SENATE 
 
 62d Congress'! 
 2d Session j 
 
 / Document 
 I No. 881 
 
 THE PANAMA CANAL and 
 RESTORATION OF AMERICAN 
 MERCHANT MARINE 
 
 AN ADDRESS 
 
 DELIVERED 
 
 BEFORE THE AMERICAN SUPPLY AND MACHINERY MANUFACTURERS’ 
 ASSOCIATION AT ITS ANNUAL MEETING HELD IN NORFOLK, VA., 
 MAY 14. 1912, BY MR. SAMUEL H. BARKER. OF PHILA- 
 DELPHIA, PA.. FINANCIAL EDITOR OF 
 THE NORTH AMERICAN 
 
 PRESENTED BY MR. O’GORMAN 
 July 20, 1912. — Ordered to be printed 
 
 WASHINGTON 
 
 GOVERNMENT PRINTING OFFICE 
 I9!2 
 
ft 
 
 THE PANAMA CANAL AND RESTORATION OF 
 AMERICAN MERCHANT MARINE. 
 
 r \n address delivered before the American Supply and Machinery Manufacturers’ Association, at its annual 
 meeting held in Norfolk, Va., May 14, 1912, by Mr. Samuel H. Barker, Philadelphia, Pa., financial 
 editor of the North American.] 
 
 .U- 
 
 60 
 
 1 
 
 American enterprise is about completing the greatest engineering 
 feat which man has known. Next year the Panama Canal will be 
 opened to commerce. That will be a world event. Bound up in it 
 are almost incalculable possibilities. They fairly stagger imagination. 
 How they shall be availed of and how turned to our best account 
 becomes now a matter of utmost, of pressing importance. 
 
 For the construction of this great isthmian waterway the American 
 people, through their National Government, will have expended some 
 $375,000,000. That is just about three times the capital cost of the 
 Suez' Canal, which is the world’s other great artificial isthmian ship- 
 way. Toward the Panama Canal other countries have contributed 
 nothing that the American people have not paid for in hard cash. 
 
 It is an American project in which the American people have made 
 a huge investment. While this has not all been capitalized and while 
 $84,631,980 of the $134,631,980 of Panama Canal bonds so far issued 
 by the United States bear only 2 per cent interest, the others paying 
 3 per cent, it is fair to calculate that 31 per cent per annum no more 
 than meets the interest and sinking fund cost of the capital invest- 
 ment. 
 
 On this basis the American people, having invested $375,000,000 
 in the Panama Canal, will be under an annual charge on account of it 
 of $12,187,500. In addition to this, the canal must be operated and 
 maintained. It cost $3,857,405 to operate and maintain the Suez 
 Canal for 1910. Such a cost in the case of the Panama Canal would 
 make it an annual charge on the American people of $16,045,000. 
 
 Com])leted and in operation, the Panama Canal will be the greatest 
 factor in world commerce that has been introduced since the Suez 
 ‘Canal came into use. It will save 8,415 miles on the present ocean 
 voyage from New York to Pacific coast ports north of Panama. 
 From our north Atlantic ports to points on the west coast of South 
 America it will reduce the voyage distance by about 5,()()() miles on 
 an average. • 
 
 From Europe, the Panama Canal will save 6, ()()() miles on the 
 present sailing distance to our Pacific coast ports and 2,600 miles to 
 points on the west coast of South America. It saves nothing on the 
 wSuez route from Euro])e to Asia and Australia, but from New York 
 it will shorten the voyage to Hongkong by 89 miles; to Shanghai, by 
 1,629 miles; to Melbourne, by 2,656 miles, and to Yokohama, by 
 3,729 miles. 
 
 3 
 
4 
 
 PANAMA CANAL AND AMEKIOAN MERCHANT MARINE. 
 
 The economic importance of the Panama Canal is thus obvious. 
 But its advantages for the United States are largely on paper and of 
 only potential value unless we have ships to make use of them. 
 Under present conditions European and Japanese shipowners will 
 reap substantially all of the huge benefit to be derived from the 
 Panama Canal — itself entirely an American work. 
 
