while the sailing vessels cross the Pacific Ocean to secure a west-coast cargo for New York or some other Atlantic port. There is an important round-the-world movement of vessels at the present time, the extent of which will probably be increased by the American canal. After the isthmian canal is completed, the shipments between our Atlantic or Gulf ports and Japan, the Philippine Islands, Australia, and the continent of Asia north of Hongkong will usually make use of the American canal route, although some ships will doubtless go and come by the Suez route, for the purpose of doing business at intermediate ports. A large part of the world's commerce will be done by tramp steamers whose charters will take them in whatever direction and along whatever route the movement of tonnage is strongest. The outbound traffic of the United States to most sections is heavier than the inbound; the opposite is true of Euro- pean commerce. The tramp steamer will, whenever possil)le, move with, rather than counter to, the flow of ti-affic. One certain effect of the isthmian canal upon the Atlantic ports of the United. States will be to cause the major portion of their commerce, to and from places east of Singapore, to use the American canal instead of the present easterly routes. Between Singapoi'e and Shanghai, and in the region of the Philippines and the Dutch East Indies, there will be a region whose trade with our Atlantic and Gulf seaboard will be divided between the American and Suez Canal routes. It is believed, however, for reasons stated in Chapters XIX and XX, that the conditions of competition will be more favorable for the American than for the Suez route. Our exports to Australia and New Zealand will consist mainly of general manufactures, and to some extent of heavy iron and steel products. The major portion of the general manufactures will be sent out from the North Atlantic ports; the iron and steel products will probably be shipped very largely from the Southern States. Most of the wool, hides, gums, etc., impoVted from Australia and New Zealand will enter by the North Atlantic cities, which are the most convenient gateways to the section of the country where manufacturing is most fully developed. After the canal has come into use probably but a small part of the trade carried on between the Southern States and Pacific markets will be handled through North Atlantic ports; soon after the opening of the isthmian waterway, facilities for importing and exporting directly through Southern ports ma}^ be expected to develop. The general effect of the canal upon the commerce handled bj' the North Atlantic ports will l)e to enlarge its volume and variety. The Pacific countries, both American and transoceanic, will be markets for increasing amounts of American manufactures and the source of growing ([uantities of the raw materials required by the industries in the northeastern part of the United PANAIVIA CANAL TRAFFIC ANTD TOLLS. 239 States. The subsequent chapters dealing- with the industries and trade of foreign Pacific coun- tries indicate in detail the character of the commerce that will be promoted b}' the construction of the canal. The establishment of a new hiohway for a large share of the world's commerce will necessarily change the present routes of some trade. It will cause the ports of our North Atlantic seaboard to cease to handle some of the traffic now passing their gatewa3-s, and will likewise bring to them some commerce now tributary to other cities. The chief effect of the canal upon the commerce of the ports of the Northeastern States will come from the industrial changes that will follow upon the opening of the interoceauic waterway. The commerce of that section must progress pari passu with its industrial advance, and the manufacturing development of the Northeastern States during the coming decades promises to be large and man3'-sided. Reports prepared with especial care were received by the Commission from the commercial organizations in Boston and Philadelphia. A bi'ief statement of some of the facts presented in those reports will indicate some of the relations which will exist between the isthmian canal and the trade of the North Atlantic ports. Appended to the report from Philadelphia, which was prepared under the joint auspices of the Board of Trade and the Maritime Exchange, were two tabular statements, one of which gave the quantit}' and value of the principal items of commerce between Philadelphia and Pacific markets. The other table compared the distances for sailing vessels and full-power steamers by way of existing routes to the Pacific markets with the distances bj' way of a Panama canal route and bj' way of a waterway across Nicaragua. Concerning the saving in freight rates that au isthmian canal would accomplish for the commerce of Philadelphia the report states: The canal would provide a shorter watej: route than any now followed between Philadelphia and certain impor- tant ports of the Pacific, notably those of the west coast of North and South America and the Hawaiian Islands; * * * it would appear that its existence should constitute a factor of significance in regulating freight rates, at least with those ports. The report does not attempt to state in precise terms the saving in freight rates that would be accomplished by the canal, because of the complexity of the factors entering into the fixing of rates, and because of the difliculty of predicting what readjustments may take place in ocean transportation as the result of the opening of a new highway for such a large part of the world's commerce, but it illustrates the saving which the new route would effect in cost of ocean trans- portation by presenting an estimate based upon the daily costs of operating a modern freight steamer of 0,000 tons cargo capacity. The calculation led to the conclusion that a saving of about 75 cents per cargo ton would be accomplished by using the canal route instead of existing water routes between Philadelphia and San Francisco, Vancouver, or Acapulco. In this calcula- tion a toll of $1 per net register vessel ton was assumed. The report closed with the following statements regarding the relation of the canal to Philadelphia: The prospect of the inevitable increase of our country's transoceanic commerce in the near future enhances the importance of an isthmian canal as contributing to the facilities of ocean transportation, but we would, however, pomt out that whether the canal exists or not, supply and demand must, in the last resolution, determine the volume of our port's trade. The canal project, while opening a new route, would in reality open up no markets that are not already accessible, but it would seem that the canal would be a favorable factor by shortening the routes to some important points, and thus assist our merchants to enter into more effective competition with nations of Europe which are now enabled to underbid us in the Far East, by reason of the more economical and expeditious transportation which their merchants enjoy by way of the Suez Canal route. In the statement that the volume of Philadelphia's trade must, in the last analysis, be deter- mined by supply and demand, the underlying thought evidently is that the opening of a new ocean route must be considered as only one of the factors determining the volume of any com- munity's foreign trade. Supply and demand, however, it must be remembered, is but a general statement of the manner in which production and consumption are kept in equilibrium. There is no absolute law or principle explaining the final adjustment of production and consumption embodied in the general term "supply and demand." The intensity of demand and the volume of supply are both subject to modification by any factor capable of altering costs or prices, or both. The effect of the isthmian canal will be to lower the cost of producing many things at Philadelphia and elsewhere, and to reduce the prices at which those products can be sold to the consumers in Pacific markets. Stated concretely, the manifold manufacturing industries of Philadelphia will be able, after the canal is in existence, to produce more cheaply and will be able to put their commodities on Pacific markets at lower freight costs. The persons who buy these articles in those markets will be able to secure commodities more cheaply, and the amount the}' consume will correspondingly expand. The cit}' of Boston has developed a large commerce with Europe, but has a comparatively small direct maritime trade with Pacific countries. A small share of its Pacific business, import and export, is carried by the transcontinental railways, but a much larger part is handled through 240 PANAIVLA. CANAL TEAFFIC AND TOLLS. New York or via Liverpool. The report of the special committee of the Boston Chamber of Commerce states: We have from Boston practically no water-borne commerce with the west coast of Central and South America, the west coast of the United States and Canada, Japan and China, Australia and Oceania. * * * AVhile we send to the Orient a considerable quantity of our manufactured wares, and receive from Asia and Australasia a large quan- tity of merchandise there produced, the trade is not systematized. Transportation is carried through a variety of channels, but only a small portion of it comes to or goes from Boston directly. Boston's tea imports, according to the report, come by three routes— by way of the trans- continental railroads, or through Mew York, or via Loudon. The Australian wool comes chiefly by sailing vessels direct from Melbourne, but a part is received by way of the London market. The chinaware from Japan and China "comes chiefly across the Pacific and by rail via Vancouver and San Franci-sco." The readier access to the raw materials and markets of the Pacific countries afi'orded by the isthmian canal will promote the hianufacturing and commercial progress of Kew England and of the territory tributary to Boston. This will give Boston a larger trade and increase the incen- tives for the operation of tramp and line vessels between Boston and Pacific ports of the United States and foreign countries. A large increase in American shipping during the coming fifteen years seems to be indicated by the trend of ouv economic development; and this, together with the larger trade tributary to"^ Boston, will naturally tend to cause Boston to depend less upon other ports. What is true of Boston in this regard will obtain with other Atlantic cities; and the general effect of the canal upon the commerce of the North Atlantic cities will be to increase its total volume and promote its distribution among the several ports. The manner in which the isthmian canal will afl'ect the industries and commerce of the northeastern section of the United States is illustrated, in a concrete way, by a letter received from a firm located in New York, engaged in the manufacture of pumping engines and hydraulic machinery for the home and foreign trade. The firm has a large tmde with several important Pacific countries. We have a large trade on the western coast of the United States, and this would undoubtedly be increased if we had a short water route, so that we might ship machinery at a reasonable freight rate. This is probably of more importance in the case of first-class freight, as the risk of railroad transportation to intricate machinery is greater than water transportation, and therefore the freight rates are unusually high, as we are obliged to pay from 81.25 to $4 per 100 pounds. You can readily see the advantage of a canal to the fruit and other agricultural industries in California if they are able to purchase machinery for irrigation at a lower price than they are now obliged to pay for it. 0"ur business in the Sandwich Islands has been very large in the past few years— at the rate of over one-half million dollars per year. This could undoubtedly be increased, and at the same time the sugar and other industries there fostered if we were not handicapped by the' long railroad haul across the country. Our business in Japan and China has not been large, owing to the fact that we are obliged to ship by all-water route in order to keep the prices down to meet European competition. Such a large proportion of our machinery is sold on contract where time is so much an object that we are badly handicapped, and that which is sent out for stock requires the tying up of considerable capital and loss of interest, owing to the long time the material is on the water in transit. Our trade on the western coast of South America is growing, but very slowly. \\ e believe that a canal would be of great benefit to the western coast of South America in building up their industries, by enabling people to purchase machinery, etc., to so much better advantage, and that this country would receive the benefit of this, a.s a good line of steamers, from here direct down to the western coast, would undoubtedly tend to throw most of the business to this market. As the manufacturing activities of the northeastern section of the United States multiply, the voliune of imported raw materials brought in by way of an isthmian canal will increase, and the stream of manufactured articles flowing out through the canal to the market of our west coast and of foreign Pacific countries will grow steadily larger with every lowering of the costs of production and transportation. The proposed waterway will readjust the routes of shipment and open avenues for a larger and more varied commerce. Chapter IV. THE CANAIi AND THE CENTRAL, WEST. The term Centi'al West is generally applied to the five States north of the Ohio River and the seven trans-Mississippi States of Minnesota, Iowa, Missouri, Kansas, Nebraska, and the two Dakotas. These twelve States have a combined area of 753,550 square miles, and in 1900 had a total population of 26,335,243 — that is to say, they comprise one-fourth of the area and nearly one-third of the population of the United States, exclusive of Alaska and our insular possessions. The eastern, southern, and western sections of the United States are situated adjacent to or comparatively near the seaboard, and the imports and exports received or dispatched by them through an isthmian canal will need to be hauled a relatively short distance by rail. The Central West, on the contrary, is situated from 500 to 1,500 miles from the ocean, and the trade which it may have by way of a canal will, on an average, be moved nearly 1,000 miles 133' railroad. Will the canal affect the industries and Pacific trade of this interior section of the United States ? INDUSTRIAL RESOURCES OF THE CENTRAL WEST. Taking this region as a whole, its most important industrial I'esources are those connected with agriculture. The States in the western part of this section of our country are eutirelj' agricultural, but Ohio and Indiana are extensively engaged in manufacturing, and Michigan, Wisconsin, and Illinois have numerous cities in which large manufacturing activities are carried on. In most of these States there are abundant supplies of the raw materials of industry. Oliio and Illinois have large fields of coal in which 30,000,000 tons of bituminous coal are annually mined; and Indiana, Iowa, Missouri, and Kansas have deposits from which 10,000,000 tons are taken yearly. The natural-gas wells of Ohio and Indiana are a valuable source of fuel for parts of those States. In the northern section of the Central West there are large forests of excellent white pine, while in the central and southern portions of the region a good quantity of hard-wood timber is available. Throughout all these States foods are cheap, and in the more thickly populated sections there is a large supply of intelligent labor. In northern Michigan, Wisconsin, and Minnesota over seven-tenths of all the iron ore mined in the United States is ol)tained, the rich deposits of those States being made available b}' the cheap transportation on the Great Lakes to the coal fields of Pennsylvania, Ohio, and Illinois. The low costs of pig iron and steel in Ohio, Indiana, Illinois, and other States of the Central West unite with the abundant stores of cheap fuel and good lumber to establish a sure foundation for diversified manufacturing activities. This foundation is being rapidly built upon, and several of the States of this part of our country are manufacturing on a large scale both for the extensive and expanding home markets and for our trade with foreign countries in all parts of the earth. Ohio is the leading State of the Central western group in the variety and amount of its man- ufactures. Cleveland and Cincinnati, the largest cities of the State, are typical industrial centers, and in order to illustrate the relation of the proposed isthmian canal to the State of Ohio, as a whole, a special discussion is given below to the industries and foi'eign trade of those cities, and the manner in which they will be aflected b}' the new water route to and from the Pacific. Indian- apolis is the metropolis and most important industrial center of Indiana, and the same is true of Chicago as regards Illinois, and St. Louis with reference to Missouri. By studying the relation of the canal to these cities and a few others of minor rank, as is done in the following pages, it is believed that the effects of the interoceanic waterwaj' upon the Central West generally can be adequately portrayed. In the tier of four States situated farthest west, in the section being considered in this chapter, the export business consists almost entirely of grain and provisions, but from all the other eight Commonwealths there are sent out to foreign markets, in addition to those articles, large quan- tities of agricultural machinery, wooden ware, vehicles, tools and implements of all kinds, stoves, engines, and other iron and steel products in great variety, boots and shoes, and many other articles enumerated in detail in the reports received from commercial organizations, the volume and variety of the export trade increasing from west to east, from the Missouri River to the State of Ohio. 242 PAN.\]VIA CAJSTAJL TEAFFIC AND TOLLS. There is also an important volume of imports from Pacific foreign countries and the west coast of the United States required in the Central West. These imports consist in part of wool, nitrate of soda, canned fruits, vegetables and salmon, Japanese and Chinese goods in large variety, and hemp, jute, gums, and waxes. Those from foreign Pacific countries come in part by way of our Pacific ports, but most largel}' through New York. PRESENT ROUTES OF SHIPMENT FROM CENTRAL WEST. The exports from the Central West to foreign Pacific countries are now sent by various routes, most of which can be indicated by referring to the shipments from Chicago, the largest and most centrally located city of the region. The manufactures of that city, particularly mining and other heavy machinery, are sent to many parts of the world. Heavy freight destined for Mexico is frequently sent directly by rail, but shipments are often made via New York, and sometimes b}' way of San Francisco. Assignments for the east coast of Central America may go either by New Orleans or New York. Most of those for the west coast of Central America and all those for western South America go via New York and thence either by the Isthmus of Panama or around South America. Until four j'ears ago most shipments of machinery from Chicago to Australasia, Malaysia, and the Orient are reported to have been sent to some European port and there trans- shipped, but latterly vessels direct from New York have handled the business. The shipments to Hawaii go via San Francisco or some other Pacific port, as also do those that must reach trans- Pacific countries with a minimum of delay, but when time permits heavy freight is sent through New York. Further information regarding the routes b}^ which commodities from the Central West are shipped to Pacific markets is given below, where a communication received from the chamber of commerce of Cleveland is referred to. THE CANAL AND THE INDUSTRIES OF CLEVELAND. The State of Ohio is situated in that indetei'miuate border land l^'ing between the northeast- ern section of the United States, where manufacturing and commerce are the dominant activities, and the Central AYest, where agriculture still heads the list of industries. The State consequently now ranks well up in the list of manufacturing Commonwealths, and its future development must inevitably increase the magnitude and variety of its industries. Something concerning the eflfects which the isthmian canal will have on the economic progress of Ohio may be found in the subsequent chapters devoted to "The canal and the iron and steel industries." By referring with some detail in this connection to the interest of Cleveland and Cincinnati in the canal, the relation of the new water route to the foreign trade, not only of those cities, but also of Ohio and much of the eastern part of the Central West, will be indicated. Cleveland, which is now the metropolis of Ohio, has become, by virtue of its location on Lake Erie, and at a point where the coal from Pennsylvania and Ohio and the iron ore from Lake Superior can be readily and economically brought together, a great center for the manu- facture of iron and steel products and the home of a large variety of activities. It has the advantages of cheap fuel and low transportation cost to domestic markets. The Cliamber of Commerce of Cleveland was requested to address a circular letter to the mer- chants and manufacturers of the city, asking them to state what commodities they were sending or receiving from various Pacific countries, by what routes these shipments to and from Cleve- land were made, and to indicate how they would be affected by the proposed canal. Letters were sent by the chamber of commerce to 15.3 establishments and replies were received from 58, of which 38 manifested a direct interest in the canal and 9 others favored the opening of the water- way because it would inevitably benefit their business. Thirty of the 38 having a direct interest in the opening of the canal were manufacturers and 8 were importers and wholesalers. Of the 30 manufacturers who replied that they were shipping to Pacific countries, 6 thought their busi- ness was such that the canal would not be of much help to them, and 1 person thought the canal would give his rivals in New England a greater advantage than they now possess. The foregoing analysis of the replies indicates, first of all, the well-known fact that the manufacturers of Cleveland — and the same is true of the Central West and most of the United States at the present time — are producing mainly for the home market. It is also evident, from the letters, that several Cleveland firms doing a foreign business have not yet developed a trade with Pacific countries. Some report that they are debarred from this trade by the present cost of transportation. A few Cleveland firms, whose goods reach Pacific markets, are unable to report the amount of trade in those markets, because their goods are sold to New York or London exporters. Other firms having no foreign Pacific trade report that they are doing business in our west coast States, and they especially complain of the present high costs of transportation by rail. The variety of commodities shipped from Cleveland to the various countries of the Pacific Ocean is surprisingly large. In the report submitted by the Cleveland Chamber of Commerce PANAMA CANAL TRAFFIC AND TOLLS. 243 the articles sent to each section of the Pacific are enumerated, the routes by which the commodities are shipped are stated, and the principal imports into Cleveland from these several sections are named. This part of the report is so informative that it merits quotation, although the multitude of details in the statement deprives it of the usual fascination of literature. 1. Commodities shipped from Cleveland to the following parts of the world during 1899; A. West coast of Central and South America: Carbons, iron roofing, iron houses, wire, barb wire, wire nails, galvanized smooth wire, annealed wire, wire fencing, telegraph wires, oil stoves, gas stoves, twist drills, machinists' tools, tackle blocks, sewing machines, ironwork. B. West coast of the United States and Canada: Sugar machinery, carbons, iron roofing, iron houses, iron maga- zines, pneumatic cranes, machine tools, bolts and nuts, steel springs, barb wire, wire nails, galvanized smooth wire, annealed wire, wire fencing, telegraph wires, malleable iron castings, oil stoves, gas stoves, cloaks and suits, manu- factured wool stock, oil and grease, paint and varnish, wire brushes and brooms, foundry supplies, bristle brushes and brooms, twist drills and machinists' tools, steel plate and castings, hot-air registers, imported and domestic whiskies, brandies, gins, imported cordials, wines, tackle blocks, forgings, turn-buckles and railroad iron, sewing machines, ironwork. . , , . C. Japan and China: Nail machinery, carbons, pneumatic cranes, jacks and pulleys, machmes, barb wire, wire nails, galvanized smooth wire, annealed wire, wire fencing, telegraph wires, oil stoves, gas stoves, twist drills and machinists' tools, automatic or self-filling buckets, rolling-mill machinery, sewing machines, ironwork. D. Australia and Oceania: Nail machinery, carbons, bolts and nuts, barb wire, wire nails, galvanized smooth wire, annealed wire, wire fencing, telegraph wires, malleable iron castings, oil stoves, gas stoves, wire brushes, twist drills, machinists' tools, tackle blocks, sewing machines. E. The Indian Ocean: Barb wire, wire nails, galvanized smooth wire, annealed wire, wire fencing, telegraph wires, oil stoves, gas stoves, sewing machines, ironwork. 2. Eoutes over which these commodities were shipped to each of the destinations named: A. West coast of Central and South America: Via New York, through New York exporters; via Cape Horn; via Isthmus of Panama (railroad). B. West coast of the United States and Canada: Southern Pacific Railway via San Francisco; over various railways and lakes; via Isthmus of Panama (railroad). .... C. Japan and China: Via New York; via Pacific coast; Suez Canal; from Cleveland to San Francisco by rail, to Vladivostok via Nagasaki, Japan. D. Australia and Oceania: New York exporters; via steamers from New York and around Cape of Good Hope; by rail to San Francisco, thence by steamer. E. The Indian Ocean: Via New York, Suez Canal. 3. Commodities received from the countries and sections named: A. West coast of central and South America: Wool, nitrate of soda. B. West coast of the United States and Canada: Canned goods, dried fruits, wine, brandy, beans, raisins, canned fruits, salmon, nuts, wool. . ,• , . C. Japan and China: Straw mattings, mattings and rugs, tea, notions, rattan cane, china reeds, split bamboos. D. Australia and Oceania: Wool. E. The Indian Ocean: Burlaps and jute bags. The results of the inquiry concerning Cleveland's trade in Pacific countries may be sum- marized by saying that this great manufacturing center has begun to trade with practically all sections of the Pacific, and that .some firms are now doing a business of considerable importance. The chamber of commerce and numerous individuals conferred with believe that Cleveland's interests will be largely promoted by an increase in the city's trade with Pacific countries. The present Pacific trade of the city is widely distributed and comprises a wide range of commodities. CINCINNATI AND THE CANAL. The industries of Cincinnati differ largely from those of Cleveland, but are quite as typical of the manufacturing activities of Ohio, because they are even more diversified. The articles produced include a large number of commodities created by the application of skilled labor to the cruder manufactures of steel, lumber, and leather. Besides being able to secure those materials advantageously, Cincinnati has the advantage of possessing in its population a homo- geneous body of skilled labor well trained in a variety of arts. The Ohio River has assured the city cheap transportation for much of the crude and raw material required, and has aided in the economical distribution of its manufactures; and although the railroads now carry the greater volume of freight, a part of their business is now subject to a water competition. From information obtained from the chamber of commerce, it appears that the industries which would derive most benefit from the canal are those engaged in the manufacture of machinery in large variety, vehicles, electric-railway equipment, saddlery and harness, pianos, oflice appliances, pork products, liquors, shoes, and furniture made from native and tropical woods. . There is at present a trade of some importance between Cincinnati and foreign Pacific coun- tries; but the business with the west coast of the United States is of greater consequence. This Pacific coast trade is now much restricted by the cost of rail transportation. Cincinnati manu- facturers, moreover, find difficulty in competing in all Pacific markets with domestic and foreign producers so situated that shipments can be made by water. The home market east of the Rocky Mountains can be reached cheaply from Cincinnati,' but in order to give her ready access to the Pacitic trade, the cheaper transportation is reported to be necessary. 