The Panama Canal: A history and description of the enterprise

by J. Saxon Mills

Mr. Taft's proclamation fixing the Panama tolls will be found at the end of the book. It will be seen that the charge of $1.20 is almost identical with the Suez toll. There are, however, to be no passenger tolls at Panama. It must not be forgotten that the Suez Canal could very well afford to lower its charges to meet the new competition. A dividend of 30 per cent. leaves a considerable margin for this purpose.

And we must remember that tolls, however important, are not by any means the only determinants of traffic-routes. All sorts of commercial and freight considerations come into play. For example, the shortest way from Japan to the eastern coasts of North America will be via Panama. Fully loaded vessels will certainly go that way. But the ship that leaves the land of the cherry blossom only partly loaded and wanting to make up a full freight may choose the route past Asia and through the Suez Canal as being more likely to serve that object.

Then the cost of coal is an important point. Other things being equal, shipowners will select the routes by which coal is cheapest and the coaling stations nearest each other. With plenty of cargo coming along and good freight rates it is desirable to reserve as little bunker space as possible. I cannot go into this question at any great length, but in the competition with the Suez route it will be quite as important to have abundant and cheap coal at Colon (the pun is accidental!) and Panama as to keep the transit dues moderate.

But we have not yet exhausted the motives which may help to prompt the choice of one route rather than another. There is the question of climatic conditions—storms and winds and currents. In this respect Panama should have a decided advantage over Suez. The Red Sea, as everybody knows, is red hot. This is not good for some sorts of cargo, and so terrible is the heat at times that the stokers are said to be unable to maintain the steam at full pressure. This may involve an appreciable delay in the 1,310-mile run from Suez to Aden. Moreover, from a temper and character point of view, the North Pacific and Caribbean are distinctly superior to the Indian Ocean and the North Atlantic. The deliverance which the Panama Canal will afford to many vessels and steamship lines from the perils and savageries of "Cape Stiff," as the sailors call the Horn, or the reefs and currents of Magellan's Straits, is in itself one of the blessings of the new route. Travellers tell us that the biggest ocean rollers in the world are found on the Pacific coast of America just a little north of the southern straits. For these reasons insurance rates via Panama are likely to be lower than those round the far south of the American continent.

There is good reason to believe that the Panama Canal will pay its way without imposing any new burden on the taxpayers of the United States. It will probably not produce the dividends of the Suez Canal. It will have cost four times as much, and is unlikely for many years to command quite as large a volume of traffic. The increase in the traffic at Suez has been enormous during the last fifteen years, owing largely to the development of the resources of the Far East with the help of western capital. The net tonnage of vessels passing through the canal in 1911 was 18,324,794, and the total passengers were 275,651. All forecasts of the traffic via Panama must, of course, be speculative, but it may be mentioned that the net register tonnage of vessels that might have advantageously used a Panama Canal in 1910 is officially estimated at 8,328,029.

Before discussing the more economic and commercial results likely to follow from the opening of the canal, there are one or two subsidiary questions we may consider. Is the Panama Canal likely to be used by sailing vessels? The prevailing idea is that it will be no more practicable a route for such craft than the Suez Canal. Winds, tides, and currents have much more to say to the sailing vessel than to the steamer, and the terminals of the canal, especially on the Pacific end, are not always easy of approach to wind-driven ships. One effect of the opening of the Panama Canal will be to hasten the decline of these old-fashioned and more beautiful craft. It must not be imagined that the "windjammer" or "limejuicer," in the sea-going vernacular, has already nearly disappeared from the seven seas. A great deal of the world's commerce is still carried on in such vessels. They still battle their way round the Horn laden with the timber of Oregon or British Columbia and the nitrates of Chile. But the unsuitability of the Panama transit for sailing vessels will unquestionably lead to their quicker decline. It is interesting to see how steam has gradually ousted sail in the world's shipping. In 1873-4 the sea-going sail tonnage of the world was 14,185,836 tons. This declined to 11,636,289 in 1888-9; to 8,693,769 in 1898-9; and to 6,412,211 in 1910-11; while steam tonnage increased from 4,328,193 in 1873-4 to 41,061,077 in 1910-11. For many reasons, climatic and economic, we may safely assume that the Panama Canal will be confined exclusively to "steam circles." Steamers will be substituted for the "limejuicers" in every canal-using line, and the snowy canvas will be banished to other regions. Hitherto, such freights as coal, lumber, grain, nitrate of soda, and sugar have been considered specially suited for sail transportation, because they are shipped as full vessel cargoes and do not require rapid transportation or delivery. But even such cargoes are certain to be largely transferred to the steamship when it is realized that the Panama Canal is "no road" for sailing vessels.

Another interesting question is the probable effect of the canal on the American mercantile marine. The ocean-going merchantmen of the United States engaged in the foreign trade are practically non-existent, though the "coasting" trade, which includes the trade of Hawaii and the Philippines with the United States, is strictly reserved to American vessels, ships flying foreign flags being entirely excluded. But these latter, which are in the main British, carry on all the foreign trade of the United States with South America, New Zealand, Australia, Northern China and Japan. It is almost unbelievable that in 1908 there was not a single steamship flying the flag of the United States between the United States ports and those of Brazil, the Argentine, Chile, or Peru. The mails from New York and the other Atlantic ports of the American republic go, or went until quite recently, via Europe, though New York is 370 miles nearer Brazil, etc., than the Old World coasts.[19] The reasons for this want of a foreign-trade mercantile marine are chiefly the greater cost of shipbuilding in the United States and the requisitions with regard to wages and food of the American trade-unions. The result of the high standards of comfort thus imposed has been that the cost in wages and food to run American ships under American conditions across the Pacific is double that in European or Japanese steamers. It is scarcely to be wondered at, therefore, that some people in the United States regard the Panama Canal as a very disinterested gift from the United States to humanity at large, especially perhaps to Great Britain and Japan—as an example of altruism run mad. But while the United States may not be ready to reap the full advantage of the canal at the start, it is highly probable that its opening will lead to a rapid growth in the United States merchant service. A larger coasting fleet will be required with larger vessels, and this will lead to a general development of the larger classes of shipbuilding.

At present no vessels are permitted to fly the American flag unless American-built. A large number of American-owned vessels are therefore registered under the flags of some foreign nation. As the United States begins to compete in cheapness and efficiency of shipbuilding with other countries, the chief motive for this foreign registration will be removed. Great Britain cannot expect to be the chief carrier of United States trade for ever. This is indeed one of many directions in which the opening of the Panama Canal may tend rather to the disadvantage than to the benefit of the United Kingdom. There is no reason why the United States should not build up a mercantile marine as swiftly as Germany and Japan have done. England will have to consider seriously this and many other probable effects of the canal closely touching her most important interests.