 Yet the isthmian waterway, which will have cost the United States 
 $375,000,000 to create and which will cost about $16,000,000 a year to 
 carry and maintain, can be made to pay -for itself many times over. 
 It offers an effective means to restore the American merchant marine 
 to its rightful place on the high seas. 
 
 As a nation we are paying very dearly for having permitted Ameri- 
 can ships to be driven almost entirely out of international trade. For 
 the fiscal year 1911 American ships carried only 10.2 per cent of the 
 imports to the United States brought by sea. They carried only 7.5 
 per cent of our exports going by sea. American ships carried only 
 $280,206,464 or 8.7 per cent of the total sea-borne commerce of the 
 country, which amounted for the year to $3,210,642,970. 
 
 Figuring that ocean freight and insurance amounts to 3^ per cent 
 of the value of imports, this country paid foreigners during the fiscal 
 year 1911, $45,132,870 on commerce for the United States carried in 
 foreign ships. Putting the like charge on our bulkier exports at 5| per 
 cent of their value, foreigners earned and Americans lost $90,250,926 
 on the ocean carriage of American products shipped abroad in foreign 
 bottoms. 
 
 As a people we pay the freight cost on imports in foreign ships. 
 We merely do not earn the possible transportation earnings on 
 exports made in foreign ships. American shipowners earned, during 
 the fiscal year 1911 on the basis of computation just used, $5,132,432 
 on the transportation of imports to the United States, and on exports, 
 $6,346,105. Thus the sea-borne foreign commerce of the country 
 paid American shipowners about $11,500,000 in a year, while it 
 yielded to foreign shipowners some $135,500,000 during the same 
 period. 
 
 Events have proved that under present conditions American 
 built and manned ships can not profitably compete with foreign 
 ships. Statistics demonstrate how American merchant ships have 
 been gradually driven out of international trade. On June 30, 1911, 
 the aggregate gross tonnage of American ships in foreign trade was 
 only 863,495 tons, or 11.3 per cent of the total gross tonnage of the 
 entire American merchant marine, the great bulk of which was 
 engaged in coastwise and Great Lakes trade between American ports. 
 From this trade foreign ships are excluded by Federal law. 
 
 Gross tonnage of American vessels engaged in foreign trade in 1884 
 was 1,276,972 tons. Since then the American merchant marine 
 has grown from 4,271,229 tons to 7,638,790, but that part of it in 
 foreign trade has decreased by nearly one-third. In 1861 American 
 ships in foreign trade had an aggregate tonnage of 2,496,894 tons, 
 almost three times as much as now. 
 
 Back in the seventies American ships carried more than 30 per 
 cent of the imports to the United States. The largest proportion 
 in any year since the Civil War was 33.1 per cent in 1870. For 
 1911 it was only 10.2 per cent. Of our export trade for that year, 
 only 7.5 per cent was done in American ships. In 1867 American 
 
 X 
 
PANAMA CANAL AND AMERICAN MERCHANT MARINE. 
 
 5 
 
 vessels carried 39.2 per cent of our ocean-borne exports. Of the 
 total import and export trade for 1911 American vessels handled 
 only 8.7 per cent. In 1870 they carried 35.6 per cent of such trade. 
 
 Various conditions are adverse to the American merchant marine. 
 British and German built steamships cost no more than two-thirds 
 as much as ships constructed in American yards. The Atlantic 
 Transport Line steamer Maine, built at Sparrows Point, Md., cost 
 $1,010,135, while her identical sister ship, the Michigan, built in Eng- 
 land, cost $647,640. It costs more to operate ships American manned. 
 Four years ago a congressional committee obtained some actual 
 figures. These showed that the salary and wage cost of running the 
 St. Louis for a month was $11,306, or 97 cents per gross ton; of the 
 Oceanic, $9,891, or 57 cents per ton, and of the Kaiser Wilhelm der 
 Grosse, $7,716, or 54 cents per ton. 
 