244 PANAJMA CANAL TRAFFIC AND TOLLS. THE CANAL AND INDIANA. The inquiries sent out by the Indianapolis Board of Trade to the manufacturers in Indian- apolis and other parts of Indiana, concerning their business in the Pacitic markets of the United States and foreign countries and the effects of the canal, were replied to bj' 150 fimis. An analysis of the letters received shows that 63 of the 150 firms making answer are now doing business either on the west coast of the United States or in foreign Pacific countries; 87 of the 150 firms have as yet developed no trade in those markets; 77 of the respondents say that the canal would either directly or indirectly assist them in the development of the Pacitic trade; 73 of the firms make no suggestion as to the effects of the canal. It is probable that these 150 firms maj'^ be taken as fairly representative of the large manufacturing concerns of Indiana, and, if so, somewhat more than two-fifths of the Indiana manufactories now have trade in American and foreign Pacific markets. Somewhat over half of these representative Indiana firms foresee that the canal would be of direct or indirect assistance to them. When one considers the present costs of reaching trans-Pacific markets from such a section as that of the State of Indiana, the significance of the foregoing showing, in regard to the pi'esent Pacific trade of Indiana firms, becomes manifest. A manufacturer in Indiana stated in a letter to the Commission that a shipment to Australia in 1899 was sent by waj' of New York at a total freight cost of $105. The freight on the same shipment would have been about $150 to San Francisco or Portland. The firm stated that it could usually reach Australia more cheaply than our Pacific coast. THE CANAL AND ILLINOIS AND WISCONSIN. The National Business League, whose offices are in Chicago, forwarded to the Commission 45 replies to the circular letter of inquiry sent to the members of the league. Twenty-one of these letters were from Chicago firms, 10 from concerns in other cities of Illinois, 8 were from Wisconsin, and 6 from other States; 34 of the respondents reported a Pacific trade, and 11 no present business in that section of the world; 35 believed that the canal would assist them, 7 said they would receive no aid, 2 gave no opinion, and 1 believed the waterway would be an injury to his business. In the city of Chicago a great variety of manufacturing industries is carried on, and ship- ments are made to all the countries of the Pacific. Railway materials and mining and agricultural machinery, however, are especially important, mining machinery being sent to all parts of the world, wherever mining operations are carried on. The foreign trade of one Chicago fii'm engaged in the manufacture of mining machinery amounts to 15,000 tons annually. The agricul- tural machinery manufactured in and about Chicago is now shipped to the west coast of South America, to eastern Siberia, and to various parts of Australasia. The Australasian trade of one firm in 1899 amounted to 11,000 tons. The shipments of this firm and presumably of others of that part of the country are made by way of New York, except on rare occasions, when, for the purpose of economizing time, the goods are routed by waj' of San Francisco or Vancouver. The rates from New York ai'e usually much lower than those by way of the Pacific coast. The time taken to get goods from Chicago to Australia varies from sixty-five to eighty-five days, ten days of that time being required for getting the goods to New York City. The average time from Chicago to the Pacific coast is eighteen daj-s, and steamers from our Pacific coast to Australasia take from twenty-two to twenty-eight days for the passage. The canal will shorten the distance by water from our Atlantic seaboard to Australasia by approximately -1,000 nautical miles and the distance to South America more than twice that number of miles. The southern and central parts of Wisconsin are developing important manufacturing indus- tries and a Pacific trade, although the cost of reaching Pacific markets is a heavy burden. A carriage company, for instance, situated near Racine, Wis., reports that it has for some time past exported vehicles to the western coast of South America, Australia, and the Orient, the shipments in the majority of cases being made via Atlantic seaports, "on account of the high cost of transportation by the transcontinental lines from here to the Pacific coast." The firm states that on business to Pacific coast points "we have to pay on a car of goods valued at $1,500 $320 for transportation." An Oshkosh, Wis., firm engaged in the manufacture of sash, doors, and blinds ships some of its products to jobbers in England who export the commodities to various Pacific markets. A Milwaukee company which manufactures engines, pumping, mining, and other heavj' machinery, and has branch offices in many parts of the United States and in several foreign countries, reports a large trade with the Pacific coast of the United States and foreigu Pacific countries. This firm states that "the rates from the European ports we generally find to be somewhat lower than from various United States ports, and this feature makes European competition more difficult to overcome." PANMIA CANAL TRAFFIC AND TOLLS. 2*45 There is a direct Pacific export business from all of the States of the Middle West except those forming the second tier of States west of the Mississippi River, In these four States — the two Dakotas, Nebraska, and Kansas — agricultural and food products comprise nearlj' all the com- modities sent be3'ond their borders. Should the canal create larger home and foreign markets for those products it would work to the indirect, if not direct, benefit of these strictly agricultural commonwealths. THE CANAL AND ST. LOUIS. It remains only to speak of the State of Missouri. Most of the activities of fhe people of this large State are devoted to agriculture. Its hard- wood forests, however, yield an export product of much importance. The city of St. Louis is a prominent manufacturing center, and is one of the largest jobbing and distrib\iting cities of the United States. Situated almost at the center of the United States, on the largest river of our country, and being the center of railway systems radiating in all directions, it has peculiar advantages both for manufacturing and for dis- tributing articles required by the people living in that great stretch of country west of the Mis- sissippi and south of the Missouri River. Our rapidly growing trade with Mexico is also largely controlled by St. Louis. The circular letter of inquiry sent out by the Merchants' Exchange of St. Louis was generally responded to, and the exchange forwarded to the Commission 6.5 letters. Of these 65 firms making reply 32 stated that they were carrying on a trade in the western part of the United , States or in foreign Pacific countries, and 33 answered that they have no present business in those sections; 48 of the 65 firms expressed the opinion that the canal would assist them either in developing their present business or in securing a trade that thej' were not able to engage in under present transportation conditions. Six companies reported that the canal would not be of any assistance to their business. Ten gave no opinion as to the eS'ect of the canal, and 1 person expressed the belief that the canal would enable the New Yoi'k exporters to injure his business. The most characteristic business of the city is its jobbing trade, which is now somewhat facili- tated by the cheap river transportation. The St. Louis jobbers of heavy commodities will in the future have the advantage of economical water transportation, not only to and from the Gulf ports, but also between their city and all points reached by the canal route. THE EFFECT OF THE CANAL UPON THE TRANSPORTATION FACILITIES OF THE CENTRAL WEST. The large and varied industrial development which the Central West has enjoj^ed, in spite of its situation near the center of a great continent, has been due to its excellent transportation facilities. Throughout the past fift^^ years the Great Lakes have given the Central West the opportunity to trade with the eastern part of the United States under peculiarly favorable con- ditions. The commerce on the Great Lakes is growing with marvelous rapidity, and at the present time these lakes afford the cheapest inland transportation to be found in any part of the world. The Ohio, the Mississippi, and other rivers of the Central West have in the past been important auxiliaries to the commercial development of that section, and at the present time the Ohio River is of much assistance to southern Ohio and the other regions adjacent to the stream. With the decreasing costs of railway transportation, the impoi-tance of river naviga- tion has grown less; but Ohio, Indiana, Missouri, Iowa, Minnesota, and Wisconsin will in the future derive no small benefit from the opportunities which they will possess of shipping their commodities by river to Gulf ports. The opening of the isthmian canal will unquestionably emphasize the commercial importance of the Gulf cities, and will strengthen the reasons for improving the great river S3'stems of the Central West. The existence of the canal, the larger commerce at Gulf ports, the more favorable conditions for river navigation, and the continued growth in mileage and efficiency of the railway sj'stems leading from the Central West to the Gulf, will tend to strengthen the power of the Gulf seaports to share with the cities, situated on the Atlantic, the trafiic from and to the Middle West. While it is not probable, for reasons that are elaborated in a subsequent chapter, that so large a share of the traffic of the Central West will be handled by the Gulf routes as by those connecting with the Atlantic, nearly all parts of the Central West will have the advantage of being able to choose between the Gulf and Atlantic routes, and this power of choice will insure to them that compe- tition in transportation which always quickens industrial activity. The transportation facilities of the Central West will be made better by the canal, and the increased trafiic to which the canal will give rise will lead to the extension and improvement of the agencies for rail and inland water transportation. Whatever affects the transportation facilities of the Central West touches its economic life at the very center. 34998°— 12 17 Chapter V. THE CANAL AND THE PACIFIC COAST STATES. With the exception of that part of the United States comprised within the great Cordilleran Plateau or Rock}' Mountain section of the United States, the Pacific coast States have been and still are the portion of our countrj' most burdened by transportation costs, because the most highly developed manufacturing sections of the United States and of the world are adjacent to the North Atlantic and its tributary waters. The economies that have been effected in the cost of transportation by rail have so reduced freight charges as to make possible the movement of considerable quantities of valuable commodities across the great mountain divide, and to a limited extent biilky freight, such as cedar shingles and finishing lumber toward the East, and raw cotton and heav3' machinery and flour toward the West, will now bear the cost of transportation by rail. The amount of rail freight, however, now being carried between the Pacific and the States east of the Cordilleras, as is shown in another part of this report, is comparativelv small, so small, indeed, that it is well within the facts to sa}^ that the Pacific section of our country is able to market its products by rail east of the Rock}' Mountains only to a limited extent. The rail- i-oads have not j^et satisfactorily connected the Pacific coast States with their largest and most natural markets. Although the Pacific coast States of our country are developing an oriental trade of very satisfactory proportions, and there is everj' reason to believe that this commerce will grow in the future, nevertheless the trans-Pacific trade of our west coast will pi'obably be small in com- parison with the commerce of that section with the markets adjacent to the North Atlantic. The western part of the United States is now, and will be for a long time to come, devoted very largeh' to the production of food products, lumber, and the basic materials of industry. The natural markets for products of this kind arc in the eastern part of our country and in Europe. THE CANAL AND CALIFORNIA. It. would be impossible, even if it were desirable, to consider every industry of California and discuss the manner in which it would be affected by the canal. This survey being intended to be suggestive rather than exhaustive, the purpose of the discussion can be accomplished better bj' considering only the grain, lumber, and horticultural and mining interests of the State. These are the industries that wiL make the largest use of the canal, and the industrial effects which that watei'way will accomplish will be fully illustrated by a consideration of these charac- teristic economic activities of the State. The two cereals that California produces for export are wheat and barley, both of which are now produced in large quantity. The average annual wheat crop of California for the past fifteen j'ears has been about 30,000,000 bushels. The annual barley crop of the State during recent years has been about 20,000,000 bushels. It is a noticeable fact that the wheat crop of California has not increased since 1893; indeed the recent annual productions have been less than they were in former years. The reasons for this are to be found partly in the low prices of wheat that have prevailed much of the time during the past decade, and in the fact that the transportation charges from the Pacific coast to the principal grain markets are relatively higher than from most of the other wheat-growing regions of the world. While the wheat production has declined, the amount of California wheat consumed at home and in the neighboring States has increased with the growth of population, and the con- sequence has been lighter foreign shipments than were formerly made. Twenty years ago wheat raising was the most attractive industry of the State, but since then the crops of the State have become diversified, the great wheat farms are being divided up, and single-crop agriculture on an extensive scale has to some extent given way to more intensive cultivation of smaller farms devoted to the production of several crops. The wheat crop of California is, however, a large and valuable one at the present time, and will probably continue to be. It is quite possible that better methods of culture, the use of fertilizers, and the ability to reach Atlantic markets more cheaph' will largely increase the future wheat production of the State. PANAMA CANAL TEAFFIC AND TOLLS. 247 California barley is of excellent quality and is being exported in increasing quantitj- to Eng- land, where it is in demand for brewing purposes. The Iwirley of California can meet the compe- tition of other regions of production more easily than'the wheat can, and cheaper transpoi'tation charges would enable the State to increase largelj' the sales of this cereal in foreign countries and the brewing centers in the central and eastern parts of the United States. Corn and oats are not grown to much extent in California, barley being used instead of them for feeding stock. Corn and oats will not be exported from California after the canal has been opened, but a small quantity of them may be imported from the eastern half of the United States. California has both an import and export trade in lumber. The exports by sea are compar- atively light, being only 23,041,058 feet in 1S!I9, and are sent mainly to Europe, Australia, Mexico, and Central America, less than one-third of the shipments being to Europe and the eastern United States. Although the annual output of the California sawmills is about 600,000,000 feet, the State is a large buyer of lumber for use at home and for sale in the moun- tain States east of her. About 200,000,000 feet of lumber — two-thirds of Washington's maritime shipments — are sent annually from Puget Sound to California. The Sierras of California are well wooded with pines, spruce, and cedar, and the redwood forests extend along the coast from Oregon south half the length of the State. The redwood lumber is much in demand in Atlantic countries, and in the future will probably be exported more largely than at present. The costs of shipping lumber by the sailing vessels which now carry the traffic have averaged about 65s. ($15.85) per ton from the Pacitic coast to Europe dur- ing the past ten vears. During the past two 3'ears, 1899-1900, the charges have been even higher, on account of the scarcity of ships. By way of an isthmian canal the rates for large cargoes would not need to be more than half the average charges of the past to the eastern United States and to European ports. In the production of fruits, nuts, and wine, California has reached a position of eminence, and the extensive horticultural -interests of this and the other Pacitic coast States are rapidly increasing in value with the betterment of the facilities for quick transportation in refrigerator cars to the Eastern markets. Formerly nearly all the excellent fruit of the West was dried or canned before shipment, but now a large part of it is marketed as green fruit. The following figures will indicate the increasing magnitude of the business of selling our west coast fruit in the central and eastern parts of the United Stiites and in Europe. In 1895, •1,568 cars of green decid- uous fruit were shipped from California to the Eastern cities, and in 1899, 9,694 cai'loads were sent. Efforts arc being made to ship the Western green fruits to Europe, 42 carloads having been shipped from California in 1896, 58 in 1897, 42 in 1898, and 123 in 1899. The citrus-fruit ship- ments average 15,000 cars a year from California to our Eastern markets. Western dried and canned fruits find a ready and increasing market in Europe. There were 8,692 carloads of dried fruit shipped out of California in 1899, about 20 per cent of which went to Europe. The growth in the sales of California canned fruit in Europe has been especially rapid. In 1894 there were 85,817 cases sent to England, whereas in 1899 over half a million cases were shipped. The production of nuts, raisins, and olives has reached large proportions. California raised 14,000,000 pounds of almonds in 1899 — one-third the total large consmnption in the United States. The California raisin crop is from 70,000,000 to 100,000,000 pounds a year, the shipments out of the State being 3,600 carloads in 1899. California olive oil is now being sold in many parts of the United States. The foregoing figures refer particulardy to California, but the development they indicate is typical of all the Pacitic States. California preceded Oregon and Washington in the develop- ment of her horticultural industries, but these two States have latterly, with the increase in their population and the formation of better railway connections with the East, been making the val- ley of the Columbia River and its tributaries a section of large production and exportation of fruit. Although fruit is a commodity with a relatively high value for its bulk, it is also an article the consumption of which is most I'eadilj' stimulated by a reduction in price. The pro- duction of fruits and other horticultural products is capable of being largely increased in Cali- fornia and the other Pacific coast States. If cheaper transpoi-tation can be secured for horticultural products from the Pacific coast to the Eastern United States and Europe, the production and con- sumption of fruits will expand. The figures of present shipments indicate that fair progress is being made in reaching our Eastern markets, but what has thus far been accomplished is reported to be but a good beginning. The shipment of fruit long distances will always be made to a large extent by rail. There is, however, no doubt about the ability of the i.sthmian canal route to reduce the costs of ship- ping canned and dried fruits from the Pacific coast to our Eastern States and Europe. It is per- haps uncertain whether green fruits will be largely shipped by the canal route instead of by rail. Most varieties of green fruit, however, can be successfully shipped by water, provided proper arrangements for refrigeration are made, and provided the market permits of regular cargo or 248 PANAMA CANAL TRAFFIC AND TOLLS. large berth shipments. Whether the water route will be used for the shipment of green fruits or not will depend upon the size of the market and the arrangements for prompt distribution among retail buyers. If the market is large enough and well organized, shipments will probably be made in vessels especially equipijed for the service. The production and shipment of California wine is such an important industry that it calls for special discussion in considering the industrial eflfects which the isthmian canal will produce. In 1897 no less than Si, 000,000 gallons of wine were manufactured in California, the production having doubled in a decade. Since 1897 the amount made has fallen off, because of the ravages of the phylloxera, but the decline will probably be only temporary. Varieties of resistant stocks are being planted that are not subject to the attack of the insect, and there is every reason to suppose that the amount of wine produced in the future will more than equal the figures of the past. Wine is mainly shipped in casks, and is a kind of freight adapted equally well to shipment by rail or by vessel, and at the present time shippers are making use of both means of transpor- tation. In 1899 California shipped by sea to the Eastern States, most of it being consigned to the port of New York, 13,373 tons of wine. To Europe 570 tons were sent direct. Doubtless a part of that consignment to New York was exported to Europe. Shipments to Europe and the eastern part of the United States are partly direct by way of the Panama Railroad and in part around South America.^ Some of the 585 tons sent to Mexico crossed the Isthmus. During this same year the shipments of wine by rail from the State were 6i,520 tons, the amounts sent by rail being between four and five times the total cargoes sent by water to Atlantic ports. In addition to the wine, there were shipped by rail 3,599 tons of brandy and 1,'475 tons of ''wine and brandy not segregated." The brandy shipments by water amounted to 316 tons. Under the present conditions of expensive transportation a fair beginning has been made in the exportation of California wine to Atlantic countries, but it is certain that the wine production of the State can be lar^felj- increased with the more favorable conditions of competition that would result from lowering the expenses of reaching markets. Among the other industries of California are those of fishing, mining, and grazing. These industries being common to all the Pacific coast States, they will be considered later in connection with the discussion of the relation of the canal to the industries of Oregon and Washington. THE CANAL AND THE LUMBER AND GRAIN INDUSTRIES OF OREGON AND WASHINGTON. The manufacture of lumber, the raising of grain, and the catching and packing of fish are industries of prime importance in both Oregon and Washington. The growth of fruit, particu- larly in Oregon, and the mining of coal in \\ ashington are industries of secondaiy but increasing rank. The commerce of this section of the United States centers at Portland and in the cities on Puget Sound. The supply of timber in Oregon and Washington is so abundant and of such excellent quality that the amount of lumber marketed is fixed entirelj' bj' the costs of transportation to the distant markets of the Orient, and particularly of the north Atlantic. It is estimated by the United States Geological Survey that the forests of Washington nowcontain about 115,000,000,000 feet of mei'chantable lumber. In the four northwestern counties of Oregon there are said to be 1,800,000 acres of standing timber, containing between fifty and sixty billion feet of lumber. These esti- mates may not be accurate, but they serve to show the magnitude of the forest resources from which W^ashington and Oregon will draw traffic for an isthmian canal. Exports of lumber from the Pacific coast of the United States and British Columbia are now made to the countries of the Pacific, and a limited amount takes the long voj-age around the Horn. In 1899 our three Pacific coast States shipped 13,354,000 feet to Europe, 5,149,000 feet to Argentina, and 15,944,000 feet to South Africa. Although western Europe and the eastern coast of the United States would be the largest markets for Pacific coast lumber if the costs of transportation were not so heavy, the present difficulty of shipping lumber from the Pacific to the Atlantic is such that California usually sends to Europe, where the demand for redwood would be large if the price were lower, but one-fourth to one one-third of her foreign exports of lumber. There were 422,211,000 feet of lumber shipped by sea from Washington in 1899. California usually takes 60 per cent of the whole amount and Hawaii one-sixth. After these countries comes Australia, then South Africa, Asia, Africa, Europe, and the east coast of the United States. The shipments to Europe and our east coast are chiefly spars for ships, while South Africa buys bridge material and other choice lumber. The opening of an isthmian canal would reduce by about 50 per cent the freight costs of marketing our west-coast lumber in Atlantic countries, and this reduction in freight expenses would add a corresponding amount to the value of all that part of the Pacific coast lumber for which there is a demand in these countries. PANAMA C'AN.U. TRAFFIC AXD TOLLS. 