rates the traffic will bear. These rates will be independent of tolls. It follows that exemption from tolls will not give cheaper rates from coast to coast to either shipper or receiver, but will increase profits to shipping companies. The same is applicable to rates from interior points to either coast. Agreements will be made between railroads and ships for through rail and water rates, same as at present, and rates divided between two interests as per agreement. Again, exempted tolls will not give lower rates to shipper or receiver. Therefore, free tolls to vessels engaged in coastwise trade result in a subsidy to a class of shipping already fully protected and not in need of subsidy. I do not believe in exemption of tolls for coastwise trade. First, because this amounts to a subsidy to a class of shipping and will benefit stockholders and not shipper; second, because the canal will need all revenue it can get to pay its current expenses and indebtedness.

GOETHALS.

Senator BRISTOw. He has practically accepted Johnson's theory. If you had not known that came from Goethals, you would have thought it was an extract from Johnson's testimony.

The CHAIRMAN. You do not think Prof. Johnson prepared it, do you?

Senator BRISTOw. I would have thought so if I had not known it came from Panama.

Senator SIMMONS. I simply put the reputation of Col. Goethals in this country behind this statement, and the public can judge for themselves.

Senator BRISTOW. Col. Goethals is a great engineer, but what information has he in regard to commercial affairs? Have we any evidence in regard to that?

The CHAIRMAN. Do you remember whether Col. Goethals, when he appeared as a witness before this committee about two years ago, expressed any views on the economic side of the question or made any objection at that time?

Senator BRISTOW. No; he made no objection.

Senator SIMMONS. Did you ask him any questions on that?

Senator BRISTOW. No.

Senator SIMMONS. I think if Col. Goethals's statements are to be put in question we ought to have the record to see what he did say. The CHAIRMAN. Col. Goethals's statements will be questioned the same as any other witness's statements. This committee has accepted no witness's statement as final.

Senator SIMMONS. The chairman did not understand me. I say, if what he said two years ago is the subject of controversy we ought to have what he did say.

The CHAIRMAN. Yes.

(Thereupon, at 1.20 o'clock p. m., the committee took a recess until 2.30 o'clock p. m.)

Whereas the President of the United States in his special message of March 5, 1914, to Congress recommended and urgently advocated the repeal of the provision of the act of Congress of August 24, 1912, which exempts the coastwise shipping of the United States from payment of Panama Canal tolls, and has thereby submitted to the action of Congress and to the ultimate judgment of the people of the United States a question of national policy of first importance, on which he invites and has a right to receive, the aid of all American citizens: Be it therefore

Resolved, That the Lawyers' Association of Illinois concurs in and supports the views expressed by the President in his message, believing that exemption provision is in violation of the letter and spirit of the treaty of November 18, 1901, between the Governments of the United States and Great Britain, whereby the neutrality of the Panama Canal was assured and its use on equal terms forever guaranteed to the nations of the world; that "equal terms," however phrased in writing, mean equal

rates of toll; that all international questions of an economic character and of business policy involved in or arising out of the construction and operation of the canal were definitely determined by the adoption of that treaty, and are not open for consideration otherwise than by consent of both of said treaty making powers; that as a nation, the people of the United States are bound in honor to maintain that treaty, and forbidden by enlightened conscience and sound morals to evade its provisions through narrow interpretation, however such a course may seem to our immediate advantage; Be it further resolved, That we now urge the Senators and Representatives of Illinois in Congress to vote for a repeal of that exemption provision, to the end that the national honor may be maintained, our treaty obligations held inviolate and the good faith of the American people remain unquestioned;

Be it further resolved, That copies of this resolution be transmitted by the chairman of the Public Service Committee to the President and Vice President of the United States, and the Speaker of the House of Representatives, and Senators from Illinois and Representatives.

Adopted unanimously March 7 at Press Club.

Charles P. Gillen of Newark, N. J., said:

I come from the city of Newark, N. J. I have taken a deep interest in the free tolls question. I have made it my business to find out in every way the feeling of the people of my city on this question. I am firmly convinced that nine out of every ten people in Newark favor free tolls. I believe the rest of the people of New Jersey hold the same opinion.

On March 8 a meeting was held at Keeney's Theater, Newark. Five thousand people fought to get into the theater, which accommodates only one-half of that number. Resolutions were unanimously adopted favoring free tolls and denouncing the repeal of the free tolls provision of the Panama Canal act as an absolute surrender of American rights. Later on another big mass meeting was held in Newark which took similar action. The Board of Trade of Newark, one of the most influential trade bodies in the country, is on record as favoring free tolls. No matter where you travel through my State you will find most of the people asking this question: What is the matter with the people at Washington, and why do they want to surrender our control of the canal?

