ever get a merchant marine for the United States until we resort to the ship subsidy, such as all other nations that have a merchant marine have followed; but if it is a subsidy to American ships passing through the canal to let them go through free, then I fail to discern a difference between a subsidy of that sort and the one we pay to any ships which enter our harbors.

I happen to be a member of the Committee on Rivers and Harbors. The other day we reported a bill which carries $7,000,000 for the improvements of the Mississippi River, yet any American vessel which goes up and down the Mississippi River in the coastwise trade pays no tolls. Why is not that a subsidy? Why is that not a local subsidy? What benefit does the Pacific coast get from the improvement of the Mississippi River, except indirectly, and no more than the people in the Mississippi Valley would get from the Panama Canal tolls. You take the Mississippi River and its tributaries and we have up to date appropriated more money for the improvement of the Mississippi and its tributaries than we have appropriated for the Panama Canal. Why should the people generally throughout the country be assessed to pay that subsidy, and yet the whole country not have the benefit of the subsidy at Panama, if it is one?

Senator BRISTOW. You have not heard anyone complaining very loudly about the subsidy to the Mississippi River boats, have you? Mr. HUMPHREY. I want to say this: I have been a Member of Congress for almost 12 years. I have heard a great deal of talk about subsidies. I have seen millions of dollars of subsidy voted out of the Public Treasury since I have been a Member of Congress, but I have never seen a Member of either the House or the Senate object to any subsidy that was to be expended in his own district; not one.

Senator THOMAS. You might go further and say that if the subsidy were big enough you can defeat any proposition of State's rights on earth.

Mr. HUMPHREY. Why, the other day, when the rivers and harbors bill was under consideration the question came up about voting $125,000 to build a sea wall or an embankment down at Vicksburg. It was not in the interest of navigation, it was not within the rules laid down by our committee, it was something the city of Vicksburg ought to do itself; but that came up on the floor of the House and, on roll call, much to my amazement a great number of these subsidy people that had been vociferating against subsidies, voted for that subsidy without blinking an eye.

Senator THORNTON. You will have to seat them with your namesake from Mississippi.

Mr. HUMPHREY. I want to say for my good namesake from Mississippi that he did not favor it. He felt that it was hardly the right thing to do; but I am not criticizing those who voted for it, I am just calling your attention to the fact.

Senator CHILTON. You spoke of the amount of appropriations made for the improvement of the Mississippi River and its tributaries a while ago. Did you mean from the beginning of that work?

Mr. HUMPHREY. I mean from the time improvements have been appropriated for.

Senator CHILTON. What is the aggregate?

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Mr. HUMPHREY. It amounts to something in the neighborhood of $400,000,000.

There is just one other matter, while I am on this question of subsidy, to which I wish to call the attention of the committee, and that is the situation in regard to the Soo Canal. You take that country which is specially benefited by the Soo Canal; they raise farm products, dairy products, various other products that go into New York and on this eastern coast. Our products from the Pacific coast will come in competition with theirs through the Panama Canal. Now, what justice is there in permitting the farmers of the Central Northwest to have free tolls through the Soo Canal and prohibiting the farmers of the Pacific coast from having free tolls through the Panama Canal on products which go into one common market?

Some of my friends from the Pacific Northwest had a great deal to say when the bill was being considered on the floor of the House about the coastwise monopoly and about paying subsidy, but I have not discovered any gentleman yet that has introduced a bill to permit foreign ships to engage in the coastwise trade on the Great Lakes. I have a lot of patriotic friends up there all the time denouncing this coastwise law, but they do not seem to think that it applies in that section of the country.

Senator SIMMONS. What are the rights of Canadian-owned vessels on the Great Lakes? I am asking for information.

Mr. HUMPHREY. They do not engage generally in our coastwise trade; but if you would ask me the details of it, Senator, I would not undertake to state without looking into it, because there is some special treaty about it.

Senator SIMMONS. They have common rights?

Mr. HUMPHREY. Yes, sir; there is some special arrangement about it. It is a little different from our coastwise trade in that particular. In regard to the question of railroad competition. There may be a general impression, and I think there has been an impression in this country, that we have had water competition with rail. That is a mistake. We have had very little of it. It has only been in spots, for this reason, that practically all the steamship lines on the Pacific coast engaged in the coastwise trade and all the steamship lines on the Atlantic coast engaged in the coastwise trade, with the exception of one or two lines, are owned or controlled by the railroads, and the railroads have always been enabled thereby to largely fix the rates. We have had no competition, practically. Now, we had hoped that when the Panama Canal was completed we thought that that was what we were building the canal for, that we would at last have competition between rail and water. You take lumber, the illustration I gave to you a while ago, and by imposing your toll you permit that vessel to charge $1.47 to $1.56 per thousand additional. It costs that much more to get it, we will say, to New York. a common terminal point. Does that not permit the railroads to add on all competing articles to a common point the same amount? Am I right about that, Senator?

