Mr. ALLEN. Oh, no; we have not overlooked that at all. We are merely saying that that has been written into the treaty since the treaty was passed, and written into the treaty despite the action of the Congress, despite the action of your party and mine and the Senator's, despite the approval of the American people. Senator SIMMONS. How can you say that Mr. ALLEN. That is an allegory. I mean that that interpretation has been written into it. I am saying that that is not a justiciable question under the treaty; that we might as well say that Germany could find the same excuse for disagreement, and that any of the other nations might find the same excuse for disagreement. But the fact remains if we are going to get for American commerce the benefit of the water transportation which this tremendous enterprise rightfully entitles us to, then we must not let Great Britain have the sole right of interpreting this treaty, because Great Britain is a businesslike nation, and generally when her business argument is on tottery legs she comes to us and intimidates our minds by all this ponderous terminology of international diplomacy about our national honor. Why, before I left home I talked with the freight traffic manager of the Rock Island Railroad, and he wanted to engage my attention in reference to the honor of England in this matter, and that is the first time in my life when I have ever seen the practical railroad traffic agents become international students and worry about the honor of England. And yet all along the road when I have met a practical railroad man he is sick at heart concerning the honor of England in this matter. What is he really sick about? He is sick lest we use this canal to produce for American commerce some reduction in the cost of transportation. That is what he is sick about. The answer to that is from the other side-one of the answers, and the one to which more attention has been paid than any other-is that if we grant this we create a shipping trust, an argument which I hope has no foundation. If for the purpose of protecting a great American right we must let it go without natural protection, if we must deprive ourselves of its natural benefits in order to prevent there being formed a shipping trust, there is a confession of the inadequacy of our antitrust program, which I think ought not to be made. That is another question for administrative honesty. Senator BRISTOW. Mr. Allen, you live at Wichita? Mr. ALLEN. Yes. Senator BRISTOW. Have you ever inquired as to the actual cost of moving a ton of freight from Wichita to the Pacific coast, San Francisco, by rail, and the cost of moving the same freight by rail to Galveston and by water from Galveston to San Francisco? Mr. ALLEN. As nearly, Senator Bristow, as I might look into it. For instance, it is a matter of general knowledge, I presume, that it costs something over $14 a ton to bring citrus fruits from San Francisco to New York, and last year San Francisco shipped some 800,000 tons of those. I have had it estimated for me by a Mr. Madden, whom you know, Senator, who is the general counsel of the Katy Railroad, that if we could bring through the Panama Canal into the Gulf of Mexico at the rates which now prevail for a distance of haul a cargo of citrus fruits, and then deliver it to a north and south railroad, the saving we would make--I mean delivery to be carried those 500 miles by the railroad at their regular traffic rates-the saving we would make on half the distance across the American continent would be more than $3 a ton. Senator BRISTOw. And that would apply to products going both ways? Mr. ALLEN. That would apply to products going both ways, and that would mean we might deliver into the Mississippi Valley the fruits of California at that very considerable saving. Senator BRISTOW. Wichita is 500 miles from the Gulf? Mr. ALLEN. In round numbers, yes. Senator SIMMONS. Let me ask you a question: One of the witnesses a few days ago-a Mr. Dunn-in a paper which he started to read, and which I do not think he quite finished, made the statement that at the present time the amount of freight carried by the transcontinental railroads is about 3,000,000 tons; that by reason of the lesser water rates after the Panama Canal is constructed the transcontinental railroads would lose 2,000,000 tons, or two-thirds of this traffic, to the steamships? Mr. ALLEN. Yes. Senator SIMMONS. Reducing their transcontinental freight to onethird of what it is now. If that should happen to the railroads-that they should lose this large volume of their transcontinental trafficdo you anticipate that they would, in order to remain going concerns, or for other reasons, recoup themselves that loss by increasing where they could the interior rates, the back-haul rate, so to speak? Mr. ALLEN. It might lead to an effort of that sort. It might lead to a complete reorganization of the economics of the railroad management. It might lead to the creation of a new day in the railroad business, when the scientifically settled question of what freight ought to cost and what character of freight the railroad ought to haul, and what character of management it ought to have, and whether it be engaged primarily in hauling freight or selling stock-it might lead to an entire reorganization of the railroad problem, and if it did then that would be another great benefit which the building of the Panama Canal has brought to the American Nation in the solution of its vast transportation problems. Now, answering your question