249 All three of our Pacific coast States are heavy exporters of wheat. The total amount pro- duced in the three States in 1899 was 77,404,000 bushels, about one-seventh of the total production of the United States for that year. The exports to Europe were 17,396.71:^ l)usheis of wheat and 378,763 barrels of flour. Counting 5^ bushels of wheat for 1 barrel of flour, the total exports equaled 19,479,908 bushels of wheat. To South Africa 1,508,100 bushels were sent, making the total shipments to the Atlantic nearly 21,000,000 bushels, or about 562,000 gross tons. Li addi- tion to this, 638,094 bushels, or about 17,100 gross tons, of barley were shipped from California and Oregon to Europe. The wheat exports from our west coast during the fiscal year ending June 30, 1899, were unusually light on account of the shortage in the crop. During the previous fiscal j-ear the total exports of wheat from the three Pacific States to Europe, including flour expressed in bushels of wheat, were 34,869,921 bushels. The exports of wheat and flour to South Africa and Brazil equaled 5,344,145 bushels. Thus in 1898 the total exports of wheat from our Pacific coast to the Atlantic were 40,214,066 bushels, or 1,077,207 gross tons. The barley exports of 1898 were 5,628,747 bushels from San Francisco and 250,792 bushels from San Diego, a total of 5,879,539 bushels, or 125,918 gross tons. The total gross tonnage of these wheat and barley shipments to the Atlantic during the year ending June 30, 1898, were 1,203,125 gross tons, more than double the tonnage of the succeeding year. The 580,000 gross tons exported in 1899 could have been carried in 65 steamers of 4,000 tons net register. To have carried the 1,203,125 gross cargo tons of grain shipped around the Horn in 1898 would have required 135 steamers of 4,000 tons net, and that vessel tonnage, 540,000 tons net register, more nearly represents the average annual requirements of the Pacific coast grain shippers than does the tonnage of 1899. At the present time this grain goes around the Horn in sailing vessels averaging about 1,800 tons i-egister. After the isthmain canal has been opened the ship used will doubtless be a steamer of not less than double, and probably three or four times, the size of the sailing vessels now employed. The freight rates now vary from §5.50 to over $10 per long ton — from 15 to 26 cents a bushel — depending upon the available supply of ships. A steamer of large dimensions could doubtless carry the grain by way of a canal from our west coast to Europe for 10 cents a bushel — $3.73 a gross cargo ton — and paj' from that freight receipt $1 per register ton — less than 50 cents per cargo ton — for canal tolls. THE WEST-COAST FISHERIES. The fisheries of the Pacific coast constitute an important industry that gives rise to the exportation of a large volume of valuable freight. The salmon jmck of Alaska, British Columbia, and our west coast in 1899 amounted to 3,138,040 cases, each containing 48 1-pound cans. Three- fifths of this was packed in Alaska and British Columbia, and two-fifths in Washington and Oregon. A package of 48 pounds of salmon weighs 70 pounds, and 3,138,040 cases would occupv 80,000 measurement tons of 40 cubic feet each. It would require about twenty fully loaded vessels of 2,000 net register tons each to carry the freight. The shipments of salmon to the Eastern part of the United States and to Europe are heavy, both from British Columbia and from San Francisco. From San Francisco the shipments by sea in 1899 to our Eastern States were 261,683 cases, valued at $1,157,608. The total ocean shipments from our Pacific ports (mainly from San Francisco) to foreign countries east of the Horn in 1899 were 21,014,989 pounds, or 437,801 cases, which would amount to 11,608 measurement tons of 40 cubic feet. At the present time these salmon exports by sea are shipped in English sailing ves- sels around the Horn, and the business is handled mostl}- by English houses. In addition to the ocean shipments of salmon, there are fresh salmon, halibut, and other kinds of fish shipped east by rail. The American consul at Vancouver reports that one company "takes in the open sea to the north of Vancouver from a million to a million and a half pounds of halibut each year. The halibut steamers bring the fish to Vancouver, where they are packed in ice and shipped to Boston." THE HOPS, WOOL, AXD MINERAL INDUSTRIES OF THE PACIFIC COAST. The three States under consideration produce three-fourths of all the hops grown in the United States, and a large share of the Western hops is shipped to our own and European consumers. The production of hops in the Western States can be much increased whenever the market conditions warrant a larger output. At the present time but a small share of the hops is shipped east to our own or foreign countries liy water, and our west coast is compelled to compete with European growers and under the limitations imposed b3' expensive transportation. The Pacific coast States and the neighboring commonwealths of the CJordilleran Plateau supply the woolen mills of the Eastern States with a large part of the fiber they require. Only a part of the wool would be shipped through the canal, but the freight on the large part of that 250 PANAMA CANAL TEAP^FIC AND TOLLS. shipped by roil from points west of the one hundred and fifth meridian would be affected \>y the isthmian waterway. The principal mining industrj' of the Pacific States at the present time is that of gold. Some copper is mined and a variety of other minerals in small quantities. The effect of a canal upon them could hardly be important. Mining machinery would be obtained somewhat cheaper, and the canal, by promoting immigration and more rapid settlement in the West, might provide the mining companies with a large and a cheaper supply of labor. EFFECT OF THE CANAL UPON THE TRADE OF WEST-COAST PORTS. The general effect of the canal upon the people of the Pacific coast will be that of enabling them to buy cheaper and sell dearer and to carry on a larger trade with the people of their own and foreign countries. The manner in which the seaports of the west coast will share in this larger trade constitutes an inquiry of local and general interest. San Francisco is the centrally located port and has a harbor of great natural excellence. Formerly that city controlled nearly all our Pacific coast trade, and in the fiscal year 1899-1900 about 67 per cent of the foreign commerce of the Pacific ports was handled through San Francisco. The trade of San Francisco, however, has avei-aged but little more during the past five 5'ears than it averaged during the pre- ceding quinquennial period. The value of the imports of the five years ending in June, 1900, shows a gain of 24 per cent over the total for the preceding five years, while the expoi-ts show a decline of 11 per cent. The other important ports of the Pacific coast, with one exception, have had an increase in both imports and exports, and in the case of the Puget Sound section the growth of foreign trade has been especially rapid. The resources of the country about I'uget Sound have been much developed during the past decade, and the transcontinental railways reaching the Sound have both increased the facilities for land transportation and have placed in service trans-Pacific steamship lines by means of which they are able to make through shipments between interior points in the United States and the Orient. There is one line from San Francisco to the Orient operated in connection with a railway company — the Pacific Mail Steamship Companj^; but from Puget Sound there are three steamship lines operated by the transcontinental railway companies. The consequence has been an increase in the foreign trade of the United States customs district of Puget Sound from $6,206,456 in 1890-91 to §25,051,670 in 1899-1900. During the past five years the total exp'orfs from the Puget Sound customs district were 146 per cent greater than the exports for the preceding period of equal length. The total imports show a gain of about 500 per cent. In the case of Portland, or the customs district of Willamette, the growth has been less rapid, a comparison of the totals of the two quinquennial periods showing a gain of 60 per cent in exports and 38.6 per cent in imports. In the foreign trade of San Diego the exports of the last five j'ears are nearly treble those of the preceding, but the imports have fallen off 17 percent. The foregoing figures indicate that with the exception of Puget Sound, where there has been veiy rapid increase, and Portlatid, where the growth has been moderately large, the maritime foreign trade of our west coast has not developed greatly during the past decade. The opening of the isthmian canal may be expected to increase the ocean commerce of the Pacific coast section as a whole and enable the southern seaports to make a better showing, as compared with the northern, than tlic}' have been making in the past decade. San Diego, Los Angeles, and also San Francisco will not only have a better route to the Atlantic than they now possess, but will have the advantage of being convenient ports of call for vessels engaged in the coasting trade between our two seaboards and, to some extent, for the vessels plying between Atlantic and Oriental ports through the canal. The short-distance or great-circle route between the American isthmus and Japan and China runs close to the coast of the United States, and, with the exception of those vessels that desire to call at the Hawaiian Islands, this route will he the one naturally taken by vessel to and from the Orient. This great-circle I'oute will also have the advantage of enabling steamers to coal on the west coast of the United States, or at Vancouver, where satisfactoiy steaming coal can be secured comparatively cheanl.v. Vessels bound for the East will be obliged to run against opposing winds and currents, but this disadvantage will probably be more than offset by the shortness of the route and b}"^ the coaling facilities. How will the canal affect the maritime commerce of ports as far north as Portland and Pugefe Sound? If the industrial analysis made in the preceding pages is accurate there will be a large increase in the exportation of agricultural and forest products. These northern ports will also be the natural gateways for a large share of the export trade of Idaho, Montana, and Wyoming, and for a portion of the commerce of British Columbia. It would seem certain that the canal will enlarge the export business of the northern Pacific ports. The canal doubtless will secure some import business that would otherwise be turned over to PANAMA CANAL TRAFFIC AND TOLLS. 251 the transcontinental railways at Puget Sound points and at other more southed}- Pacific ports, but a study of the through business now being done by the transcontinental railroads shows it to be of small amount, so small that the canal would not have to create a large tonnage of new traffic for the railways to cover what it could divert from the roads. A discussion of the transconti- nental railway traffic may be found in Chapter X of this report. There are two forces that will favor Puget Sound as a gateway for imports from Japan and the Continent of Asia. Vessels on their eastward voyage across the northern Pacific along the great-circle route for the southern Pacific ports of the United States, or for the American isth- mus, will add only about 600 to 600 nautical miles to their voyage by calling at Puget Sound. Under those conditions it would seem that Puget Sound points would natui-ally become important centers for the distribution of Japanese and Asiati<> goods. But in addition to being near to the ocean highway, along which a large quantity of imports will travel, the Puget Sound ports will be able to supply steamers with coal. The coal obtainable in these ports will be required by the vessels engaged "in the commerce of the north Pacific, and this fuel supply will give to Washing- ton and British Columbia the possession of a magnet that will attract commerce with great force. That region is now deriving from its coal much assistance in the development of its commerce; the opening of a canal will inaugurate commercial conditions on the Pacific that will enhance rather than lessen the efficiency of Puget Sound coal as an agency for the promotion of commerce. In this discussion of the relation of an isthmian canal to the industries and commerce of the Pacific coast States, only the larger industries of the section have been considered. The business activities here dealt with are concerned mainly with the production of food and the raw materials of manufacture. The fisheries and horticultural business of our Western States require a con- siderable amount of auxiliary manufacturing for local purposes; but, with the exception of lumbei- and flour and a small amount of leather, the Pacific coast manufactures but little for export. This will be characteristic of the section for some time to come, although the use of the Puget Sound coal, and the petroleum oil of southern California, and the application, by means of electricity, of the abundant water power of California to industrial purposes will make possible a greater diversification of industry than has yet been accomplished. The most general statement that can be made of the efl'ect which an isthmian canal will have on the Pacific coast is that the waterway will enable that section to meet more easily and success- fully the growing competition of those countries whose similar productions make them commercial rivals of our Western States. Argentina is a lar^e and growing exporter of grain, wool, and hides; but it possesses all the requisites of successful horticulture, and just as our Western States have done, so will Argentina become a large producer of fruits and wine, both for domestic and foreign markets. Much the same development may safely be predicted of South Africa and Chile. Without an isthmian canal our west coast will have increasing difficulty in meeting the competition of these rival sections. Chapter VI. THE COAIi STTPPXiY FOR THE COMMERCE AND COUNTRIES OF THE PACIFIC— THE CANAIj AND THE COAL TRADE OF THE UNITED STATES. Abundant and cheap coal and iron are resources fundamental to highly diversitied industries and an extensive domestic and foi'eign commerce, and their importance increases rather than diminishes with the development of the economic organization of society. Whatever affects these resources and the activities directly connected with them strengthens or weakens the foundation upon which the industrial and commercial superstructure of society is ba.sed. ('oal has become the almost universal fuel force of manufacturing and commerce; and except in that limited field where electricity generated by water power can be utilized it is the motive power of business activity. It more than anj^ other factor determines where most industries shall be located, and the price of coal is, at the present time, not only determining which sections within each country shall succeed most largely, but it is also deciding which of the industrially resourceful and well- equipped nations of the world is to achieve the highest measure of economic success. If the abundant supply of coal in the eastern half of our country is available for export at a moderate cost, it will tend to increase the use of the isthmian canal by the merchant marine of our own and foreign countries, to facilitate the development of the commerce of the Pacihc, and to enhance the industrial changes that may be wrought by the waterway on the west coast of South America and North America as far north as southern California. With the exception of the coal beds of the section of country adjacent to Puget Sound in Washington and British Columbia, there are as yet no large and valuable coal supplies on the entire west coast of the Americas available for the vessels engaged in the commerce of the Pacific or for the fuel which future industrial development will require. There are coal deposits in northern Mexico, northern Peru, and southern Chile, and there are petroleum fields in Peru. These several sources of fuel may possibly become valuable for the commerce and industry of the Pacific coast generally, but what has thus far been accomplished in connection with these fields would hardlj^ warrant one in expecting them to become of much more than local importance. Probably during the early years of the use of the canal, and possibly for many years, the wesf coast of America from California south, and the coaling stations of the Pacific generally, will draw their supply from other than Mexican and South American sources. The routes followed by steamers is determined, when a choice is possible, almost as much by coal costs as by distances. The larger share of the world's ocean commerce originates or ends in the countries about the North Atlantic, and a large share of the North Atlantic trade with the nations of the Pacific will have the choice of the Suez and American canal routes. For a part of this Atlantic-Pacific trade the Suez route will be shorter, and for another portion the American route will have an advantage in distance. The route chosen will, to some extent, depend upon the relative cost of coal at the stations along the respective routes. This is equivalent to saying that, in the competition of the two canals for the traSic free to choose between the two water- ways, the route will be more successful that can furnish vessels with the cheaper coal, unless a disparity in toll charges and the chances for securing and delivering cargo at intermediate ports should be sufficient to offset the advantage of cheaper fuel. An abundant supply of good coal, obtainable at moderate prices in the coaling stations of the Pacific, in addition to the commercial and industrial benefits conferred, will be of advantage to our Nav}% because of the necessity of our maintaining a number of naval vessels on that ocean. The efficiency of a naval squadron is even more dependent than that of a merchant fleet upon an adequate and sure supply of good coal, and whatever will increase and cheapen the coal supply of the Pacific will enable the United States to protect its commercial and colonial interests with fewer risks and less expenditure. SOURCES FROM WHICH THE COAL CONSUMED ON THE PACIFIC IS NOW OBTAINED. The Pacific States of the United States are not only unable to export much coal, but are, with the exception of the State of Washington, obliged to import large quantities. The fuel reguired by the steamers on the Pacific Ocean and for industrial purposes by the countries in and adjacent to the Pacific Ocean is practically all supplied by other countries than our own. In 1899 P.^NAilA CANAL TRAFFIC AND TOLLS. 253 ■Ne sent a small amount of coal for the first time, 34,000 tons, to the British East Indies, and less than 2,000 tons to the Dutch East Indies. This, however, was due to unusual conditions, and does not indicate the probable beginning of coal exports to the East Indies. For several jears we have sent a little coal to the Hawaiian Islands, probablj' as ballast, and in 1898 our shipments to the Hawaiian and Philippine Islands reached 16,580 tons, and in 1899, 80,209 tons. Nearly all of this tonnage, however, can probably be accounted for by the military operations which we carried on in the East after the spring of 1898. Washington, our only Pacific State having a surplus of coal, produced 2,000,000 tons in 1899, the output having doubled since 1893. The larger part of this coal is consumed locally, some of it is used by the steamers calling at Puget Sound ports, and California imports about 400.000 tons annually. The State of Oregon has coal mines of minor importance, but which may possibly be so developed as to enable that State to supply a part of its own fuel needs. In 1898 the output of the Oregon mines was but 52,000 tons, and the statistics for the last ten j-ears do not reveal any tendency toward the increased output. However, there are said to be veins in Oregon which are expected to yield considerable quantities of low-grade bituminous coal in the future. Britisli Columbia has well-developed coal mines on Vancouver Island, and veins that are probabl}^ extensive are being opened up on the mainland. The total coal production of Canada in 1898 was 4,172,655 tons; ten years earlier it was 2,658,000 tons. The greater part of the present output is obtained in British Columbia, although Nova Scotia, Quebec, and Ontario all produce limited quantities. Regarding the coal mines of Vancouver, the United States consul at Victoria reports that the total output of the island in 1898 was 1,117,915 tons, and for 1899, 1,666,251. The shipments to foreign countries in 1898 were 765,961 tons, and in 1899, 769,091 tons. San Francisco and the southern ports of California, the Hawaiian Islands, and the steamships engaged in the trade between America and China and Australia are consumers of this British Columbia fuel. The imports of British Columbian coal into California in 1899 amounted to 652,926 tons, which figures represent an increase of 50 per cent during the last ten j-ears, although the amount of British Columbian coal imported into the United States at the present time is considerably less than it would be had not the coal from the State of Washington become available for the Cali- fornia trade. The constantly increasing use of petroleum and electricity in California has probabh' made the demand for coal in that State less than it would otherwise have been. At the present time neither the State of Washington nor British Columbia is furnishing any considerable amount of coal to the coaling stations of the Pacific nor sending very much coal to Pacific countries generall}' . It would seem, nevertheless, that the supply of coal in this section of the United States and Canada was large enough to make possible the development of an important coal export business. Although a large part of the coal thus far discovered and worked is either lignite or low-grade bituminous, and but little, if any, bituminous coal equal to the best bituminous of the eastern part of the United States has j'et been found, the best coal of Vancouver and the State of Washington is satisfactory for steaming pui'poses and is now emplo}*ed for both industrial and commercial uses. There is no genuine anthracite coal mined in this district. For many years Japan has been developing her coal mines, with the result that the total production rose from 1,402,000 tons in 1886 to 5,080,000 tons in 1896. During this decade the domestic consumption rose from 726,000 tons to 2,936,000 tons. Thus, while the consumption grew rapidly, it had not increased so fast as the total production, and Japan was able to increase her exports during the decade from 776,000 tons to 2,144,000 tons. Since 1896 the coal exports from Japan have increased largely. The tonnage figures for the recent production and expor- tation are not available; but the value of the coal exported rose from 11,545,801 yen ($5,772,900) in 1897 to 15,168,799 yen ($7,584,400) in 1898. Japan supplies a large quantity of coal to steamers engaged in the oriental trade, and also sends coal to Pacific ports. Australia is a country producing a moderate but increasing amount of coal of good quality, the total production growing from 4,179,000 tons in 1888 to 6,313,000 tons in 1898. The only colony of Australia tliat has a surplus for export is New South Wales, whose foreign shipments in 1898 amounted to 2,791,796 tons. The shipments out of New South \Yales are larger than the total exportation of Australia, which fact indicates that some of the New South Wales exports were to other Australian colonies. The total coal imports of the Australian colonies were 1,000,000 tons, and two- fifths of this amount was drawn from sources outside of Australia. Australian coal is at the present time distributed quite generally throughout the Pacific, the shipments being facilitated by the cheap transportation available. A large number of vessels leave Australia for America with coal as ballast, and this has enabled Australia to market her coal readily in Hawaii and in both North and South America. For the last decade California has annually procured from 200,000 to 400,000 tons of Australian coal, and Australia and Japan are 254 PANAJVIA CANAL TRAFFIC AND TOLLS. at the present time supplying the larger part of the coal to be found in the tropical and southern sections of the Pacific. Another important source of the coal used in the Pacific is Great Britain. The vessels which carry the grain, lumber, and nitrates of the west coast of America are frequently obliged to make the outbound voyao;e from Europe in ballast. This enables Wales to compete even with British Columbia and Washington in the California coal trade. A part of the coal thus imported, a portion of which is Welsh anthracite, is used for domestic purposes. The continued use of British coal on the Pacific is due, in part, to its superior quality and in part to the exceedingly cheap transportation which the coal is able to obtain. In addition to the coal supply mentioned above, California annually purchases in the eastern part of the United States a limited amount of anthracite. There is also brought from the Eastern States a limited quantity of high-grade bituminous coal for smithing purposes. This anthracite and smithing coal are obtained from Pennsylvania and Maryland," and have not amounted to 50,000 tons in anj' j'ear during the past decade. The foregoing survey of the principal sources from which the coal used on the Pacific is now secured, will serve to show that the coal fields are widely scattered and are by no means so pro- ductive as those in the eastern part of the United States" or in Europe. The Australian, Wash- ington. British Columbia, and Japanese coal fields are all capable of development, but the increase in their output will be only moderately rapid. Much is said but comparatively little is known in regard to the coal fields of China. It is possible that within the next decade and a half railroads will have been con.structed from the Chine.se fields to the seaboard and that foreign capital will have opened up the Chinese mines. Should that take place, the largest future coal supply for the Pacific will be China. Unless that does take place, however, the Pacific coal supply, "until the isthmian canal has been constructed, will be drawn from the four countries mentioned above, unless that which is highly improbable should occur and there should be found in Mexico and western South America richer fields of available coal than are now known to exist. PUGET SOUND COAL. The proximity of the coal resources of Puget Sound to Oregon and California, and their availability for the use of the steamers engaged in the American-Asiatic trade of the North Pacific, make desirable a further inquiry into the quantity, quality, and marketability of the coal of this section. Although the Canadian coal production, most of which is to be accredited to British Columbia, was only 4,172,655 tons in 1S9S and had increased only a little over 1,000,000 tons since 1890, the reports of our consuls and other sources of information indicate the existence of extensive deposits. These coal beds, however, are not especially thick, and the costs of mining have not been so low as in the great coal-mining regions of the world. The best mines yet developed are those of Vancouver Island and Crows Nest Pass, both of which produce a fair grade of bitumi- nous coal from which coke can be made. The Crows Nest Pass field, at the eastern edge of the Cordillera Mountains, near the Canadian Pacific Railway', is a valuable source of supply for the metal-mining industries of the mountain district and for the section of the country just east of that region, but is too far from the coast to be marketed profitably at tide water. The Vancou- ver coal is favorably located for transportation, and it has been the source of most of Canada's exports of the mineral. Most of the foreign sales of this coal have been in the United States, where it has competed successfully with the product of other countries, without being able, how- ever, to monopolize the market. The coal mines of the State of AVashington, although the product is somewhat inferior to the better grades of the British Colum))ia output, have been developed more rapidlj' than have the rival Canadian fields. The figures of production remained nearly constant at about 1,000,000 tons from 1886 to 1893, but for the five years ending in 1899 there was a rapid growth, the amounts being, in short tons, for 1895, 1,191,-ilO; 1896, 1,195,504; 1897, 1,434,112; 1898, 1,884.571; 1899, 2,020,260. The latest report of the United States Geological Survey, that for 1899, says: Washington is the only one of the Pacific coast States whose coal product amounts to as much as 1 per cent of the total bituminous output of the United States. It is also the only State on the Pacific coast producing true bitumi- nous coal, the entire product of California and Oregon being lignite or brown coals. Some of the Washington coals are true coking coals, over 50,000 tons in 1899 being made mto coke. Some of the coals produced in Washington approach anthracite in character, and some "natural coke" has been observed. These fields have an area about three times that of the Pennsj'lvania anthracite beds, but are not especially rich deposits except in limited and scattered areas. Like those of the Cordilleran Mountains generally, they have sufl'ered badly by the irregular fracturing of the earth's crust. As regards the quality of the Puget Sound coal three sources of information may be drawn Pi^AMA CANAL TRAFFIC AND TOLLS. 