of the competition because the traffic which originates at Portland and San Francisco is enough to support all the lines. Senator WALSH. This is exceedingly interesting information because the impression seems to be abroad that there is not any such things as competition between the steamships plying in the coastwise trade, nor is there any competition between them and the railroads. Senator SIMMONS. That is what we had been fearing here for a long time. When we had this matter up two years ago that was the main burden of the song. Mr. DUNN. What is true possibly for the Atlantic coast, for the reasons which have been repeatedly stated, is not true of the Pacific coast. I have lived there all my life, but I do not know a time when there was not competition in rates, and frequently I had occasion to use boats for transportation. I will say that right in San Francisco to-day the rates are so flexible between San Francisco and Los Angeles that they are not marked up on permanent signs, but changed from day to day, and posted in the offices written on paper. Senator WALSH. That is freight rates, not passenger rates? Mr. DUNN. Passenger rates. Changes of as little as 15 cents are made to attract traffic. Mr. WHEELER. Not since the Harvard and Yale went on. Mr. DUNN. The same conditions are true of the coastwise traffic between San Francisco and Seattle and Tacoma. The independent lines of ships-not one but several-successfully compete with the railroad lines. The true fact also, is, that the Atlantic States railroads in the main acquired their coastwise ships in order to escape possible commercial failure through a forced dependence on interchange traffic arrangements with other railroads which were naturally competitive against them. The underlying cause of their competitive distress was, and is, the coastwise navigation law of the United States. The effect of this law has been, and is, to concentrate foreign commerce of the Atlantic Coast of the United States into the port of New York. Foreign ships may, it is true, distribute their foreign import cargoes coastwise, and may, it is true, collect their foreign export cargoes coastwise, but, except to a very limited extent, foreign ships do not so distribute their import cargoes, and to a much less extent even do they collect their export cargoes. The main reason for this trade condition is because the foreign passenger ship carriers can not economically distribute their immigrant passengers to even two coastwise Atlantic ports, but all go to that one coastwise port which the greatest number of immigrant passengers has elected for landing in our country-New York. These passenger ships incidentally have large capacity to carry freight, but sailing on fixed schedules, and, therefore, unable to wait for full cargo on payable rates, they must and do make concessions in rates to get the full cargo, carrying it below cost. This was explained in the statement that grain exports from New York could be taken by any ship at any price to make cargo. Naturally, the possible low ship freight rate, always open, attracts grain, a large export, and with it the great volume of all other exports, and the same passenger ships bring into New York the great volume of imports from Europe. The export freight concentrating at New York attracted by the low and open export rate by passenger ships naturally brings the cargo ships to the port of New York in competition with the passenger ships for the carrying of the exports. Inevitably railroads having coast-port terminals other than New York found themselves at a commercial disadvantage with railroads having the New York terminal. Shut out by land from the port of New York, these other railroads logically bridged the waterway between their respective coast-port terminals and the port of New York by ships. That this is so appears whenever the fact of present ownership of ships by most of these railroads is gone behind to the time when, and the circumstances under which they were acquired. It is not the railroads with eastern terminals in New York which own ships in coastwise service, but the railroads which come to Atlantic coast ports southward from New York which own such ships. They own ships in coastwise service because they have to in order to survive at all as measurably independent railroads. That the coastwise navigation law is the underlying force compelling such ownership of coastwise ships by railroads, is proving itself at this moment on the Pacific coast. With the opening of the Panama Canal, the force of the coastwise navigation law, which has concentrated the foreign import and export commerce of the Atlantic coast ports at the port of New York will begin operating, and its effect there will be to concentrate the foreign import and export commerce of the Pacific coast at the port of San Francisco. Railroads with their Pacific coast terminals at ports north of San Francisco already sense the necessity of bridging the open sea between their port terminals and San Francisco with ships. The Great Northern Railroad is building two ships to bridge across the 600 miles of coastwise ocean between its most southern Pacific coast terminal, Astoria, in Oregon, and San Francisco. The Canadian railroads with Pacific port terminals respectively at Vancouver, 850 miles, and Prince Rupert, about 1,250 miles, north from San Francisco, are both reported to be acquiring ships for coastwise service from their terminal ports to San Francisco. Senator WALSH. Let me see if I understand you. The Great Northern, having an entrance into Portland, is establishing