Prof. JOHNSON. I think, without definite information, that it would not be less than 25 cents per ton for each handling. The CHAIRMAN. That would be 50 cents, then, to unload and to reload a ton? Prof. JOHNSON. Yes, sir. The CHAIRMAN. And how much time would be occupied in that performance? Prof. JOHNSON. How much time would it take to unload a ship of ordinary size? The CHAIRMAN. Yes. Prof. JOHNSON. From one to three days. The CHAIRMAN. And that would be an item of cost in addition to the 50 cents per ton which would cover the immediate unloading and reloading of the merchandise. You have told us that under the operation of the Panama Canal act we pay only 60 cents, or, rather, we only get the benefit on an average of 60 cents a ton? Prof. JOHNSON. Yes. The CHAIRMAN. Would there be any advantage in a shipowner trying on the one hand to get the benefit of the 60 cents exemption and then subjecting himself to this expense of 50 cents a ton plus the additional loss involved in damage and delay? Prof. JOHNSON. As far as the handling of full cargoes is concerned it is not probable that the transfer would take place at San Francisco to save the tolls. Your question is to be answered in the affirmative as far as that is concerned. But a large part of our trade to the Orient will be sent, I suppose, to our west coast in partial vessel cargo lots of a few hundred tons-will be sent to our west coast as our coastwise trade and then sent on to the Orient. Instead of sending goods by rail across the country, we will send them around through the canal and then on to the Orient. My fourth point looks at this trade movement in the opposite direction. There will be a number of lines from the Orient to our west coast ports that will ply back and forth on the Pacific; there will be other lines that will ply from the Orient to our east coast, but there will also be lines moving only on the Pacific. They will bring oriental goods to Seattle, Portland, or San Francisco, the larger part of which will move on by rail to the great interior markets of the country. The minor share will be sent on by the canal coastwise and the goods that reach New York from the Orient by that route will reach the New York markets in competition with goods that have been brought direct from the Orient. The goods that come by way of San Francisco, Portland, San Diego, or Seattle will reach New York toll free, while those that go by the direct route through the canal will pay tolls, which is again a discrimination as regards the conditions or charges of traffic through the Panama Canal, as it seems to me. Senator BRISTOW. Doctor, as a practical proposition, they have got this charge of transshipment, the unloading and the reloading, which we estimate at 50 cents a ton. That is the first handicap. Senator PERKINS. Also breakage and damage. Senator BRISTOw. The breakage and damage, as Senator Perkins suggests, which would be a considerable item; then Seattle and San Francisco are not in a direct line; the ship going direct from the Orient would not stop at San Francisco unless it wanted to divert; it would go direct 500 miles out to sea from San Francisco; it would not certainly go into Seattle, and, as a practical proposition, there is nothing to the point, is there, so far as cost of moving a ton from Yokohama to New York is concerned direct or by going into the port of San Francisco and paying port charges in addition to your expenses of loading and unloading and breakage and time and delay, does not the advantage all or very largely lie with the through trip? Prof. JOHNSON. On the contrary, Senator Bristow, I think there would be very active competition for the trade from the Orient to the United States by the lines on the Pacific to our west coast ports. There will be lines plying back and forth across the Pacific; there will be, of course, a number of lines plying between our west coast and our east coast, and it is to be expected, and it is to be desired, that there should be a large movement of oriental goods to our west coast ports for shipment on. Of course, I think that is a good thing. I simply point out the fact that when goods move in that way, as they certainly will, they move toll free, whereas oriental goods that are carried through the canal without transshipment or reconsignment at the west coast ports do pay toll. Senator BRISTOW. Do you know, Doctor, that there is a large amount of cotton that is shipped by rail from Texas to Pacific coast ports-Portland and Tacoma and Seattle and on to the Orient? Prof. JOHNSON. I think the Texas cotton goes to the southern ports and the Memphis cotton to the northern ports. Senator BRISTOW. It may now, but it did not a few years ago. The Northern Pacific handled tons and thousands of tons of it from Texas, and the rate from the Texas points to Tacoma was the same as from the Texas points to