255 upon in this discussion — the studies of the United States Geological Survey, to which reference has just been made, the experience of those using the coal on vessels and in industries, and the tests made by the United States Navy. Several large consumers of coal, including the ocean steamship companies, I'eport that the Puget Sound coal can be used to advantage for steaming purposes, although it is inferior to the product of the best bituminous fields. The president of one of the steamship companies states: The British Columbia coals that are now being mined are considered fair average steam coals. The Washington coals are lignites, semibituminous, and bituminous. The lignites are used principaUy as house coals, the screenings from such lignites being used at points close to the mines for steam purposes, as they are sold at a very low figure. The semibituminous and bituminous coals range from fair to good steam-producing coals. One firm, using as much coal as any industrial concern on the Pacific, which ordinarily secures its coal from the Washington mines, and an authoritj' regarding the sources of the coal used in California, wrote in reply to the question, "Is the coal from Washington and British Columbia good for steaming purposes?" — The lignite coals are not. Those of a more bituminous character are so used, but they have not the evaporative power of the better grades of bituminous used on the Atlantic seaboard, nor are they so good as the bituminous grade from Australia or the semianthracite ceals from Cardiff and Wales. The numerous analyses and tests made by the United States IS'avy of coals mined in different parts of the world indicate that the Ijituminous coals of West Virginia and Wales rank highest, that the Alabama coal is somewhat better than the Australian, and that the Australian product is superior to that exported from Washington or British Columbia. On account of their different qualities these several coals will sell in the same market for different prices; and the decision of the question whether the Puget Sound mines will in the future control the market, in which the ships and industries of the Pacific coast will secure their coal, will depend both on the relative qualities and on the costs of mining and delivering the competing products. The foregoing review of the present sources of the coal used in Pacific markets shows that there are, and will be, several I'egions competing for this coal trade. The nature of this competition can be shown to advantage by a brief reference to the coal trade of California at the present time. THE FUEL SUPPLY OF CALIFORNIA. The sources of California's coal supply constitute one of the interesting facts of the world's commerce. Every continent, except Africa and South America, is drawn upon. Europe, Asia, Australia, and both sides of North America export coal to California. The annual jiroduction of the State being only 160,000 tons of low-grade coal, nearly all the supply has to be imported. At the present time about half the amount consumed is received from foreign countries, and half from the United States. The following table shows the oi-igin of the foreign and domestic imports, and indicates that the American product is gaining on the foreign: Coal imports of California.'^ , 1889. 1894. 1899. Tons. Percent. Tons. Per cent. Tons. Per cent. Foreign: 417,904 408,032 45,617 1,340 31.0 30.0 3.5 647,110 211,733 176, 198 15,637 42.4 13.9 11.5 1.0 623, 133 36. 2 Australia 139,333 93, 263 9,390 8.1 5.4 Japan .6 Total 872,893 64.5 1,050,678 68.8 865,059 50.3 Domestic: 372,514 87,600 18,950 27.5 6.5 1.5 395, 173 65,263 16, 640 2.5.9 4.2 1.1 627,450 189, 507 38,951 36.4 11.0 2.3 Total 479,064 35.5 477,076 31.2 855,908 49.7 1,351,957 100.0 1,527,754 100.0 1,720,967 100.0 a In addition to the amounts given in this table there has been a small quantity of anthracite annually obtained from Utah and Wyoming since 1893. The figures for alternate years are, for 1893, 21,562 tons: 1895, 37,530 tons: 1897, 44,343 tons, and 1899, 19,000 tons. The anthracite imported from Wales is included in the figures for Great Britain given in the table. The prominence of the United Kingdom as an ocean carrier and the possibilities of her foreign trade in coal are well illustrated by her large shipments of that bulky commodity halfway around the world. In past j'ears California has received a part of her coal from Australia and Great Britain in ships that carry her wheat to Europe. The coal from Great Britain has varied 256 PANAMA CANTAL TEAFFIC AND TOLLS. from 'di to 15 per cent of the total imports during the last dozen years, while the supply obtained from Australia has ranged from 11^ per cent to 30 per cent of the total. In the past from 25 to 35 per cent of the California supply has been drawn from these two foreign sources. For several reasons, however, coal shipments from these countries are falling off. The price at which British and Australia coal can be sold in California fluctuates sharply, and rises and falls according to the pi-ospectof the cereal crops and the expectation on the part of shipowners of remunerative homeward business. Under extremely favorable conditions freights on coal from Great Britain have been as low as 8s. per ton, while during the succeeding year they have reached 19s. from the same ports. When California was largely dependent upon Great Britain and Australia for her coal supply, the practice was common of importing the coal from those covmtries on a speculative basis, the coal shippers sending out the cargo with the intention of selling the coal on or before its arrival at the port of destination. During recent yeai-s California buyers have adopted the practice of making contracts for the delivery of coal at fixed prices for periods of time, and the speculative shipments have nearly ceased. This change in business methods has given an advantage to the coal miners of the Puget Sound section. The decline of the Australian and British coal in the California trade, and the concurrent development of the Puget Sound coal, is well illustrated by the statistics of the coal imports of that State. In 1889 Australia furnished 30 per cent of "California's coal needs; in 1899 the Australian shipments formed only 8 per cent. In 1899 but a small amount of coal was shipped from Great Britain, whereas in 1892 15 per cent of the coal imports of California came from the United Kingdom. In 1899 the supply obtained from Great Britain amounted to only 5^ per cent. The State of Washington, on the contrary, supplied California with 27^ per cent of her coal in 1889, and with 36.-1 per cent in 1899. In 1899 the Puget Sound section, including British Columbia, Vancouver, and the State of Washington, furnished California with nearly three- fourths of her coal supply. Ten years earlier the amount from this section was 58i per cent of the total. The importations of coal into California have increased very slowly, the present amount being only If million tons, whereas twelve years ago 1^ million tons were brought into the State. These figures show clearly enough that California has not yet become a State with diversified manufacturing industries, her principal business activities being concerned with the production of grain, fruit, and wine, the .sawing of lumber, and the mining of metals. Most of the manu- facturing is auxiliary to these industries. As has been stated in another chapter of this report, the auxiliary manufacturing industries of California are making an increasing u.se of electrically transmitted water power. Electricity thus generated is also extensively used for power and lighting purposes in the towns. Further- more, California would be obliged to use more coal than she does at the present time were there not petroleum oil fields in the southern part of the State, from which increasing supplies of oil are being annually taken for industrial and domestic fuel purposes and for use in railroad locomotives. Concerning the value of oil for fuel the secretary of the Los Angeles Chamber of Commerce makes the following statement: At the present time it is estimated that 4 barrels of oil are'equal to 1 ton of coal, and the expense of handling the same is so much less that 3 barrels of oil are nearly equivalent to a ton of coal. As the development of the oil fields continues the price of oil will be reduced, and unless the present price of coal can be greatly reduced coal will cease to be a factor in our manufacturing industries. This statement probabh' overestimates the industrial importance of the development of the oil fields of southern California; nevertheless, the opening of them has resulted in an extensive substitution of oil for coal. The oil is not adapted to lighting purposes, but makes a good fuel. The foregoing facts indicate that, under the existing conditions of transportation and competi- tion, the coal needs of the west coast of the United States and Canada will be drawn mainly, and within a few years almost entirely, from the fields near Puget Sound. The steamers of the north Pacific, excepting such as make the trip to Australia, will draw their chief supply from the same section. Will the opening of an isthmian canal enable the coal of the eastern and southern por- tion of the United States to enter the west coast markets of our country? Will this coal from east of the canal be able to compete with the Puget Sound product in the markets of the tropical and southern sections of the Pacific? In order to answer these questions it will be necessary, first, to inquire into the prices at which Puget Sound coal can be sold in Pacific markets, and then to examine the present and prol)able future costs of delivering our eastern and southern coal at tide water, and to take account of the methods that will probably prevail in the transportation of coal from the eastern and southern mines to the vicinity of the canal and beyond, when that water- way shall have become available. PANAMA CANAL TKAFFIC AND TOLLS. 257 PRICES AND COSTS OF COAL IN DIFFERENT SECTIONS OF THE UNITED STATES. The prices of coal on the Pacific coast range higher than the prices of similar grades in the Atlantic ports. In the Puget Sound cities near the mines "good steam coals" range in price from $-2.25 per gross ton, for the lower grades, to $3.25 per gross ton for the better qualities, free on board vessels. Vancouver coal sells for $2.50 to $3.50 per ton, according to quality, in the British Columbia coaling stations. Portland and Astoria secure their coal from the Washington mines at a cost, delivered, of $4.60 to $5.25 per ton. The authority for these figures is the gen; eral manager of a steamship company doing a large coasting business, and he also states: San Francisco uses, for houseliold purposes, a large quantity of Wasliington lignite coals and British Columbia bituminous house coal. For steam purposes the British Columbia and Washington bituminous coals are used, rates , ranging from $4.80 to $5.50 per gross ton at the wharf." Another authority says: The San Francisco prices are variable. Steam coals from Washington will vary from $5 to $6 per ton; from Vancouver Island from $5.50 to $7, and from Australia from $5.50 to $7.50 (gross tons in each case). The same gentleman reports that the price paid by a San Francisco firm, whose business requires a large amount of coal, ranges from §4.75 to $5.25, delivered from the ship. This coal ordinarily comes from the Puget Sound mines in Washington. The superior quality of the Comox and other British Columbia coal enables them to com- mand a somewhat higher price than the Washington product, but the Washington mines, prob- ably on account of our tariff of 67 cents a ton on bituminous coal, have been annually securing a larger percentage of the coal business of California and Oregon. The imports of the British Columbia coal into California have remained aliout constant during the last si.x years.* The prices just cited are probably not the lowest ones possible in the future. When the market shall have become larger, when new mines shall have been developed, and those now in operation shall be worked on a larger scale, and, what is most important, when the means of land and ocean transportation shall have been improved, enlarged, and cheapened, the Puget Sound mine operators can doubtless deliver coal in California and elsewhere considerably cheaper than at present. It is the belief of one competent to speak that— The foreign sources of supply are becoming less important to us (California) with the development of northern mines, and the day is not far distant when the northern capacity will be equal to the entire demand. At the moment it would seem to be a question of miners and water transportation, for certainly the northern coals can be laid down here at a cost so far below that of coals from Great Britain and Australia as to overcome any possible difference in quality. The coal exported from the eastern half of the United States will be taken mainly from two sections, the Pennsylvania and West Virginia fields in the Upper Ohio Valley and the mines in north central Alabama. The coal from the Upper Ohio Valley section is shipped by rail to the several North Atlantic ports, where it is sold in large amounts to industrial plants and ocean vessels, and whence a limited quantity is now exported to foreign countries for naval and industrial purposes. In the handling of coal, both for domestic coastwise distribution and for foreign export, Norfolk and Newport News have some advantares over the Atlantic ports north of them, because of the exceptionally high grade of the coals handled and the spacious and inexpensive terminal facilities possible in their harbors, which are also, because of their nearness to the ocean, convenient stations for vessels desiring to coal. The railway haul from the mines to Baltimore and Philadelphia is somewhat shorter and more economical than to Norfolk and Newport News, but the disadvantage of the longer railway distance to the ports at the mouth of the James is counterbalanced by the closer proximity of those cities to the sea, and their central situation on the Atlantic coast. The Ohio River is another route used for the shipments of large quantities of coal from Pennsylvania and West Virginia. The coal sent down the Ohio is mainly destined for Cincinnati and other Ohio River points, but a considerable share of the total is distributed along the Missis- sippi, about 3,000,000 short tons reaching New Orleans each year. The distance from Pittsburg to New Orleans by river is about 2,200 miles, and, as will be .shown presently, it is the extra- ordinarily cheap transportation which this river navigation makes possible that will in the future give importance to the Upper Ohio Valley as a coal-exporting section of the United States. The city of Birmingham, in the Alabama coal and iron district, is about 260 miles by rail a The unavoidable use of both long and short tons in this discussion may be confusing. Bituminous coal from Pennsylvania and West Virginia and Virginia is sold in the Atlantic ports by the ton of 2,240 pounds; in the Gulf ports by the ton of 2,000 pounds. On the west coast coal prices are quoted on the ton of 2,240 pounds. b These figures regarding the prices of western coal are for the year 1900. Coal prices were high that year and have since remained higher than they averaged during several years preceding 1900. However, it is not probable that the circumstances are permanent which have kept the price of coal at the high level of the four years ending in 1904. 258 PANAMA CANAL TEAFFIC AND TOLLS. from Mobile and Pensacola and 360 miles from New Orleans. The deposits are rich, the costs of mining are comparatively low, and the distance to good tide-water harbors is short. The prices of coal have recently been high on account of the almost unprecedented industrial demands of the past two years. In September, 1900, two members of the Isthmian Canal Com- mission had a conference in Pittsburg with persons shi])ping large quantities of coal down the Ohio and Mississippi rivers, and the price at which bituminous coal was then selling in New Orleans was found to be 39 cents a bushel, or $-i.S2 a ton of 2,000 pounds. It was also stated by » prominent coal merchant that $3.50 a short ton in New Orleans would be as low a price as would be accepted at that time, even on a contract calling for the delivery of a large quantity. In reply to an inquii-y addressed to the secretary of the New Orleans Board of Trade in July, 1900, the response received was: A large dealer here advises that $3.50 per short ton would about cover cost of Pittsburg coal, and Alabama would be about the same. The same inquiry was made of the general freight agent of one of the Gulf railroads, and his reply, under date of July 10, 1900, was: I have addressed dealers in coal asking for their prices free on board vessels Pensacola and Mobile for export. I am quoted on coal free on board vessels at Pensacola $2.60 per ton of 2,240 pounds, and at Mobile $2.35 per ton of 2,000 tons ($2.64 per long ton). There is no export business moving through New Orleans, nor has it moved that way for some time, but the cost of coal free on board vessels at New Orleans would probably be at least 75 cents per ton higher than to Mobile and Pensacola. The price of coal for local use was considerably higher at that time, because the railway companies regularly make a large rebate in their rate when the coal handled is exported or sold to vessels other than tugs or local harbor crafts. The export price for the best Pocahontas coal in October, 1900, was $2.60 per 2,240 pounds. The bunker price of that coal was then $3.10 per long ton trimmed in bunkers. At the .same time the price of bituminous coal in vessel cargo fots at Philadelphia was $2.30 per gro.ss ton. The price paid by local manufacturers was $3.75 per long ton. The prices just quoted were so much above the charges which had prevailed during previous years, that it was necessary for the accomplishment of the purposes of this investigation to inquire what price conservative business men considered would, under existing conditions of transporta- tion, cover the costs of mining and delivering the coal at the seaboard, including adequate business protits. Pittsburg firms mining and shipping coal by rail and by river state that the cost of the coal at that section need not average over $1 per short ton on the barges in the Monongahela River, and that under the present conditions of Ohio River navigation, a rate of $1 jier short ton would yield a good profit to the vessel men for transporting the coal from Pittsburg to New Orleans. One of the Pittsburg firms doing a large business in mining coal and shipping it down the Ohio and Mississippi rivers prepared the following detailed statement of the cost of mining coal and getting it to New Orleans. The items are not estimates, but are the costs actually incurred. The word "ton" means 2,000 pounds: One ton, mine-run coal, f. o. b. works ...per ton.. $0. 75 Expen.se of transporting same to Pittsburg do 10 Transporting from Pittsburg to Louisville do 20 Transporting from Louisville to New Orleans ' do 37 Cost of boat containing coal do 70 Total cost of coal and boat at New Orleans do 2. 12 Only about 30 per cent of the coal barges or flats sent to New Orleans are brought back; the remaining seven-tenths are sold as rough lumber mainly to the planters. According to the above statement the purchaser of the coal is charged 70 cents per ton of coal for the boat con- taining the coal. The firm that submitted the .statement accompanied the list of costs with the following explanation: In the event that we want the boat back after having been unloaded, we buy it back from the customer at a very low price, thus enabling us to get the boat back home with a profit to us. The cost of coal in New Orleans is the same, whether the barge be towed back to the coal mines or not. This statement as to the cost of coal on the barges seems to be corroborated by the fact that the price of Pennsylvania bituminous at the mine has, according to the reports of the United States Geological Survey, avei-aged 76.4 cents during the past decade The testimony of the above-mentioned firm and of otjfier Pittsburg coal merchants is, that Pittsburg coal could be delivered with profit, in large (luuntities on board ves.sels in New Orleans, at a total charge of $2 to $2.25 per short ton, or f2.50 per ton of 2,240 pounds. PANAMA CANAL TRAFFIC AND TOLLS. 259 In Birmino-ham, Ala., the committee of the Commission was informed in September 1900, bv the vice-prt^sident of one of the hirge mining- and transportation companies that Alabama coal could be profitably sold at that time, free on board vessels at Gulf ports at ^2.o0 per short ton That this estimate was a liberal one is proven by the fact that for the last ten years_ the average price of Alabama coal at the mines has been 9(3 cents, and that at the time the committee visited Birmino-ham the railroad freight rate on coal for export from the Birmingham district to Mobile, including "the cost of placing the coal into the ship's hold at the coal chute, was $1.10 per ton of 2,000 pounds. i «r * j- + In 1898 the averao-e mine cost of Alabama coal, as a whole, was only 75 cents, according to the report of the United States Geological Survey, and in Jefferson County, where 57 per cent of the total production of the State originated, the average mine cost was but 69 cents per ton ot 2 000 pounds. The railway charges in 1900 were generally higher than they were in previous vears and more than they need to be in the future for the conduct ot a larger volume ot traffic according to the most improved methods. Indeed, the export rate on pig iron from Birming- ham has been $1 per ton. In view of these figures and of the testimony of several Alabama men engaged in the transportation and mining business, it would seeni certain that coal f^m the Birmingham district can now be sold free on board vessels at Mobile and Pensacola for ^1.7» to $2 per short toil (§1.9<) to §2.24 per long ton). ■ . ^- ^, v ,u t.i f Under the present (19(iO) conditions ot raining and transportation the iNorth Atlantic^ sea- board cost of bituminous coal free on board can be placed at $2.25 to $2.50 a long ton or $2 to $2.25 a short ton, depending upon the quality of the coal and the ports through which it is ^" Briefly stated, it appears that the cost of bituminous coal, under existing conditions of trans- portation, mav be expected to be somewhat higher on the North Atlantic seaboard than in the Gulf ports of "Pensacola and Mobile; and that in the New Orleans market the upper Ohio "Valley coal will normally rano-e about 25 cents above the price of Alabama coal in Pensacx)la and Mobile. In respect to the qualitv, however, the coal from the Pittsburg section is somewhat superior to that from Alabama, the difference probablv being sufficient to offset the greater price ot the more northern product. Speaking generally, the mine operators of the eastern and southern parts of the United States could offer bituminous coal for export for $1. (5 to ^2.25, or at an average price of about $2 a short ton. RIVER TRANSPORTATION OF COAL FROM PENNSYLVANIA, WEST VIRGINIA, AND ALABAMA. The Ohio River traffic is a matter of such importance, in connection with this discussion of the exportation of American coal to and bevond the isthmian canal, that a brief description ought perhaps to be given of the manner in which the coal transportation is now conducted on the river The following statement of the methods of handling the coal traffic originating in the Monono-ahela River Vallev is taken from a special report of the Chamber of Commerce of Pitts- burg After stating that the Monongahela River has been made navigable 102 miles above Pittsburg bv means of nine locks and clams constructed and operated by the United States Gov- ernmentfand that the river ffows through the center of rich coal fields, the secretary says: Three species of boats loaded on the Monongahela River for the Ohio River trade are used by the ahippere viz: Coal boats drawing 8 to 8i feet and carrying 1,000 to 1,100 tons; coal barges, dra^vlng 6 to ^ leet, carrying 500 tons, '"' Th'e ^'iXSlv briS'flom ?he"ines about 3,000 tons of coal in small fleets. arrang«l for passing the locks ronvenientlv * * * "At Pittsburg * * * the small coal fleets are moored whde awaiting rises sufficient for navigation on the Ohio River. * * * When rises of 10 feet occur, or sufficient for 8-foot coal barges, fleets from 10,000 to 15,000 tons are made up for shipment to Cincinnati or Louisville. At Lou sville, two and sometimes three of the Pittsburg fleets are made up into monster fleets of fiom 35 000 to 40,000 tons and towed to New Orleans by powerful tow boats. A fleet conveying 40,000 tons covers about 10 acres. The coal fields of Alabama lie along streams capable of providing uavig-ation to Mobile for baro-es drawing about 6 feet of water; and these rivers, particularly the Warrior which flows throuo-h the most productive coal deposits, are being improved by means of locks and dams Coal can now be barged from a few miles above Tuscaloosa, Ala. , through the Warrior and Tombigbee rivers to Mobile, and when the Warrior River improvements shall have been extended 45 miles farther to Jefferson County, it will be possible to ship coal in barges carrying from 400 to 500 tons and drawing 6 feet of water, directly from the mines to the Gulf. The barges can be con- structed of the low-priced steel obtainable in the Birmingham district, and by means ot them coal can be profitably transported to tide water for 50 cents a ton. The coal barges now so extensivelv used on the Ohio and Mississippi rivers are made ot wood. Some of them are strongly built, and after discharging their cargoes are towed back to the mines for reloading. A large share of the coal barges (70 per cent ot those used tor shipping coal to New Orleans) are constructed as cheaply and f ragilely as possible, and, as was stated 260 PANAilA CANAL TEAFFIC AND TOLLS. above, arc sold for rough lumber in or near New Orleans. That these types of barges will be used a decade or fifteen years hence seems improbable, in view of the increasing costs of lumber and the declining costs of steel. The pressed steel car is rapidly displacing the wooden one for railway coal traffic, and it is rational to expect that wood will give place to steel in barge construction. Steel river barges with a draft of 6 to 10 feet and a capacity of 500 to 1,000 tons will have the added advantage of being strong enough to be towed on the Gulf and Caribbean. By means of them coal can be shipped directly from the Pennsylvania, West Virginia, and Alabama mines, not only to the Gulf ports, but also to the coaling stations of the West Indies, Mexico, and Central America, including the important stations that will certainly be established at the termini or along the line of the canal. It is possible the opening of an isthmian canal will lead to the use of a special type of I'iver barge for handling coal for export. A barge capable of drawing 15 to 20 feet of water might be loaded to a draft of 9 feet at the mines, to a draft of 12 feet at Louisville, and for six months of the year to 15 or 20 feet at Vicksburg. Barges of this size and type could, of course, be towed through to any desii'ed seaport, American or foreign. The suggestion that such barges might be used was made by a gentleman who has had large experience in shipping coal down the Ohio. Under these conditions of transportation coal costing §1 per short ton, free on board at the mine, could be sold in Panama, Greytown, and other Caribbean or Gulf ports for $3 or less per ton. American coal at $3 a ton of 2,000 pounds in these ports will not onlv hold the market against all foreign competition, but will be so much less expensive than the price at which coal can be obtained along the Suez Canal route, as to give the American route a strong commercial advantage resulting from the possession of cheap coal for steamers. In 1900, when the prices were high, coal was selling from $5.83 to $8.03 a gross ton under yearly contracts along the Suez Canal route, the price increasing with the distance from the British mines. The following average contract prices of coal have prevailed during each of the past five years at the more important stations along the Suez route, the figures having been obtained from a large coal mercJbant of London b}' the London representative of an American firm of shipbrokers. Contract prices in shillings and pence for the past five years. [London, E. C. October 31, 1900.] Coal port. 1896. 