serious difficulties. In the present controversy the one point at issue does not fall within the possible scope of any treaty obligation. It affects what is essentially and entirely a matter of internal commerce. No self-respecting nation will ever tolerate foreign interference in such a matter.

The Hay-Pauncefote treaty was made in 1901. At that time and for more than a century before coastwise trade was preempted to American shipping. This nation, in the courage of youth, laid it down in 1792 as an American policy that the American flag, and it alone, should fly over vessels plying between American ports. No foreign ship can engage in our coastwise traffic. This fact was well known to the world when the Hay-Pauncefote treaty was made, and it was merely recognized in the regulations which Congress adopted in 1912 for the operation of the Panama Canal.

Those regulations, in imposing upon American vessels in foreign trade the same tolls charged foreign vessels using the Panama Canal, admitted an obligation under the Hay-Pauncefote treaty which I am convinced it does not impose. With many others, I hold that the intent and the requirements of the treaty go only to the extent that we shall see that rates of toll are fair and so levied as to render exact equality as between foreign users of the canal. But we have arranged to charge American ships in foreign trade, ton for ton, the tolls which will be collected from foreign ships.

As the matter stands there is at issue merely the demand that like tolls be collected from American vessels in coastwise, and so internal, commerce. In no way do such ships compete with those of any foreign nation. They are engaged in handling a traffic which no British, German, or other foreign ship can touch and not become countraband. To the foreign shipowner this coastwise and coast to coast water carriage of American goods presents no opportunities. Therefore he has no concern in how it is done nor at what charges.

But the American people have a direct and vital concern in this business. For one thing, it is their own. Beyond that, it is to their interest that the costs of coastto-coast transportation of American commerce shall be brought down as low as is possible. Free passage through the Panama Canal of American ships engaged in such traffic works for that result.

Between the eastern and western sections of the United States there is a big interchange of products. It will grow as development goes forward. Our thought should be to reduce the interposed barriers of distance, time, and cost, so that eastern and western articles may be exhcnaged on the most economic basis. In that way our whole people will be gainers.

At present there is about 4,200,000 tons of interchange commerce across the conti nent, approximately nine-tenths by rail. With the losses and costs of two rehandlings at the Isthmus eliminated by the through passage which the Panama Canal will give, water transportation will get a huge stimulus. For coast-to-coast traffic it will place the ship ahead of the trancontinental railroad. Our object is not to hurt the railroads, but to promote, by a right use of the Panama Canal, the greater economic interests of the American people.

Via the Isthmus routes American products moved west last year to a value of $71,000,000, and from the Pacific ports east to a value of $38,500,000. American goods to foreign countries, valued at $20,500,000, also took these routes in preference to the transcontinental rail lines. The citrus fruit crop of California is estimated at 45,000 carloads, or 675,000 tons for this year. Consumers in the East will pay a great transportation bill to get this fruit.

The freight charge from the California orchards to Philadelphia is $1.15 per hundred pounds, or $23 per ton. That would figure a transportation cost of $15,525,000 to get this year's California citrus fruit crop to the eastern markets. B. N. Baker, who, as creator of the Atlantic Transport Line, demonstrated himself a successful steamship man, estimates that via the Panama Canal California fruit can be brought to North Atlantic ports for $7 per ton, with a handsome profit to the steamer.

He also figures that the generality of transcontinental traflic can be handled by steamer from coast to coast, via the canal, at rates ranging from one-half to one-quarter the present rail charges, and at large profit. This is easy to believe.

About the lowest rail rate from Philadelphia to the Pacific coast is that on cast-iron pipe, 65 cents per hundred pounds, or $13 per ton. Per hundred pounds in carloads, the rate of 80 cents on structural steel; $1.50 on hosiery, sweaters, and underwear; $1.52 on household goods. Class rates per hundred pounds run $3.70, $3.20, $2.65, $2.25, and $1.90; and on the western classification, which also apply on different articles, $1.92, $1.52, $1.20, $1.15, and $1.05 per hundred pounds.

Thus rail transportation of freight across the continent involves large cost, from say, $13 per ton, as the least, to as high as $74 per ton. Obviously, the about to be inaugurated Panama Canal lines will command this business by greatly lower rates. As to

time, transcontinental freight is now handled all-rail in 18 to 21 days. Steamers doing 16 knots will go between North Atlantic ports and San Francisco in 16 days. With such possibilities of reducing the transportation cost of our internal commerce, the $375,000,000 expended in creating the Panama Canal has been wisely invested. It can be made to yield huge return and benefit to the American people. Their interest lies in passing American commerce free through the canal. If our coast to coast traffic via the Panama Canal is to be subjected to the established ship tolls of $1.20 per net ton for merchant vessels carrying passengers or cargo or both, and 72 cents on vessels in ballast, such toll charges must inevitably be added to the rates charged by the ships.

In such case the American people must pay the bill. It is asserted that exemption of our coastwise ships from canal tolls will benefit no one but the owners of such vessels, and that the great bulk of them are controlled by railroads and combinations made to hold rates excessively high. This is intended to confuse the issue, to prejudice the American case. Congress can regulate the conditions and rates of coastwise commerce just as surely as it has brought the railroads under public control.

