that you thought existed among our own in respect to this competition.

Mr. OUTERBRIDGE. I do not know anything about that, sir; I could not tell you. I think they are at present engaged in sharing a great apprehension about the economic situation there and how they are going to work it out.

Senator WALSH. Irrespective of the canal?

Mr. OUTERBRIDGE. Irrespective of that altogether.

Senator WALSH. Is it your personal opinion that they would feel the effect of the traffic through the canal?

Mr. OUTERBRIDGE. I am sure they will.

Senator WALSH. And the Dominion Government had some $100,000,000 in those transcontinental roads?

Mr. OUTERBRIDGE. It is nearer three or four hundred million. In fact I should think in one way or another it would amount to $600,000,000.

Senator WALSH. I had in mind $255,000,000.

Mr. OUTERBRIDGE. I think they have $255,000,000, either in money or in guaranties of bonds on the Canadian Northern system alone. In fact, I am sure they have.

Senator WALSH. Then, as a Government, they apparently would have a very vital interest in this?

Mr. OUTERBRIDGE. As a Government I think they would view this matter with concern.

Senator SIMMONS. Do you mind giving the committee some idea of the difference between rail rates and water rates?

Mr. OUTERBRIDGE. In what territory and between what points? Senator SIMMONS. Take New York across the water, and a like distance across the continent?

Mr. OUTERBRIDGE. The ocean transportation rates are a mere fraction of the mileage.

Senator SIMMONS. About what fraction?

Mr. OUTERBRIDGE. I could not give it to you entirely. It would vary so on different articles.

Senator SIMMONS. Could you give us an idea of the difference between railroad rates and water rates in the coastwise trade? Say, from New York across the continent to San Francisco, and from New York around by water to San Francisco?

Mr. OUTERBRIDGE. Of course, the voyage from New York by water around the Horn is such a long voyage that practically there is not any traffic that way except a little sailing-vessel traffic, which takes three or four months.

Senator SIMMONS. Suppose the canal was opened, then what would be the difference?

Mr. OUTERBRIDGE. In distance it would cut off 8,000 or 9,000 miles. I had those figures in my head, but I should not like to trust my memory.

Senator SIMMONS. Could you give the probable rate now, from your knowledge of the difference between water and rail rates-could you give the probable rates by water from New York to San Francisco by way of the canal and across the continent?

Mr. ŎUTERBRIDGE. The rates would vary greatly on the class of tonnage, you know. It might be one rate on lumber and another on coal and another on general merchandise. The rate must vary a

great deal according to the class of merchandise, the cost to handle it, lading it and discharging it, and the volume of traffic, but take it in a round figure of tonnage, say $8 or $9 a ton, probably will be a through rate on miscellaneous cargoes by water, by the canal route. Senator SIMMONS. What would it be by land?

Mr. OUTERBRIDGE. I pay 70 cents per 100 pounds on freight I am interested in. That would be $14 a ton.

Senator SIMMONS. It would be $14 a ton, as against $9 a ton? Mr. OUTERBRIDGE. Yes.

Senator SIMMONS. The construction of the canal will probably reduce the rate by water $2.50 or $3 a ton, will it not?

Mr. OUTERBRIDGE. I think it has been estimated by some of those people who have studied it as experts as high as $5 a ton.

Senator SIMMONS. This apprehension on the part of the railroads, of which you spoke a little while ago, was because of that probable great reduction as a result of the construction of the canal?

Mr. OUTERBRIDGE. The apprehension I spoke of applied more particularly to the absolute loss of tonnage; just so much tonnage going, rather than the difference in the rate.

Senator SIMMONS. And the rates would be greatly reduced by reason of the shorter distance?

Mr. OUTERBRIDGE. Yes.

Senator SIMMONS. It had no reference to the question of toll at all in your opinion?

Mr. OUTERBRIDGE. No.

Senator SIMMONS. Just as a matter of general information, I want to get a record on a matter on which I have got no satisfactory answer. Can you give us, in general terms, the difference between the rates in foreign and over-seas shipping and coastwise shipping?

Mr. OUTERBRIDGE. You mean the rates of transportation?

Senator SIMMONS. Yes; on like commodities and like distances. What would you say would represent about the general difference for over-sea shipments and coastwise shipments?

Mr. OUTERBRIDGE. I could not give it. I am not sufficiently informed about the coastwise rates to make that estimate.

Senator SIMMONS. The coastwise rates are very much higher. Mr. OUTERBRIDGE. I do not do any coastwise business by coastwise steamers, and I do not know the general schedule.