1897. 1898. 1899. 1900. s. d. 22 6 25 6 16 6 15 6-16 15 6 15 6 S. d. 29 C) 18 15 6-16 15 6 15 6 s. d. 26 6 19<"'6 18 18 17 «. d. 29 34 23 22 22 6 21 6 s. d. 35 6 36 6 26 24 Algiers . . 25 24 a No contracts. Note. — The above are prices at which contracts were made with the principal shipowners for the years named, and do not show varia- tions in "current" prices that occurred from time to time. All large shipowners contract; therofore the variations in the respective "cur- rent" prices do not affect them. The contract prices in the autumn of 1900 at Port Said were 26s., but current prices there were 40s. The contract prices for 1901 were higher than those lor 1900. "During the years 1896 and 1897," according to the London informant, "the Welsh coal market was quiet and freights were much lower than for the past two years;" but even during those years the coal costs along the Suez route were higher than the probable future cost of coal in the' stations of the West Indies and the Caribbean. Moreover, every indication points to increasing rather than diminishing costs of coal in Europe, and the future prices of European coal in the Mediterranean, Red, and Arabian seas can hardly be expected to be so low as they have prevailed in normal times in the past. CONCERNING THE MARKETING OF APPALACHIAN COAL WEST OF THE CANAL. Well-informed men engaged in mining and shipping coal testified in September, 1900, that the freight rate would then be about $3 per ton for shi^Dping coal 5,000 knots in chartered vessels. Assuming a tide-water price of $2.50 per gross ton, a canal toll of 45 cents per cargo ton (this would be about equal to $1 per vessel net register), and a freight rate of $3 a ton, coal from the mines east of the Mississippi River would have sold for about $5.95 a long ton in 1900 in California, Hawaii, and the west coast of South America. This price of $5.95 is not suggested as the probable price of eastern coal in Pacific markets after the opening of the canal, but it has some value, inasmuch as it represents a maximum, and shows what would be quoted were the present conditions as regards costs of coal and transportation to prevail. PANAJVIA CANAL TRAFFIC AND TOLLS. 261 After the canal has become available, coal can be shipped through it to Pacific ports either as ballast, as berth, or part cargo freight, as full cargo shipments in chartered vessels, or in towed barges. The rates for part cargoes or berth lots will in all probability be so high as usually to preclude shipments of that character, but there will be a large amount of steam-vessel tonnage going in ballast or with light cargoes westsvard through the canal for the Chilean nitra,te, the Hawaiian su"-ar, and the grain and lumber of the west coast of the United States and Canada. Such beino- the case, there will naturally be more or less coal carried as ballast to those ports of the Pacific^and at a very low freight rate. Moreover, vessels may be owned or chaitered by coal companies for the purposes of taking westward full cargoes of coal and bringing eastward nitrates, sugar, grain, or lumber. , , , . » , j i. j j: It is furthermore probable that the steel barges described above, if they are adopted tor river traffic, will be towed with their cargo through the canal to Central American and west South American ports within a thousand miles of the canal. The smooth water of this part of the Pacific coast will be favorable for towing, and there will be economy in shipping direct from the mine to the Pacific port without transfer of cargo. In view of these favorable facilities for the transportation of coal westward it would seem conservative to expect the freight costs of sending coal from the Gulf ports and the Atlantic ports of Norfolk and Newport News to points 5,000 knots distant— that is, in general terms, to north- ern Chile, Hawaii, and our west coast— will be as low as §2 per ton of 2,2i0 pounds, and possibly less in exceptional cases. The foregoing estimates regarding the cost of coal were that, with the existing transportation agencies, coal can be sold at tide water on the Atlantic and Gulf for an average cost of ^2 per gross ton, and that the costs of shipping coal to the Gulf will probably be less in the future than thev now are. Assuming that the cost of coal at Gulf and Atlantic ports will at the time of the opening of the canal range from $1.50 to $2.25 per gross ton (depending upon the quality o^ the coal, the port of shipment, and the conditions of the market), that the ocean freight will be $2 per ton, and the canal tolls 45 cents per cargo ton, the cost of delivering Pennsylvaliia, West Virginia, and Alabama coal in the ports of the west coast of the United States, Mexico, Central America, South America as far south as northern Chile, and the ports of Hawaii will be from $3.95 to $4.70 per ton of 2,240 pounds. Having made this detailed inquiry concerning the present and probable future costs of delivering Appalachian coal at the Atlantic and Gulf seaboards and the cost of shipping this coal to Caribbean ports, it is now possible to consider whether and to what extent the Puget Sound coal and that from the eastern third of the United States will compete in Pacific markets, particularly in California. In the earlier part of this chapter the present prices at which Puget Sound coal was selling in California and Oregon were given. Those prices can doubtless be reduced during the coming ten or fifteen years. According to the annual report of the United States Geological Survey, the averao-e cost of Washington coal at the mines was $1.78 in 1899, and for the ten years ending in 1899 the average was $2.16 per short ton. As the supply of labor becomes greater, and when the mining operations are conducted on a larger scale, the wages of labor will be somewhat lower and the totid cost of mining will be less per ton; how much it is impossible to say. Possibly $1.50 per short ton would be a fair estimate. An average railway rate from the Washington mines to the seaboard of §1 a ton is as low as may be expected. These estimates would make the average cost of Washington coal at the seaboard $2.50 a short ton or $2.80 a ton of 2,240 pounds, except for the coal from those mines close to the sea- board, which could sell their product at a lower price because of the cheap railway haul. As was stated above, the prices of coal in the year 1900 in Puget Sound cities ranged from $2.25 to $3.25 per gross ton. The Vancouver coal cost $3.50 per ton on an average in the British Columbia coaling stations. The ocean freight rates in 1900 were high, and this accounts for differences of $2.50 to $3 per ton then prevailing between the Puget Sound and San Francisco prices. It would seem that $1.50 per ton would ordinarily be a remunerative ocean rate to ban Francisco and also to Hawaii. On the basis of these estimates a possible future price of $4 a gross ton for Washington coal in California and Hawaii may probably be predicted. British Columbia coal will be obliged to pay the tariff of 67 cents unless the existing law is changed. These estimates are based on too meager data to make it safe to accept them as being closely accurate, but they are probably approximately correct; and, if they are, they indicate that Puo-et Sound coal will be sold in California and Hawaii at from $4 to $5 per long ton by the tim'e the isthmian canal shall have been opened. To Central and South American ports the freio-ht rates would doubtless be 50 cents a ton more than the California and Hawaiian points, andli selling price of from $4.50 to $5.50 per ton of 2,240 pounds would need to be predicted.^ The conclusions to be drawn from these estimates regarding the prices at which Appalachian and Puo-et Sound coal can be sold in the Pacific markets are that the Appalachian coal will doubt- less have an advantage over that from Puget Sound in Central and South American ports, and that in California and Hawaii the two coal-producing sections will be active competitors; the 34998°— 12 18 262 PANAJMA CAN^U^ TEAFFIC AND TOLLS. Puget Sound mine owners will apparently be able to sell at a somewhat lower price than their Eastern rivals can afford to accept, but the producers of the Eastern and Southern States will have an article of slightly better quality to offer. The two chief reasons why the Appalachian coal can compete in the markets so near Puget Sound are the lower mining costs in the East and the exceptionally cheap transportation that will be available from the Appalachian mines to the seaboard and from the seaboard west, both in steel barges and in vessels seeking the Pacific coast for the eastbound cargoes of lumber, grain, sugar, and nitrates. The general conclusions to this investigation of the probable sources of the future coal supply for the commerce and countries of the Pacific, and of this inquiry into the effects which the isthmian canal will have upon the coal trade of the United States, are: 1. That the coal consumed for commercial and industrial uses on the west coast of the American continents, in Hawaii, and in the coaling stations of the eastern half of the Pacific Ocean will be supplied in the future mainly from the mines of the United States and Canada, unless the opening of the Chinese mines should revolutionize the coal trade of the Pacific. It is not probable that coal from the Orient or Austi'alia will in the future be sold on this side of the Pacific. In this case, however, China is, as usual, the uncertain and indeterminable factor. 2. The isthmian canal will enlarge the export markets for American coal, both by creating a demand for coal in Gulf, West Indian, and Central American stations to supply the steamers that will be engaged in our own and Europe's commerce through the canal, and also by^ opening in the Pacific ports of the American continents a coal market that is now important and wWch is certain to grow. We shall secure the larger share and probably nearly all of a coal trade that is now possessed by Great Britain and Australia, and the industrial progress that will result from the use of the canal will add to the volume of that trade. At the present time the United States occupies an unimportant place as an exporter of coal to foreign countries other than Canada and Mexico, and while this promises to become less true in the future as the cost of the British product rises, and as the purchases of our high-grade steaming coal by foreign governments for their navies occur more frequently, nevertheless British coal producers will continue to have the great advantage which they now possess of of abundant facilities for shipping their coal to all parts of the globe. The volume of Great Britain's total imports is so much larger than the volume of her exports that a large number of vessels are regularly obliged to start in ballast from the United Kingdom on their outbound voyages. This enables the coal exporters of that country to secure very low rates to distant and widely scattered foreign markets, and accounts for the fact that the foreign coal shipments from Great Britain have averaged 35,000,000 gross tons annually for the past five j'ears. While the total exports from the United States will continue to be more bulky than our imports, there will be a large tonnage movement westward through the isthmian canal of vessels with part cargoes or in balast, and the canal promises to develop an important foreign and domestic market for American coal. The ability to distribute the excellent coal of the United States extensively among the countries of the Caribbean Sea and the Pacific Ocean, will be of great benefit to the industries and commerce of those countries, and will redound to the advantage of our naval, maritime, and industrial interests. Chapter VII. THE ISTHMIAN CANAL AND THE IRON AND STEEL INDUSTRIES OF THE ITNITED STATES. The United States holds first place among the countries of the world iu the amount of coal and iron ore mined. In 1899 three-tenths of the world's total output of iron ore and 32 per cent of the total coal supply were produced in the United States, and the production of both of these minerals is being increased rapidly, not with the prospect of exhausting a limited supply of raw materials, but by drawing upon abundant resources that have but recently been put under requisition. In no other country has the increase in the amount of iron ore mined been so rapid as in the United States. Great Britain is now mining no more iron ore than she did thirty years ago. Germany, including Luxemberg, ranks next to our country in the amount of iron ore produced, and the production has developed rapidly during recent years; but although the German output was 18,000,000 tons in 1899, a large quantity of ore had to be imported, and the amount of pig iron turned out b}' German furnaces was barely two-thirds the pig-iron product of the United States, whose productions of iron equaled 13,620,703 tons of pig and 25,000,000 tons of ore." THE UNITED STATES AS AN EXPORTER OF IRON AND STEEL PRODUCTS. Iron and steel and their manufactures now constitute the fourth largest general class of exports from the United States, breadstuffs, rawcotton,andprovisionsbeing the only categories having a greater value. For the years ending June 30, 1900 and 1903, the values of these commodities were — Raw cotton 241. 832, 737 Provisions, meat, and dairy products 18'l,431,716 Iron and steel, and manufactures of • I 121,858,344 $221,242,285 316,180,429 179,839,714 96, 642, 467 The growth in the exportation of iron and steel in crude and manufactured form was very rapid from 1896 to 1900; since then the great demand at home has temporarily cut down foreign sales. In 1896 the total value was but slightly more than one-third of that of 1900. The trade is widely distributed, the most promising markets being in North and South America and the Orient. Of steel bars and rails British North America, Japan, and Asiatic countries are large buyers. Builders' hardware, saws, and tools found 45 per cent of their market in Europe in 1900, but Australia was also a large purchaser. Wire is very widely distributed. Electrical machinery, printing presses, and pumping machinery have been sold mainly in Europe, and also in the colonies of European nations. Our best foreign markets for locomotives have been Japan, Canada, Mexico, Brazil, and Russia. American producers are finding their way into the markets of all parts of the world. Among the letters received from the manufacturers of iron and steel was one from a firm whose plant is on the Atlantic seaboard. This firm reported, among other things: At present 25 to 30 per cent of our products are exported. We expect, however, by reason of our location at tide water, to constantly increase this proportion and ultimately export from .50 to 75 per cent. In the year 1899 the capacity of this firm was about $10,000,000 worth of products per annum. At the time this letter was written the firm was filling a foreign order for 70,000 tons of rails for the trans-Siberian railway, and also an order for 30,000 tons of rails received from the government of Victoria, Australia. A Philadelphia firm shipped two full vessel cargoes of loco- motives to China and Siberia in 1898, one full cargo in 1899, and another shipload in 1900, 156 in all, sent out in two years. oin 1902 there were 35,554,135 long tons of iron ore mined in the United States, from which 17,821,307 tons of sig iron were made. 264 PANMLl C'ANAI. TRAFFIC AND TOLLS. A firm in the eastern part of Pennsj'lvania reported: We shipped 3,000 tons of plates to Australia early this year (1900), and similar quantities to various points, especially to China and Japan. * * * We shipped many tliousands of tons to the Pacific coast, a part of which goes to New Orleans and thence overland. Some goes by way of Panama and some around Cape Horn. A firm manufacturing $750,000 worth of files and rasps, one-third of which is sold outside of the United States, reported: We have lately developed a constantly growing business in all the Eastern countries, Japan, China, and the Straits Settlements. We are also selling to some extent on the west coast of South America. One of the largest manufacturers of bridge material in the United States reports: Business is developing throughout the world, having sold bridges for many years to South American countries, and lately to China, Japan, and Russia. Probably 10 per cent of our present business is for export, with every evidence of large increase in the future. Examples of this nature might be given in large number. The foregoing, however, are sufficient to illustrate the truth of the general proposition that the present exportation of iron and steel products from the United States, although large, is but the beginning of a rapidly increasing business that is certain to assume great proportions. The great iron and steel manu- facturers of Pittsburg, Cleveland, and Birmingham expect this, and a visit to their great estab- lishments and an inspection of their methods of manufacturing and di.stributing their products will convince any observer that the feelings of these manufacturers are well founded. THE CONDITIONS OF PRESENT COMPETITION OF THE UNITED STATES WITH EUROPE. The chief competitors that the United States must meet in exporting iron and .steel manufac- tures are Great Britain, Germany, and Belgium. In selling for delivery in Europe we are at a di.sadvantage as regards costs of transportation, and must expect to overcome the handicap, if at all, by being more inventive and by introducing more economical processes of production than are emplovcd by our rivals; that is, by making a better article at a lower cost of manufacture. That Me are now able to sell many manufactures of iron and steel and even pig iron in Europe shows that great progress has been made in the United States in reducing the expenses of pro- duction; indeed, we are able to enter all markets where the competitor does not have a decided advantage in lower costs of transportation. The cost of manufacturing iron and steel is lower in most of the centers of production in this country than in Eiu'ope, and the expenses are certain to decrease during the coming ten or fifteen years. The continuation of the pre.sent rapid growth in our foreign .sales of iron and steel products is essentially a question of securing cheaper transportation, and especially to South American and trans-Pacific countries. Most foreign countries, however, can be reached more economically under existing condi- tions by European producers than by American. Not only the west coast of South America, but also the east side of that continent, south of the equator, can at present be reached more cheaply from western Europe than from the iron-producing sections of the United States. The Suez Canal has brought Europe nearer than the United States is to the East Indies, Australia, China, Japan, and oriental countries generally; and until the American canal route becomes available, American manufacturers and exporters of iron and steel and other articles, will find their lower costs of production largely ofl'set by the greater expenses of transporting their commodities to these promising foreign markets. AMERICAN IRON AND STEEL TRADE WITH PACIFIC COUNTRIES. The i.sthmian canal will afi^ect the iron and steel industries of the United States chiefly by lessening the time and expense of reaching the Pacific markets of our own and foreign countries. These are the markets in which Europe and America will strive for supremacy, and the prize is worthy of zealous effort. Though now at a di.sadvantage in the competitive struggle for this trade, the American producers have already secured a desirable trade. The direct exports of our iron and steel products to foreign Pacific countries in 1900 were as follows: Chinese Empire •. S822, 074 Japan 5, 460, 205 British Australia 7, 386, 3.58 Chile 655, 935 Bolivia 23, 006 Ecuador 292, 314 Peru 495,411 Total 15,135,303 PANAilA CANAL TKAFFIC AND TOLLS. 265 The principal exports from the United States to Pacific countries are and will be breadstufF.s, lumber, raw and manufactured cotton, petroleum, and iron and steel products. The exportation of the last three of these five classes of commodities will be facilitated by the canal; and in the case of iron and t^eel products, which have to meet a specially strong competition from Europe, the isthmian waterway will be of great assistance to American exporters. The table indicates that the canal's influence will be exerted where important results are possible. The total exports of iron and steel products from the United States in the year ending June 30, 1900, amounted to $121,858,344, and the exports of those commodities to Pacific countries comprised one-eighth of the total. THE MANNER IN WHICH THE ISTHSHAN CANAL WILL AFFECT THE AMERICAN IRON AND STEEL INDUSTRIES AS A WHOLE AND THOSE OF THE SOUTHERN STATES IN PARTICULAR. Iron and steel and the manufactures of them being heavy commodities, with a relatively low value per unit of weight, they constitute a class of traflic for which water transportation is especially well adapted. They will uatui'ally seek the canal route to Pacific markets. The future exports of iron and steel will be sent out both from the Southern States and from those north of the Ohio and Potomac rivei's. Of the iron ore mined in 1899, 19 per cent, or -1,800,000 tons, were taken from the mines of the Southern States; 72. fi per cent came from the Lake Superior region, and 8.-1: per cent from other States. The Southern States have special advantages for the manufacture and exportation of pig iron because of the juxtaposition of the coal, iron ore, and limestone, and the comparatively short distance of the furnaces from the seaboard. In shipping pig and other forms of iron to our Western States, the Hawaiian Islands, and the Pacific coast of Central and South America, by way of an isthmian canal, the Southern producers and the Gulf seaports will have the advantage of being nearer the canal than the producers in other sections of the L^nited States will be, and this will probably give the Southern mines, furnaces, and mills a large share of the iron and steel export trade to Pacific markets. The Northern producer will, however, by no means be debarred from successful competition, because the North Atlantic ports will have a greater volume of shipping and trade with the East than the Southern ports will have, and consequently more abundant facilities for dispatching their exports. The iron and steel manufacturers of this country anticipate a large foreign trade with Pacific countries. An ironmaster of Birmingham, Ala., states: The canal -n-ould open to this district a demand for pig iron from the Pacific coast, including South America, now filled from England because of the absence of freight communications from Birmingham, which could otherwise supply it more cheaply. It would open up a demand for pig iron in Honolulu, Japan, China, and Australia, which would then be supplied to them more cheaply than from European markets. It would open up a demand in the last-named countries for cast-iron pipe, which at present is largely supplied from Belgium, which could then be more cheaply supplied from this district. In Pittsburg the iron and steel manufacturers, who already ship extensively to Pacific markets, believe that the present business could be much inci'eased by the use of an i.sthmian canal, and a special report prepared for the Canal Commission by the chamber of commerce of that city lays stress upon the possibility of exporting from the section of which Pittsburg is the industrial center large quantities not onh' of iron and steel products but also of coal, glass, petroleum, and pottery. In Cleveland, Ohio, one firm engaged in the manufacture of relatively high-priced iron and steel products in that city and elsewhere reported in 1900 that it was shipping annually to foreign Pacific markets 77,000 net tons, and was doing a large business with the west coast of the United States, the amount of which was withheld for special reasons. Another firm having headquarters in Cleveland and doing an annual business of over 121,000,000 in mining iron and coal and manufacturing pig iron informed the Canal Commission that — The opening of a canal across the American isthmus would prove of very great beneCt to the iron and steel industries to whom we sell our raw materials — hence of great benefit to us. The development of trade in the Orient promises a large volume of business to the iron and steel industries of the world. With a canal the United States should, and in our judgment would, control this trade. From the reports prepared for the Commission by the commercial organizations of Pittsburg, Cleveland, and Birmingham, it is beHeved that these statements of large iron and steel manufac- turers in these cities, represent the views held by practically all of those interested in the iron and st«el industries of the United States. Chapter VITI. the canal and the shipbuilding and mahitime interests of the united STATES. The shipbuilding industry and the merchant marine are of great importance to the industrial, commercial, and naval welfare of our couutr}-. There are few industries of equal magnitude that require a larger number of auxiliary business activities, that employ so large a force of skilled labor, and that do more to call forth inventive genius. The permanent strength and efficiency of our merchant marine and our Navy are dependent upon our having well-equipped yards, owned by trained builders with inventive capacity. However much men may differ as to the policy to be adopted for building up our merchant marine, they are agreed as to the necessity for having a well-developed shipbuilding industry. The desirability of having a large merchant marine under the American flag is also generally acknowledged. "The more facilities the more business." The existence of a greater number of vessels connecting our leading seaports with various parts of the world would be of assistance to us in developing our foreign trade. It is possible to secure a moderate amount of trade with a distant section of the world by depending entirely upon chartered vessels, but much more can be accomplished with the aid of regular lines of ships. The regular liners are needed, not only for the passenger and mail services between our own and foreign countries, but also for carrying on trade at scattered points where the business is not large enough to warrant the use of chartered steamers. In building up our trade with the Far East, and with South America, we need lines of vessels as well as cnartered ships. Neither agency is sufficient by itself. The value of a large merchant marine as a training school for the Navy, and as a source from which to draw both men and vessels when a sudden expansion of the naval fleet becomes necessary, is a fact recognized in the naval and maritime policy of many countries. THE CANAL AND SHIPBtTTLDING. The isthmian canal will operate as has the Suez Canal, and hasten the change from sail to steam power in ocean commerce. By doing this the isthmian waterway will modify both the shipbuilding and the ship-operating industries. Inasmuch as few, if any, steamers will be con- structed with wooden hulls, the canal will necessitate a larger and earlier reorganization than would otherwise occur in many of the shipbuilding plants now employed in constructing wooden vessels. This change from wooden to steel vessels may be a burden to some builders, but the country as a whole will be benefited. One sure result of the opening of an isthmian waterway will be a larger coasting trade between our two seaboards. A larger coasting fleet will be required, and the vessels for this fleet must be built in American yards. The coasting fleet engaged in traffic through a canal will consist mainly, if not entirely, of steamers." A part of our present coasting vessels will doubtless use the canal, but it is probable that a large number of ships will be built especially for the long-distance traffic that will be carried on through the canal. Most of them will be comparatively large ships, and will be freight vessels of the most modern design. The use of steel barges on the Ohio, Missis- sippi, Warrior, and other rivers promises to enlarge the demand for barges, and they must be constructed in American yards. Likewise an increase in the exports of iron and steel products will necessitate the handling of more ore on the Great Lakes, and thus add to the tonnage of vessels constructed. In securing data for the discussion of the effect which the canal would have on the shipbuild- ing and maritime interests of the United States, a circular letter containing six inquiries was sent to the American firms building and operating ships. Replies were received from fort}' of the persons addressed, and in most of tne communications received each question was carefully answered. One of the interrogatories was: Will the opening of an isthmian canal and the development of its traffic stimulate American shipbuilding i Will the larger demand for coasting vessels so increase the output of American j-ards as to enable shipbuilders to construct all ships more economically, and thus to compete successfully with foreign builders in the construction of vessels for the foreign trade ? "Consult following chapter on "The use of the canal by sailing vessels." 