the Orient. Prof. JOHNSON. Yes; it is now. Senator BRISTOw. They would have to pay toll, and would not there be discrimination then and ought that not be broken up here. in order that the sacred character of this treaty might be preserved? Prof. JOHNSON. Traffic does not use the Panama Canal if it goes by rail. Senator BRISTOW. But then it would be a discrimination, would it not? Prof. JOHNSON. Not that we are considering here. Senator BRISTOW. To charge any tolls on traffic that might go from Texas to the Orient through the canal rather than from Texas direct would be a discrimination, would it not, against the line that carried it from Portland to the Orient? Prof. JOHNSON. Let us understand that. I, at least, am considering only the use of the Panama Canal. Senator SIMMONS. At present a large part of the trade of the United States to the Orient is brought primarily to Pacific ports and then shipped across the continent by rail or shipped around by water. When the Panama Canal is built, probably there will not be quite so much of that trade that will run along those lines; but is it not certain that a part of that trade will continue to run along those lines, a part coming directly from the Orient to the Atlantic seaboard ports and a part going to the Pacific ports and then shipped either by rail or by water to local points in the United States? Prof. JOHNSON. I personally expect to see a rather large share of the trade from the Orient transshipped at western ports. Senator BRISTOW. If the tolls are charged on the traffic at Panama, as suggested by you, this shipment of cotton, we will say from Texas, by rail to the Pacific coast will be in a measure preserved, that is, it will not break up this arrangement which the Great Northern Railroad has had for years in taking traffic from as far south as Texas, and it has gone from northern Georgia, so I have been told, to the Pacific coast by rail and then across the sea to the Orient? Senator PERKINS. I suppose you also refer to the passenger traffic? You have not touched on that? Senator BRISTOW. Yes: the passenger traffic the same. Senator PERKINS. That is very large, and that is the inducement for them to come up to San Francisco or Seattle? Senator BRISTOW. It is. The tolls will preserve that business for the Great Northern to a certain extent, will it not? Prof. JOHNSON. I do not think so, Senator. Senator BRISTOW. It will have a tendency to, will it not? It will increase the cost of moving the freight the other way? Prof. JOHNSON. My reasoning this morning was that the railroads would probably continue to charge the rates they now charge; that if tolls are charged upon the coastwise ships that they will have operating expenses amounting to, on the average, about 3 cents per hundredweight of cargo more than they would otherwise have. I would expect that the cotton would go from the South in rather large volume by way of the canal, and that the expense of taking it by that route would be to the carrier 3 cents a hundred more than otherwise, but that will not, as I view it, probably bring about an increase in railroad rates, nor will it affect the water rates. Senator BRISTOw. But if tolls were charged on this traffic, necessarily the cost of moving the traffic that way would be more than if the tolls are not charged? Prof. JOHNSON. The cost of moving the traffic by the canal will be 3 cents per 100 more. Senator BRISTOw. If the cost is more, does that not impose just that much handicap upon the competitor of the rail carrier that would take this cotton from Texas and across the continent to the Pacific coast ports and there load it? Prof. JOHNSON. Unquestionably; yes. The CHAIRMAN. Prof. Johnson, have you concluded? Senator SIMMONS. Let me ask you one more question. I understood you to say that exempting from tolls intercoastal shipments from the different seaboards of the United States, and charging tolls for intercoastal shipments from the seaboard to Canada or Mexico would result in a discrimination against the traffic of the Canadian and the Mexican citizen. How many countries on this continent face both oceans? Prof. JOHNSON. I have not counted them up. Senator SIMMONS. And the same rule would apply to all of those that you have applied to Mexico and Canada? Prof. JOHNSON. Yes; I suppose so. Senator SHIELDS. You spoke of the per cent of the Pacific coast traffic coming from east of Buffalo and Pittsburgh in connection with the competition of the railroads-the water competition-in a previous part of your examination. I think you stated it was about 20 per cent? Prof. JOHNSON. Yes, sir. Senator SHIELDS. What part of the Pacific coast traffic that goes over the transcontinental railroads, and in competition with which the Panama Canal route will come, has its origin in the Mississippi Valley? 