I will not burden you with a repetition of the all-powerful arguments in favor of free tolls. I wish to convey to your minds the fact that the people of New Jersey are thoroughly familiar with these arguments. They know that the Panama Canal act, which became the law of the land, provides for free tolls for American coastwise ships; that the Democratic, Progressive, and Republican parties, and their candidates for President in the last campaign declared for free tolls; that Woodrow Wilson in public utterances indorsed the free tolls provision of the act, and the freetolls plank of his party platform; that it is no longer claimed by opponents of free tolls that treaty obligations would be violated by the free-tolls provision; that free tolls means low shipping rates between coast and coast; and that the transcontinental railroads fought against the digging of the canal, and are now fighting against the free tolls, because they are afraid of honest competition.

The people of New Jersey know the question involved in this controversy is not so much the question of how many dollars can be collected at the Panama Canal for tolls; the real question is, shall the United States absolutely own and control its own canal? They know that if the free-tolls provision is repealed the United States will then be placed on an equal footing with other nations and will have no more right in the control of the canal in times of war or peace than any other country; that then our fortifications at the canal would become a joke and the Monroe doctrine an obsolete proposition.

The enemies of free tolls now tell us we would be justified under the treaty to exempt our domestic commerce from toll payment, but that we sohuld not do so, because we should be magnanimous. They know that our people have four hundred millions invested in that ditch and that our investment should be protected. The lower House of Congress has attempted to remove this protection. It does not seem possible that the Senate will follow suit.

During the present month Mr. O'Byrne, Democratic candidate for Congress in the sixth New Jersey district, running on a platform opposed to free tolls, was overwhelmingly defeated; backed by a personal letter from the President, supported by Senators James and Lewis, Congressman Kinkead, and other distinguished statesmen who stumped the district, the repeal of the free-tolls provision was made the paramount

issue. Mr. O'Bryne accepted it as his platform. The candidates running against him stood on the free-tolls platform. Senator James stated at Paterson that New Jersey was expected to stand by the President in his Panama Canal policy; that if Mr. O'Byrne were defeated it would be looked upon as an insult to President Wilson. The tolls question was the issue in that campaign. The press of the country so declared, and the people of the country waited for the result. You know how our American citizens in the sixth district voted. Mr. O'Bryne was snowed under. Is there any further evidence needed as to the feeling of the people of New Jersey on this question, and can it not be truthfully said that the people throughout the Nation feel as the Jersey people do? It is safe to say that not a single Congressman in New Jersey who voted against the free tolls can be reelected in the fall. God knows it is in no spirit of exultation that I make this statement. I am a Democrat, and have held the highest admiration for President Wilson. Most of the Jersey Congressmen are my good friends.

Gentlemen, the question is now in your hands; you must decide. In New Jersey we feel that the question is in safe hands. The Members of the Senate are big men, otherwise they would not be elevated to such high station. They are mostly broadminded Americans and able statesmen. We believe they can safely decide as to whether we will continue to guide our ship of state by the wise counsel of patriotic Americans, or by the treasonable advice of Andrew Carnegie, who is using some of the millions he made by methods well known to every school boy to betray the interests of this Republic into the hands of the foreigner.

Senator JAMES A. O'GORMAN,

HORACE TURNER & Co., EXPORT LUMBER,
Mobile, Ala., April 17, 1914.

Chairman, Washington, D. C.

MY DEAR SIR: As I testified before your committee when the Panama act was being considered, and as I am dead against the repeal of the "free-toll" provision, naturally, I have followed with interest the arguments advanced for the repeal. It is astonishing to read the excuses given by many Democrats for going back upon the Democratic "free-toll plank." If a man ran upon a prohibition ticket and after election voted "wet,' no possible excuse would be accepted; but to swap positions upon this Democratic platform seems to be quite the proper thing. How different would be the situation if either Mr. Champ Clark or Mr. Óscar W. Underwood had been the Democratic nominee instead of Mr. Wilson. We would hear the voice of President Clark or President Underwood raised for "the right to regulate and control our own coastwise traffic through our own canal," and the country would have backed this position to a finish. The Republicans forgot their "tariff" platform pledge and lost out, and the Democrats will, I believe, find great difficulty in satisfactorily explaining to the American people at the next election just why they violated their "free-toll" pledge and in convincing the public that the next Democratic platform is a genuine one and not subject to change overnight.

Treaty. I think it would be difficult to find many men amongst the most ardent repealers of free tolls who would assert that the Hay-Pauncefote treaty, as signed, would have been ratified just the same by the Senate (in 1901) even if the British Government had in 1901 questioned our right to grant "free tolls" to our coastwise vessels. If they had interfered with our right to regulate our coastwise trade while the treaty was in the Senate we all know that the treaty would never have been ratified in its present shape. If in 1912-when the Panama Canal Act was drawn--the Hay-Pauncefote treaty had come up for consideration and the British Government had, for the first time, questioned our right to grant free tolls to our coast wise vessels, we all know there would have been a very different treaty signed, so why, at this late date, after the canal is completed, should we permit Great Britain to interfere because she reads our treaty differently from what we know it was intended to cover? The action of Great Britain seems to be nothing short of sharp practice in a trade—just an effort to take an unfair advantage.