Senator SIMMONS. Do you know the general fact that the coastwise rates are very much higher than the foreign rates?

Mr. OUTERBRIDGE. I should assume they were, and I would be immensely surprised if they were not. In fact they must be to enable them to live under the conditions which they have to observe. The CHAIRMAN. I think that is all, Mr. Outerbridge. Mr. OUTERBRIDGE. I am much obliged to the committee.

STATEMENT OF MR. GEORGE L. FOX-Resumed.

Mr. Fox. Before I go on with my regular statement I should like to call the attention of the committee to the fact that it is not necessary for me to dwell long on argument No. 14, because Mr. Outerbridge has brought out that fact. The Hamburg-American Steamship Co., the largest in the world, has never received any subsidy in the proper sense of the word. I was told that by the marine superintendent of

the company, with whom I crossed two years ago, and the company's secretary has published in Germany a book against subsidies, showing the natural ill effects in the world and on companies, so that there need be no more discussion upon my part with regard to that matter. I take up No. 6, the economic analysis of the effect on prices of articles of imposing $1.25 per capacity ton as toll on articles carried through the canal: (a) How it works out as to oranges brought from the Pacific coast; (b) how it works out as to coal carried from the Atlantic coast. It will enhance the cost of a box of oranges not more than 5 cents a box as compared with the cost if no toll is charged on American coastwise vessels. This difference of price according to those who demand free tolls will kill the American merchant marine, prevent its development, and largely enrich the transcontinental railroads.

I think I ought briefly to discuss that a moment, because it is so difficult to understand the rule for changing from capacity ton to weight ton that you speak of. It is alluded to in my pamphlet and, as you said, on an average it is 2 to 1, but in the case of oranges it differs somewhat, and I am going to try to illustrate my argument that it will work out but 5 cents a ton extra on a box of oranges from the other slip to this country, so far as the toll is concerned.

If you take a box of oranges as 2 feet long, which is practically so, and, I think, 1 foot high and 1 foot wide, I think, on a fair estimate; now put 2 of those end on end and you have got 2 boxes 5 feet long, 1 foot wide, and 1 foot high, which is 5 cubic feet. Now you lay 5 of them side by side, and you have got 10 boxes 5 by 5, which makes 25. As Mr. Chamberlain showed you, the capacity ton refers to 100 cubic feet, and we can find out how many boxes of oranges are to be carried in a capacity ton from that statement. If you place four layers of 10 boxes each upon each you get practically an exact 100 cubic feet 5 by 5 by 4, so that I think it is a fair argument, and it is supported by the statisticians I consulted at the Interstate Commerce Commission, that the toll resting upon a hundred boxes of oranges will be something like $1.20. That is, it will be 3 cents a box; so it seems to me that the argument that it will be an immense burden upon the commerce does not hold water for that

reason.

If the cost of the tolls amounts to but 5 cents a box, you can not say that the charge of $1.20 a ton on oranges is an insuperable and awful burden upon the coastwise traffic. Have I made myself clear you on that point?

to

If you take a ton of coal, it is a little more difficult to argue, but so far as I can find out from the statisticians 1 tons of coal will be absorbed in a cargo or capacity ton, so if you are putting $1.20 a ton on a capacity ton, upon 1 weight ton, you will charge upon a ton of coal practically 60 to 80 cents-practically 80 cents.

Senator SIMMONS. It was estimated by Mr. Chamberlain at 60

cents.

Mr. Fox. I should say from 60 to 80 cents, and therefore in the case of a ton of coal your burden is not at all heavy, it seems to me.

I was very glad of the remarks of Mr. Outerbridge upon the point that as you are dealing with some uncertainty it is far better to charge all vessels once at first, and then if you find that the traffic is going to

43756-14-23

increase so largely that you can lessen the charge or moderate it upon American tonnage, it might be well to consider it, but it seems to me it would be fatal if you start in by not charging any tolls at all on American coastwise vessels. You can never end it if you start it on

that basis.

The building of the Panama Canal represents a most unjust taxation of all the inhabitants of States north of the southern boundary of Missouri, west of the Alleghenies, and east of the Rocky Mountains. The possible pecuniary benefit to be obtained by any one of these States is very difficult even for the most ingenious statistician to show. It also injures their prosperity by taking away considerable traffic destined for Europe formerly crossing the continent which will now go by foreign ships directly through the canal without benefiting in any way the inhabitants of the United States.

I do not need to dwell upon that, because I spoke of it before, and you heard the remarks of Mr. Outerbridge on that.