directly, if the railroads should attempt that unjustly, and it should be a burden, then that would be a question of the administration of the Interstate Commerce Commission to settle. Senator SIMMONS. The Interstate Commerce Commission settles things now. It will not settle them more after this act than it does at the present time. I think the former witnesses have given us to understand that the back-haul zone would probably embrace about 500 miles, or something like that, on each coast. Mr. ALLEN. Yes. Senator SIMMONS. That is, east of the Rockies on one side and probably up to Pittsburgh and Buffalo on the other side. Mr. ALLEN. Yes. Senator SIMMONS. And down the coast? Mr. ALLEN. Yes. Senator SIMMONS. You would probably be in that back-haul zone? Mr. ALLEN. Yes. Senator SIMMONS. And if the loss of this immense transcontinental traffic did result in the roads recouping themselves by adding some thing to the back-haul rate, then you might suffer instead of being benefited? Mr. ALLEN. I think, Senator, that is borrowing trouble-a thing we ought not to do. I think it would be a situation to take care of if it came. Senator SIMMONS. I wanted to know if you had considered that. Mr. ALLEN. I have considered that worry. It was suggested to me in Chicago the other day by a railroad traffic manager, and I questioned whether I ought to share in his worry on that particular point, because I am worrying in respect to a broader thing-that we may have in the nation over all of the vivid and instant touch that may come to our commerce by the reduction of transportation rates on the things we use the most in the Middle West, for as a general declaration, half of the cost of them is transportation cost. And so I am willing to try out a broader policy and to force whatever relief is due us from the creation of this great canal to force that into the traffic civilization of the country; and if it busts some railroads, even then I would not hesitate, although I think it would bust no railroads. It might force them to reorganize along more cautious and genuine business methods. Senator SIMMONS. I am not speaking about busting railroads. I was speaking about the effect. Mr. ALLEN. No; I am not quoting you. Senator SIMMONS. Let us follow that a little further. The chief benefits from the lessening of freights from the result of opening the canal would be to the coast cities Mr. ALLEN. Not necessarily. Senator SIMMONS. Let me finish my question. Mr. ALLEN. Pardon me. Senator SIMMONS (continuing). And to that back haul zone. When you get beyond that back haul zone there will not be the same degree of benefit, if any? Is not that true! Mr. ALLEN. That sounds reasonable. I do not know whether it is true or not. I think, as a matter of fact, Senator, that that vision I have of the matter is more likely to be true than yours. But if we can produce such obedience from the railroads to new economic conditions as will give the Mississppi Valley the benefit, first, of its nearness to the Gulf, and, second, of its position on the Mississippi River and her tributaries, if we do that we have settled one branch of the transportation question which is worth more than the worries of the others. Senator SIMMONS. That might bring it in the back haul zone. Mr. ALLEN. I would say, Senator Simmons, that those would be new conditions created by this, and a problem to be taken care of, that is it not of sufficient certainty now as to justify us in seeking to ward off at such tremendous cost as you offer. SENATOR SIMMONS. I have understood the witnesses who testified before to give us to understand that while the rates in the coast cities, and the rates within the back haul zone, which we will fix at 500 miles from each coast, would be less than the railroad rates, that the rates farther in the interior would still remain the present railroad rates. That is, the railroads could still carry that traffic for less than it could be carried through the canal. Now, if that is so, in the face of the fact that if we remit these tlls to the coastwise ships, and the Government will have to pay that money which it would lose by this remission in order to meet the running expenses of the canal and to pay the interest upon our investment, if only the coastwise sections and this zone that we speak of, the back haul zone, is to get cheaper rates, and the balance of the country, which would comprise, I should say, at least five-eighths of our whole country, would not get any reduction in rates, do you think it would be quite fair to make all the country pay this amount which would be lost from the country by remitting this toll in order that this small strip of country might get the benefit of it? Mr. ALLEN. Senator, that is an assumption of borrowed trouble that leads us into fields that are purely speculative. In the first place, why have we exempted American coastwise shipping from the canal? Why, in order that we might solve just such problems as stood before us a few moments ago, that we might create the establishment of that thing which we now have not, a merchant marine. Why do we want a merchant marine? Why, in order that the country without any respect to railroad discrimination or railroad existence, or any other ulterior motive, in order that the country may have the advantage to which it is entitled, from our tremendous amount of water inland and around our coast, and we have made 40 miles of new coast, and we want vessels to sail along it and serve the Nation; that is all. Why did we create it? Because