There is no fear that the Panama Canal, even if it prospers exceedingly, will ruin the transcontinental railroads. The report of the Isthmian Canal Commission in 1901 made some interesting remarks on this subject, and they are as pertinent to-day:—
The competition of the canal will affect, first, the volume and rates of the through business of the Pacific railroads, and secondly, the amount of their local traffic. At the beginning of their existence these railways depended almost entirely upon their through traffic; but their chief aim throughout their history has been to increase the local business, which is always more profitable than the through traffic; and although the great stretch of country crossed by them is still in the infancy of its industrial development, the local traffic of some, if not all, of the Pacific roads has already become of chief importance. A vice-president of one of the railway systems states that since 1893 "the increase in business of the transcontinental lines has not come from the seaports, but from the development of the intermediate country." The canal can certainly in no wise check the growth of this local traffic, and the evidence strongly supports the belief entertained by many persons that the canal will assist largely in the industrial expansion of the territory served by the Pacific railways.
If this be true, the proximate effect of the isthmian canal in compelling a reduction and readjustment of the rates on the share of the transcontinental railway business that will be subject to the competition of the new water route, will be more than offset by the ultimate and not distant expansion of the through and local traffic, that must necessarily be handled by rail. It seems probable that the increase in the population of the country, and the growth in our home and foreign trade, will early demonstrate the need of the transportation service of both the canal and the railways.
The reduction of freight through the use of the canal is sure to give a big stimulus to many leading industries of the Pacific states. One of the most important is the lumber industry. California and Oregon are very rich in forests of pine, spruce, cedar, and redwood, the last being much in demand in Atlantic countries. A good deal of this timber is exported to Europe and the eastern states, and it has all to be carried in sailing ships round Cape Horn. It is calculated that the opening of the Panama Canal will reduce the freight by 50 per cent., which means that all this Pacific coast timber will be correspondingly increased in value. The exports eastwards are sure to advance rapidly with the new means of transport. Grain, wine, and fruit will benefit, and the manufactured goods from the industrial states of the east will flow through the same channel to the western states in an ever-increasing volume.
Every staple industry of the United States will feel the new stimulus, and England and Europe generally are certain to feel the pressure of this new competitive power of the American republic. In cotton and iron goods especially the exports from the eastern and southern states are bound to forge ahead. Manufactured cotton goods exported from the southern states have had to be carried by rail to the western ports, and thence by steamer to China and Japan, or else eastward by the Suez Canal, sometimes even via England or Germany. We may imagine what a boon the Panama Canal will be to this trade, and how conveniently it will lie for the Gulf ports and all their raw and manufactured exports. American iron and steel will also be immensely strengthened for competition with those of England and Europe in the markets of China, Japan, British Australasia, and along the coast of South America. We need not describe in detail effects which are likely to be felt over the entire range of American industry.
The United States appears, indeed, to be on the verge of tremendous developments. In a paper read before the Royal Colonial Institute,[20] that well-known physical geographer and economist, Dr. F. B. Vrooman, gave us a hint of further American enterprises in civil engineering, after the Panama Canal is opened:—
The isthmian canal is but a part of the greater American waterways project. As soon as this is finished it is possible that the United States will start in a large way with the project of the artificial canalization of the Mississippi with its 16,000 miles of already navigable waters and a drainage basis of 1,280,000 square miles. The cutting-through of an ocean-ship canal to the Great Lakes will make seaport towns of the Canadian cities on the Lakes Ontario, Erie, and Superior. The Saskatchewan and the Red River can be canalized for 1,000 miles, and a short haul from Winnipeg will open the whole Saskatchewan valley from near the foot-hills of the Rocky Mountains—downstream, but for this short portage—all the way to the Gulf of Mexico, and thence to Panama and the Pacific ports. Every transcontinental freight-rate in Canada and the United States will be reduced, and perhaps some in the middle interior. As this great southern movement starts up the industries of the southern states will receive a new impulse. The Gulf of Mexico and the Caribbean Sea will spring into a new life, together with the West Indies and Central America and the vast and fertile interior drained by the Orinoco and the Amazon.
CENTRAL AND SOUTHERN AMERICA.
But there are no countries which will hear the call of the canal so nearly and clearly as those of Central and Southern America. It is astonishing how that forty-mile wide land barrier between the two oceans has isolated all the western shore of the continent. The Panama Canal Railroad has done very little to modify the situation. The Pacific coast of America has looked westwards over its waste of waters, and has scarcely been reached by the industrial and economic forces at work behind it in the Old and New Worlds. Its trade has been carried on mostly with Europe, and especially England, in sailing vessels that have plodded round the distant Horn. An interesting example of this geographical and commercial detachment of the west coast of Central and South America is furnished by the port of Mazatlan in Western Mexico. From this place there are considerable exports of logwood and mahogany. But thirty times as much of this lumber has gone to Europe as to the east of the American continent. On the opposite or eastern side of Mexico is Tampico, where the returns of trade are just the reverse, the United States being the largest customer for its exports. Despite the old Spanish paved roads across the isthmus at Panama, by which the silver and pearls of Peru and the Pacific were conveyed to Nombre de Dios and Porto Bello, for shipment to Spain, despite the sixty years of the little Panama Railway, the American continent even in its narrowest parts has been something like an impenetrable screen between east and west. Four centuries of continued agitation and effort to get the water through show how seriously this physical divorce has been felt, and give an earnest of the large results which are sure to follow the completion of the task.
There have been other reasons for the backward development of western South America. To begin with, the Spanish, not a progressive and pioneering race, laid their hands on these countries four hundred years ago, and have held them politically or racially ever since. This would not in itself have kept out the Anglo-Saxon or the German. But these countries have not yet been greatly needed as an outlet of the surplus populations of Europe. Even the United States is very far from being filled up, and Canada is likely to be giving away farms for many years to come. The Teutonic race, to which above all others the trusteeship of Western civilization is committed, has left these Spanish Americas, with their revolutions coming almost as frequently and regularly as the seasons, comparatively unvisited. As yet the North European emigration to the southern continent has been mainly confined to Argentina and Southern Brazil.