The Panama Canal

It has been stated that a proper system of finances would provide for the repayment of the cost of constructing the canal in a hundred years. This would mean an annual charge of $3,750,000, and would bring the total annual outlay, exclusive of the cost of protection, up to $19,250,000. From this viewpoint the canal will not be self-sustaining until the total traffic approximates 17,000,000 tons a year, which it will reach about 1925.

It has been estimated by Prof. Emory R. Johnson, the Government expert on canal traffic, that the total tonnage which will pass through the canal during the first year of its operation will approximate 10,500,000 net registered tons. Since the shipping of the United States is permitted to pass through without paying tolls, the tonnage upon which toll will be collected will yield a gross revenue of approximately $10,000,000. This will afford the United States an income of a little less than 2 per cent on the money invested, after paying the actual cost of operation. On this basis it probably will be four or five years from the opening of the canal before the returns will yield 3 per cent on the investment.

The ships of the world use approximately 75,000,000 tons of coal annually. The opening of the Panama Canal will save several million tons a year and the money thus saved will, in part, fall into the coffers of Uncle Sam. A vessel en route from Chile to Europe can save nearly enough in the cost of coal alone to pay the tolls that will be exacted at Panama.

When the United States came to frame its system of toll charges and collections, it was found that there was a wide difference of opinion as to the right of the United States Government to exempt coastwise shipping from the payment of tolls. Under the Hay-Pauncefote treaty with Great Britain there was also a wide variance of opinion as to the question of whether the United States, as a matter of national policy, ought to exempt from the payment of tolls, ships trading between its own ports on the two coasts. These questions were argued pro and con, and Congress finally decided by a very close vote that the United States ought to allow ships trading between its own ports to use the canal free of charge. No foreign ships are permitted under any circumstances to engage in such traffic.

Those who advocated the exemption of ships trading exclusively between United States ports from the payment of tolls, did so on the ground that it would build up a wealthy American merchant marine which would be invaluable to the United States in time of war, and also that it would tend to reduce freight rates between Atlantic and Pacific points. They argued that every cent added to the cost of transportation through the canal would be reflected in freight rates between the East and the West.

Those who opposed the exemption of American coastwise shipping from the payment of tolls, asserted that the coastwise shipowners already had a monopoly on the handling of cargo between American ports, and that no further encouragement was needed. They argued that it would make little or no difference in rates whether tolls were charged or not, and that the only people who would benefit would be the shipowners. They contended that the United States ought to charge everybody alike and use the tolls collected for the purpose of repaying the money it spent in building the canal. Some of them also contended that the Hay-Pauncefote treaty bound the United States to treat all shippers alike, and that the United States could not discriminate in favor of the American coastwise traffic without contravening the treaty with Great Britain. This view, however, did not prevail, and the law, as enacted, exempted coastwise shipping.

England immediately protested against this exemption on the ground that it was in contravention of the treaty between the two countries. The story of how the United States came to be bound by a treaty with Great Britain in the building of an Isthmian canal goes back for more than half a century. The year 1850 found the North American continent, north of the Rio Grande, in the possession of the United States, England, and Russia. The United States had only recently finished its continental expansion, and each of the two countries needed a canal to connect their east and west coasts. England had long possessed a west coast in Canada, but the United States had only recently come into possession of a Pacific seaboard. When it came to consider the question of connecting its two coasts the United States found that Great Britain was holding the position of advantage in the Isthmian region. It held the Bahamas, Bermuda, Jamaica, the Barbados, Trinidad, the Windward and Leeward Islands, British Guiana and British Honduras; and held a protectorate over the "Mosquito Coast," now the east coast of Nicaragua. That protectorate covered the eastern terminus of the only ship canal then deemed possible.

Under these conditions the United States concluded that it was necessary for the support of the Monroe doctrine that some sort of an understanding should be reached between the two countries. England assented to such an understanding only after Nicaragua and Costa Rica had given to the United States its consent to the building of a canal across its territory. These treaties with Nicaragua and Costa Rica were negotiated but never ratified, and were used as a club to force Great Britain to make a treaty. The result was the Clayton-Bulwer treaty, which provided that neither Government should ever obtain or maintain for itself any exclusive control over an Isthmian canal, and that neither Government should ever secure for itself any rights or advantages not enjoyed by the other in such a canal. The proposed canal was to be entirely neutral, and the treaty set forth that the two countries agreed jointly to protect the entire Isthmian region from Tehauntepec to South America, and that the canal always should be open to both countries on equal terms. The canal under this treaty was intended to be entirely neutral with reference to defense, with reference to tolls, and with reference to such other nations as might join in maintaining neutrality.

When the United States decided to build the Panama Canal, it found the Clayton-Bulwer treaty wholly unsuited to its aims and desires. It therefore asked England to enter into a new convention; the Hay-Pauncefote treaty was the result. This document declared that its purpose was to remove any objections that might arise under the Clayton-Bulwer treaty to the construction of an Isthmian canal under the auspices of the Government of the United States without impairing the general principle of neutralization.

Under this treaty the Government of Great Britain made a protest against the decision of the United States to exempt its coastwise traffic from the payment of tolls, claiming such exemption to be a violation of the neutrality agreement. This protest came in the form of two notes to the American Government. The first was written as a warning to Congress that the British Government would regard the exemption of American coastwise traffic from the payment of tolls as a discrimination against British shipping, and a violation of the neutrality agreement between the two countries. It admitted that if the United States were to refund or to remit the tolls charged, it would not be a violation of the letter of the treaty, and acknowledged that if the exemption of coastwise American shipping from toll charges were so regulated as to make it certain that only bona fide coastwise traffic, which is reserved for American vessels, would be benefited by this agreement, then Great Britain could have no objection. But it declared that England did not believe that such regulation was possible.

After Congress, with this note in mind, had passed the canal toll law with an exemption to ships carrying goods between the two coasts of the United States, President Taft, in approving the measure, declared that the canal was built wholly at the cost of the United States on territory ceded to it by a nation that had the indisputable right to make the cession, and that, therefore, it was nobody else's business how we managed it. He contended that for many years American law had given to American ships the exclusive right to handle cargo between American ports, and that, therefore, England was not hurt at all when that shipping was exempted from toll charges.