 For ships in the West Indies trade there was less disparity, the 
 salary and wage cost of a German ship being 90 per cent that of 
 an American ship. In such trade foreign ships must more nearly 
 pay American seamen’s wages. In the trans-Pacific service the 
 monthly wage and salary cost of running a fast Japanese passenger 
 steamer has been found to be $4,247, or 31 cents per gross ton, while 
 that for a similar American ship, employing mainly Chinese, is 
 $4,836, or 43 cents per ton. It has been figured that such a ship as 
 the Lusitania, built, run, and maintained as an American vessel, would 
 cost nearly $1,000,000 more per annum than does the British ship. 
 
 No wonder American enterprise turns from competitive operations 
 on the high seas. The building and running of ships is a business. 
 Men do not engage in obviously losing operations. Under the con- 
 ditions shown, it is plain why American ships have been withdrawn 
 from international trade. They can not pay. Foreign governments 
 put additional handicaps on American ships by contributing directly 
 and largely to the development of their own merchant marines. 
 
 My subject is not that of shipbuilding bounties or of subsidies to 
 American steamship lines, but as to how the Panama Canal can be 
 ^employed to most largely benefit the American people and to best 
 promote their interests both on sea and land. Yet I am compelled 
 to point the issue. Foreign nations give large financial support and 
 encouragement to their merchant marines. Government compiled 
 figures place the total of such payments of $46,907,220 a year. 
 
 Compare this huge sum with the paltry $1,074,945 which the United 
 States paid during the fiscal year 1911 to American ships for mail 
 service m the now only seven American routes. W e paid foreign ships 
 in the same time $2,129,654, almost twice as much. Canada paid 
 $1,684,683 in the year ended March 31, 1909, to help her ship lines. 
 
 Great Britain pays in postal and admiralty subventions about 
 $9,700,000 a year, although only some 3 per cent of British shipping 
 in foreign trade shares in this bounty. Quietly the British Govern- 
 ment, as owner of nearly half the Suez Canal stock, levies a tribute 
 on world commerce, and from this source drew into its treasury for 
 1910 $5,386,300. 
 
 France pays graded bounties on all vessels built in French ship- 
 yards besides navigation allowances and mail subsidies, in all about 
 $13,425,000 a year. The other European nations give large direct 
 support to national ocean lines. Japan grants shipbuilding bounties 
 of $10 per gross ton for steel steamships, and $2.50 for each horsepower 
 
6 
 
 PANAMA CANAL AND AMERICAN MERCHANT MARINE. 
 
 developed by the engines, which gives about $200,000 toward con- 
 struction cost of the type of passenger steamer she is now running to 
 San Francisco. 
 
 Japan also gives mail subsidies and navigation bounties. During 
 the fiscal year ended March, 1909, the Japanese Government paid 
 $6,183,000 in aid of the national shipping. Under such encourage- 
 ment the Japanese merchant fieet grew from 360,695 tons in 1895 
 to 1,288,053 tons in 1909. 
 
 Under the ocean mail act of 1891, the United States post office pays 
 to American built, owned, and officered line ships $4 per mile sailed 
 by steamers of 8,000 tons or more, with a speed of 20 knots; $2 per 
 mile sailed by steamers of 5,000 tons or more, with a speed of 16 
 knots; $1 per mile to 2,500-ton 14-knot ships; and 67 cents per mile 
 to steel, iron, or wooden ships of not less than 1,500 tons and 12 knots 
 speed. 
 
 All sorts of ways have been proposed to revive the American mer- 
 chant marine and to restore it to a position of vigor and strength in 
 international commerce. Nearly every plan put forward has been 
 such as would promote special interests. The Panama Canal will 
 open a way to encourage all American shipping without discrimina- 
 tion or favor. It will afford a way to give the American merchant 
 marine an important advantage in world commerce. 
 
 Sentiment and false generosity should be thrust aside by the 
 American Nation in this matter. A national business policy should 
 be inaugurated with the opening of the Panama Canal. This huge 
 project will be purely an American accomplishment. The American 
 people have paid all the cost; they must maintain and operate the 
 canal and, under these circumstances, they have a just right to claim 
 and take for themselves its larger benefits. 
 
 Give to any and all American built and manned ships free use of 
 the Panama Canal. Levy tolls upon all foreign vessels availing of 
 the great waterway. In this way can the American canal promote 
 American interests. Let the tolls charged foreign ships passing 
 through the Panama Canal be, say, those levied by the Suez Canal. 
 