If the clause, the canal shall be free and open to the vessels of commerce and of war of all nations" does not include the United States so far as its war vessels are concerned (and this seems to be admitted even by Great Britain), how on earth can it include the vessels of commerce of United States? Those against "free tolls" can assert that the United States in paying tolls upon its own war vessels would simply be taking money from one pocket and putting it in another pocket of the same trousers. But if this is correct, and if Great Britain admits the absolute right of the United States to grant its vessels of commerce a subsidy, amounting to exact sum of the canal tolls (just the system adopted by Spain as to Panama Canal tolls) then what is the difference between the United States collecting $5,000 in canal tolls from an American vessel, depositing

the vessel's check in United States Treasury, the same Treasury official at once drawing a United States Treasury check, sending same back to vessel owner, and the United States granting its coastwise vessels "free tolls" outright under Panama Canal act of 1912? Just a little useless bookkeeping, that is all the difference. The United States once owned some vessels of commerce, and I think there is a plan by present administration to use some of our war vessels for carrying mail, etc., through the canal-in other words, making them vessels of commerce. Will they not be "free of tolls" like all United States war vessels? Then one American vessel of commerce (and one not in coastwise trade either) can pass free of tolls (with permission of all concerned) and the right to pass another American vessel-engaged purely in the coastwise trade is questioned by Great Britain. The only difference is, Uncle Sam owns one vessel while Bill Smith owns the other vessel a matter of ownership only. If Great Britain does not pay any more canal tolls than her pro rata share of the canal expense, why she has no complaint, and it is not likely that any foreign nation will ever pay even its pro rata proportion of the grand total expense of the canal. There will be an actual loss to the United States.

Free tolls.-Now does not free tolls on coastwise traffic in the last analysis mean, first, assisting our manufacturer to meet the competition of the foreign manufacturer; second, reducing our domestic freight bill just the amount of the canal tolls?

We find the Canadian, using cheap foreign vessels, loading lumber in British Columbia to New York or New England. We find the American, living in Washington or Oregon, manufacturing the same lumber, yet forced to use the higher-priced American tonnage to reach New York or New England. Result: The American receives a less price for his lumber than the Canadian. For example, the rate of freight, via foreign vessels, is $7 per 1,000 feet, British Columbia to New York, while the rate via American coastwise vessel, Oregon to New York, is $10 per 1,000 feet. If lumber sells for $22 in New York, the Canadian receives net price of $15, whereas the American receives $12 or, if this is below cost of production, quits business. The same difference against the American would exist upon everything that the American on the Pacific coast shipped to New York or New England in competition with the Canadian.

What would the situation be as to products of this State-Alabama-such as coal, iron, cotton goods, oak and other hardwoods? Take iron, for example, now that China is awake. The State of Alabama will have to deliver iron to San Francisco in American coastwise vessels in competition with China, the latter possessing the cheapest labor on earth and having the selection of vessels from the cheapest ocean fleets of the world. If the American coastwise vessel (more expensive to build and to operate than the foreign vessel) was free of tolls, the Alabama iron shipper would be just the amount of the tolls better able to meet the competition of China.

Another example. The South and New England must manufacture cotton goods in competition with China and Japan and use the more expensive American vessel to reach San Francisco and the Pacific coast of the United States. Free tolls to American vessels would help offset the advantage China and Japan have in cheaper foreign tonnage. Why the manufacturer in England, skilled in manufacture of cotton goods, shipping in British vessels, whose first cost and operating expense is less than the American vessel, upon these long ocean trips will have an advantage over American cotton goods. The freight cost from Liverpool to San Francisco in British vessels will be less than the freight cost New York to San Francisco. When China and Japan get well started, with labor that costs less per year than our labor per month, why we will be out of the race in everything these countries can produce.

By giving the American coastwise vessel "free tolls" we are just attempting to equalize, to some extent, the disadvantage that the American vessel, with its higher first cost and greater operating expense, is working under in competition with the lower priced foreign vessel-bringing goods from those foreign countries in competition with the different sections of the United States. The oak of Japan will be put upon the Pacific coast in foreign vessels and the Gulf coast, to meet this competition, must receive a less net price because of the higher freight bill of the American vessel or quit business. On such articles as the Atlantic and Gulf manufacturers have no foreign competition to meet, why, of course, the amount of tolls will be added to and form part of the freight bill paid in the end by consumers on Pacific coast.