England responded, in a second note, that the clear obligation of the United States under the treaty was to keep the canal open to the citizens and subjects of the United States and Great Britain on equal terms, and to allow the ships of all nations to use it on terms of entire equality. It also contended that the United States is embraced in this term of "all nations"; that the British Government would scarcely have entered into the Hay-Pauncefote treaty if it had understood that England was to be denied the equal use of the Panama Canal with America. The three direct objections urged by the British against the American canal law were: That it gives the President the right to discriminate against foreign shipping; that it exempts coastwise traffic from paying tolls; and that it gives the Government-owned vessels of the Republic of Panama the right to use the canal free. The answer of the United States to the first of these objections was that the right of the President to fix tolls in a way that would be discriminatory against British shipping was a question that could be considered only when the President should exercise such action.

The British Government expressed the fear that the United States, in remitting tolls on coastwise business, would assess the entire charges of maintenance of the canal upon the vessels of foreign trade and thus cause them to bear an unequal burden. This, the second objection was answered with the statement that, whereas the treaty gives the United States the right to levy charges sufficient to meet the interest of the capital expended and the cost of maintaining and operating the canal, the early years of its operation will be at a loss and, therefore, at a lower rate than Great Britain could ask under the treaty. The third objection was considered insignificant.

The British Government, after laying down its objections to the American canal toll law, requested that the matter be submitted to The Hague tribunal for adjudication. The American Government declared that this course would not be just to the United States, since the majority of the court would be composed of men, the interests of whose countries would be identical with those of England in such a controversy. Before leaving office President Taft proposed that the matter should be submitted to the Supreme Court of the United States. The whole question was left in that situation when the change from the Taft to the Wilson administration took place.

As to the merits of the controversy, there is no unanimity of opinion on either side of the Atlantic. Some British authorities entirely justify the American position, while some American authorities take the British position. It is probable that the controversy will require years for settlement.

Before the canal was open for traffic there was much speculation as to what rate policies the railroads would adopt to meet the situation caused by the competition of the Panama Canal. If the same classes of goods are handled through the canal as across the United States, there will be more than 3,000 different articles on the tariff books of steamship lines using the canal. In his report on the effects of canal tolls on railroad rates, Prof. Emory R. Johnson expressed the opinion that the payment of tolls by ships engaged in coast trade would affect neither the rates of the regular steamship lines nor the charges of the transcontinental railroads.

A provision of the canal toll law forbids any railroad to be directly or indirectly interested in any ship passing through the canal, carrying freight in competition with that railroad. This provision was inserted to prevent the railroads from controlling the steamship lines using the canal, and through that control fixing rates between the two coasts on such a basis as to prevent effective competition with the railroads themselves. The result was that a number of railroads had to dispose of their steamships engaged in coastwise trade. This provision affects several Canadian railroads, and after it was made the British Government served notice on the United States that it intended to take up this question and consider whether or not the law in this particular does not infringe upon British rights.

Nothing seems more certain than that, in the course of years, canal tolls will be materially lowered from the $1.20 fixed by the President. It seems inevitable that the Panama Canal and the Suez Canal will enter into a lively battle for the great volume of trade between eastern Asiatic and Australasian points and western European ports. On this dividing line between the two great interoceanic highways there originates many millions of tons of traffic, and this will be largely clear gain to the canal which gets it. The considerations which will draw this trade one way or the other are the rates of toll, the convenience of coaling stations, the price of coal, and the certainty of the ability to secure proper ship stores. This spirit of competition will probably serve to lower rates more rapidly than they otherwise might be reduced. With some 10,000,000 tons of traffic on the great divide between the two canals, ready to be sent forward by the route which offers the best inducements, it is certain that good business policy will call for some hustling on the part of both canals. As the business of the Panama Canal expands, it can afford to reduce rates. With an ultimate capacity of 80,000,000 tons a year, as the canal stands to-day, the rate of toll could be cut down to 25 cents a ton when that capacity is reached, and still afford the United States an income large enough to take care of the operation and maintenance of the canal, and sanitation and government of the Canal Zone, to meet the interest on the cost of building it, and to amortize the entire debt in a hundred years.

It is certain that the United States made a good investment at Panama. Assuming that the coastwise traffic is worth to the Government the amount of the tolls it is exempted from paying, the canal becomes a self-supporting institution from the day of its opening, leaving all the military and trade advantages it affords the United States as clear profit.

CHAPTER XXVI

The force required at the locks will be comparatively small. It will consist of men in general charge of the lock operations, men in charge of the towing operations, men who handle the various mechanism and operate the several types of valves for the regulation of the water in the locks; and the general labor force consisting of a few hundred operatives at each end of the canal. A force will be required to operate the big hydro-electric station at Gatun Spillway, where the electricity for the operation of the locks and for the lighting of the canal will be generated. Another force will be required at the auxiliary power plant at Miraflores which will be operated by steam. Fewer than a thousand men will be required in putting ships through the canal.

When the question of placing the canal on a permanent operating basis arose one of the first considerations was the scale of salaries to be fixed. Having in mind the fact that salaries paid during the construction period (which were 50 per cent above the standard in the United States) were based upon conditions existing in the early days of the American occupation, it was decided that this was an unfair basis for the permanent organization. The salaries for the construction period were made high because they had to be. It was more a question of reducing men to risk their lives than of fixing fair rates of compensation. The conclusion reached was that there was no longer any reason why the Government should pay salaries so much higher than obtained in the States, especially in view of the fact that all positions under the permanent organization would carry with them free quarters, free medical attendance, free fuel, free light, free hospital service and the like. It was finally determined that it would be fair to both the employee and the employer to establish as a basis of compensation for services in the permanent organization a scale of salaries not to exceed 25 per cent higher than obtained for similar positions in the United States. This decision was made on the basis that it would be fair to the employee and at the same time would allow the canal to be operated at a cost which would impose no undue burden on shipping.

When Congress took up the matter in the enactment of the permanent canal law, it reflected the recommendations of the chairman and chief engineer of the Canal Commission in almost every particular. With reference to the canal employees, that body provided that they should be appointed by the President or by his authorities, and that they should be removable at his pleasure; also, that their compensation should be fixed by him until such time as Congress should regulate it by law.