266 PANAMA CANAL TRAFFIC AND TOLLS. 267 Nearlj- all the responses to this query were in the aflBrmative. The general character of the answers may be illustrated by quoting from two of the letters; one received from an eastern shipbuilder and the other from a west coast shipo-»»ner. The statement of the shipbuilder was: In my judgment the opening of the isthmian canal and the development of its traffic would stimulate American shipbuilding, to the extent of an increased demand for vessels to be used in trade affected by said canal. As a rule increased demand develops increased sources of supply, and the cost of product is invariably reduced in proportion of increased business to fixed expenses of any manufacturing establishment, and therefore the canal would in ttds case tend to enable shipbuilders to construct ships more economically and more surely to compete with foreign builders. The response of the shipowner was: The increased facility afforded for the transfer of American vessels from ocean to ocean in trading between American ports will call for an increased number of vessels, which undoubtedly will result in new shipyards being established (boih for the building and repairing of our vessels), which could be called upon when needed for the construction of vessels to carry on our foreign import and export trade. We already know that structural steel has been produced in the United States cheaper than in any other part of the world, owing to the almost inexhaustible beds of iron ore in the region of the Great Lakes, as well as in other sections, and the skill and economy with which it is mined and worked When we combine this advantage with the facility which will be developed by a large increase in our capacity for building roasting vessels, we see no reason why in the future ocean carrying vessels of the best class may not be built as cheaply here, if not already done, as in any other country. The cost of building ships in American yards is generally admitted to be higher than in Europe in spite of the recent introduction in our yards of economical processes of handling material and doing work. Most of the large American shipyards are new and are equipped with the most approved labor-saving machinery. The labor costs are said to be higher in American than in foreion yards, but whether the cost of labor per unit of work done is greater in the United States is harS to determine. In most lines of iron and steel manufactures the labor co,sts of pro- duction in the United States can hardly be higher than in Europe. For many commodities the labor outlay is undoubtedly less, and it is not probable that the labor costs of building ships in the United States will continue permanently higher than in Europe. It is, however, not to be expected that American builders can construct the small merchant tonnage now being built by them at as low a cost per ton of shipping as can the foreign builders. Ships are built by retail in this country and by the wholesale abroad. " The British shipbuilders build many vessels from the same plans, buying or making not onlj^ duplicate or triplicate parts, shapes, machines, etc., but like parts by the dozen or score."" The tonnage now being constructed by the American builders is nearly all for the coastwise and inland comtnerce, from which foreign-built vessels are excluded — that is. for the home market. It is, however, probable that the American shipbuilding industry will eventually repeat the history which other iron and steel manufactures have had during the past ten years. From importers of large quantities of iron and steel products we have become large exporters of them, and are now rapidly finding our way into new markets. The recent growth of the shipyards of the United States' has been checked for the time being, and our yards are suffering from the pre.sent dull period in the shipping business. The increase which will occur in our domestic water commerce during the coming decade, and particularly after the isthmian canal shall have been opened, will enlarge the tonnage built in our yards, tend to lower the costs of construction and to induce American builders to seek f oreign'markets for their ships. The increase in the number of vessels built will be accumulatively beneficial to American builders. A larger American fleet means more repairing in the tfnited States, and this will be a valuable aid to our shipyards. THE OWNERSHIP OF OCEAN VESSELS BY EXPORTERS. During the investigation of the relation of the canal to the maritime interests of the United States, some gentlemen well versed in maritime matters, expressed the opinion that a considerable tonnage was to be added to our merchant marine engaged in foreign commerce, by the purchase and operation of ves.sels by the large American manufacturing concerns, which are now rapidly developing a heavy foreign trade. Manufacturing for export is already largely concentrated in the hands" of large combinations of producers, and some of these combinations now find their foreign trade so important that they are considering the desirability of providing themselves with ocean vessels. For reasons stated in another part of this report, it is believed that the exportation of coal from the United States is going to increase and that it will assume large proportions after the canal is opened. The exportation of iron and steel products from the United States is growing and is certain to increase. The large corporations engaged in mining and in the manufacture of iron and steel, as well as those in the lumbering business, will doubtless tind that provision must "Report of Commissioner o£ Navigation, 1900, page 33. 268 PANAMA CANAL TRAFFIC AND TOLLS. be made by themselves for handling their water-borne foreign trade. To a considerable extent the vessels which carry the exported oil are owned by the manufacturers of the oil. A part of this exported lumber is handled by the men who manufacture the commodity. The heavy pur- chases of European vessels by American capitalists during the spring of 1901 was doubtless in part for the purpose of securing better facilities for handling the export trade. The purchasers are also largely engaged in manufacturing for export. THE CANAL AND THE AMERICAN MERCHANT MARINE. The ownership and operation of ocean vessels by the large industrial firms as a part of their business, which has now in many cases come to include the entire process of obtaining the raw materials, converting them into usable commodities, and placing them in the hands of the con- sumer, whether foreign or domestic, will, to some extent, solve the ciuestion of our securing a larger merchant marine owned b}- Americans. Whether these vessels owned by American pro- ducers will be sailed under our flag, or under that of some foreign nation, will be determined by forces over which the isthmian canal will have but slight influence. Some of the vessels employed in the commerce between our Eastern seaboard and the trans- Pacific coimtries will doubtless desire to participate in the interoceanic coasting trade of the United States, and in order to do so they^ will need to have the American registry. The action of Congress in restricting the commerce of Porto Rico and Hawaii with the United States to American ships has been followed by similar legislation regarding our trade with the Philippines, which, after July 1, 1906, will also be limited to the vessels flying our flag. It is probable that the restriction of our Philippine commerce to American ships may cause a larger share of the commerce of our Atlantic and Gulf ports with Japan and China to be carried in American vessels, because such ships would be able to participate in both our Philippine and foreign trade. Any benefit conferred upon our shipbuilding industry will indirectly aid in the enlargement of the tonnage of American vessels engaged in the foreign trade of the United States. If the American purchaser could secure vessels at home as cheaply as in foi'eign yards, one of the present reasons for registering his ships under the flag of some other nation would be removed. The future growth of the merchant marine under the flag of the United States will depend on numerous factors, some economic and some political. The construction of the isthmian canal will apparently affect that growth favorably. Chapter IX. CONCERNING THE USE OF AN ISTHMIAN CANAL BY SATLING VESSELS. In order to reach intelligent conclusions regarding the use which sailing vessels will make of a canal, there are at least three questions that must receive consideration. The first general question is concerning the place which those vessels now hold in the commerce of the world and of the United States; the rate at which steam has been displacing sail tonnage in our own and foreign shipping during the past twentj'-tive years, and the commercial position which the sailing vessel will occup}- fifteen years hence, should the present tendency to substitute the engine for the sail continue to prevail. Another subject meriting careful inquiry is whether there are special classes of traffic, such as lumber, grain, nitrates, and unrefined sugar, which have found the steamer the more economical carrier. If there are commodities that can be freighted more cheaply by sail than by steam, are they articles that would naturally be carried through the canal r The third general question is whether an isthmian canal, either in Nicaragua or at Panama, is a waterway adapted to navigation by sailing vessels. Are the conditions of winds and currents that prevail at the approaches to the canal such as to enable sail craft to use the waterway; and if the route is possible for the sailing vessel, will the economies resulting from its use be sufficient to induce the owners of such ships to adopt the transisthmian routed In the discussion that follows these three general questions will be considered in the above order of statement. THE PLACE OF THE SAXLING VESSEL IN THE COMMERCE OF THE WORLD AND OF THE tWITED STATES. That the sailing vessel is giving place to the steamer, both on the high seas and in domestic waters, is a well-known fact, to the significance of which attention has been drawn on many occasions. The United States, however, having certain obvious advantages over other nations for the construction of wooden ships, has given up the use of sails more slowly than any other important maritime nation, with the possible exception of Norway. In the enormous traffic of our Great Lakes we have come to use steam almost exclusively, but this is not the case with our seagoing marine. The report of the United States Commissioner of Navigation for 1899 contains tables show- ing the extent to which the world's seagoing sail tonnage has declined during the last quarter of a centurj-, and the increase which has taken place during the same period in the world's sea- going tonnage. The tables are taken from the records of the Bureau Veritas. The table regarding the sail tonnage is as follows: Seagoing sail tonnage. Country. 1873-74. 1878-79. 188&-89. 1898-99. Decrease from 1874 to 1899. 5,320,089 2,132,838 1,137,177 1,126,032 893, 952 768,059 2,807,689 5,596,018 2,075,832 1,374,824 963,625 914,674 595,933 2,796,524 4,215,634 1,913,090 1,328,296 718,889 737,028 352,418 2,370,9W 2,910,555 1,285,869 1,144,482 463,767 535,937 279, 412 2,073,757 Per cent. 45 40 Italy 59 40 64 26 14,185,836 14,317,430 11, 636, 289 8,693,769 40 The world's seagoing tonnage declined 40 per cent during the twenty-five years from 1874 to 1899, and the decline in the tonnage of the sailing vessels in our merchant marine has proceeded pari passu with the change occurring in the world's marine. This table, however, presents only one side of the change that has been taking place. When we come to study the figures of the growth of steam tonnage, we find that the United States has fallen far behind her rivals. The following table presents the gross tonnage of the seagoing steamships of over 100 gross tons 270 PANiUIA CANAI. TRiiFFlC AND TOLLS. operated under the flags of the various maritime nations of the world. For purposes of com- parison there are appended to the table the statistics of the tonnage of the steamships engaged in foreign trade under the American flag: Seagoing steam tonnage of the irorld. Country. 1873-74. 1878-79. 1888-89. 1898-99. Increase Tonnage. Per cent. Tonnage. Per cent. Tonnage. Per cent. Tonnage. Per cent. 1898-99. 2,624,431 483,040 316.765 204,894 138,675 85,045 72,753 67,522 41,602 60.4 11.2 7.4 4.8 3.3 1.9 1.7 1.6 .9 3,465,187 609,101 335, 219 253,667 152,708 84,421 116, 149 104,702 53,331 62.4 10.8 5.9 4.5 2.7 1.5 2.0 1.8 .9 6,873,662 536,345 752,028 662,331 395,685 276,326 197, 748 163,656 160,658 115, 088 913,720 62.3 4.8 6.8 5.9 3.5 2.5 1.8 1.5 1.4 1.0 8.3 10,993,111 ElO, 800 952, 682 1,626,521 620, 847 420,880 363,200 368,415 628,493 439, 509 1,773,674 58.6 4.2 5.1 .S.3 2.7 2.2 1.9 1.8 3.3 2.3 9.5 Per cent. 311 68 200 693 276 395 399 430 1,410 France Spain Italy Holland 293,466 6.8 420, 690 7.6 504 Total 4,328,193 100.0 5,595,175 100.0 11,045,937 100.0 _ 1 Atlantic coast 165, 280 20,451 141, 145 20, 010 129,961 57,144 227,731 131, 953 38 545 Pacific coast The world's seagoing steam tonnage has grown from 4,328,193 gross tons to 18,887,132 gross tons, an increa.se of 336 per cent, during the twenty-five years. Our seagoing steam tonnage, however, has risen only 68 per cent, the percentage of increase being only one-third that of France, the nation next above us, who are the lowest on the list. While we have been raising our maritime .steam tonnage from 483,010 gross tons in 1874 to 810,800 in 1899, Great Britain has lifted her figures from 2,621,431 gross tons to 10,993,111, an increa.se of 311 per cent over a tonnage that had already reached large proportions at the beginning of the period. With the causes of our decline in the ocean-carrying trade we are not here concerned. It is evident that the decline in our .seagoing sail tonnage presents no exception to the tendency of all countries to substitute steam for sails. Should our maritime sail tonnage decline on\j 40 per cent during the coming twenty-five years, it will be reduced to 771,515 gross tons; but there are strong reasons for thinking that the substitution of the engine for the .sail will proceed more rapidly in the future than it has in the past. As the sailing vessels wear out they will be replaced by steamers. The American merchant marine engaged in the foreign trade ha.s declined to small proportions, but there is no doubt that economic and political conditions favorable to the restoration of our carrying trade are rapidly developing, and that our new marine must almost certainly consist of steamships. The statistics of the tonnage of sailing vessels and steamers constructed in the United States, during the five years from 1894 to 1899, tend to confirm this view. During these five years 296,933 gross tons of sailing vessels were built in American yards and 570,831 tons of steamers. The figures, moreover, include the vessels built for the fleet on the Great Lakes, and this fleet consists partly of schooner-rigged barges that are classi- fied as sailing vessels, although they are practically always towed." In the future construction of ocean-going ve.ssels it'is probable that we shall do as we have done in constructing our lake fleet, and substitute steamers for sailing ves.sels. The gross tonnage of the vessels on the Great Lakes in 1875, 1880, 1890, 1899, and 1903 (not including canal boats and small barges), is shown by the following table, which also indicates the division of the tonnage between sailing vessels and steamers: Number and gross tonnage of sailing \ < and steamers on the Great Lakes, 1875, 1880, 1890, 1899, and 190S. Year. SaUing. Steam. Year. Sailing. Steam. Number. Tons. Number. Tons. Number. Tons. Number. Tons. 1875 1,710 1,4.69 1,272 339,787 304,933 328,666 891 931 1,527 202,307 212,045 6.62, 923 874 676 318,175 315, 195 1,732 1,796 1,014,561 1,467,992 1880 1890 oDuring the calendar year 1903 the total tonnage of ships constructed in the world comprised 1,964,000 tons of steamers and 182,000 of sail. During that year the sail tonnage of the world decreased 143,000 tons and the steam tonnage increased 1,54.5,000 tons. During the decade 1893-1903 the steam tonnage under the American flag grew 1,224,816 tons, while the sail tonnage declined 152,272 tons. PANMLA. CANAL TRAFFIC AND TOLLS. 271 The steam tonnage of the lakes grew from 203,298 tons in 1879 to 1,467,992 tons in 1903, a fourfold increase in twent^'-four j'ears. The sailing vessels, although they have decreased in number, have apparently not declined greatlj' in tonnage. This is more apparent than real because, as was stated above, a part of the tonnage, classified as sailing, consists of schooner- rigged barges. The sailing vessel has ceased to be an important factor on the Great Lakes. It may pi'obably be assumed that the canal across the Isthmus will have been completed and put in operation by lyi-i; according to the foregoing facts, what will then be the position of the sailing vessel in our maritime fleets if the rate of change from sail to steam that has taken place during the ten years from 1889 to 1899 should simpl}^ be continued, our seagoing sail tonnage will have declined to about 650,000 gross tons by 1914, and our seagoing steam tonnage will have grown to about 1,500,000 gross tons. But the increase in our seagoing steam tonnage will undoubtedly be much more rayjid during the coming fifteen years than it has been during the past decade and a half. During the fifteen years from 1884 to 1899 the steam tonnage on the Great Lakes increased 214 per cent. If the seagoing steam tonnage of the United States in 1899, 810,800 gross tons, should increase bj' a like percentage during fifteen years, it would amount to 2,546,000 gross tons in 1914. The assumption of such a growth as this in our seagoing steam tonnage during the first decade and a half of the twentieth centurj^ does not seem unwarranted. An estimate would seem to be conservative that placed our sail tonnage at about one-sixth of our total tonnage in 1914. Should the sailing vessel after 1914 continue to give way to the steamer, the isthmian canal will be used by sailing vessels only to a limited extent. THE FUTURE USE OF SAILING VESSELS BY SPECIAL CLASSES OF TRAFFIC. There are some kinds of freight, such as coal, lumber, grain, nitrate of soda, and sugar, espe- cially adapted to movement by sail because they are shipped as full vessel cargoes and do not need to be transported rapidly or delivered promptlj'. Will this traffic continue to find the sailing vessel the more economical carrier^ If the sailing vessel is to be used for the carriage of commodities that can be shipped as full cargoes, the prevalent type of vessel will probably be large five and six masted steel schooners capable of carrying 5,000 or more tons of cargo. Two six-masted schooners were built on the Maine coast during 1899 and several other large four and five masted sailing vessels were built during 1898 and 1899. One of the two six-masted schooners is 302 feet 11 inches long on the keel and 345 feet long on deck. She has 48 feet 3 inches beam and is 22 feet 6 inches deep; her gross tonnage is 2,974, the net tonnage 2,743, and she will cany a little over 5,000 tons of coal. According to the owner, this vessel "was built expressly for the coal trade, yet she is built so as to go to any part of the world with any kind of cargo." The largest sailing vessel yet constructed is the Thomas W. Lawson, which is a seven-masted schooner of 5,218 tons gross register and having a cargo capacity of between 7,000 and 8,000 tons. The length of the vessel is 375 feet over all, the beam 50 feet. Two five-masted steel barks, the Preussen and Potosi, nearly as large as the Lawson, are owned in Hamburg, Germany. Like the Laioson, they date from 1902. During 1899 and 1900 there was a revival in the business of building sailing vessels, both wooden and steel, caused bj- the great scarcity of ships, the high ocean freight rates, the high price of steel, and the unusual price of coal in Europe; but this was probabh' a temporary increase in the construction of sail tonnage. If the sailing vessel is in the future to occupy a prominent place in the ocean marines of the world, it will be because of its special adaptability to the trans- portation of such commodities as sugar, coal, nitrates, grain, and lumber. The best basis for deductions as to the future is the present practice of the large shippers and carriers of these special commodities. The transportation of nitrates from Chile to Europe and the Atlantic seaboard of the United States is well adapted to the sailing vessel, and the Preussen and Pofosi were built for that trade. It was formerly supposed that the steamer could not compete with the sailing vessel in this traffic; but during the past few years a large part of the nitrate shipments have been made by steamers. It is obvious that the isthmian canal will make it much more difficult for the sailing vessel to compete with the steamer for this traffic. As regards the transportation of grain and lumber, much the same change seems probable, although the lumber of our west coast is at present all shipped in sailing vessels. If sailing ves- sels can not advantageously use the canal in competition with the steamer — a question that is con- sidered at length in the latter part of this chapter — the grain and lumber cargoes will certainly be taken by the steamers. The action I'ecently taken by a company of New York business men, who have acquired a large tract of timber in the Carolinas, is significant in this connection. The lumber gotten out by this company will be shipped from Georgetown, S. C, by two large steamers built especially for this business. Not long since a New York firm operating a large fleet of sailing vessels between the two 272 PANAMA CANAL TRAFFIC AND TOLLS. American seaboards sold out the entire fleet and in 1900 and 1901 put in its place seven steamers which are plying between New York and Pacific Ocean ports and Hawaiian Islands via the Straits of Magellan. The trade between the North Atlantic countries and Aus'tralia has long been considered one that would be held by the sailing vessels against steam competition. This was the opinion of Lieutenant Maury. Three or four years ago, however, this business was invaded by steamers, which now carr}- the larger percentage of the traffic. The facts regarding the present division of the trade between the Suez route and the route followed by sailing vessels are- especially important in connection with this inquirj'. In order to determine the extent and nature of the present competition of sailing vessels with steamers in the trade between Europe and the East, the following table has been compiled from British reports. It gives the tonnage of steam and sailing vessels cleared from British ports for the foreign ports of the East in the years 1893 and 1898. While it does not include the clearances from other North Atlantic countries, it undoubtedly represents the facts for the entire trade, because the major share of the commerce between the North Atlantic and the East is in the hands of Great Britain. Moreover, this table is to some extent supplemented by figures regarding the sail and steam tonnage employed in the trade from Germany to the East. Tonnage of steam and sailing vesnels cleared from British ports for the East in 1893 and 189S. Destination of vessels. Java Borneo and other Dutch possessions in the Indian Sea French possessions in East Africa and Asia and Pacific islands. Portuguese East Africa and India Philippine and Ladrone islands Abyssinia Madagascar Prussia Siam. China, exclusive of Hongkong. Japan Pacific islands Zanzibar Mauritius Aden British possessions in India: Bombay and Scinde Madras Bengal and Burmah Ceylon :.. Straits Settlements Hongkong Australia and New Zealand: West Australia South Australia Victoria New South Wales Queensland Tasmania New Zealand Total 3,026,486 Steam and sail combined. 194, 873 10,858 3,367 8,118 32,811 2,743 706 4,047 902 34,027 83, 401 6,361 6,416 34, 920 86,183 601,895 128,050 211,603 297, 574 10, 943 43, 692 135, 965 143, 309 199, 200 50,496 31,419 140, 068 182, 582 2,144 12, 580 346, 706 33, 876 6,948 7,054 4,108 966 71,283 413,906 10, 673 485,711 19,273 595, 962 116,875 128, 546 56, 828 46,216 so.se.'i 51,416 73,247 893,843 96,366 6,422 209,175 Increase in five years. 1112,291 a 8, 714 9,223 338,588 1,065 4,205 6,348 61 64 37,256 330, 605 4,222 2,733 37,057 11,471 a 83, 057 3 241,746 36, 273 6,661 84,539 a 70, 062 194,643 45, 870 o 24, 997 69, 107 3,694,273 I 567,787 164,080 2,034 14, 490 7,657 31,346 2,743 2,481 426, 201 185,100 267,845 6,327 22, 559 82,439 97, 329 122, 658 33,146 29,088 103, 744 170,500 10, 921 11,623 337, 645 30, 680 6,948 2,186 4,108 476 106,916 128, 546 46,815 26, 148 26, 041 9, 721 9,328 293, 962 67,017 176,500 Increase in five years. 4,205 2,186 1,627 o 1,178 43, 073 11,471 56,554 221,030 20, 821 3,482 o 72, 718 88,001 171,294 33, 871 29,088 72,756 562,072 From the foregoing table it appears that the total clearances, steam and sail, from British ports for the East increased 567,784 tons during the five years from 1893 to 1898, and that nearly all of this increase was in steam tonnage, the growth in the tonnage of steam vessels being 562,072 tons, or all but 6,716 tons of the total increase. By making the proper subtractions, the sail tonnage for 1893 is found to be 498,757 tons; and for 1898, 504,472 tons. The facts, then, are that the sailing tonnage remained practically stationary, while the steam tonnage considerably increased. The .sail tonnage did not fall off absolutely, but declined relatively. In 1893 the sail tonnage constituted 16.4 per cent of the total steam and sail, whereas in 1898 the sail tonnage constituted only 14 per cent of the total, the decline having been nearly 2^ per cent in five years. The clearances from Great Britain to certain special ports in the East present figures quite as significant as the totals referred to above. The commerce entering Eastern Africa by way of the Portuguese po.ssessions represents a comparatively new trade. In 1893 the trade was very small, but in 1898 it had grown to large proportions. It is interesting to note that practically all of this new tonnage consisted of steamers. Japan presents a similar showing. The recent rapid growth of the trade of Great Britain with Japan has brought into service a large amount PANAMA CANAL TEAFFIC AND TOLLS. 