The Panama Canal

by Frederic J. Haskin

The history of the French régime was such as to prejudice the whole world against the canal region and to deter any but the most adventurous spirit from entering there into a gamble with death. The Americans soon found that without extraordinary inducements it would be next to impossible to recruit a force able to build the canal. Therefore it was determined to make the rewards so great that extra dollars to be gained by going to Panama would outweigh the fears of those who had any desire to go. It was decided to pay the employees of the Canal Commission and the Panama Railroad Company wages and salaries approximately one-half higher than those obtaining at home for the same work. Furthermore, it was decided that the Government should furnish free quarters, free medical service, free light, and other items which enter into the expense budget of the average family. It was found advisable to establish Government hotels, messes, and kitchens, where the needs of every employee from the highest officer to the most lowly negro laborer could be met, and to operate them at cost.

Still another problem had to be faced; that of providing places where the people employed in building the canal could escape from the high prices fixed by the merchants of Panama and Colon. With this end in view, a great department store, carrying upward of 5,000 different articles, was built at Cristobal. This store established branches in every settlement of canal workers where patrons could go to ship and receive the benefit of prices much lower than those prevailing with regular Panaman merchants.

Anyone who will study carefully the annual reports of the operation of the commissary of the Panama Railroad Company, will realize what great profits are made by the various middlemen in the United States who handle food products between the producer and the consumer. In 1912 the commissary had gross sales amounting to $6,702,000, with purchases amounting to $5,325,000. This represents a gross profit of 26 per cent. The cost of transportation from New York and distribution on the Isthmus, amounted to about 24 per cent, leaving a net profit of approximately 2 per cent on the sales of goods. When it is remembered that transportation of commissary products from New York amounted approximately to a quarter of a million dollars a year, and that wagon deliveries on the Isthmus added $50,000 a year to this, it will be seen that the expenses of distribution at Panama were approximately on the same footing with those in the United States.

In the case of dressed beef, one finds a most illuminating example of how it is possible to sell the ordinary items of a family budget to the consumer at rates much lower than those obtaining in the United States. According to the most authentic information dressed beef laid down at Panama costs more, quality for quality, than it costs the ordinary retail butcher in the States. At one time in 1912 the commissary was paying $11.94¹⁄₄ a hundred pounds for whole dressed beeves laid down in New York. This was for the best corn-fed western steers, a grade of beef that is found only in the best retail butcher shops of any American city. Yet, with the expense of ocean-refrigerator carriage added, and with other operating costs equal to those of the retail butcher in the States, the commissary found it possible to sell to the consumer, delivered at his kitchen door, porterhouse steaks from this beef at 20 cents, sirloin steaks and roasts at 19 cents, and round steaks at 13 cents a pound. At this same time the average American housewife was paying from 26 to 30 cents for porterhouse steaks, from 22 to 26 cents for sirloin steaks and roasts, and from 17 to 22 cents for round steaks; and in the butcher shops in the United States where grades of meat comparable to those at Panama were handled the figures were usually around the top quotations.

One cannot escape asking the question how it is that if the Panama Railroad commissary could pay approximately 12 cents a pound for dressed beef at New York, deliver it in refrigeration at Cristobal, thence to the housewife by train and wagon, and make a gross profit of some 26 per cent by the operation, that the American retail butcher can reasonably claim that at the price he sells his meat he is making little or no net profit.

One finds the same scale of prices on other commodities at Panama as meats. Only the very best goods are handled in the commissary. Any reasonable need of any employee could be supplied by the commissary at prices probably lower than a retail merchant in the United States could buy the same commodities.

A few instances of how the commissary fared when its supply ran short will serve to illustrate the grasping disposition of the average Panaman merchant.

In one case high waters in the Chagres interrupted traffic on the Panama Railroad, and the price of ice in Panama City promptly jumped from 50 cents to $1 a hundred pounds. At another time a ship bringing coffee to the Isthmus ran aground and the commissary had to buy coffee in the Panama market. It had to pay 6 cents a pound more at wholesale for the coffee than it was selling for at retail in Panama the day before the ship went aground. On another occasion a vessel carrying a supply of milk went ashore and the wholesale price of that commodity jumped a hundred per cent overnight. The Panaman merchants made a long and persistent fight to get the privilege of doing the business which is done by the commissary, but the canal officials were too wise to allow the working force to be dependent upon native business men for family budget needs.

Although the commissary did an annual business of nearly $7,000,000 a year during the height of the construction period, it received comparatively little actual money for the commodities it sold. A great deal of this business was with the subsistence department of the Canal Commission, furnishing supplies for the hotels, European laborers' messes, and common laborers' kitchens. Practically all of the remainder was with the employees of the commission, and was done through coupon books. When an individual wanted to buy from the commissary he asked that a coupon book be issued him. If it were found that he had sufficient money coming to him for services rendered to cover the cost of the book, it was issued to him and the clerk in the commissary detached coupons to cover the purchases. When the monthly pay roll was made up, the cost of the coupon books was deducted from the amount due the employee for services. Many employees and their families lived too far away from the commissaries to make daily visits, so they simply deposited their coupon books with the main commissary at Cristobal and sent their orders in by mail from day to day. The commissary clerks would fill these written orders, sending the goods out on the first train.

In addition to buying and selling products for the benefit of the canal workers, the commissary operated a number of manufacturing establishments. It had a bakery using some 20,000 barrels of flour, baking 6,000,000 loaves of bread and other things in proportion annually; an ice-cream plant freezing 138,000 gallons of ice-cream annually; a laundry washing 4,250,000 pieces a year; a coffee-roasting plant; and a large cold-storage warehouse. About 70,000 people were constantly supplied with commodities from the commissary.