The head of the permanent force on the Canal Zone will be known as the Governor of the Panama Canal. He is to be appointed by the President with the advice and consent of the Senate, for a four-year term, or until his successor shall be appointed and qualified. He will receive a salary of $10,000 a year, and will be the personal representative of the President on the Isthmus. Indeed, the permanent organic act provides that the President himself is authorized, after the disbanding of the Isthmian Canal Commission—which is to take place whenever the President thinks the work has approached a sufficient degree of completion to warrant it—to complete, govern, and operate the Panama Canal, and to govern the Canal Zone, if he desires to do it himself; or "cause it to be completed, governed, and operated through a governor of the canal." Of course, the President will prefer to "cause it to be completed, governed, and operated" through such a governor. As a matter of fact, when the question of selecting a governor comes before the President it may be expected that he will choose a man in whom he has every confidence to carry out the organic law on the Canal Zone, and to place the canal in operation. This man will be as much of an autocrat on the Zone under the permanent organization as the chairman and chief engineer was during the construction.

When President Roosevelt undertook to carry out the provisions of the Spooner Act, and to have the canal dug by a board of seven commissioners, each independent of the other, he soon found that it would not work. After repeated trials he came to the conclusion that the control of affairs on the Isthmus should be concentrated largely under the chairman and chief engineer. He therefore issued an executive order requiring that all officials on the Isthmus should report to the chairman and chief engineer, giving him practically all control over the entire project. This brought both the Canal Zone Government and the sanitary department under the supervision of the chairman and chief engineer. The result was a coordination of the work and a satisfactory organization for its prosecution.

When Congress came to make the permanent canal law it profited by the unsatisfactory results that would have grown out of a rigid adherence to the principles of the Spooner Act, and concentrated all authority under the governor of the Canal Zone. There were those who thought the sanitary department should not be under the control of the governor, and still others who felt that the operation of the canal probably should be under one man and the civil government under another. But these suggestions were not followed, and the act as finally adopted makes the President practically a czar of the Isthmus, and under him the governor need give account to no one but the President.

It has been the ambition of the present chief engineer of the canal to see the operating force fully installed and things moving along on a satisfactory working basis before leaving the Isthmus. He thinks arrangements should be made whereby acute changes of policy should be prevented. This he would do by having a principal assistant who would succeed the governor at the end of his four-year term. This would permit a continuous policy and an unbroken line of action which, according to his view, would make for the efficiency of the operating force. In speaking of this phase of the matter, he stated that were a new man chosen at the end of the four-year term of his predecessor—a man who had had no previous experience on the Isthmus—there would always be a tendency to make radical changes.

He would have on the governor's staff a doctor from the Army to have charge of the work of sanitation on the Canal Zone, who would report directly to the governor. The quarantine officer, in his opinion, should be under the Public Health Service of the United States. Under the plan as adopted in the permanent canal law, any officer of the Army or of the Navy chosen to fill a position in the canal operating force will be paid the same salary as a civilian, with the exception that he would get only the difference between his regular Army or Navy pay and the salary his position carried.

It is estimated that the expense of operating the canal will amount to about $3,500,000 a year. This includes the cost of operating a number of dredges which will have to be maintained in connection with the canal work. The estimate was made upon the amount of business handled at the Sault Ste. Marie Canal which has the largest traffic of any canal in the world.

There will be five departments for the operation of the canal outside of the work of maintaining the civil government and sanitation. The operating department will have charge of the operation of docks and wharves at the terminals, pilotage, lockage, and the lighting of the canal. It is estimated that it will cost $400,000 a year to maintain the terminals, $150,000 a year to light the canal, and that it will require 60 pilots, at $1,800 each a year, to take ships through. During the first years of operation it is believed that a single shift can handle all the business that comes, but, as the years go by, it may require two shifts and eventually three to keep the work going.

The engineering department will require about 500 men and will have charge of all the construction and repair work pertaining to the canal property, and of all excavation and dredging in the canal. It will cost approximately a million dollars a year to maintain this department, of which three-fourths will be required for the operation of the dredges and other equipment for keeping the canal open.

The quartermaster's department will have charge of the construction, repair, and maintenance of all buildings, roads, and municipal improvements in the Zone settlements and of the receipt, care, and issue of all property and material. This department will require nearly a thousand men and the total expense will be in the neighborhood of $600,000.

The electrical and mechanical department will have charge of the mechanical and electrical apparatus belonging to the canal, and of the permanent works at its two ends.

The accounting department will require some 60 men with annual salaries amounting to approximately a hundred thousand dollars. It is estimated that the cost of materials for the operation of the canal will range around three-fourths of a million dollars a year.

The force which will be maintained on the Isthmus, with their families, will make a Canal Zone population of approximately 5,000. These, in addition to the eight or nine thousand troops and marines which will be quartered there, will bring the total population up to about thirteen or fourteen thousand. Of these perhaps three-fourths will be along the southern 10-mile section of the canal. But, in spite of the greater population at the Pacific side, the Atlantic end will probably not lack for attraction. It is likely that Gatun Lake will be stocked with a supply of fresh-water fish, and that shooting preserves will be established adjacent to Gatun, to be conducted in connection with the Washington Hotel at Colon. There is also some talk of constructing golf links adjacent to Gatun, which will be open alike to the employees of the canal and to the guests of the two big Government hotels—the Washington and the Tivoli.

While a freight-carrying steamer will make its stay as short as possible, the probabilities are that the passenger-carrying steamer will require at least 48 hours to make its calls at the two terminal cities and pass through the canal. They will probably handle the major portion of the package cargo, leaving the bulk cargo business entirely for freighters. When going through the canal from the Atlantic to the Pacific they probably will have cargo bound for a large number of Pacific ports on diverse routes. This would be discharged at Balboa and there be put into other ships to be carried to its destination. During the time the shipping and unshipping of cargo, replenishing stores, taking on coal and like operations are being performed, the traveler will be afforded opportunity to get acquainted with dry land again, and to enjoy for a day or two a respite from his long sea journey.

The plan advocated on the Isthmus for perfecting the permanent organization was as follows: The chairman and chief engineer would call upon each of the departments to furnish a list with the ratings of the best men. The man having the best record would be offered a position under the permanent organization similar to the one held by him under the construction organization. If he chose to accept this position under the wage standard laid out he could do so; if he did not, the next man would be given the opportunity, and so on down. In this way it was expected that the entire force would be chosen because of records made in the service.