Senator BRISTOW. Of course it does. Everybody knows that. That is what this fight is about.

Mr. HUMPHREY. I thought I heard it stated since I have been here that that was not true. I was wondering if I were wrong.

Senator BRISTOw. If that were not a fact this bill never would have been before Congress. That is the source of this controversy. Mr. HUMPHREY. Now, then, that leads to the next step. I saw a statement Mr. James J. Hill made that he estimated that only 10 per cent of the traffic between the two coasts would be carried through the canal for some time to come. Using that as an illustration, if that be true, then, for every dollar that you permit a ship to add in the way of tolls to the canal, you make a present of $10 to the railroads, do you not? That is what we are fearing on the Pacific coast. It is not so much the rate of tolls that is charged on the traffic that goes through the canal; that is not what we are facing, but we realize the fact that the railroads will take an opportunity to charge 10 times as much.

Senator SIMMONS. Mr. Humphrey, just before we adjourned this morning Mr. Dunn made us a statement here, and if I understood him correctly he said that there was about 3,000,000 tons of freight now carried from the Pacific to the Atlantic in the through traffic, and he said that the opening of the canal would result in diverting at least 2,000,000 of those tons from the rail to the water route, leaving only 1,000,000 to be carried by rail and 2,000,000 that are now carried by the railroads to be carried by the boats. That, he said, would be the result of the enormous reduction in freight rates by virtue of the opening of the canal. Now, if that be so, would not the ability of the railroads to compete with the boats be broken up independently of whether tolls were charged or not charged?

Mr. HUMPHREY. I heard his statement this morning in regard to that. I presumed from his statement that was probably on a particular class of freight.

Senator SIMMONS. I understood him to embrace all through traffic. Mr. HUMPHREY. I was basing it on what

Senator SIMMONS. Within that 3,000,000 tons.

Mr. HUMPHREY. I was basing it on what he had said. But, even if that were true, it would not follow that the railroads could not add on whatever they did credit that amount of freight.

Senator SIMMONS. Let us suppose this, that as a result of the shortening of the route and additional facilities given to water transportation by the construction of the canal that the water rate could be reduced $5 a ton if there were no tolls and $3.50 a ton if there were tolls. Would not that $3.50 reduction be such a factor as would destroy, practically, competition on the part of the railroads and divert this traffic by water without any reference to whether tolls were charged or not?

Mr. HUMPHREY. It would, probably, in regard to certain commodities; but if it is true that the Panama Canal can carry certain commodities for less than the railroads and that they can not compete at all, certainly we ought to have it. I do not know any reason why we should pass legislation to protect one domestic industry against another.

Senator SIMMONS. If they could only carry them in a sum equal to the tolls less, then there might be force in your argument; but suppose they can carry them not only for a sum equal to the tolls less, but for a sum three or four times the amount of the tolls less?

Mr. HUMPHREY. Admitting, for the sake of argument, that that might be true regarding certain commodities, but there are certain

other commodities in certain other portions of the country where that certainly would not be the case.

That suggests to me another question which I came very nearly forgetting, and that is the market we hope to reach and that the tolls directly affect. Let me give you an illustration of what I mean. You take a carload of fir lumber to-day, I will say 1,000 feet to-day, and you can send that lumber down the Pacific coast in a vessel to the Isthmus, 103 miles across the Isthmus by the Tehuantepec Railroad, put it on another vessel, bring it up to Philadelphia, put it on the railroad there, and send it back to Indianapolis for about 1 cent less or 2 cents less than you can send it direct from Seattle to Indianapolis or any of the Pacific coast ports.

Take a still more striking illustration; take canned salmon, one of our principal products on the Pacific coast. You could send a case of canned salmon, or could when I looked it up a few months ago, down the Pacific coast, across the Tehuantepec Railroad, bring it up to New York and put it on the railroad and take it to Buffalo; put it on a vessel there and take it through the Great Lakes and the Soo Canal to Duluth at just the same rates you can send it direct from Seattle to Duluth. That shows you the effect of water transportation. Now, every time that you place 1 cent upon the tolls, every time you add 1 penny to the freight that goes through the Panama Canal you restrict the market that much; you keep us from getting that much farther west and that much farther up the Mississippi River.