I appreciate fully the argument used by opposition that the American coastwise vessels are a monopoly, controlled by several large corporations a regular trust so to speak. But is it not better to pay tribute to an American shipping trust than to a British shipping trust? At least we can get back at the American trust by taxation or similar means, whereas we can not reach the British or other foreign shipping trusts; our money once paid them is gone. I, for one, am thankful to have the American flag left upon the sea and am willing to take my chances in regulating the American shipping trust so that it will be a benefit to the country, and we should not lose sight.

of the fact that we have a large fleet of American sailing vessels, suitable for bulk cargo, in addition to numbers of independent American freighters, all of which will make the basis of ocean rates upon bulk goods. Really there is nothing in the shipping trust idea, for once there is a public ownership of water terminals at the different ports of the United States and a fair chance for the independent American vessel you can rest assured that there will be competition in such trade as the independent American vessel has a fighting chance. The American sailing vessel to-day makes the rates of freight upon the Atlantic and between Gulf and Atlantic ports for the regular American line steamers, in coal, cement, lumber, cross ties and other wood goods, and all such bulk goods. The Panama Canal act forbids our railroads passing vessels owned by them and supposedly competing with them through the canal, 80 this will stop the railroads from crushing out competition by lowering rates until independent boats are gone and then raising rates to recoup their losses. The other weapon, and the greatest one, has been the control of water terminals by the railroads and their affiliated steamship lines. When this evil is fully realized and is remedied and an "open door" given to all, there will be competition wherever there is a living chance for the American vessel in this Atlantic to Pacific trade against the foreign vessel bringing goods to United States in competition with our own goods. What good is an exclusive right to American vessels in the Atlantic to Pacific coastwise trade if there is nothing to carry by reason of our American goods being forced out by foreign goods?

I have read with amusement the fear entertained by some that "free tolls" on American coastwise vessels would be used to hurt American manufactured goods; that a British vessel with foreign goods for San Francisco or the Orient would come to New York, discharge there into an American vessel, which would take goods “free of tolls" to San Francisco and there discharge, or there transfer into a foreign vessel bound for the Orient. Undoubtedly those who have this view never shipped a cargo of any kind. The tolls would be $1.20 per net registered vessel ton-equivalent to 50 cents to 60 cents per cargo ton of 2,000 pounds. To save 50 cents per cargo ton, the British vessel discharges at New York on a dock (stevedoring at least 50 cents per ton), the American coastwise vessel loads (stevedoring at least 50 cents per ton again), then at San Francisco the American coastwise vessel discharges on dock (stevedoring at least 50 cents per ton again), and, if destined to the Orient, the foreign vessel loads at San Francisco (stevedoring at 50 cents per ton), a total cost for stevedoring of $2 per cargo ton if for Orient, or $1.50 if for San Francisco proper. In addition, there is the lost time of the vessel making transfer at New York-two vessels, say, with quick dispatch of 3 days each-6 days at $400 to $500 per day for such freighters, or $2,400 to $3,000, equivalent to 25 cents at least per cargo ton. The same delay, or another 25 cents per cargo ton at San Francisco, if transferred there to foreign vessel bound to Orient. And nothing has been added for wharves and warehouses at New York used to store the goods discharged by one steamer and held awaiting arrival of the American coastwise steamer--which service would be at least 25 cents per cargo ton. At some ports this cost would average 50 cents per cargo ton. The same wharfage and storage expense must be incurred at San Francisco, whether goods are for San Francisco proper or held there for loading to the Orient. The goods must be discharged rapidly by steamer into warehouses to release the steamer, and goods are later loaded out by car or drayed away. Docks and wharves cost money, and the goods must, by a wharfage and storage charge, pay the interest and maintenance cost of these properties. Possibly the idea occurred to some that each British steamer would meet each American coastwise steamer at New York at the exact same moment, tie alongside, and there discharge or transfer into the American steamer; further that the cubic dimensions of the British steamer would be exactly the same as those of the American steamer; therefore the cargo of one would fit exactly the cargo space of the other. Again, that the American vessel would reach San Francisco at the exact same moment that the foreign vessel arrived from the Orient; that these boats would touch each other and there the transfer be made-the cargo of the American vessel fitting exactly the cargo space of the foreign vessel. And really this might happen, once at least in a lifetime, but I doubt it. Vessels cost too much money to wait upon anything their charter time per day is too high--and the weather conditions are such as to make a schedule on a long trip for cargo boats anything but accurate. All of these costs-stevedoring, wharfage, storage, and delay at New York and San Francisco-would cost at least $2.25 per cargo ton on the San Francisco freight and at least $3 per cargo ton if a transfer of freight was made to an Orient steamer-all to save 50 cents per cargo ton in canal tolls. And no mention made of damaged goods, by additional handling, which damage is an item, and which transfer would not be permitted in any event by shippers or consignees. Reference was made to a possible transfer at Colon to save the tollThe extra stevedoring makes this out of the question. For example, 50 cents per ton