CHAPTER XXVII

While the great Isthmian highway will be completed far enough ahead to be ready to handle all traffic that offers long before the official opening date, it will, on the other hand, never reach that stage where dredges will not be needed. There are 22 rivers which wend their way from the watersheds of the canal, and pour their loads of sand and silt into it. Of course, these rivers are small—so small, indeed, that few of them would be dignified by being called rivers in the United States. But when the heavens open and the floods descend, as they do so frequently during the rainy season at Panama, these usually quiet, lazy, little streams become almost as angry as the mighty Chagres itself, and they rush down to the canal heavily freighted with sand and silt. If the water in the great interoceanic channel is to be kept at its appointed depth of 41 feet, dredging perforce must be continued from year to year, summer and winter, spring and fall. And so it is that the dredges will be met by every ship that steers its course from Cristobal to Balboa, or from the Atlantic to the Pacific.

Few ships large enough to tax the dimensional capacity of the locks ever will go through the canal. Full 90 per cent of all the ships that sail the seas could go through locks one-half the size of those at Panama. So far as commercial shipping is concerned, a 15,000-ton vessel plying tropical waters is considered large, and a 20,000-ton ship is an exception. According to the best shipping authorities, the day when vessels of more than 25,000 tons will find it profitable to ply on the routes which lead through the Panama Canal is so far in the future that they are not able to discern it. With reference to the Navy, naval experts generally agree that the United States will celebrate many a decade of passing years before a battleship too large to use the present lock chambers is a possibility.

When a ship makes its maiden voyage through the canal, the measurements to determine its net register will be taken by the shipping experts in the employ of the United States. When this work is completed the master of the ship will be required to pay the toll before he can take his vessel through the canal. If he should fail to pay the toll the vessel itself would be put on the block and sold at auction, if necessary, to reimburse the United States for its passage. However, it is not to be expected that such contingencies as these will arise. When once a ship has been measured, the formality will not have to be gone through with on future visits. It is not expected that each ship will be actually measured for every dimension as it comes to the canal on its first trip, since its net register tonnage probably will have been determined long before, and the canal officials will only check up the work already done elsewhere to assure its accuracy.

Many ships will go to Panama which will not use the canal. For instance, there will be those which will leave European ports, loaded in part with cargo bound to Pacific points and in part with cargo for Atlantic points on the South and Central American coast. Such ships will simply call at Colon, discharge their cargo bound to Pacific points, and take on what additional cargo they can get bound for points for which they are sailing on the Atlantic side. In stopping at Colon they will probably replenish their supplies from the commissary department of the canal.

What the freight department is to a railroad the cargo ship will be to the Panama Canal—its greatest revenue producer. Such ships will do comparatively little loading and unloading of cargo at either end of the canal. The tramp steamer will figure largely in the traffic that passes from ocean to ocean at Panama. With no schedule of sailing dates and with no definite routes, the tramps constitute the flying squadron of the shipping world, moving hither and thither seeking cargoes wherever they can find them. A tramp steamer may load at Liverpool for San Francisco, reach that point through the Panama Canal, and, after discharging its cargo, go on up to Seattle and load for China. There it may discharge its cargo again and go thence to India to pick up a load of grain for Liverpool, passing through the Suez Canal. Its master always will turn its prow to the point where profitable cargo awaits it, and this may carry it by Panama once or a dozen times a year. The line steamers will have their regular sailing dates and will pass through the canal at stated intervals.

The problem of providing coal for passing ships is one of the most important with which the canal authorities will have to deal. The cheaper that commodity can be sold to the ships, the more attractive the route will be. For instance, a 10,000-ton ship which saves a dollar a ton on a thousand tons of coal, saves the equivalent of the cost of operating the vessel for a period of from 24 to 36 hours, and this, with the rates at Suez and Panama on an equal basis, gives at least one day's advantage to the Panama route in figuring on a voyage. Pocahontas steaming coal costs $2.70 per ton laid down at Newport News. Under the carrying agreements with shipping interests that obtained during the construction period, this coal was carried to Panama for $1.395 a ton. It is estimated that the canal colliers, which have been authorized by Congress, with a capacity of 12,000 tons of coal and with a speed of 14 knots, can deliver to the Isthmus a half million tons of coal a year. The saving which will be effected by having the coal carried by Government colliers is a large one. A merchantman would get $368,000 for delivering 264,000 tons of coal, while the cost of delivery by collier for the same amount would approximate $184,000. The average life of a collier is 20 years. The saving effected in these 20 years by the Government carrying its own coal would be large enough to pay back the million dollars which the collier cost, and to yield an additional profit of $2,630,000 during the life of the vessel.

The sale of coal at Suez, where an annual shipping traffic of some 21,000,000 tons is handled, amounts approximately to 1,000,000 tons. Thus, it will require two colliers to handle the coal when the canal opens, and two more 13 years later.

Not all the ships which use the canal will coal there. For instance, the Royal Mail Steam Packet Company, which was so forehanded in its effort to get a good share of the trans-Isthmian traffic that it acquired the Pacific Steam Navigation Company long before the canal opened, is building a coaling station at Kingston, Jamaica, where its ships will replenish their bunkers. This coaling station will, of course, always be at the disposition of the British Government in case of war, and of such British merchantmen that choose to pass that way.

Some ships will not negotiate the canal under their own power. Many small vessels steer so badly that their masters would be afraid to risk them going through without aid. For instance, the skipper of the Cristobal, one of the 6,000-ton cement-carrying ships bought by the United States a few years ago, declared, in discussing this phase of the matter, that he would be afraid to trust his vessel going through the canal under its own power. To ships not sufficiently responsive to their helms, Government tugs will be furnished.

Some skippers prefer to have their vessels towed by one powerful tug, while others prefer several smaller ones. Several tugs are now building for towing purposes, and they will also be used to tow vessels through the locks in the early days of operation, pending the completion of all of the electric towing locomotives.

Two floating cranes will be provided in the permanent equipment at a cost of a quarter of a million dollars each. These cranes, with a lifting power of 250 tons, will be suitable for any wrecking operations in the canal and, also, for lifting the gates in case of repairs being required.

The canal will probably be the death blow to the sailing ship of international commerce. Not being able to negotiate the canal under their own power, and because of the dead calms which prevail in the Gulf of Panama, sailing ships will be stopped from using the Isthmian waterway. When they attempt to journey around Cape Horn and the Cape of Good Hope in competition with steam vessels which pass through the Panama Canal, the operation will afford such little profit that in the course of a few years they will have to surrender what little share of international commerce they have succeeded in keeping.