 That waterway is owned by a company and is under the virtyal 
 control of the British Government which, since 1875, has owned 
 176,602 of the 379,421 shares of the capital stock, acquired at a cost 
 of $19,855,320. The Suez Canal was opened in 1869. It is 103 miles 
 long, and an average of nearly 17 hours is required for passage 
 through it. At a cost of $19,300,000 the canal is being widened to 
 147.6 feet and deepened to 36.1 feet, the present depth being only 
 28 feet. The Panama Canal will carry 41 feet of water and have a 
 channel from 300 to 1,000 feet wide. 
 
 Ships will pass through the American canal in 10 to 11 hours. It 
 is calculated that the most advantageous handling of the world’s 
 present commerce will route through the Panama Canal the first year 
 ships to an aggregate tonnage of 8,328,000 net tons. That would be 
 about one-tenth the estimated traffic capacity of the canal. 
 
 During 1910 the Suez Canal handled 4,533 vessels, having a total 
 tonnage of 16,581,898 net tons. Total receipts of the company from 
 its canal service amounted to $25,168,400. The cost of operating and 
 and maintaining the canal, plus appropriations to depreciation 
 reserve, was $3,857,405. Payments for fixed charges and for retiring 
 capital obligations amounted to $6,072,602. The company divided 
 
PANAMA CANAL AND AMEKICAN MEKCHANT MAEINE. 
 
 7 
 
 a balance of profits for 1910 of $15,908,419, paying a dividend of 31.6 
 per cent to its stockholders. Whenever the dividend exceeds 25 per 
 cent the Suez Canal tolls are reduced. They are now $1.30 per net 
 ton on ships with cargo, and 82 cents per ton on ships in ballast, and a 
 charge of $1.93 each for passengers older than 12 and half that much 
 for those younger, children under 3 going free. Up to the end 
 of 1910 the cash expenditure on the Suez Canal amounted to 
 $126,642,406. The company had outstanding capital obligations of 
 $92,484,544. 
 
 Freedom of American ships from tolls at the Panama Canal will 
 also enable that costly national undertaking to confer the largest 
 measure of benefit upon the people of the United States. So will 
 it be possible for American ships to transport coast-to-coast freight 
 at lowest rates. It is believed that general cargo goods can be carried 
 from Philadelphia to San Francisco for from $5 to $7 per ton. 
 
 Transcontinental railroads can not possibly meet such rates. Class 
 freight rates from Philadelphia to San Francisco, figured to tons, are 
 now $60 for first class, $52 for second, $44 for third, and $38 for 
 fourth class. Commodity rates are lower, but in no case less than 
 double the expected Panama route ship rates. The rate on steel rails 
 from Bethlehem to San Francisco is $14 per ton. 
 
 With the Panama Canal, made free to American ships, while reason- 
 able tolls are charged foreign vessels using it, this $375,000,000 work 
 can become a means of restoring the American merchant marine to 
 its rightful place, and thus save to the American Nation tens of millions 
 of dollars now paid foreign shipowners every year for transporting 
 American commerce and also of reducing the delivery cost within 
 the United States of all kinds of goods which are now transported 
 across the continent by rail. 
 
 Objection is made to such a policy. It is the violent objection 
 of threatened interests. An American policy for the Panama Canal 
 is questioned from abroad, attacked at home. The great trans- 
 continental railroad interests are making an underhand fight to 
 nullify, as far as possible, the benefits which should accrue to the 
 American people from the isthmian waterway. They want to put a 
 burden of tolls upon American commerce through the canal so as to 
 make the freight charges as high as possible. 
 
 From abroad is raised the contention that we are under solemn 
 treaty obligations not to use our American-built canal to promote 
 our own interests. This sly appeal to honor has been urged with 
 all force by designing interests. Do we fear the hurt-trade anger 
 of England, of Germany, or any foreign power? Are we ready to 
 yield the greater good of 100,000,000 people to the will and temporary 
 interest of the transcontinental railroads? Americans will answer: 
 No, never! 
 
 Let us examine this jiroposition. What are these treaty undertak- 
 ings and what are our rights ? 
 