273 of steam tonnage and but a very small number of sailing vessels. The figures for Bengal and Burmah also show that nearly all of the large increase in the clearances from Great Bntam to those countries consisted of steam tonnasre. The same statement applies to New South Wales. In the case of New Zealand the increase in the steam tonnage, durmg the five years under con- sideration, was larger than the total increase in steam and sail tonnage combmed. This mdicates a falling off in the use of sailing vessels. In the trade from Germany to the Far East the change from sail to steam tonnage is taking place very rapidlv. German trade directly with the East has largely increased during the past decade, and this new traffic has brought steamers, and not sailing vessels, into use. The follow- . ing figures taken from the German reports indicate this, and also show that sail tonnage has fallen off. In 1890 there cleared from German ports for British India and the islands of the Indian Ocean, sail tonnage, 76,000 net tons; steam tonnage, 219,000 tons. In 1897 the figures were: For sail, 55,000, and for steam 319,000. That is to say, during those seven years the tonnage of sailing vessels cleared from Germany for British India and the islands of the Indian Ocean decreased 21,000 tons, while steam tonnage increased 100,000 tons. In 1890 there cleared from Germany for China sailing vessels with a net tonnage of 9,000, and steamers with a tonnage of 70,000. In 1897 no sailing vessels cleared for China, but the tonnage of steamers had grown to 110,000 net tons. MERITS OF THE STEAMER AND SAILING VESSEL COMPARED. The special advantages of the sailing vessel are that its motor power costs nothing and that it requires a smaller crew of men than is necessary for a steamer of the same size. The British reports show that a tvpical sailing vessel of 2,381 net tons is manned by a crew of 3-t men, 23 of whom are seamen. A steam vessel of nearly the same tonnage, 2,315 tons net, has a crew of 38 men, of whom 11 are seamen and 17 are engineers, firemen, and coal passers. Taking the total British merchant marine, the number of men was 15.8 in 1898 per 1,000 net tons on British sailing vessels, while on the steam vessel the number of men was 22 per 1,000 tons. In the foreign trade of Great Britain the number of persons employed on sailing vessels for each 100 tons net register was, in 1880, 2.32; 1890, 1.96; 1898, 1.65. On steam vessels the num- ber employed for 100 tons net register was, in 1880, 2.95; 1890, 2.73; 1898, 2.32. These figures are sufficient to show that steamers require more men than sailing vessels for an equal amount of tonnage. In large, slow-going steam vessels the number of men required is relatively small and may, indeed, not exceed 1 man per 100 tons net register, but it is equally true that a large schooner requires a very small crew of men— even smaller than is needed by the large, modern, slow freight steamer. ' , . « • j . xi There seems, moreover, to be but a small difference in the size of crews required by the more recently constructed steamers and sailing ves.sels of equal caoacity. A steamer of 3,000 tons dead-weight cargo capacity (which would be a small steamer) and a sailing vessel of equal capacity (which would be a relatively large .sailing ship) would each have a crew of 23 or 21 men. The sailing vessel's crew, however, would include a larger number of unskilled laborers— seamen— than would the steamer, and the sailing vessel's expenses for labor would be somewhat lower than the steamer's. . .^i • i The disadvantages of the sailing vessel are its slow speed, its dependence upon the winds and c«irrents, and the consequent uncertainty as to the time of delivering the cargo assigned to it. The superiority of the steamer consists in its speed and its ability to assure the delivery of its freight at a st'ipulated time, unless violent storms are encountered. The disadvantages of the steamer are the cost of coal, the large amount of space taken up by the coal bunkers and machin- ei.y_one-fourth to one-third of the hull capacity— and the somewhat larger crew ordinarily required. j i i. i i.u As regards the cost of coal, mechanical improvements have done a great deal to lessen the steamers handicap. Some of these new steamers for the trade between our two seaboards will carry 10,000 dead-weight tons, besides 2,500 tons of coal. They have quadruple expansion engines, with boiler pressure of 210 pounds to the square inch. These vessels will consume 40 tons of coal per day, running at 9 knots per hour. It is planned now that in making the trip via the Straits of Magellan they will coal only at Coronel, Chile. The consumption of coal between New York and San Francisco via the canal will be about 1,000 tons each way. This will make the consumption 224 pounds per ton of freight each one-way trip. Assuming the price of coal free on board vessels in Atlantic ports to be $2.50 per ton of 2,240 pounds, it would take one- tenth of a ton of coal, costing 25 cents, to transport one ton of cargo between New York and San Francisco. The data presented in the foregoing paragraphs do not fully demonstrate the inability ot the sailing vessal to compete with the steamer in the future for the transportation of special classes 274 PANAMA CANAL TKAFFIC AND TOLI.S. of commodities, but the evidence strongly indicates that result. That the sailing vessel will con- tinue to be used for some time to come, especially by the people of the United States, seems probable, but our use of the sailing vessel, however, will be restricted mainly to two classes of service. One of these two fields of usefulness will be that part of our coasting trade that can not readily be so organized as to be performed by regular lines of steamers. The other use to which we shall continue to put the sailing vessel will be that of performing the irregular or skirmish work of international trade. There is at the present time an irregular trade develop- ing between the United States and several parts of South America — such, for instance, as that being carried on between the Gulf ports ancl the River Plata. In the earlier stages of the devel- opment of such a txafSc the .sailing ves.sel is a convenient agent; but when the trade becomes larger and the exchange of commodities between the two sections becomes regular and continu- ous, a line of steamers will be established, and most of the sailing vessels will be obliged to with- draw from the business. The withdrawal of sailing vessels from the trade between the United States and the Orient and the substitution of steamers for the greater part of the traffic between our two seaboards are instances of the substitution of the steamer for the sailing vessel when the amount of business to be done had become regular and large in volume. WOULD SAILING VESSELS USE A CANAL EITHER AT PANAMA OR ACROSS NICARAGUA? It does not seem probable that coal, lumber, grain, nitrates, and sugar — commodities that will make up a large share of the canal's traffic — will in the future be carried to a large extent in sailing vessels. Nevertheless, the sailing vessel will be a carrier of some importance when the canal is opened, and possibly for a score of j'ears thereafter. Such being the case, the relative advantages of the Panama and Nicaragua routes for sailing vessels should be compared. The extent to which sailing vessels will use an isthmian waterway will depend upon the actual saving in time which a sailing vessel could make by using the canal instead of the Cape route, and upon whether sailing vessels can compete with steamers, both using the canal route. In the year 1866 Lieut. M. F. Maury, in a letter written to a friend, made the following statement: The result of my investigations into the winds and currents of the sea and their influence upon the routes of commerce authorize the opinion which I have expressed before, and which I repeat, namely, if nature, by one of her convulsions, should rend the continent of America in twain and make a channel across the Isthmus of Panama or Darien as deep, as wide, and as free as the Straits of Dover it would never become a commercial thoroughfare for sailing vessels, saving the outward bound and those that could reach it with leading winds. * * * You will observe at a glance that the Isthmus of Panama or Darien is, on account of these winds and calms, in a purely com- mercial point of view, the most out-of-the-way place of any part of the Pacific coast of intertropical America. Those persons who have endeavored to prove that the Panama route could not be used by sailing vessels have cjuoted the foregoing statements of Lieutenant Maury, and have interpreted his statements to mean that no sailing vessel would or could make use of a canal across the Isthmus of Panama. It is well, however, to note the exception which Lieutenant Maury makes at the close of his general statement. He says the Panama route "would never become a com- mercial thoroughfare for sailing vessels, saving the outward bound and those that could reach it with leading winds." In view of this limiting clause, it would seem that Lieutenant Maury thought sailing vessels outward bound from Europe or from any North Atlantic port to the Pacific might pass through a Panama canal. His statement would also indicate him to think that vessels bound from the west coast of the United States for the Atlantic might pass through a Panama canal during the winter months, when the winds and currents are favorable for vessels sailing .southward toward Panama. When we consider that the larger part of the Pacific coast frrain would be exported during the later autumn and winter months, and that a large part of the imiber from the Pacific coast of North America might be shipped during the winter half of the year, we must conclude that Lieutenant Maury's apparently strong statement does not pi'eclude the possibility of a considerable trafiic in .sailing vessels through that waterwa}". Hydrographers, ship brokers, and sailing masters generally disbelieve in the practicability of the use of a Panama canal by sailing vessels. There is no doubt that sailing vessels can enter and clear the Baj' of Panama — they now do so to a limited extent — nor would it be impossible for a .sailing vessel to make use of a Panama canal; but there is little reason to think that the sailing ship would, under the conditions of competition that will prevail after the waterwa}' has been opened, pass from one ocean to the other in any considerable numbers. It perhaps ought to be stated in this connection that sailing vessels bound from Panama either to the north, south, or west are obliged to work their way southward and westward to the Galapagos Islands, and usually .some distance west of that group, before getting the winds and currents that will take them to their destination. Vessels bound fi-om Panama to San Francisco are advised b}' Maury's sailing directions to work their way down the Colombia coast, and during PANAJVIA CAJSTAL TRAFFIC AND TOLLS. 275 the months from June to January, inclusive, to change their course about latitude 2° north, standing off the coast to the westward, passing north of the Galapagos Islands. From February to June, inclusive, it is better for the vessel to work southward across the equator before turning to the west. The course toward the west is maintained until the one hundredth meridian is passed, and then the vessel maj' "edge away for Cipperton Rock (10'-' 18' N. and 109° 10' W.), after passing which they may push to the northward for the northern trades." Before Maury worked out these sailing directions, as the result of his study of winds and currents, .sailing vessels consumed 90 days, on an average, in sailing from Panama to San Fran- cisco by the direct route. According to the geographer Berghaus, the average time taken to make the voj'age by Maury's route is 37 days. The disttmce by the circuitous route is somewhat more than 5,000 nautical miles. The direct route, the one followed by steamers, is nearlj^ 2,000 knots shorter than the one taken by sailing vessels. A most careful study of the conditions affecting the use of the Panama and Nicaragua routes by sailing vessels was made bj' Lieut. Frederick Collins, U. S. Navy, in 1872. He studied the winds and currents prevailing at different seasons of the j'ear in each part of that section of the ocean that would be ti'aversed by sailing vessels plying between Panama, Nicaragua, and other Pacific ports, and then estimated the number of days that it would, on an average, take a sailing vessel to make the voyage between the two isthmian ports and other Pacific harbors. The gen- eral conclusion to which he came in regard to the navigation of the Bay of Panama was that " no great difficulty need be experienced in getting from the vicinity of the Bay of Panama to where good winds might be found. * * * ^ careful computation gave only 10 days as the average time that would be consumed in getting a sufiicient offing to secure good winds, providing the correct route was pursued." The route considered correct by Lieutenant Collins was the one adopted by Lieutenant Maury, to which reference was made above. The distances which Lieutenant Collins calculated sailing vessels would have to travel in proceeding from Panama and from Brito to reach San Francisco, and the number of daj's which each of these trips would require, are indicated bj' the following table: Panama to San Francisco NicaragTia to San Francisco Difference in favor of Nicaragua The table makes the time required for a sailing vessel to reach San Francisco to be l-t days less when the trip begins at Brito than when it begins at Panama. The distances and time required for the return trip from San Francisco to Panama and Brito are indicated by the following table: Miles. Days. Miles. Days. October to April: 3,600 3,000 26 April to October: 4,000 3,400 600 4 600 •According to the calculations of Lieutenant Collins, the time required for a sailing vessel to make a round trip from Nicaragua to San Francisco would be nineteen daj's less than for a round- trip voyage between Panama and San Francisco. These figures would seem to indicate that if either route is available for sailing vessels, the Nicaragua route would possess decided advan- tages over the one at Panama. However, other authorities differ from Lieutenant Collins as to some of these conclusions. The figures given for the length of the average voyage from Nica- ragua to San Francisco is 3,240 nautical miles. This seems too .short; indeed, the United States Hydrographic Office estimates the distance to be 4,600 miles. The great-circle distance, or the length of the route followed by full-powered steamers, is 2,700 miles. Furthermore, experienced navigators assert that a vessel bound for Brito must beat up and down the coast or go far to the westwai-d; and that, although the Nicaragua route is more advantageous than the one from Panama for sailing vessels, it is nevertheless neces,sary for vessels to make a long detour from a direct course. The distance for steamers from Panama to San Francisco being 3,277 nautical miles, a 9-knot steam freighter would make the run in 15 days, a 10-knot ship in 13.6 days, and a vessel of 12 knots in 11.3 days. These figures are to be contrasted with 37 days, the average time required by the sailing vessel. From Brito to San Francisco the distance for steamers is 2,700 nautical 276 PANAJVIA CANAL TRAFFIC AND TOLLS. miles. To make this run, a 9-knot freigiiter would require 12^ days, a iO-knot ship 11^ days, and a 12-knot vessel 9| days. Lieutenant Collins made the time by sail between Nicaragua and San Francisco vary from 22 to 26 days, but, for reasons just stated, his calculations underestimate (possibly by about 5 days) the time that would actually be required. SAVING TO SAILING VESSELS BY USE OF ISTHMIAN CANAL INSTEAD OF CAPE ROUTE. Concerning the time required to make the voyage by sailing vessel from New York to San Francisco, abundant information is obtainable from the logs of the many sailing vessels that are now navigated between those two ports. A New York firm operating sailing vessels from New York to San Francisco has reported the time taken by eleven ditferent sailing vessels that made the trip during the year 1898. The average time for these vessels was 138 daj's, the range being from 113 to l.')l days. Another New York firm doing a large business with the Pacific coast has given the time required by seven sailing vessels whose voj'ages were made at different seasons of the 3'ear. The time taken ranges from 118 to 169 days, the average for the seven being 139 days. Both of these firms report that they consider 1-40 days to be a fair average for the west- bound passage. For the return trip from San Fi'ancisco to New York the time taken is somewhat less, and is said to average from 110 to 115 days. In order to arrive at the time a sailing vessel would require to make the trip from New York to San Francisco by way of an isthmian canal, it is necessary to add the time that would be taken for the voyage from New York to the Isthmus, the time that would be required for making the transit through the canal, and the number of days necessary for reaching San Francisco after leaving the Isthmus. When Commander (now Rear- Admiral) Selfridge gave Lieutenant Collins instructions to investigate and report upon the time it would take sailing vessels to make a voyage between the Isthmus of Panama and various Pacific ports, he said: In composing the table you will allow an average of twenty days to and from the United States and the mouth of the Atrato; thirty days from the English Channel to the same point, and forty days homeward to Europe. It would take a sailing vessel practically the same time to reach Panama or Greytown that it would to reach the mouth of the Atrato. On the basis of the averages accepted by Admiral Selfridge for the Atlantic part of the voyage, and by Lieutenant Collins for the Pacific portion of the trip, a vessel would be twenty davs from New York to the Isthmus, thirtj'-eight days from Panama to San Francisco, a total of fifty-eight days, to which should be added one day for the passage of a Panama canal. Lieutenant Collins estimated twenty-three dajs as the time required by a sailing vessel to reach San Francisco from Brito. For reasons that have already been stated, tnis estimate seems to be too small. If twent}' -eight days be accepted as a fair estimate of the sailing time required between Brito and San Francisco, the time required for a sailing vessel from New York to San Francisco would be twenty days for the Atlantic part of the trip from New York to Greytown, two days for the passage through the canal, and twenty-eight days from Brito to San Francisco, a total of fifty days. The probable time required by sailing vessels to make the trip from New York to San Francisco b}' way of the Cape and through the two canals would then be as follows: For the Cape route one hundred and forty days; for the Panama route fifty-nine days, and for the Nicaragua route fifty days. According to these figures, a sailing vessel could save on an average eighty-one days by using a Panama canal instead of making the trip around the Cape, and ninety days by using the Nicaragua canal instead of the present route. The east-bound trip from San Francisco to New York can, on account of the more favorable winds in the Southern Hemisphere, be made in a shorter time than is required for the west- bound trip. One hundred and fifteen days can probably l)e assumed as a fair average for the trip fi'om San Francisco to New York around the Horn. Lieutenant Collins estimated that a vessel would on an average require twenty-six days from San Francisco to Panama during the winter months, and thirtj'-one da^'s during the summer months. On the basis of these estimates the time required for a sailing vessel to make a voyage from San Francisco to New York by way of a Panama canal would be forty -seven days during the winter months and fifty-two da^s during the summer season. That is to say, a general average of about fifty days for the year as a whole. The time estimated by Lieutenant Collins for a sailing vessel starting from San Francisco to reach Nicaragua was twenty-two days in the winter months and twenty-six days in the summer season. This would make the time from San Francisco to New York forty-four days for half of the year and forty-eight days for the other half, or an average for the j'ear of forty-six days. In view of the uncertainties attending the navigation of the Pacific Ocean near the American coast, where sailing vessels are obliged to beat for a considerable part of the distance, it would seem conservative to add five days to each of the foregoing averages and assume fifty-five days for the trip by way of Panama and fifty-one days for the voyage by the Nicaragua route. Assum- PAN.UIA CAN.4L TRAFFIC AND TOLLS. 277 ing that one hundred and fifteen days is the average time required for a vessel to make the east-bound trip around Cape Horn, the Panama route would enable the vessel to save sixty days and the Nicaragua Canal sixty-four days. Vessel owners report that $75 per day will cover all the expenses of operating a sailing vessel of 2,000 tons net (including wages, interest, repairs, insurance, and all other items of expense). The foregoing reduction in length of voyage would effect the following net saving in the cost of moving a cargo of freight by such a sailing vessel between New York and San Francisco^ which may be taken as typical Atlantic and Pacific ports. A sailing vessel bound from New York to Saii Francisco could save eighty-one days by way of the Panama route, which would be equiva- lent, at the rate of §75 per day, to a saving"^of |6,075. If we assume a toll of §1 per net ton and a towage cost of $450 for a Panama canal, the saving effected by the vessel would be as follows: Eighty-one days, at $75 per day S*'i O""* Toll, at §;l per ton I>2, 000 To^'^g'^ _^ 2.450 Net saving 3, 625 For the Nicaragua Canal the account would stand as follows: Ninety days, at $75 per day $6, 750 Toll........ ... — - ?2,000 Towage 600 2, 600 Net sa^■ing - - 4, 150 The towage costs adopted in the foregoing estimates are on the basis of a charge of 30 cents per net register ton for towage through a Nicaragua canal and 22^ cents per net register ton for a Panama canal. In order to secure a reliable estimate of the probable cost of securing towage through each of the proposed canals, a score of large towboat companies were requested to submit an estimate of the charges that would need to be made for the service of towing. The letter requesting the information stated that — The total length of a canal at Nicaragua would be about 190 miles. Of this distance about 70 miles will consist of excavated channel, about 50 miles of improved river navigation, and about 70 miles of lake. And— The distance from anchorage at Colon to anchorage at Panama is about 47 miles, only a short distance being open for navigation. It is also probable that sailing vessels would usually desire to be towed about 100 miles from Panama out to sea, and in making your estimate of the cost of towage for the Panama Canal we should be pleased to have you give both the cost of towage between Colon and Panama and the cost of towing 100 miles on the Bay of Panama. The replies received in response to this request varied so largely that they did not furnish the basis for so close an estimate as it was hoped might be made. The estimate adopted was one of those midway between the higher and lower extremes, and one submitted by a well-informed gentleman who was known to have given the question careful consideration. His estimate of the cost of towing loaded sailing vessels through a Nicaragua canal was 30 cents per net ton register, and for towing loaded ships through a Panama canal and 100 miles to sea — li? miles altogether — was 22^ cents per net ton register. Provision was made in the Panama estimate for towing vessels 100 miles out to sea, because it was believed that a sailing ship would ordinarily save more than enough in the time of getting to sea to pay the additional charges. Indeed, it is probable that a tow of several hundred miles would at times be found profitable. The foregoing estimates of the savings possible for a sailing vessel to effect by using a Panama or a Nicaragua canal, instead of the Horn route, do not take into consideration the saving in insurance that would be effected by the reduction in insurance charges that would result from the use of an isthmian instead of a Cape route. This reduction would be about 50 per cent of the existing insurance charges, and would be the same for each of the two routes. The foregoing calculations, it may be well to repeat, are based upon the estimated saving which a sailing vessel could ordinarily make by the use of each of the proposed waterways. It is well known that sailing vessels require very different times for making the run between the same ports. The foregoing estimates are intended only to represent the average savings possible. Among the general deductions that seem warranted by the facts set forth in the preceding pages are the following: 1. A canal across Nicaragua would enable a sailing vessel to accomplish a greater net saving over the expenses of the present route around the Horn than could be effected by using a Panama canal. The difference in the advantages of the two routes for sailing vessels, while not large, is 34998°— 12 19 278 PANAMA CANAL TRAFFIC AND TOLLS. sufficient to be made a factor of some importiince in deciding which route should be adopted were it probable that either route would be largeh* used by sailing ships. 2. Neither the Nicaragua Canal nor the one across the Isthmus of Panama would be much used by sailing vessels. The unmistakable tendency of commerce is to use steamers instead of sailing vessels for all classes of traffic. The sailing vessel would compete with the steamer for the traffic through either of the canals under conditions so unfavorable as to make practically certain the general substitution of the steamer for the sailing vessel for all lines of trade through the isthmian waterway. The consideration of the Ivicaragua and Panama Canal routes, from the standpoint of their relative usefulness as commercial highways, becomes mainly a question of determining which is the more advantageous route for the steamers engaged in the maritime commerce of the United States in particular and of the world in general. Chapter X. THE CANAIi AND THE TEAFnc OE AHEBICAN RAILWAYS. There are several ways iu which the isthmian canal uvax aflect the traific of the railways serv- ing the different sections of the United States. The canal will introduce a new and competing route for trafiic between our two seaboards, and between the eastern half of the United States and Pacific foreign countries. There may result from this one or all of four consequences: 1. The railway lines competing with the new water route may reduce their rates, and thus be able to hold their traffic against the new competitor. Should this be the result, the effect of the canal upon the freight of the railroads might be small; their rates would be reduced, but the traffic secured by the water route would consist of new business developed because of the water route, instead of traffic diverted from the other transportation lines. _ 2. The waterway may divert from the railway lines a greater or less share of their through business. Should this be the result of the waterway, the railways will be obliged to secure a compensating amount of new business or suffer a shrinkage in their traffic as the result of the competition of the waterway. 3. The canal may bring new business to the railways by making them collectors and distri- butors of the commodities carried between our eastern and western seaboards by the way of the Isthmus. In our country of great distances and of diversified industrial activities, generally dis- tributed throughout our wide territory, the origin and destination of but a small portion of the water-borne commerce of the United States can be at seaboard points. The collection and distri- bution of commodities for traffic by water is and must remain mainly the work of the railway line. The major part of the traffic of the canal must be rail traffic previous to or subsequent to being handled bv the ocean Acsseis. 