The Panamans are inclined to think the United States drove a hard bargain when the provision was inserted in the treaty that all supplies for the building and operation of the canal, and for the demands of shipping using it, when imported by the United States, should be free of duty. This practically gives the United States a monopoly of the business of catering to the needs of ships passing Panama. The present duty on imports is 15 per cent, and the local merchant who would sell supplies to the passing ships would be under the necessity of adding 15 per cent to his buying price before he could compete with the United States Government on equal terms. This advantage is made all the more marked by the reasons of the fact that the United States often can make much money out of the operation by selling at actual cost, the profit arising from the extra shipping which is thereby attracted to the canal.

The United States will reimburse the owners of any vessels passing through the locks of the canal, under the control of its operatives, for any injury which may result to vessel, cargo, or passengers. Provision is made under the permanent canal law that regulations shall be promulgated by the President which will provide for the prompt adjustment, by agreement, and immediate payment of claims. In case of disagreement, suit may be brought in the district court of the Canal Zone against the governor of the Panama Canal. The law says: "The hearing and disposition of such cases shall be expedited and the judgment shall be immediately paid out of any moneys appropriated or allotted for canal operation."

The character of misrepresentations made concerning the canal was illustrated in a story published in the midsummer of 1913. This story originated in London and declared that all of the big shipping interests were afraid of the Panama Canal, and that Lloyds would insure vessels and cargo only at much advanced rates. The article went on to state that the representative of one of the biggest European lines had visited the Isthmus and had returned with the announcement that his company could not afford to trust its vessels in the canal.

As a matter of fact, with the United States Government standing responsible for any damage sustained in the canal, no shipping interest could sensibly regard it as extra hazardous to pass through it; rather, it would be less hazardous than to negotiate the tortuous Strait of Magellan, where thousands of wrecks tell of unseen dangers, or to round Cape Horn with its fierce storms and its grave perils.

Much has been said about the probability of injury to the canal by persons of evil intent, and the Panama Canal law imposes heavy penalties on anyone attempting to inflict such an injury. The law provides that the governor of the Canal Zone shall make rules and regulations, subject to the approval of the President, touching the right of any person to remain upon or pass over any part of the Canal Zone. "Any person violating these rules or regulations shall be guilty of a misdemeanor and, upon conviction in the district court of the Canal Zone, shall be fined not exceeding $500 or imprisoned not exceeding a year, or both penalties in the discretion of the court. Any person who, by any means or any way, injures or obstructs or attempts to injure or obstruct any part of the Panama Canal, or the locks thereof, or the approaches thereof, shall be deemed guilty of a felony and on conviction shall be punished by a fine not to exceed $10,000 or by imprisonment not to exceed 20 years, or by the infliction of both of these penalties. If the act shall cause the death of any person within a year and a day thereafter, the person so convicted shall be guilty of murder and shall be punished accordingly." As a further precaution, individuals will not be allowed to approach the locks with any sort of packages unless they are properly vouched for.

The possibility of serious injury to the locks will be carefully guarded against. They will be lighted at night by electric lamps of large candlepower and the whole lock structure will be kept as light as day throughout the night. Men will be always on sentry duty, and an adequate system of intercommunication will enable the sentries to call out a guard large enough to repulse any attack of any small surprising party.

CHAPTER XXVIII

Under the treaty with the United States, Panama has its independence guaranteed, and recognizes the right of the United States to maintain order within its boundaries. This entirely does away with the necessity of maintaining an army and navy. The result is that with no appropriations required for military purposes, and with a $600,000 income from the Canal Zone, it enjoys one of the lowest tax rates in the world.

Although the Republic of Panama has its Declaration of Independence and its Glorious Fourth, the former was written by a foreigner, and the latter occurs in November. There is some dispute as to who wrote the declaration of independence, but the best information points either to Philippe Bunau-Varilla, a Frenchman, or to William Nelson Cromwell, an American. These two gentlemen differ upon this subject, each claiming that he was the Thomas Jefferson of Panama.

When the $10,000,000 was paid to Panama by the United States, one of the first things done was to build a university, locally known as the National Institute. Some $800,000 was spent in the construction of the buildings, which are located near the line of the Canal Zone. But it so happens that Panama has few teachers qualified to hold university chairs, and fewer students qualified to pursue university courses; and the result is that the university is more a place of buildings than a seat of learning.

No other country in the world calls in another nation to superintend its elections. When the first presidential election was held the United States took the initiative and demanded the right to supervise the balloting. Before the second election was held the President became ambitious to succeed himself, although the constitution provided that he could not do so. He thereupon decided to resign for a period of six months, in favor of one of his partisans, thinking that this would allow him to live up to the letter of the constitution even though he were violating its spirit in becoming a candidate for reelection. This situation was brought to the attention of the United States, and the President was politely but firmly informed that the subterfuge would not be permitted. When the election approached each side thought that the other was trying to win by fraud, and the United States was asked to referee the political battle.

The City of Panama is famous for its wickedness. Men who have seen the seamy side of life in all of the big cities of the world declare that Panama is as bad as the worst of them. Until a few years ago bull-fighting was permitted, but the bulls were so poor and the fighters were such butchers that the Government finally outlawed this form of entertainment. Cock-fighting persists, and numerous cock pits are popular resorts every Sunday. Nowhere else can one witness a greater frenzy in betting than at one of these cocking mains. The backers of the rival birds nod their heads and place their bets so rapidly that it is more bewildering to the onlooker than the bidding at an auctioneer's junk sale.

The prize ring has succeeded the bull ring in gratifying the Spaniard's thirst for gore, and scarcely a Sunday passes that there is not a prize fight in Panama. Few Americans who attend them come away without a feeling of disgust over the poor fighting, the brutality, and the trickery resorted to.

While the Americans have done so much for public cleanliness in Panama and Colon, the masses seem to know little more about sanitary living today than before the Americans came. The stenches which greet the visitor in the native quarters are no less odorous than those encountered in other cities of tropical America. The bathtub is an unknown quantity among the masses. Most of the natives who live in the cities are engaged in some line of small trade. It may be that a shop has only a platter of sweetmeats and a few bottles of soda on ice, and that another has only a bushel of different kinds of tropical fruits, but out of the small sales large families manage in some way to exist. The markets open early in the morning. There is no spirit of rivalry among the market men, and they act usually as if they were conferring a favor upon the buyer. At the markets many Indians are encountered who bring their wares from the interior and offer them for sale. These usually consist of pottery, net bags, charcoal and the like.