'Prof. JOHNSON. Sixty-five per cent apparently of the westbound business through to the coast originates west of the Buffalo-Pittsburgh district. That is, in the Mississippi Valley. Senator SHIELDS. A much larger traffic goes from the Mississippi Valiey to the Pacific coast than from the Atlantic coast? Prof. JOHNSON. Yes, sir. Senator SHIELDS. Something over three times as much? Prof. JOHNSON. Twice as much. Senator SHIELDS. I understand you to say that there is about 20 per cent east of Pittsburgh and about 65 per cent in the Mississippi Valley? Prof. JOHNSON. Yes; with 15 per cent, roughly, in the BuffaloPittsburgh traffic territory. Senator SHIELDS. That traffic in reaching the Panama Canal would go down the Mississippi River and its tributaries to the Gulf, then to the canal? Prof. JOHNSON. The roads to the Gulf will compete with the railroads to the Pacific coast. Senator SHIELDS. Throughout the Mississippi Valley there is water transportation all the way to the canal, and thus all the way to the Pacific coast, is there not? Prof. JOHNSON. Yes, Senator. Senator SHIELDS. That would be in competition with the railroads? Prof. JOHNSON. I am not so certain about it. Senator SHIELDS. The rivers are there, are they not? Prof. JOHNSON. The rivers are there; yes, sir. Senator SHIELDS. And they are navigated? Prof. JOHNSON. Somewhat; not much. Senator SHIELDS. Do you know how many vessels there are engaged in the coastwise trade in the Mississippi River and its tributaries? Prof. JOHNSON. I think vessels-barges of 4,000,000 tons on the Ohio. Senator SHIELDS. The Mississippi River Valley, then, with its tributaries engaged in the coastwise trade have a larger interest in it than any other part of the United States? Prof. JOHNSON. I do not know that that necessarily follows. I think the sections of the United States most interested in the Panama Canal are those within 500 miles of the Atlantic, Gulf, and Pacific coasts. Senator SHIELDS. Your figures were about 20 per cent east of Buffalo and Pittsburgh; that is, 20 per cent of the Pacific trade originated east of Pittsburgh and Buffalo? Prof. JOHNSON. Yes. Senator SHIELDS. And about 65 per cent in the Mississippi Valley, so that would necessarily make the Mississippi Valley largely more interested than other sections of the Union? Prof. JOHNSON. My statement was that of the traffic carried by rail through to the west coast 20 per cent of it originates east of Buffalo and Pittsburgh, roughly, and 15 per cent in the Buffalo and Pittsburgh district, and some 65 per cent in the section west of Buffalo and Pittsburgh; that is, rail traffic. Senator SHIELDS. Then have you any estimate or statistics showing the amount of traffic, whether by rail or water, that originates in the Mississippi Valley as compared with that shipped from east of Pittsburgh? Prof. JOHNSON. You will remember that when the intermountain cases were before the Interstate Commerce Commission the traffic officials of the railroads made an estimate of their tonnage by rail through to the west coast. At that time it was estimated to be 3,000,000 tons that the railroads carried through to the west coast. In my report of 1912 I increased that estimate by the amount that the traffic had developed since those estimates were made, and as I remember, without going into details, it came to about 4,000,000 tons that was moving by rail in 1912 through to the west coast. Senator SHIELDS. From the Mississippi Valley? Prof. JOHNSON. From all sources, of which some 20 per cent would be traffic east of the Buffalo and Pittsburgh district. Senator SHIELDS. Did you make an estimate of what the water traffic was the traffic by water transportation? Prof. JOHNSON. Yes, sir. I give the figures in much detail in the report of 1912-somewhat over a million-let me be accurate about that. Senator SHIELDS. If that approximates that, a million, that will be sufficient. Prof. JOHNSON. In 1911, the latest figures which this report presents, the total water traffic eastbound and westbound between the two seaboards, excluding Hawaiian sugar, was 808,000 tons. Including Hawaiian sugar, 1,104,000 tons. I can finish my statement in about five minutes, Mr. Chairman. The CHAIRMAN. You may proceed. Prof. JOHNSON. I have attempted this afternoon merely to point out that as I view it the exemption of the coastwise shipowners from the payment of tolls and the collection of Panama tolls from foreign traders and shipowners will work a discrimination as regards the condition or charges of traffic through the Panama Canal. The reasons for that belief are stated somewhat more fully in the statement which I shall file with the stenographer. In closing my formal statement I wish to express the thought which I expressed two years ago before this same committee, which was that the United States should adhere to the business principle of the management of the Panama Canal. The Government needs |