we have allowed a policy of such extravagance, inattention, indifference, and criminal lack of attention to prevail that we have ruined our own merchant marine. We have driven commerce from our rivers and our coast. Now, we seek to reestablish it by a benevolent attitude on the part of the Nation. Now, you ask me to worry because the admission of this great dream into our lives might produce an extensive back haul along the western slope of the Rockies and the eastern slope of the Alleghenies. I say, let us go my way, and then we will get together later and take care of that back haul. I believe we can do it. If we have surrounding this great continent the coastwise shipping we ought to have, and plying on our great rivers such as ply upon the inland waters of every other nation but ours, if we have the commerce to-day we are entitled to, and which we could create, then we could take care of the back haul and we would reorganize the whole system. Senator BRISTOW. Mr. Allen, you have been struggling against that back haul for some time in Wichita, have you not? Mr. ALLEN. Yes; we have had that back haul, and we have struggled against it sometimes, and we have won little victories. There used to be a day when Wichita, if you will pardon the reference to a local community, when it cost more to haul a carload of wheat from Newton, which is 20 miles from Wichita, than it did to haul it to Kansas City, which is 180 miles. It was the back haul business.. There was a time when if a wholesale merchant at Wichita bought a carload of sugar in San Francisco the sugar went through-it came to Wichita, of course, but when the freight bill came the merchant had been charged the freight rate from San Francisco to Kansas City, a deep-water point, and an additional local haul back to Wichita. But we have settled that. We settled it through the new railroad law, and the wise and able administration of it by the Interstate Commerce Commission. And I have hoped when I look at those dangers that they can be solved. The CHAIRMAN. That is all, Mr. Allen; we are very much indebted to you. Senator SIMMONS. Before we take a recess, I should like to present just one page of a statement from Mr. Col. Goethals. I want to state to the committee that I asked the War Department the other day if they would not have Col. Goethals come before the committee. They said they would, and they cabled him, and he advised them he could not reach here before the 26th of this month, and that it was very necessary that he should be present in the zone. I said to the department that I hoped these hearings would be closed before the 26th. I said, "Under the condition that you present, I wish you would ask Col. Goethals by cable what are his views with reference to the economic question of charging tolls on the canal," and the Secretary of War said he would do that. I have the following communication. It reads: Hon. F. M. SIMMONS, Committee on Interoceanic Canals, PANAMA CANAL, WASHINGTON OFFICE, United States Senate, Washington, D. C. SIR: I have the honor to transmit herewith two copies of a translation of a cablegram, dated April 23, 1914, addressed to you by Col. Goethals, governor of the Panama Canal. This cable was received in this office this morning for transmission to you. I also forward herewith two copies of Dr. Emory R. Johnson's report on Panama Canal traffic and tolls, to which reference is made in Col. Goethals's cable. If any additional copies of this report are desired, this office will be pleased to furnish same. Very respectfully, A. L. FLINT, Assistant to the Chief of Office, in the absence of the Chief of Office. Inclosures: Two copies translation cable above mentioned; 2 copies report on Panama Canal traffic and tolls. P. S.-It is noted that whereas Col. Goethals's cable states that $11,950,000 is the amount to be secured annually through tolls, the items given foot up $12,200,000. This is occasioned, no doubt, by a mistake in transmitting the cable, but we are unable to state whether the error is in one of the items or in the total. We are, however, cabling to ascertain the correct figures and will advise you as soon as a reply is received. TRANSLATION OF CABLEGRAM RECEIVED FROM CULEBRA. APRIL 23, 1914. Maj. F. C. BOGGS, Washington, D. C. (For Senator Simmons.) My views on economic side of tolls question follow: Government will expend $375,000,000 for canal and intends to charge for its use. Basis of tolls given in Emory R. Johnson's Report on Panama Canal Traffic and Tolls, pages 193, 194, and 195. These figures should be corrected for operating expenses, which will be $5,500,000, including depreciation. I believe tolls should pay outstanding indebtedness, fixed charges, and operating expenses, leaving amounts appropriated from current revenues to be contribution of present generation toward canal, and because of unknown future conditions not burdening posterior for remainder. Bond issue to date under canal acts $134,631,980; interest on these approximately $3,200,000; annual amount to be set aside for redemption of bonds, $3,250,000; operation and maintenance, $5,500,000; annual payment to Panama, $250,000. Amount to be secured annually through tolls is, therefore, $11,950,000. If additional bonds are issued, these figures should be changed accordingly. To secure this amount through tolls necessary to charge all shipping, as indicated in report quoted. Established steamship companies fix rates after conference, and as they are in the business for profit, will demand the highest |