 By the Ilay-Pauncefote treaty of November 18, 1901, which was 
 promulgated February 22, 1902, it was agreed between the United 
 States and Great Britain that the Clayton-Bulwer treaty of April 19, 
 1850, should be siqierseded to the end that the Panama Canal might 
 be constructed “under the auspices of the Government of the United 
 States, without impairing the ‘general principle’ of neutralization” 
 laid down by the old convention. 
 
8 PANAMA CANAL AND AMERICAN MERCHANT MARINE. 
 
 The old treaty barred the United States from ‘ ^ any exclusive control 
 over” any isthmian canal or railroad which might ever be built, and 
 from ^‘any rights or advantages in regard to commerce or navigation 
 through the said canal which shall not be offered on the same terms” 
 to Great Britain. The two nations were to determine what ^‘charges 
 or conditions of traffic” were ‘‘just and equitable,” and undertook to 
 see that any canal should ‘ ‘ be open on like terms to the citizens and 
 subjects ” of all nations engaging to observe and protect its neutrality. % 
 
 iJnder the present treaty the United States enjoys “the exclusive 
 right of providing for the regulation and management of the canal.” 
 
 Acting upon its prime right it “adopts, as the basis of the neutraliza- 
 tion” of the Panama Canal substantially the rules established in 1888 
 by the convention of Constantinople, making the Suez Canal open for 
 the passage of vessels of all nations, whether merchant or armed ships, 
 in times of war as well as of peace. 
 
 Thus it is clear that the great actuating purpose of the Hay- 
 Pauncefote treaty was to establish over the Panama Canal for all 
 time a condition of neutrality, even as such was the prime object 
 of the convention of Constantinople with respect to the Suez Canal. 
 
 This becomes doubly plain in the fact that this treaty specifies with 
 exact precision the duties of nations to observe the neutrality of the 
 Panama Canal and the rights of war vessels of a belligerent nation 
 when within the canal zone. 
 
 Coming to the point at issue, the United States has undertaken to 
 see that the Panama Canal — 
 
 shall be free and open to the vessels of all nations on terms of entire equality, so that 
 there shall be no discrimination against any such nation, or its citizens or subjects, in 
 respect to the conditions or charges for traffic, or otherwise. 
 
 The United States has “the exclusive right” to determine what 
 these conditions and charges shall be. As to this it is restricted by 
 the treaty only to the extent that they “shall be just and equitable,” 
 but as to this no other nation may raise question. The treaty of 
 November 18, 1903, between the United States and Panama, under 
 which the Canal Zone exists, provides that no costs shall be im- 
 posed on vessels, or upon the cargoes, crews, or passengers of vessels 
 using the canal “except such tolls and charges as may be imposed by 
 the United States for the use of the canal and other works.” Here 
 again our authority stands forth. 
 
 Existing treaties, read in the light of that which stood before, clearly 
 admit the right of the United States to construct, control, and operate 
 the Panama Canal as a neutral waterway open to the commerce of the 
 world without let or hindrance from any other nation. Our under- 
 taking is limited to an obligation not to discriminate against any 
 nation, nor the citizens or subjects of any nation. 
 
 In this regard the treaty is fairly open to two interpretations. 
 Considering what Great Britain surrendered when she agreed to the 
 Hay-Pauncefote treaty to supercede the Clayton-Bulwer treaty, it 
 may well be held that she admits the sovereign right of the United ^ 
 
 States with regard to the Panama Canal. From this I submit that 
 the treaty should be held to require of the United States only that 
 there shall be no discrimination in Panama Canal charges and regula- 
 tions as between foreign nations or their citizens or subjects. 
 
 That is the interpretation I would give the treaty. Fulfilling our 
 clear and just duty to other nations and their peoples, which is ob- 
 viously to put them all on the same footing in the use of the Panama 
 
PANAMA CANAL AND AMERICAN MERCHANT MARINE. 
 
 9 
 
 Canal, the tolls and other regulations must be on a uniform basis for 
 all foreign vessels. To American ships give free passage through the 
 great isthmian waterway which will exist solely through the enter- 
 ^ prise and at the cost of the American nation. 
 