Senator SIMMONS. The point I am making is if the distance is not too great that the lesser cost of carrying by water than by rail, if the handicaps were taken off of the water transportation, will of itself divert the traffic from the railroads to the water.

Mr. HUMPHREY. I admit, sir, if I understand you correctly, that there are certain commodities, or all commodities for that matter, and if vessels can carry them through the canal with free tolls and carrying them cheaper, it seems to me self-evident

Senator THOMAS. If I understand your last illustration about the canned salmon

Mr. HUMPHREY. Did I understand you correctly, Senator?
Senator SIMMONS. I think so.

Senator THOMAS. If I understood your last illustration, in which you cite the transportation of salmon by water up into Duluth where it could be sold cheaper than the same canned salmon could be transported by railroad to Duluth, you run it over the Tehauntepec Railroad?

Mr. HUMPHREY. Yes.

Senator THOMAS. How does the transportation charge of the Tehauntepec Railroad, including breakage, compare with the tolls that are proposed by this repeal bill to be placed on the same commodities going through the canal?

Mr. HUMPHREY. I am not familiar with that.

Senator THOMAS. It is greater, is it not?

Mr. HUMPHREY. The rate in that way, handling and unloading, of course is a great deal greater than going through direct.

Senator THOMAS. It seems to me that with the tolls you could still do that and sell the can of salmon for less than if sent by rail.

Mr. HUMPHREY. You can do that. Take another illustration. Take the same commodities and let them come across the railroad and take them up to New Orleans, and we can now reach almost to your country. After we get the Panama Canal we hope to be able to raech practically all that country and increase our markets for our products and at the same time be able to get the products out of the middle West back on the Pacific coast, and that is what we thought one of the great purposes in the construction of the Panama Canal was.

Senator BRISTOw. Did you ever have an estimate as to the cost of moving a ton of freight from Denver to San Francisco by way of Panama after the canal was opened, as against across the mountains by rail, a comparative estimate?

Mr. HUMPHREY. No; I never have. I took sheets one day and worked out these different rates I am telling you about as they existed and as they were at that time, but I did not do it the other way.

Senator BRISTOW. I asked the question because I had a railroad traffic man make an estimate for me at one time as to the cost of moving one ton of freight from Kansas to San Francisco by way of Panama and over the mountains by rail, and he gave me his estimate that the cost of moving the traffic by way of Panama would be about from 50 to 60 per cent of the cost of moving it over the mountains. Senator WALSH. How would it go, Senator?

Senator BRISTOW. It would go by way of Panama through the canal when opened.

Senator WALSH. Out of Denver ?

Senator BRISTOW. Out of Kansas, this was.

Senator THOMAS. How did you get to the seaboard?

Senator BRISTOW. By rail.

Senator THOMAS. What was the cost of getting to the seaboard? Senator BRISTOW. I did not ask him for details; I asked him for the cost of delivering it to San Francisco, and he figured the cost of getting it to the seaboard and the cost of getting it to San Francisco by water from Galveston and New Orleans.

Mr. HUMPHREY. I recall this illustraiton along that line: There was a shipload of barley sent from San Francisco down across the Tehauntepec Railroad up to New Orleans and there reloaded on scows or smaller vessels of some kind and taken to St. Louis at a considerable saving over what it would have been to send it directly from San Francisco to St. Louis by rail.

Senator SIMMONS. I want to ask you this question, and I am asking it for information, because I am not advised about it. Do you regard the transcontinental rates, the through rates by rail from the Pacific coast to prominent points on the Atlantic coast, at present as very excessive? I am speaking now of the through rates.

Mr. HUMPHREY. I have never been a shipper and I do not know, but I would not think that, considering the rail rate, that it is exorbitant. I think they are carrying it for what they think is an ordinary profit; in fact, they claim they are losing money, you know. Senator SIMMONS. The chief complaint, then, is not as to the through rate from coast to coast, but interior rates?

Mr. HUMPHREY. Take it on lumber, for instance, and our complaint is this: If we have to pay the same rate we have to pay now, we are practically out of the eastern markets, and the only particular advantage the Pacific coast is going to get out of the Panama Canal,