4. The canal may make possible the establishment of new industries along the railway lines or cause an expansion of activity in the business of existing plants, and thus add to the local traffic of the railways. In general, whatever facilitates commerce establishes the most important prerequisite to industrial development. The traffic whose routes may be modified by the opening of the interoceanic waterway is: 1, That originating and terminating at or near the seaboard points of our eastern and western coasts. The traffic between the territory east of Buffalo and Pittsburg and that west of the Sierra Nevada and Cascade Mountain ranges will be most directly subject to the influence of the new waterway. 2. The trade of the central section of the United States with our Pacific slope and with foreign Pacific countries will, after the canal has been opened, be able to leave or enter the United States either by an Atlantic, a Gulf, or a Pacific port. If it passes in and out by an Atlantic or Gulf gateway, it will be canal traffic; if by a Pacific port, it will not. CONCERNING THE STATISTICS OF TRANSCONTINENTAL RAILWAY TRAFFIC. Statistics are not kept of the traffic which the railways now carrv between the Atlantic and Pacific sections of the United States and between the Pacific and central parts of the country— the rail traffic that would be subject to canal competition were the waterway now in use. Some years ago the Transcontinental Freight Bureau, whose offices are in Saii Francisco, compiled figures of the through business of the transcontinental lines, but the chief of that bureau reports: This office has compiled no statistics whatever for several years past, neither has it been furnished with any reports of the movements of business. The managing editor of Poor's Manual of Railways says: This matter [the statistics of transcontinental railway traffic] has been the subject of inquiry for some timp, and without any result. The officials of the Pacific railways who were conferred with in regard to the volume of business that would be affected by the canal were unable to supply the information. The traffic manager of one of the lines reported: So far as our line is concerned, would say that we have virtually discontinued compiling statistics of this nature, finding after many years' experience that the expense incurred in compiling these figures was unwarranted. 280 P.-ySTAMA CANAL TRAFFIC AND TOLLS. One of the Pacific railway companies furnished the Canal Commission with a statement of the tonnage east and west hound during- 1899 for each of the important commodities comjDrising its total through traffic. By through traflic was meant that originating anywhere on the lines of the company and turned over l)y the company to some connecting railroad; also the freight received from some connecting road and carried to some point along its own system of lines. This classified statement comprises a total of nearly 2,000,000 tons of freight and gives an interesting expose of the nature and volume of business being done by this important Pacific railway system. The figures, however, reveal but little information concerning what portion of this total traflic would be subject to canal competition were the isthmian waterway now in existence. While information concerning the present volume of traflSc of the Pacific railroads tliat would be subject to the competition of an isthmian canal, were the waterway now open, would be inter- esting and possess some value, it would not thi-ow very much light upon the manner in which the business of the transcontinental railways will be afl'ected some ten or fifteen years hence by the competition of an interoceanic canal. I3etween now and the opening of the canal the position of the railways as carriers will have become stronger, and, whatever tlieir business may be at the time of the completion of the watcrwa}^ their policy with reference to the retention and develop- ment of their business will doubtless be much modified by the inauguration of water competition by the new route. NATURE OF THE COMPETITION OF THE CANAL WITH THE RAILWATS. In addition to finding it impracticable to determine the amount of railway business that would be subject to competition by a canal were it in existence at the present time, it has like- wise been impossible to draw a sharp line between the classes of commodities that would be liable to move by water, and those that will move by I'ail after both agencies have become available to the shipper. An intelligent railway official replied in response to the question; What kinds of traffic would be diverted from the railways to the canal ? — All kinds of traffic would be diverted except that which is perishable or which demanded disi^atch, unless the railroads met the competition of the canal by a reduction in rates. Similar opinions were expressed by several other railway officials who were conferred with. It seems probable that the competition of the canal route will not be confined entirely to the bulkier commodities of compai'atively low value per unit of weight or bulk — articles universally recognized to be especially adapted to water transportation — ^but that the isthmian route will be available for the shipment of practically all articles except those whose perishable nature or whose unusually high value demand a quick service and a prompt delivery. The distance between our two seaboards by the isthmian canal will be about 5,000 nautical miles and the time required to make the run wiU be about three weeks for the slow fi-eight steamers of 10 knots an hour, and about two weeks for the 15-knot vessel. The ordinary freight service of the railroads will be only a few day's shorter than the service by the faster steamers using the water route. At the present time the American-Hawaiian Steamship Company, which is running steamers between New York and San Francisco through the Straits of Magellan, is carrying a large variety of commodities. The time required for the passage between the two seaboards by this route is from sixty to sixty-three days, but even this length of time does not restrict the freight to a limited number of articles. On the other hand, the practice of a New York firm that manufactures a large quantity of structural steel and ii'on work for buildings and bridges, and all classes of ornamental steel and iron, shows that heav}' freight must frequently be shipped by the quickest route. The firm states: It costs about §8 per ton to ship from New York to the Hawaiian Islands around the Horn, $12 per ton to send the freight by way of Panama and San Francisco to Honolulu, and about ?19 per ton to ship across the United States by rail to San Francisco or Vancouver and thence to Honolulu. The first way of shipping takes about four to iive months; the second way of shipping about three months, and the third way of shipping takes at least two months. The element of time very often enters into the question of whether it is possible to erect buildings in the time for the requirements, and often parties are compelled to ship by the most expensive lines in order to gain time. In fact, probably seven or eight thousand tons of materials will be shipped by us in this season (1900) via the trauscontinental lines, and only two or three thousand tons around the Horn. When the canal has been opened the railway's will not permit their traffic to be taken away from them if they can hold it, and they will unquestionably so adjust their business as to retain the maximum amount of business. It is the belief of many railway officials that they will be able to hold most of their traffic against water competition. Whether that is so or not, is not ju-t now under consideration, the present purpose being to illustrate the nature and extent of the competition that the opening of the canal will inaugurate. The coiupetition will be keen and will not be restricted to a limited number of commodities. PiySTAMA CAN.IL TRAFFIC AND TOLLS. 281 THE CANAL AND THE TRAFFIC OF THE ATLANTIC ROADS. From the nature of the subject under discussion the treatment can not be statistical. The only bases upon which to rest conclusions are theoretical analysis and the opinions of traffic experts. The main purpose of the following pages will be to present impartially the views of transportation experts whose opinions are worthy of consideration. Several officials of the Atlantic lines were asked the following question: " Will the canal promote the commerce and industries of the Atlantic slope in such a way as to give the railway lines to the Atlantic a larger traffic in coal, iron and steel manufactures, machinery, and other commodities?" Two traffic managers of the Atlantic railroads handling the largest volume of freight expressed the opinion that the opening of the canal by giving the American manufactures readier access to western South America and the Far East would largely increase the exports of manufactured commodities. The major share of the manufacturing done in the United States is carried on within the territory of the lines leading to the North Atlantic ports; and those roads, accord- ingly, expect to secure a greater volume of traffic when the canal has become available. It was said that the amount of freight that now moves from seaboard to seaboard by rail is compara- tively small; consequently the trunk lines to the Atlantic will receive more than they will lose from the operation of the isthmian waterway. Much the same view was expressed by a traffic manager of one of the Pacific railways. Some railway officials, particularly those whose roads lead to the Gulf ports, believe that one effect of the canal on the railway traffic in the United States will be to divert a considerable share of the business at present done through the Atlantic ports to the cities situated on the Gulf. This view, however, seems not to be shared by the officials of the North Atlantic trunk lines, for the reason that the railway lines to the Atlantic are shorter, from points east of .Chi- cago and north of Kentucky and Virginia, than those to the Gulf are, and for the reason that the ocean rates from Atlantic ports to the Pacific coast of the United States and the foreign Pacific countries will be practically the same as those from Gulf ports. Officials of the Atlantic lines were also asked whether "one result of the canal will be to cause a larger share of total imports of the United States to enter the country through the Gulf ports;" and whether "the canal will divert to the Gulf gateways imports that would otherwise enter through the Atlantic ports." The opinion seemed to be that the Atlantic lines will be able to retain their present strong position in the import traffic, in competition with the Gulf lines, partly because most of the expoi-t business will continue to be handled at the Atlantic. Both the Atlantic and Gulf roads load light from the seaboard to interior points, the heavier volume of traffic being outbound. The North Atlantic ports have a much larger ship tonnage at their service than the Gulf cities now have or will secure. The northeastern section of the United States, being the most im{X)rtant manufacturing region, will continue to be the chief importing section. Thus, while it was believed that the imports by way of the Gulf cities will probably be larger after the canal has been constructed than they can be before that event, it was not thought that this larger trade would be secured by drawing traffic awaj' from the North Atlantic cities and the railroads serving them. Another question asked the officials of the North Atlantic lines was whether "the roads to the Atlantic will exchange less traffic with the Pacific lines as the result of the canal." The replies indicated that the Atlantic lines did not expect the canal to have the effect of reducing the volume of business exchanged between Atlantic lines and Pacific roads. The railways will not permit their business to be taken away without an effort to retain it, and wherever possible arrangements will be made for transcontinental shipments on through bills of lading to the west coa.st of the United States and to countries beyond. The present volume of business exchanged between the Atlantic and Pacific roads is comparatively small. It will not be less after the canal has been put into operation. While the officials of the eastern roads are by no means unanimous in their opinions, the foregoing statement of their opinions is believed to represent fairly their views. THE CANAL AND THE TRAFFIC OF THE GULF ROADS. _ It seems uncertain how much of the import and export business of the section north of the Ohio and east of the Mississippi will be done by way of the Gulf ports; the testimony is not unanimous. Probably some of the trade of this region will be handled by the Gulf ports; and the competition of the Gulf lines will affect the rates on a largo share of the business that is handled by the Atlantic roads and jjorts. The opening of the isthmian canal will give the people of the States north of the Ohio and the Missouri rivers the choice of three routes for their trade with our west coast and Pacific countries, and the volume of their trade will be a prize for which the Atlantic, the Gulf, and the Pacific lines may be expected to strive with zeal. 282 PAKlilA CANAL TRAFFIC AND TOLLS. There can be little uucertaint\- as to the general effect of the canal upon the traffic of the railways located in the Southern and Southwestern States. The railways serving the Southern States will have the .same measure of benefits that may come to the industries and trade of the region. The canal can take no business away from the South or the southern railways. It can onh' increase existing railway business and draw new industries and trade to the section. The import business handled by the Gulf lines is small at present, and it will doubtless always remain less than the volume of outbound traffic, although the opening of the canal may be expected to increase the amount of inbound business handled by the Gulf cities. The officials of the Gulf lines who were consulted believe that the canal will cause a moderate though not a large volume of imports to enter through the Gulf cities. THE CAXAL AND THE TRAFFIC OF THE RAILWAYS OF THE CENTRAL WEST. In that large stretch of country north of the Ohio and Missouri rivers and west of Chicago, that is to say, in the region west of the territory served by the trunk lines to the Atlantic Ocean and north of the States occupied by the railway systems terminating at. Gulf ports, there is a network of important railways having a large volume of traffic. Until recently the traffic of these railways in the Central West consisted almost exclusively of agricultural products, but the diversification of industries in that part of the United States is now proceeding with great rapid- ity. There is an immense volume of export business, the major part of which is now handled by the lines leading to the Atlantic Ocean, although latterly the lines to the Gulf have handled a portion of this traffic, and the volume of business handled from the Central "West by the trans- continental railwa^-s has grown to considerable dimensions. The imports brought into the Central West from foreign countries come mainly by way of the Atlantic gateways. A certain amount of fruit comes through the Gulf cities, and an appreciable volume of oriental goods is brought in by way of Pacific ports. As to the effects of the canal upon the railwa}- traffic in the Central "West opinions are not unanimous. Manufacturers and most, though not all railway officials, anticipate that the canal will develop a large volume of new business. The views of those railway officials who expect but .small results from the canal were well summarized by a prominent official of one of the strongest roads of the Central West — a system that ramifies in seven States. He said that inas- much as the industries of the territory served liy this road were chiefly agricultural, no large volume of traffic would ever be exchanged with the agricultural States of our own Pacific slope. This gentleman said that if the canal were to affect the business of railroads situated as his .sys- tem is, it must be accomplished bj- the creation of manufacturing industries, and it was his opin- ion that the volume of this kind of business woukl not and could not become very large. If the canal should divert this new business from the Pacific roads to the Atlantic trunk lines, or to the roads leading to the Gulf, that result would not affect the roads of the Central West, because this diversion would do little more than to change the direction in which the traffic was hauled by his and similarly situated roads. Believing that the development of manufacture would be limited to small pi'oportions, and that any diversion of traffic would simply change the direction in which the outbound and inbound business was handled, it was the opinion of this gentleman that the canal could not affect the business of his railwaj- and other similarly situated systems to any large extent. The traffic manager of another equally strong railway S3-stem in the Central "\A'est was of the opinion that an isthmian canal would help build up the upper Mississippi Valley and be a benefit to the railways of that section. As a general proof of this proposition he cited the Lake Shore and ^lichigan Southern Railway as one that was particularly subject to water competition, and which was nevertheless one of the most profitable freight roads in the United States. The canal, he said in substance, will doubtless take from the raih'oads some shipments they would otherwise secure, but by increasing the total volume of business, by causing the centers of distribution and manufacturing to grow and multiply, and population to increase, the water route will add to the traffic seeking transportation by the railroads. This gentleman believes that water competition is a help instead of an injury to the railroad, because of the larger industrial development made possible by the cheaper water transportation. He called attention to some of the large wholesale and jobbing houses in St. Louis, and said that the prominence of that city as a wholesale jobl)ing center was ])artly due to the cheap transportation from the East by way of the Gulf and the Mississippi River. This official also laid down the proposition that the best conditions for a heavy railway traffic are produced by the existence of a large number of manufacturing and distributing centers. Some railway officials, he said, seem to believe it better for the railroads to favor the concentration of business in a few large centers; but such a polic}' experience had shown would restrict the possible development of railway traffic within unnecessarily narrow limits. Believing that the canal will develop the territory, diversify and distribute industry, he was of the opinion that the effect of the waterway upon the bitsiness of the railway lines situated in the Central West would be beneficial. PANMIA CANAL TRAFFIC AND TOLLS. 283 While these views regarding the efficacy of water competition to develop the industries of the interior part of the United States, and to increase the traffic of the railways of that part of the country, are not shared by all the railway officials that were consulted, the history of transporta- tion, the evidence afforded by a study of business conditions in different jmrts of the United States, and the opinions entertained by the manufacturers and large shippers of commodities, tend to substantiate the accuracy of the position taken In- those railway' officials, who expect their lines to profit rather than sufter injury bj^ the opening of the proposed isthmian canal. No one can visit the great industrial centers of the central West, study the vast resources of the States of that section, and acquaint himself with the activities of the business men without feeling certain that increased transportation facilities are certain to result in a very large expansion of industry. The history of the great central West shows that the measure of its industrial devel- opment has always been the measure of its transportation facilities. New facilities mean new business; and this is more true to-day than it was twenty -live or even ten years ago. EFFECT OF THE CANAL UPON THE TRAFFIC OF THE PACIFIC RAILWAYS. The railway s^'stems that will feel the competition of the new water route across the Isthmus most severely are those whose lines connect the Mississippi Valley with the Pacific coast. This competition may apply to nearly all kinds of traffic. The only articles wholly exempt will be the perishable fruits and those goods of high value sent by express and as fast freight. The more southerly Pacific lines will feel this competition more keenly than will those situated farther north. The northern lines, moreover, will be able to meet the canal competition more readily than will those farther south, because the territory crossed by the southern roads includes such a wide belt of relatively unproductive country. The northern half of the Cordilleran highland is not only rich in mineral resources, but is also capable of raising considerable quantities of agricultural products. Li some parts of this region irrigation is necessary and in others not. Tlie southern part of this great highland, however, is capable of but a limited development. The mineral resources are less extensive. U'iierever agriculture is possible it is dependent upon irrigation, and the irrigable areas arc very limited. Thus the northern lines have a territory capable of producing a much larger amount of local traffic than can be secured by the southern lines from the country across which they are located. Traffic officials of the three southern lines to the Pacific stated their views with frankness and in some detail. The opinions of these gentlemen, however, differ largely. The views of those who believe that the effect of the canal will not be to create business, Init that it will compel a large I'eduction in railway rates without affording compensation to the railroads, were fully stated by an official in charge of the traffic business of one of the Pacific roads. He said iii substance: During the early years of the transcontinental railways the traffic from the Atlantic section of the United States to the Pacific section was drawn almost entirely from the Atlantic seaboard. Before the railways were built the traffic was all handled by the sea route, and the costs of transportation from the interior to the ocean were such that the traffic was drawn almost entirely from the seaboard cities. The effect of the transcontinental railways has been to cause a large part — three-fourths, it is estimated — of the business carried across the country westward by the transcontinental railways, to originate in and west of Pittsburg. The effect of the canal will be to tend to cause traffic to originate nearer the Atlantic seaboard again, and thus affect deleteriously not only the business of the trans- continental railways, but the general industries of the middle section of the United States. The traffic of a canal will consist of all kinds of commodities except those of a perishable nature. The competi- tion of the waterway with the railway lines will be very severe, but the raihvays will not permit their traffic to be taken away from them by the canal. The competition will necessitate a reduction in rates — such a reduction as may throw the transcontinental raihvays into insolvency and require the scaling down of capital. The railways will continue in business, however, after the owners of the property have suffered a great reduction in the value of their holdings. As far as the export trade across the Pacific is concerned, the canal would be an injury to the Pacific coast sea- board, because the export traffic very largely originates in the central and eastern jiart of the United States. That traffic would be carried directly to tlie Eastern and South American countries by way of the canal. The establishment of industries along the transcontinental railway lines as a result of the opening of the canal will be possible only to a small extent by any of the transcontinental railways south of the Northern Pacific. The Southern roads cross such a long stretch of arid country that general industries can not be developed except relatively near the termini. California and the Pacific coast generally do not constitute a manufacturing section, nor will they become such. Before criticising the remarks contained in the foregoing statements, the views of a traffic manager of one other Pacific line may be stated. This traffic manager says that the canal will compel a reduction in rail rates to Pacific terminal points below the charges that would otherwise prevail, and that the adjustment of charges will probably result in the establishment of blanket or identical rates between Pacific ports and all points in the central and eastern part of the United Stat( 5. The effect of this will be to take from the cities in the central part of the United States the advantages which they have over the Eastern cities for trade with the Pacific coast. This official does not believe that the canal will be of much help to California, because the trade in 28J P^i^'^UIA C.1XAL TRAFFIC .iND TOLLS. grain, which is and will always be the principal item of export, is going- to be carried on less with Europe and more and more with China and Japan, where the consumption of wheat is even now takino- the place of rice. He believes that the surplus grain products of the Pacific coast will be milled and shipped to the Orient, and that the canal will not be of benefit to this industry. Con- cerning the general efiects of a canal upon the commerce and industry of the United States as a whole, this traffic official is more optimistic than the others above quoted. He says, and very accurately, that the transportation business of this country' is so organized that if touched at one point the efl'ect is felt everywhere. The opening of the canal will afford a new transportation agent of importance, and while it will compel an adjustment of business, a revision, and in some cases a reduction, of rates, the railroads will nevertheless find business to do, and the travel and traffic of this country and the Inisiness done at home and abroad will so increase as ultimately to make both the railways and the canal a necessity. The construction of the canal was regarded by this traffic official as inevitable, as something which the American people have decided to be necessary for naval reasons and for the purpose of securing the quickest and best transportation facilities for their domestic and foreign trade. The transcontinental railways, in his opinion, will temporarily suS'er from the reduction in rates, but the growth of the country will be such that twenty-five j'ears from now the railways will have nothing to fear from the canal. In the opinion of the Pacific railway officials above quoted, and of others, the isthmian canal will be an active and rate-controlling competitor. That this is true will hardly be questioned, and if the canal can not compensate the railways with a larger volume of business they will not share witli the producing and manufacturing interests in the benefits accomplished by the water route. "Whether the canal will give the Pacific railroads a larger trafSc than they would otherwise have is partly a matter of judgment and partly a question of safe deduction from past experience. The belief entertained by one of the officials above referred to, that the isthmian canal will draw traffic and the centers of industry back from the central section of the United States to the Eastern States, is based on an inadequate conception of the industi-ial strength of the Central States, as compared with the Eastern. The Central States possess vast stores of coal, iron, and timber, and these and their other natural resources are causing the population and industrial activities of our country to become generally distributed. The railways that serve the Central States are wisely fostering this teiKlcnc y. an