 Could there be just attack upon such a stand? Selfish interest 
 might prompt some nation to cry out against a toll system which 
 would give to the American people a preferential advantage in the 
 « use of their own canal. We are entitled to benefit from our work. 
 If foreign nations, for selfish ends, make issue on the treaty, then let 
 the American nation assert itself. 
 
 No power can exceed its source. The power which makes can 
 unmake a treaty. In 1832 the United States and Russia made a 
 treaty which provided that citizens or subjects of each country 
 might enter the other and while there enjoy all the security and 
 protection accorded to natives. There was a plausible basis for the 
 contention of Russia that Jews, citizens of the United States, should 
 not travel freely in Russia, because Jews, subjects of that country, 
 were restricted in their movements. 
 
 None the less the American nation refused to tolerate any abridge- 
 ment of the personal rights of her citizens abroad. What was done 
 is recent history. Acting on a terminating clause, President Taft, 
 on December 17, 1911, gave notice that at the end of this year the 
 Russian treaty would stand abrogated. Congress ratified this action 
 by resolution passed by the Senate December 19, by the House next 
 day, and signed by the President on December 21. 
 
 The Constitution of the United States provides that the President 
 
 shall have power, by and with the advice and consent of the Senate, 
 to make treaties, and that Congress shall have power to provide 
 for the general welfare of the United States.’’ If necessary for the 
 general welfare the President and Congress can annul or amend the 
 Hay-Pauncefote treaty. 
 
 While it exists, we must, as an honorable nation, observe it, even 
 should it be interpreted by foreign nations to bar the United States 
 from allowing American ships a free passage of the Panama Canal 
 while charging tolls to foreign vessels. It is probable that this 
 interpretation will be put upon the treaty. Even so, the situation 
 thus forced is not such as need rob us of the fullest benefits from 
 our isthmian waterway. 
 
 In fact, it would interpose no serious obstacles in the way of our 
 getting such benefits. The hands of the American people are not 
 tied by any treaty in such way as to leave them helpless in this 
 situation. We can in such case collect tolls from all vessels using the 
 canal on precisely the same basis, and then distribute back to those 
 American shipowners whose vessels had used the canal the tolls 
 which such vessels had paid, doing this in the form of subsidies paid 
 pro rata as were the canal tolls collected. 
 
 Tliere can be no question that we have an assured right to allow 
 free passage of the canal by all those American vessels which are 
 engaged in our coastwise and domestic trade, sailing between ports 
 of the United States, or to and from its island possessions, Hawaii, 
 Porto Rico, and the Philippines. To this no tenable objection can 
 be interposed. In the operation of the Panama Canal we undertake 
 that there shall be no discrimination as between nations. 
 
 Under our navigation laws, whicli existed when the Hay-Pauncefote 
 treaty was made, foreign vessels are prohibited from engaging in 
 
10 
 
 PANAMA CANAL AND AMERICAN MERCHANT MARINE. 
 
 trade between American ports. Thus in making the Panama Canal 
 free to passage by American vessels engaged in such trade there can 
 be no discrimination, for they run in competition with no foreign 
 vessels. 
 
 If there is any bar in the treaty, let the United States frankly take 
 the position that, observing a possible, although questionable, obli- 
 gation to charge American ships engaged in foreign trade the same 
 tolls for using the American isthmian canal that foreign vessels are ' 
 charged, that all American vessels in domestic trade shall go free; 
 that as to this we will no more tolerate outside interference than we 
 would permit a foreign nation to meddle with our internal commerce, 
 and further, that through subsidies, which Congress has a no less 
 inalienable right to mafo in any form it may see fit than it has to 
 appropriate moneys for coast defense or river and harbor improve- 
 ment, all toll money collected at the canal on American ships shall 
 revert back to the owners of those particular ships. 
 
 Let the American nation be perfectly frank and absolutely firm 
 in declaring such purpose. Could Great Britain, a signatory power 
 to the Hay-Pauncefote treaty, object ? Not with any sincerity or 
 with much force of argument in view of the fact that she pays 
 annually to the Peninsular & Oriental Steamship Co. subsidies approx- 
 imating the Suez Canal tolls paid by that great British line. Thus 
 for 1907 the canal tolls aggregated £333,000. the subsidies £332,784; 
 for 1910 such tolls were £357 989. the subsidies £297,143. 
 