Life among the Panamans in the jungle is simple indeed. With his machete the householder may provide a thatched roof for his mud-floored hut, and he can raise enough beans, plantains and yams, and burn enough charcoal, and catch enough fish to meet all of his needs. In the kitchen the principal utensils are gourds and cocoanut shells. The most tempting morsel that the Panaman can get is the iguana, a lizard as big as a cat, whose meat is said to taste like spring chicken. It is about the ugliest creature in the animal world, and yet it means more to the native Panaman than does possum meat to the cotton-field darky of the South.

The unconscious cruelty of the average native is remarked by almost every visitor. He is usually too lazy to be conscious of cruelty, for that would require exertion. When he catches the iguana, for instance, he takes it alive so that it may be fattened before being killed. Its short legs are twisted and crossed above its back, and the sharp claw of one foot is thrust through the fleshy part of the other, so as to hold them together without other fastening. The tail, being useless for food, is chopped off with the machete, and thus mutilated and unable to move, the lizard is kept captive until fat enough to eat.

The fruits of Panama are neither so numerous nor so plentiful as those of Nicaragua or Jamaica. The mamei is a curious pulpy fruit the size of a peach, with a skin like chamois and with a smooth pit the size of a peach-stone. The sapodilla is a plum-colored fruit with seeds in a gelatinous mass. One is usually introduced to the sapodilla with the remark that, although the seeds are eaten, they have never been known to cause appendicitis.

Cedar is preferred to mahogany in Panama. The Indians make their cayucas out of mahogany logs, and it is not uncommon to see bridges 40 feet long and 5 feet thick, made of mahogany logs which would be worth several thousands of dollars in an American furniture factory.

Panama is famous for its tropical flowers. Many of them are beautiful, but few are sweet smelling. Orchids abound, especially on the Atlantic side, and while the waters of the Chagres were being impounded in Gatun Lake, native boatmen would go out in their cayucas and gather orchids from the trees. One of the most beautiful of the orchids of Panama is the Holy Ghost orchid. It blooms biennially, and when its petals fold back they reveal a likeness to a dove.

Some of the American Women on the Canal Zone became enthusiastic collectors of tropical flowers. Among these were Mrs. David Du Bose Gaillard and Mrs. Harry Harwood Rousseau. Both of these ladies spent much time hunting orchids and other flowers for the verandas of their houses and for their gardens. Mrs. Rousseau made trips into several of the other countries of Central America in her quest for new orchids. The collections made by these two ladies represent the finest on the whole Isthmus of Panama.

The animal life of the Isthmus is not abundant, although some deer and a few tapirs are to be found. Alligators abound in the Chagres River and other streams of the Zone. Perhaps the most interesting form of animal life to be found on the Isthmus is the leaf-cutting ant. This ant seems to be nature's original fungus grower. As one walks around the American settlements, he frequently comes upon a long path filled with ants, passing back and forth. They resemble a sort of miniature yacht under full sail, except that the sails are green instead of white. Upon closer examination it is found that what seemed to be a sail is a triangular piece of leaf carried on the back of the ant, with its edges to the wind so as to overcome air resistance. The ants do not gather these leaves for food, but they store them in such a way that a fungus grows upon them. They eat the fungus, and when the leaves are no longer useful they are thrown out and new supplies brought in.

The native remedies used by the Panamans are many and interesting. For stomach troubles, which are very rare, they eat papaya. The papaya is a sort of fruit which might be a cross between a cantaloupe, a watermelon and a pumpkin, except that it grows on trees. It has the rind of a green pumpkin, the meat of a cantaloupe, and the seeds of a watermelon. It is probably richer in vegetable pepsin than any other plant in existence—a pepsin which neutralizes either alkaline or acid conditions in the stomach. It is said that a tough steak, wrapped in the leaf of the papaya tree overnight, becomes tender as the result of the digestive action of the pepsin in it.

The Indians and Panamans who live in the jungle use the wood of the cacique, or "monkey cocoanut," to stop any flow of blood. In their materia medica they have a large number of tropical plants which they use for their ailments.

The way in which sanitary instruction may be made efficient is illustrated among some of the people of Panama. Upon one occasion the Canal Record carried a small diagram of how to make a sanitary drinking cup out of a sheet of paper. After that there were many Panamans who, although in a hundred ways indifferent to contagion, would no longer drink from common drinking cups, but would make their own sanitary cups. Even the Jamaican negroes employed around the offices of the commission in many instances would not think of using the common drinking glass at the office water-cooler.

Two tribes of Indians on the Isthmus have not mixed with the Caucasians or the negroes. They are the Chucunoques and the San Blas Indians. The latter tribe has never been known to allow a white man to remain in its territory after sundown. Even the higher officials of the Panaman Government are forced to respect this tradition when they treat with the San Blas chiefs.

Government land in Panama can be bought at the rate of $49.60 for 247 acres, with reductions for larger areas. The Government invites foreign capital, declaring that the United States stands as a perpetual guarantee against revolutions within and aggressions without.

The story of the early days in Panaman history is a strange admixture of romance and cruelty. The Isthmus was discovered in 1500, and first settled by an adventurer who had been the Royal Carver in the king's household at Madrid. Balboa, carrying with him a small force of men and a lot of bloodhounds, one of them a dog of mighty prowess, known as Lioncico, or "Little Lion," which drew a captain's pay because of its fighting qualities, crossed the Isthmus in 1513 and discovered the Pacific Ocean. After him came a new governor of the Isthmus, who put Balboa to death.

The Spaniards were unspeakably cruel to the Indians. Even those who received them kindly were tortured and roasted to death, because they did not produce enough gold. One governor rode a mule, which was noted for the frequency of its braying. The Indians were taught that the mule was asking for gold, and in meeting these demands they not only had to give what they possessed, but were forced to rob the graves of their ancestors as well. Upon one occasion the Indians, having captured a number of Spaniards, melted a lot of the yellow metal and poured it down their throats, telling them to drink until their thirst for gold was quenched.