Now, I will take up a rebuttal of some of the common arguments used by advocates of exemption.

The anti-Pacific Railroad and the anti-Jim Hill argument are founded on the absurd fallacy that there does not exist in the United States any competent and efficient interstate railroad commission which has full power to raise, lower, or maintain rates as it thinks fit.

This argument was made in the Washington Post several times. This we all know not to be the truth. Railroad traffic will often be preferred to sea-borne traffic for its many advantages of greater promptness, regularity, and efficiency.

The main point will be in connection with the specific gravity of the article carried, and you will send low-grade ores and bulk things by the Panama Canal which are not likely to go by the trans-Pacific railway. I think I should like to dwell a little more on that point by the illustration of oranges that I spoke of. I went to the Interstate Commerce Commission this morning and obtained some facts with regard to the traffic on oranges which illustrates that. The distance from Tampa to New York is 1,195 miles, and the charge is about 76 or 77 cents on a box. From Los Angeles to New York the distance is 3,149 miles, yet the railroad charges only $1.15 for three times the distance. That has been prevailing for a good many years. Suppose the attempt should be made by the transcontinental railroads, as it is urged will be made, to raise the tariff because tolls are charged; the Interstate Commerce Commission have it entirely in their hands; they can not do it without their consent, and if the transcontinental railroad has been making this very low rate, which is a very great discrimination against Florida oranges, it can not be possible for the thing to be carried out as it is alleged, and therefore I feel that it is rather unwise to assert that as a sure thing to follow. The fear, then, of retaliatory action upon the part of the Pacific railroads by increasing prices is not to me a sound one and can safely be challenged.

You asked Mr. Outerbridge just now as to some facts which may be answered by this: They gave me the rates from Fort Myers, which is down on the west coast of Florida, to New York by rail to Jacksonville, and then by boat. That is 58 cents. Then they gave me the rate all railroad. That is only 11 cents more. Fifty-eight cents and 69 cents are the respective rates. Although it comes a very much

When

longer way by rail, they still charge only 11 cents more. I tried to find out what the actual effect upon the traffic was, they could not give it. But I think you will find the actual fact is that the large majority of oranges from Florida come by railroad all way, as well as part way by boat and part way by railroad. From Fort Mead 53 cents was the rate by rail and water, and the rate all rail was 64 cents. Here you have the water rates on seagoing commerce from Jacksonville as compared with the all-railroad rate, and the thing does not work out to any very great extent of a severe discrimination on the part of the railroads.

Senator SIMMONS. The inference would be that the water lines charge about all the business would allow ?

Mr. Fox. Yes. They get as much out of it as they can. And therefore the fallacy, as it seems to me, of expecting a very large reduction in rates from an open water route open to everyone is rather clearly shown in that way. You have a large amount of capital invested in a route. You have had for 30 or 40 years these routes to the south, and they have not very greatly increased. The voyage is free to them. They have no tolls to pay.

You illustrated the eastern coast of South American very well. You were asking some question about mail to South America, etc., which I think I could possibly answer. For several years they have had a regular line, the Lamport & Holt Line, from the south to New York, and whereas formerly the people sent their freight to Liverpool and then across, and the mail went that way. I do not think it goes that way now, unless there is a long distance between the sailing of the steamer direct. I had some friends who went south on that steamer two months ago. Mr. Roosevelt, you will remember, went south on that steamer. There is slowly growing up with South America a considerable freight tonnage, but this is the point to be considered, that there has been nothing to restrain traffic with South America for the last 50 years. The Panama Canal has nothing to do with that, and yet it has been very slow of growth, although the opportunity was free to it. Whereas another point I should like to call your attention to which is brought out in my pamphlet in the quotation from Col. Church and Mr. Nimmo, namely, that the great prize in South America is the east coast and not the west coast. The Appalachian Mountains go along the west coast of South America. There is very little fertile fruitful land on that side of the continent. Whereas the east coast drained by the watershed of the Amazon and all those rivers extends very far into the heart of the continent, so that steamers go away up the Amazon, for instance, and take on loads and go to England or to Germany that way, coming down the Amazon River. So that the idea is brought out clearly, I think, by Mr. Nimmo and Col. Church.

If you are figuring on an enormous increase of traffic from the west coast of South America and a development of large steamship lines in that respect, it is hardly a sound conclusion, because you have not had that in the case of the eastern half of South America. The great magnificent trade which England and Germany have is largely with the Argentine and with Brazil, and they from their watershed drain a very large portion of South America. We have had all this time the opportunity we needed to get the business of by far the most populous and by far the wealthiest part of South America and no