 Again, what objection could Germany urge? To the North Ger- 
 man Lloyd Line to the Orient there was paid during 1910 a Govern- 
 ment subsidy of SI, 385, 160, which sufficed much more than to pay 
 the Suez Canal tolls of the company’s fleet. Next, take France, whose 
 subsidies for 1908 to the three chief French lines via the Suez Canal 
 amounted to $2,145,232. This cash aid paid the canal tolls three times 
 over. 
 
 For the fiscal year ended March 31, 1909, the Japanese Govern- 
 ment paid $1,336,947 as a subsidy to the steamship line operating to 
 Europe through the Suez, equal to about two and one-half times the 
 canal tolls. These refunds of the Suez Canal tolls may be accounted 
 indirect. The Austrian-Lloyd Steamship Co. is operating under a 
 15 years’ agreement by which the Government undertakes to make 
 up to the company annually its Suez Canal tolls, about $375,000 a year. 
 
 Russia pays the canal tolls of the Russian Volunteer Fleet, not only 
 the tonnage charges but the passenger tolls. For 1909 she so paid 
 $334,750. Sweden subsidizes her regular steamship line to the 
 Orient, on the basis of the canal tolls, about $100 000 a year. It is 
 closely figured that one-fourth of the steamship tolls paid to the 
 Suez Canal Co. during 1910 were reimbursed to steamship companies ' 
 
 out of the treasuries of the nations whose flags they carried. 
 
 Thus have we abundant precedent to subsidize American ships 
 using the Panama Canal, to the amount of the tolls they pay. Should 
 any foreign nation maintain that under the Hay-Pauncefote treaty t 
 the United States is in honor bound to charge American ships engaged 
 in foreign trade like tolls to those demanded from foreign vessels, 
 then let us boldly announce a determination to so act as to protect 
 our own. 
 
 Almost as his last public thought William P. Frye, long a Senator 
 from Maine, proposed a bill to this end. It provided that all tolls and 
 transit charges which may hereafter be imposed” on American vessels 
 
PANAMA CANAL AND AMEKICAN MEECHANT MARINE. 
 
 11 
 
 “passing through the Panama Canal shall be paid’’ by the United 
 States and “shall be deemed permanent annual appropriations.” 
 
 Urging this treatment of the problem, Eugene T. Chamberlain, 
 A United States Commissioner of Navigation, in his latest annual report, 
 says of the Frye bill : 
 
 It is consistent with the most scrupulous respect for our treaty obligations; it accords 
 with the accepted and successful practice of maritime nations, and it applies to the 
 ^ Panama Canal the same rule of untaxed American navigation which we have applied 
 
 for a quarter of a century to the navigation of every river, harbor, and lake deemed 
 worthy of the consideration of Congress. 
 
 Americans have never accepted the English brand of political 
 economy. As taught by the British school it was indeed a “dismal 
 science.” When we broke in a new country, the old laissez-faire 
 theory crashed by the wayside of progress. The American school of 
 economics holds high the rights of men to live and prosper, demands 
 of government policies such as will promote enterprise while protect- 
 ing the weak against the strong, such as will develop every home 
 industry that has economic right to exist, such as will increase the 
 general welfare of the country, advance every just interest of the 
 nation. 
 
 Thus should it be the national policy to maintain a true economic 
 protective tariff system, such as Henry C. Carey might rise from his 
 grave and put his noble blessing upon. Standing upon the proposi- 
 tion that America should be industrially and financially, as well as 
 nationally free, and holding that she can not enjoy her rightful m.eas- 
 ure of independence except she is, I ask: 
 
 Is our Government to withhold honest protection to Am.erican men 
 and American capital employed on the high seas ? Can we, as a na- 
 tion, afford to pay tribute to foreign shipowners of $135,500,000 
 annually for the ocean carriage of American commerce with the world ? 
 Ponder well these questions! 
 