After the Spaniards had established themselves upon the Isthmus, the English buccaneers, Drake and Morgan, fell upon their cities and despoiled them. The ruins at Old Panama, which once was a city of 30,000 inhabitants, to-day tell the story of the effective work of Henry Morgan when he raided it and captured its treasure.

While the Spanish conquerors, the French filibusters, and the English buccaneers, who took their turns in pillaging Panama, were cruel beyond imagination, they were always famous for their outward evidences of religion and piety. The Spanish were always chanting hymns and honoring the saints; the French would shoot down their own soldiers for irreverent behavior during mass; the English pirate captains never failed to hold divine services on Sunday, and often prohibited profanity and gambling.

Where once Spaniards tortured Indians and British buccaneers raided Spaniards, where once revolution after revolution left a poor and desolate country, to-day the gates of Panama are open to the world, and its trade is invited again to pass that way. The people of the Isthmus believe that the glory which departed when Morgan sacked Old Panama, forcing the Pacific trade to seek the Strait of Magellan, will return with the opening of the Panama Canal, and that their capital, whose walls cost so much that the Spanish king thought he could see them from his chamber window in Madrid, will retrieve its ancient glory.

CHAPTER XXIX

During the first dozen years of its operation various curves were straightened, the turning-out places where vessels passed one another were enlarged, and their number increased to 13. This work of straightening curves and widening the canal has continued from that time until the present, and to-day vessels may pass one another through a large part of its length. The policy increasing the general dimensions of the canal was begun in 1887. By 1890 its depth had been increased to 29¹⁄₂ feet, so that it could accommodate ships having a draft of 26 feet 3 inches. The work of deepening continued, and when the United States began to build the Panama Canal this work was speeded up, so that by 1908 a depth of 32³⁄₄ feet was attained and vessels of 28 feet draft could be accommodated. In 1909 it was decided that it would be necessary to make the canal still deeper, and a project, which will not be completed until 1915, was then undertaken, calling for a depth of 36 feet 1 inch. By 1898 the width of the canal had been increased from 72 feet to 98¹⁄₂ feet. This is now being still further increased to 134¹⁄₂ feet. Even when this project is completed in 1915, the Panama Canal still can accommodate ships of 5 feet greater draft than the Suez Canal.

The maximum draft of ships permitted to use the Suez Canal is demanded in comparatively few instances. A recent report showed that 94 per cent of the ships using the canal had a draft of less than 26¹⁄₄ feet, and that only 1 per cent had a draft of 28 feet. The increase in the depth of the canal, therefore, was made largely in anticipation of future shipping requirements.

When the canal was completed it required 49 hours for a ship to pass through it. The growth in its dimensions, together with the increase in the number and size of passing stations, the straightening of curves, and the improvement of facilities, have brought down to 17 hours the average length of time required for the transit. Ships not equipped with electric searchlights are not permitted to pass through at night. The improvements being made on the canal are being paid for mainly from the revenues derived from tolls.

The Suez Canal was constructed, and has been enlarged and managed, by a private corporation which has invested from the beginning of the construction up to the present time about $127,000,000 of which approximately two-thirds has been secured from the sale of securities, and one-third from the earnings. The original capital of the Suez Canal Company, issued in 1859, was 400,000 shares of $100 each. These shares partake of the nature of both bonds and stock, for they are entitled to interest of 5 per cent 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-bearing feature. On 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 Khedive of Egypt, paying some $20,000,000 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 have increased from 4.7 per cent to 33 per cent. The shares are closely held and trading in them is light. The stock sells at a premium of over 1,000 per cent. When the work of building the canal was undertaken, 100,000 shares were 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. The net profits of the canal amount to about $17,000,000 a year. Of this the stockholders get $12,000,000, the Egyptian Government $2,500,000, the founders of the company $1,500,000 and the administrative officers and the employees divide $100,000 among them.

The traffic of the Suez Canal during the first two years was relatively small, for the reason that the canal is not a practicable one for sailing vessels, and steam vessels had to be built. These, being much less efficient than freight steamers are to-day, were slow in securing the trade that had been enjoyed by the sailing vessels. The rate of tolls charged by the Suez Canal Company has declined steadily since the canal went into operation. On January 1, 1912, they approximated $1.30 a ton, with a reduction of nearly a third for vessels in ballast. On January 1, 1913, the rate was made approximately $1.20 a ton, the fraction of a cent higher than the rate at Panama. The passenger tolls are $2 for passengers above 12 years and $1 for children from 3 to 12 years of age; children below 3 years are carried free. The highest toll charged on the Suez Canal was in 1874 when it was $2.51 a ton.

The Suez Canal has proved highly profitable to its owners. No one believes that the Panama Canal will yield as great a return on the capital invested. The cost of the Panama Canal will be four times the cost of Suez, and it is doubted by traffic authorities whether the Panama Canal will ever handle as much business.

The Manchester Ship Canal, which connects Manchester with Liverpool, was constructed only after years of preliminary agitation. There was opposition by the railways, and from the industrial and commercial centers with which Manchester competes. Over 300 petitions were presented to Parliament before its consent was obtained for the construction of the canal. Work was begun in November, 1887, at which time it was estimated that the canal would cost $42,000,000. It was opened for traffic January 1, 1894, after $75,000,000 had been spent in building it. Of this about $60,000,000 went into actual construction work. The Manchester Canal is 35¹⁄₂ miles long. It extends from Eastham, about 6 miles from Liverpool, to Manchester. Its original depth was 26 feet, but this has been increased to 28 feet. Ships with a length of 550 feet, a beam of 61 feet, a height of 70 feet, and a draft of 27 feet can use the canal. There is a difference of 58 feet 6 inches in level between Eastham and Manchester, and this is overcome by five sets of locks. The highest lift is 16 feet.

The Manchester Canal Company owns the Bridgewater Canal and makes connections with 13 other barge canals. It handles about 6,000,000 tons of freight a year, of which the bulk is sea-borne. Although it connects with 13 barge canals, the amount of barge traffic handled is less to-day than it was a decade ago. From the beginning the Manchester Canal has had to compete with the railroads, and they cut their rates to such a basis that they get the business and force the canal company to operate as a losing venture to its stockholders.

