The Panama Canal: A history and description of the enterprise

by J. Saxon Mills

In one respect the isthmian breakwater has been profitable to these states of the Pacific coast. It has sheltered them largely from the negro element which has spread so widely over the West Indies and the southern United States. But Japan and China are already there, and the yellow will be laid on more and more thickly unless these countries are brought quickly within the zone of Western ideas and enterprise. And that process is likely to begin with the opening of the canal.

The backwardness of these regions is indeed almost unbelievable. Most people think of them as producing mainly nitrates and revolutions. But their possible resources and products are illimitable, and are only awaiting the organized capital of the West to be made available for human service. As yet these Latin republics are in their middle ages of development. There are few railways, only one continuous transcontinental line having been completed between Valparaiso, through Mendoza, to Buenos Aires. Their internal communications are carried on mainly by the pack mule, as they have been since the days of Pizarro and Valdivia. Each country, of course, has a foreign trade, but the people of the interior, the Indians or mixed breeds, live in isolated communities which are self-sufficing, raise their own food and make their own simple manufactures, knowing little or nothing of the products of foreign countries.

The whole coast and its hinterland is engaged almost solely in what are known as "extractive" industries—that is, in mining or agriculture. The exports consist mainly of foodstuffs and raw materials, nitrate, ores of copper, silver, and gold, grain, sugar, cotton, cocoa, coffee, wool, hides, rubber, and woods. With these the people pay for their manufactured goods, and these come mainly from Europe, and chiefly also from the United Kingdom. The mineral wealth of the northern parts, especially the Andean plateau, is still enormous, though vast quantities have been extracted. For centuries the Andes furnished the civilized world with most of the bullion used for its current coinage. Between 1630 and 1803 Peru alone sent out £250,000,000 worth of silver. Bolivia has contributed £800,000,000 worth; the famous mines of Potosi alone accounted for £600,000,000 worth of this metal. The nitrate works of Chile are in the hands of Englishmen and Germans, and American and other foreigners hold the sugar plantations of Peru. But, as I have said, the range of production is enormous and only awaits the stimulus of imported capital. To give one example of the variety of products, it is said that the Aconcagua valley in Chile would alone furnish annually from its vineyards 1,000,000 gallons of claret, if the grapes were not used to produce a local drink named "chica." There is no sign of the exhaustion of any of the natural products of these regions. Even the nitrate of soda, that most valuable of fertilizers, though it is being shovelled out at a great rate, covers about 220,000 acres, or about 400 miles from north to south, and is sufficient to last for a very long time to come.

Nitrate, minerals, wheat, barley, wool, hides—these are the main exports of the Pacific west, the returning imports being cotton goods, machinery, steel rails, woollens, coal, and all sorts of miscellaneous manufactures and supplies. But, as I said, the trade has been almost wholly with Europe, England enjoying a very predominant position. The United States have competed with Europe at great disadvantages. The trade has been mostly carried on in sailing vessels. Now such craft, to get from New York to South America, have been obliged to sail eastwards almost as far as the Canaries in order to catch the trade winds and weather Cape St. Roque on the coast of Brazil. The sailing vessel from Europe, on the other hand, sails right past the Canaries, and can give the American ship ten days' start in the journey to any part of South America south or west of the most easterly point of Brazil. If the reader will turn back to the chapter on the new distances he will see how the little streak of blue water at Panama will alter all this. Take one little fact to illustrate the change. Callao, on the coast of Peru, is, before the opening of the canal, farther by steam from New York than is the South Pole, but the Panama Canal will bring the city 1,000 miles nearer to New York by steam than San Francisco will then be. The canal will reduce the distance from New York to the Chilean nitrate port of Iquique by 5,139 miles (nautical), to Valparaiso by 3,747, to Coronel (farther south) by 3,296, to Valdivia (about 1,000 miles north of Magellan's Straits, nearly at the farthest southern limit of the commercially important part of western South America) by 2,900. Take Iquique, an important North Chilean nitrate port. By Panama this place is 4,004 miles from New York, but 6,578 from Liverpool. Their respective distances via Magellan were 9,143 and 9,510.

It looks, therefore, as though the United States, with its new advantages, which begin when the first vessel is passed through the Panama locks, would have a good chance of securing for the future the main share of the South American trade. Its cotton, iron and steel goods, electrical machinery, etc., will be able to compete on very different terms with those of England and Germany. Cotton manufactures have reached Chile and the other countries of Pacific South America by a rather absurdly roundabout route. The raw cotton has been grown in the southern parts of the United States, carried to Europe for manufacture, and brought back to South America via the Straits of Magellan. These goods will, we may be sure, tend in future to go direct from the American factories via New York, Charleston, or New Orleans, without trans-shipment, thus saving about 7,000 miles of transportation. A very small part of the American trade with these countries has passed by the Panama railroad. The rates charged by the steamers which have picked up the goods for the west coast at Panama have been kept so high as to be practically prohibitive. It has actually been cheaper to send goods from the United States by way of England or Germany—that is, a journey of 14,000 miles—than by way of Panama, a journey of three or four thousand. One of the surest results, then, of the Panama Canal opening will be a rapid development of the Pacific coasts of America, especially of South America, and a great expansion of trade between these countries and the United States.

The effect of the canal on the Atlantic coasts and hinterland of South America will naturally be less striking. There has never been much interchange of trade between the two coasts of the southern continent, for the simple reason that their products are not complementary but mostly identical. Most of the trade of the eastern coast states is with the countries of the North Atlantic. But some trade to the more northerly and tropical parts of this coast is certain to flow through the canal. Lumber from the Pacific coasts of North America is used in Atlantic South America, and a part of this trade, which is likely to grow in extent, will be passed through the canal. It should be noticed, however, that the temperate reaches of the eastern coast of South America farther to the south will be nearer the Pacific coasts of the United States and Canada via the Horn and the Straits of Magellan owing to the big easterly projection of Brazil.

We must leave the probable effects of the Panama Canal on the British possessions in America to another chapter. It has not been possible to deal with prospective commercial developments in great detail. Only some general idea could be given of the vast changes and developments in progress. On the day on which I am writing the Washington correspondent of The Times summarizes the meaning and effect of the Panama Canal in three rather formidable words. He says it "symbolizes commercial Pan-Americanism." The canal is going to help America to keep its trade more to itself. It represents in commerce and economics what the Monroe doctrine represents in politics. It will immensely assist the United States to become the chief industrial supplier of the great continent, with the other states mainly as agricultural or mining annexes. One incident in the furthering of this ambition was the attempt to conclude a treaty of reciprocity with Canada, the effect of which, as Mr. Taft admitted, would have been to make Canada such an "annexe" of the republic. The Canadian people, however, realizing the ulterior political and commercial effects of such a treaty, refused to ratify it. Canada, in fact, belongs to another political and economic system. She gives valuable trade-preference to the manufactures of the mother-country in the Old World, and there is happily no reason to believe that she will abandon the Imperial ideals for the objects of continental Pan-Americanism. After all, the citizens of Canada and the United States are mostly of the same stock, speaking the same language and cherishing the same great traditions. The two branches of the Anglo-Saxon family ought to be able, while each maintaining its own life and growth, to remain happily side by side, sharing in the new prosperity which the world owes to this latest achievement of the great republic.

FOOTNOTE:

[20] March 19, 1912.