 With liberal, and in the main, wise hand our Government has ex- 
 pended since 1884 $527,000,000 for river and harbor improvement. 
 For the Panama Canal we will have expended $375,000,000. Last 
 year foreign shipowners earned as freight money for the carriage of 
 American commerce a sum equal to one-third the total cost of this 
 huge project. 
 
 Think of it! Thus are we under a tribute that is ever sapping our 
 wealth and helping to swell the burden of foreign debt, now amount- 
 ing to $6,600,000,000, which rests upon us as a people. Here is an 
 economic condition which demands serious attention, a financial prop- 
 osition which calls for correcting action. 
 
 It has been seriously proposed that foreign-built ships bought and 
 owned wholly by citizens of the United States or by American corpo- 
 rations, shall be admitted to American registry, to engage only in for- 
 eign trade. This nation, in the courage of youth laid it down in 1792 
 as the American policy that the American flag should fly over no for- 
 eign built or owned ship, unless a prize of war. 
 
 We have maintained this policy. By the tariff of 1909 duties on 
 all foreign materials used in construction of American-built ships 
 are rebated where such ships do not ply in the preempted coastwise 
 trade more than six months a year. Steel for shipbuilding now costs 
 no more in American than in English shipyards. 
 
 The higher cost of building American ships results from much 
 higher labor, from lack of merchant marine work sufficient to keep 
 
12 
 
 PANAMA CANAL AND AMERICAN MERCHANT MARINE. 
 
 the yards busy to capacity and to enable a standardization of con- 
 struction. American registry of foreign ships for foreign trade would 
 cut off a prospect for larger shipbuilding activity in this country. 
 It is strongly opposed by shipbuilding interests. 
 
 But free ships would not suffice. American labor costs as 
 much more as American ships. So might ‘^free crews’’ be proposed 
 with equal justice. Then would we have not an American merchant 
 marine, but a foreign merchant marine masquerading under the 
 American flag. This would fail in the prime purpose. We, as a 
 people, would not earn the freight money, except as to the smaller 
 share left as profit for the shipowners, and so, having first surrendered 
 the right to profit in the building and operating of such ships, we 
 Americans could not reap the great benefit which would accrue to us 
 from a real American-built, American-manned merchant marine. 
 
 Right use of the Panama Canal will result in large direct and 
 greater indirect benefit to the American people. It can be the means 
 of overcoming some of the influences which have worked to destroy 
 the American merchant marine and so of extending in proper way 
 needed aid to those who would carry the American flag on the peace- 
 ful missions of commerce to the ports of the world, and particularly 
 to those of sister American Republics. 
 
 With such accomplished, we will be in the way of clearing off that 
 financial burden which now crushes down upon us from foreign 
 creditors, absorbing every year all that we, as a people, can spare to 
 the world and leaving us ever deeper in debt. International trade 
 conforms to the facilities for its doing. As a nation we are bare of 
 these. We lack ships, we lack financial arrangements to make easy 
 the flow of international commerce. 
 
 Thus it is that Germany, England, and even Spain, are supplying 
 South American countries with the bulk of what they import. Spain 
 has authorized an annual subsidy of $285,000 to a new steamship 
 line to run through the Panama Canal to Valparaiso. Our commerce 
 with South American peoples runs heavily against us — $148,750,087 
 for the fiscal year 1910. 
 
 Immediately before us lies a great opportunity. Grasp it and 
 American interests will prosper. Let it pass and we shall rue the 
 day that American enterprise undertook the Panama Canal. Our 
 right course is plain. It is to turn the isthmian waterway to our 
 full account by so using it as to foster American shipping by accord- 
 ing in one way or another free passage for American ships. 
 
 That will strengthen our national position. It will stimulate 
 American shipbuilding. It will open to American manufacturers and 
 merchants new markets. It will promote our commerce with South 
 ^ America. It will cut down the enormous tribute we are under to 
 ^ foreign shipowners. It will bring our two seaboards into closer 
 economic relationship. It will reduce present transportation costs 
 between Atlantic and Pacific States, thus facilitating the interchange 
 of their different products. It will promote the general welfare of 
 our whole people. 
 
 Let us realize these possibilities; they are easily within reach, and 
 the cost of the Panama Canal, great as it is, will sink into insignifi- 
 cance when measured by results. 
 
 o