Let the Panama Canal become a force to promote American commerce, to bring into closer economic relations our eastern and western people. To be such a power for largest good it must be kept free to passage of American coastwise traffic. And just as England and other European nations make refund of Suez Canal tolls to their regular steamer lines using that waterway, so should the United States hold itself free to arrange, through subsidies or otherwise, so that toll moneys collected at the Panama Canal on American vessels in foreign trade shall revert back to the owners of those particular ships.

With free passage of the Panama Canal preserved to American coastwise trade it will grow to fullest proportions. As it does, a great and proper stimulus will be given to the American merchant marine in coastwise trade. That in turn will make activity in our seaboard shipyards, which, with ample work and a standardization of vessel types will be able to construct steamers at greatly reduced cost. But of greatest importance, an interchange of products between different sections of the United States at a minimum cost will be assured.

The right is ours to utilize the Panama Canal to realize for the American people all possible economic advantages. It is the duty of the National Government to see that they are realized. As matters stand the responsibility rests upon the Senate of the United States.

Respectfully,

SAMUEL H. BARKER.

(Thereupon, at 6.20 o'clock p. m., the committee adjourned until to-morrow, Friday, April 24, 1914, at 10.30 o'clock p. m.)

FRIDAY, APRIL 24, 1914.

COMMITTEE ON INTEROCEANIC CANALS,
UNITED STATES SENATE,
Washington, D. C.

The committee met at 10.30 o'clock a. m. Present: Senators O'Gorman (chairman), Thornton, Shields, Walsh, Owen, Simmons, Brandegee, Crawford, Bristow, Perkins, and Page. The CHAIRMAN. The committee will come to order. One of our witnesses is eager to leave the city as soon as possible in order to keep an engagement in Connecticut to-night, so we will proceed with him now. Mr. Donnelly, you may give your testimony.

STATEMENt of mr. FREDERICK W. DONNELLY, MAYOR OF THE CITY OF TRENTON, N. J.

The CHAIRMAN. Mr. Donnelly, you are mayor of Trenton, N. J.? Mr. DONNELLY. Yes, sir.

The CHAIRMAN. And have been for how long?

Mr. DONNELLY. Three years.

The CHAIRMAN. What is your business or profession?

Mr. DONNELLY. Merchant.

The CHAIRMAN. The committee will be glad to hear any views you have to offer now regarding the legislation before us.

Mr. DONNELLY. Mr. Chairman and gentlemen, as a result of a mass meeting of a nonpolitical character which was held in the city of Trenton recently, resolutions were adopted opposing the passage of the repeal of the tolls act. I came here yesterday with a large delegation representing the manufacturers, and, in fact, men of all walks of life in business in the city of Trenton. Agitation has never been so forcible, so strong, so apparent on any public question as it is at the present in our city. We are a city of 100,000 popluation, who have been planning for water transportation for a number of years, producing $60,000,000 annually in manufactured products, and shipping three and one-half million tons of freight annually over one railroad. We have a great variety of manufactures-wire, steel, cables, linoleum, automobiles, rubber, crockery, tile, and many other things that go into heavy tonnage and our business on the Pacific coast is a very important factor among the manufacturers of Trenton. We have been planning for improvements in the Delaware River at the head of navigation. The city now practically owns all its water front, and is building a line of municipal docks, and planning to take advantage of this new outlet or artery to connect ourselves with this system of waterways we are developing throughout the country. Not being a lawyer, and not wanting to get into the international complication at all, I want to view this from a commercial standpoint and a local standpoint which is applicable to other cities on the Atlantic coast accessible by water.

Agitation is now rife throughout the country on the contemplated repeal of the free-tolls provision of the Panama Canal Act. This hearing, as I understand its significance, is to give us an opportunity to voice a protest against the enactment of legislation that will, supposedly, rob the United States of the advantages and privileges which we have always naturally accepted as being due us because of our initiative in constructing the Panama Canal, the greatest engineering feat in the world's history.

The National Rivers and Harbors Congress and the Atlantic Deeper Waterways Association-both large and influential organizations and of paramount importance in advancing the cause of improved waterways have unequivocally pledged themselves in favor of tolls exemption for American coastwise vessels.

The membership of both orgainizations is composed in a great degree of men who have assiduously studied for years the problems of waterway development in all of its diversified phases. Consequently, the combined opinion of these experts, as expressed through the medium of the organizations of which they are component parts, is worthy of grave attention. Having been honored with an office in each organization, and having taken an important part in the formulation of the policies they have promulgated, I, of course, consider myself morally bound to the free-tolls provision of the Panama Canal Act.