In spite of the competition of the railroads, the canal has managed to increase its business at about the same rate that traffic through the Suez Canal has increased, and a little more rapidly than it has been estimated that traffic through the Panama Canal will grow. The shareholders have not yet received any dividends, but it seems probable that in the course of a few years all of the securities will earn an annual income. Many shareholders have been more than compensated for their subscriptions by the collateral benefits they have received from the canal.

The Government of Germany constructed a canal connecting its Baltic and North Sea ports, and named it the Kaiser-Wilhelm Canal. The natural route from the Baltic to the North Sea around Denmark is circuitous, dangerous because of storms, and is guarded by foreign powers. The canal was begun in 1887 and completed in 1895, and was constructed primarily for military and naval purposes, although it has proved to be of great value to the commerce of Germany. It connects Brunsbuttel Harbor on the Elbe with Holtenau on Kiel Bay. It passes through low lands and lakes and along river valleys. It is 61 miles long and, as it was first constructed, had a width of 72 feet and a depth of 29¹⁄₂ feet. The total cost of the canal was approximately $37,000,000. It was in operation only 12 years until it was found necessary to enlarge it. The reconstruction of the canal was authorized by the German Government in 1907, and the work, which is expected to be completed in 1914, was started in 1909. When this work is completed the canal will be 144 feet wide and 36 feet deep. At 10 places it will be widened so as to permit ships to pass. New twin locks, built for the regulation of the tides—for the canal itself is at sea level—will be 82 feet longer and 37 feet wider than the Panama locks. The maximum depth of these locks will be 45 feet, although at low tide they will be a little less than 40 feet.

During a recent year commercial vessels with an aggregate net register of over 7,000,000 tons used the Kiel Canal. The increase of business during the first decade of the present century amounted to 70 per cent, or a little more than the estimated increase for each decade at Panama. The net receipts from the operation of the canal are not sufficient to pay interest on the investment. No effort is made to levy tolls that will provide for interest charges, or for the amortization of the principal. The canal does not connect regions of enormous traffic, nor does it greatly shorten ocean routes. The longest route is cut down only 429 miles. The German Empire was so well pleased with the success of the Kaiser-Wilhelm Canal that the enlargement it is now making represents an expenditure one and a half times the original cost.

The Amsterdam Canal was built to connect Amsterdam with the sea. Formerly, ocean-going vessels were small and the Zuider Zee River was then a stream of considerable depth. Gradually, however, the Zuider Zee became shallower and the size of ocean vessels larger, so that the commercial supremacy of Amsterdam was threatened by the competition of Rotterdam and Antwerp and north German ports. In 1818 a corporation constructed what was known as the "North Holland Canal," which was large enough to accommodate ships employed in the East India trade. It had a minimum depth of 20 feet and a minimum width of 100 feet. This canal, however, had numerous curves and it was constructed by a roundabout route of 52 miles from Amsterdam northward to the North Sea, while Amsterdam is less than 17 miles from the sea by direct route.

In 1863 a concession for the construction of the North Sea Canal was granted and two years later active work began. It was finished in 1876. There were no serious engineering difficulties to be met, there being no rivers to be crossed, no towns to block the way, and only three bridges to be built. The work consisted mainly of building embankments, draining and reclaiming land, and dredging the channel. The canal was not completed according to the original plan. Extensive enlargements and improvements were decided on, and a larger additional lock was undertaken in 1889 and completed in 1896. At that time it was the largest canal lock in the world. Plans are now being considered for building another new lock, which will be larger than those at Panama. The bottom width of the canal is now 164 feet. It can accommodate vessels 721 feet long, with a 79-foot beam and of 30 feet draft. The construction of the canal cost $16,000,000. Improvements have brought the total amount up to about $24,000,000. Since 1893 all toll charges have been eliminated, and the canal has been operated at the expense of the State. The annual average cost of operation and maintenance is about $200,000. This canal bears about the same relation to the city of Amsterdam that the Delaware River Channel bears to the city of Philadelphia, or the improvements on the lower Mississippi to the city of New Orleans.

The Cronstadt and St. Petersburg Canal is 16 miles long and gives St. Petersburg an outlet to the Gulf of Finland. It was built at a total cost of about $10,000,000. It has a minimum width of 220 feet and a navigable depth of about 20¹⁄₂ feet. It was built primarily as a military undertaking, but has proved of great service to Russian commerce.

Another important European canal is that extending from the Gulf of Corinth to the Gulf of Aegina in southern Greece. Its length is about 4 miles, a part of which was cut through soft granite rock and the remainder through soil. It has no locks. The bottom width is 72 feet and the depth 26¹⁄₄ feet. The average tolls are 18 cents per ton and 20 cents for passengers.

No other canal in the world can rival the one at Sault Ste. Marie, Mich., which connects Lake Superior with Lake Huron, in the enormous volume of its shipping. There are really two canals—one owned by the Canadian Government, and one by the United States Government. The canal belonging to the United States was begun in 1853 by the State of Michigan, and opened in 1855. It had a length of about a mile and was provided with twin locks 350 feet long, allowing the passage of vessels drawing 12 feet of water. The United States Government, by consent of the State of Michigan, began in 1870 to enlarge the canal, and, by 1881, had increased its length to 1.6 miles, its width to an average of 160 feet and its depth to 16 feet. A lock 515 feet long, 80 feet wide, and 17 feet deep was located south of the locks which were built by the State.

In 1882 the United States Government took over the entire control of the canal. Five years later the locks that had been built by the State were torn down, and a new one 800 feet long, 100 feet wide, and 22 feet deep was put into commission in 1896. The Canadian Canal, 1¹⁄₈ miles long, 150 feet wide, and 22 feet deep, was built on the north side of the river during the years 1888 to 1895. Its locks are 900 feet long, 60 feet wide, and 22 feet deep.

The traffic through the Sault Ste. Marie Canals averages around 60,000,000 tons a year. This is as much as the Panama Canal can expect to get 40 years after its opening. The tonnage of the American Soo Canal passed the million mark in 1873, reached the 20,000,000 mark in 1899, and amounted to 46,000,000 net tons in 1909. It now ranges around 50,000,000 tons. It will be seen from this that the American Canal, built on the south side of St. Mary's River, gets about ten times as much traffic as the Canadian Canal, built on the north side of the river. This gives the American Soo Canal more than twice as much traffic as the Suez Canal, and about four times as much as the Panama Canal expects to begin with.