In advocating the defeat of the repeal bill I am not actuated by any desire to criticize the opposing forces who favor the repeal. It is this

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divergence of opinion that tends to give impetus to the successful administration of our Government. The man who honestly disagrees and has the courage of his convictions is, after all, the man whose friendship should be most cherished. I consider myself a better friend of President Wilson and his administration by following the dictates of my own conscience on a matter of such vital importance to our Government as tolls exemption than the man who sits idly by and approves of every action of the administration, knowing full well that his approval is based on his deceit and untruthfulness as far as his own opinion is concerned.

Regardless of the bitter opposition which has arisen, I am firmly convinced that the administration at Washington has many very substantial reasons for its stand of which we are ignorant and which, if known to us, might put an entirely different light on the whole controversy. With this probability kept constantly in mind, I do not feel justified in criticizing the position of the administration or in questioning the honesty of its purpose in demanding the repeal of the free tolls. And I will do neither.

Personally, without any knowledge of the reasons that are actuating President Wilson, I am unqualifiedly in favor of absolute freedom from any restrictions for American vessels engaged in coastwise trade. And I think I can say that 80 per cent of the citizens of Trenton, N. J., are opposed to this repeal. My own personal observations in my own community is that 95 men out of 100 men are opposed to the repeal of this act.

Senator SIMMONS. Did not the legislature of your State pass some resolutions about this matter?

Mr. DONNELLY. No, sir.

Senator SIMMONS. I was under the impression that the Legislature of New Jersey passed some resolutions.

Mr. DONNELLY. They attempted to, but it was not successful. Senator SIMMONS. They did not pass?

Mr. DONNELLY. No; it did not pass. It did not come out of committee.

I have gathered together quite a number of thoughts on the subject, all of which have occurred to me from time to time since I was requested to speak at this hearing. Because of the unusual importance attached to the controversy I have deemed it advisable to jot down my ideas on paper, and will crave your indulgence while I give my version of the great argument that is dividing the opinion and cooling the friendly arder of many of our foremost statesmen, and at the same time causing tremors of anxiety to reach out to the remotest parts of the civilized world.

My motives should not be construed as an attempt to embarrass the administration, for this I would not do. My position is not in contravention of the tenets or dogmas of my party's faith, for the Democratic platform adopted at the Baltimore convention contains the following plainly stated plank:

We favor the exemption from tolls of American ships engaged in coastwise trade passing through the l'anama Canal. We also favor legislation forbidding the use of the I anama Canal by ships owned or controlled by railroad carriers engaged in transportation competitive with the canal.

My purpose is to set forth the advantages that would necessarily accrue from the free use of the Panama Canal for American coastwise

vessels. I approach the subject from an argumentative viewpoint. My convictions have necessarily been formed through my experience with waterway movements, and I have for years steadfastly and consistently advocated the policy of free waterways; consequently I am decidedly averse to seeing our greatest waterway achievement encumbered with restrictions that will surely deprive waterway traffic of the very benefits which the construction of the canal was intended to provide. I must stand on my own conviction in the matter, and that is that a grave and irreparable error will be committed if American coastwise vessels are to be deprived of the free use of the Panama Canal as an avenue of travel.

The claim is put forth that the privilege of tolls exemption would be an unwarranted subsidy to American vessels, and that it would be in direct violation of the Hay-Pauncefote treaty. With this contention I have no sympathy. The Hay-Pauncefote treaty states that "The canal shall be free and open to all vessels of commerce and war of all nations on terms of entire equality." But the same treaty in another section says, "The said Government (meaning the United States) shall enjoy all the rights incident to such construction, as well as the exclusive right of providing for the regulation and management of the canal." Among these rights is the right to fix tolls and administer our policy of shipping, which was operative long before the Hay-Pauncefote treaty was in existence.

The rivers and harbors act of 1884 provides that—

No tolls or operating charges shall be levied or collected from any vessel, dredge, or other craft for passing through any lock, canal, canalized river, or other work for the use and benefit of navigation now belonging to the United States or that may be hereafter acquired or constructed.

The Panama Canal and the adjacent territory are United States property and can not, therefore, be compared, for instance, with the Suez Canal. None of the nine signatory powers are owners of the Suez Canal, and after the tolls were fixed for this canal the powers. did not consider it a breach of faith to subsidize their ships to the amount of tolls charged. So, if our tolls are just and equitable and do not discriminate against any nation, we have fulfilled our treaty obligation.

The Panama Canal is exclusively an American enterprise. Great Britain was not inclined to pay any share of the cost of construction, although, under a previous treaty, which was superseded by the HayPauncefote agreement, that country expressed a willingness to defray one-half of the expense of an interoceanic canal. However, in the construction of the canal no country has contributed to the burden of

expense.

Article 3 of the Hay-Pauncefote treaty provides:

The canal shall be free and open to the vessels of commerce and of war of all nations observing these rules on terms of entire equality, so that there shall be no discrimination against any such nation in respect to the conditions or charges of traffic or otherwise. Such conditions and charges shall be just and equitable.

be free and open to the vessels of commerce and of war of all nations observing these rules on terms of entire equality so that there shall be no discrimination against any such nation in rspect to the conditions or charges of traffic or otherwise. Such conditions and charges shall be just and equitable."