water communication to San Francisco so that it may obtain at the port of San Francisco and transport over its own line into the interior the commodities brought to the port of San Francisco by foreign vessels? Mr. DUNN. Yes sir. The Union Pacific Railroad, with Pacific port terminals at Portland, Oreg., north from San Francisco, and at Los Angeles, south from San Francisco, is struggling, unconscious of the force of the coastwise navigation law impelling its struggle, for the possession of a railroad which has its terminal at the port of San Francisco, by means of which it will avoid the commercial handicap of ownership of coastwise ships. Not only are the Atlantic States railroad ships unavailable for coastwise traffic through the Panama Canal, but I am unable to see any possible commercial incentive for these railroads as such to build ships for coastwise service through the Panama Canal. In dealing with this question of railroad-owned ships, it has seemed to me that the people, now obsessed through reiterated suggestions by unconscious ignorance with the false view that the railroad-owned ship will have a malign relation to coastwise commerce through the canal, should be informed of the true fact of the matter, which is that they could have no influence at all. It is only fair that the people should know that it is their law-their coastwise navigation lawwhich has been the source of the commercial force which has compelled Atlantic States railroads in self-defense against other railroads to own coastwise ships, and which is now compelling Pacific Coast railroads, which never before owned a coastwise ship, to acquire them. It is the incidental effect of a wise law of the people, and not the wicked contrivance of the old grandmothers and maiden aunts who now own the railroads, which has made most of the railroad ownership of coastwise ships. But, regardless of the use or nonuse of the Panama Canal by railroad-owned ships, it is exceedingly plain that there will not be enough available ships to fairly start coastwise traffic through the Panama Canal. One single company has built works in California with the facilities and purpose of shipping 1,000 tons daily of mineral salts through the canal coastwise. This traffic alone will employ 6 ships of 5,000 net register tons continuously. So far as I am informed these ships have not been built yet. And more ships and still more ships besides these will be required with a toll-free canal for the beginning even of the coastwise traffic through the canal. If, however, instead of coastwise traffic through the canal being toll free a toll be imposed on it, the effect will be to reduce the requirement for new American ships to figures about the following: 11 ships of 10,000 net tons and 20 sea miles hour speed. 25 ships in continuous operation or equivalent; total. This number of new ships would carry all the new Pacific coast exports which could go coastwise into Atlantic States markets with toll imposed. It would also carry all of the present westbound coast to coast freight which I have estimated would become diverted from the transcontinental railroads. The tonnage each way would appear to be about the same. Such petroleum, as might move through the canal when the price in California dropped low enough, would hardly require the building of new tank ships to carry it. Oil tank ships ordinarily in the Pacific coastwise trade would be available in such periods of temporary depression of the coast demand for petroleum causing lower prices. Undoubtedly there would be some lumber carriers built, but the number of such ships additional to the 25 estimated above can only be a guess at this time. It is, however, a dependable conclusion that with toll imposed on coastwise traffic through the canal not over 40 per cent of new American ship tonnage will then be built, which will be built if the canal be toll free coastwise. HAWAIIAN AND PHILIPPINE CANAL TRAFFIC. The present commerce of Hawaii is all ship carried commerce. It will continue to employ the same ship tonnage in its commerce through the canal that it now employs on both sides of the two isthmuses, Tehuantepec and Panama. No new American ships will be built for this commerce, which aggregates in exports which would go coastwise through the canal about 400,000 short tons and in imports which would pass through the canal about 200,000 tons. If toll be imposed, the Hawaiian producers of sugar will pay it on that article of export for this reason. The price at which sugar sells in our Atlantic States ports is made by the imports from Cuba where sugar is produced cheaper than in Hawaii, and laid down in Atlantic American ports under a cheaper freight charge than sugar from Hawaii. Also foreign sugar from Cuba will, with Panama Canal toll imposed, have a preference over Hawaiian sugar in Atlantic ports to the amount of the toll-about 80 cents per ton, equal to four points in New York sugar market quotations. There is now no direct commerce between Atlantic ports of our States and the Philippines. The route for this commerce is overland to San Francisco and from that port by sea. The opening of the canal would divert the commerce from the overland part of this route to the sea route through the canal, but there would likely be a transshipment at San Francisco then as now. None of the commerce of the Philippines with Spain will become diverted from its present route through the Suez Canal to the Panama Canal route. The Suez Canal route with its toll charge will be a cheaper route for this commerce than the Panama Canal toll free. CANADIAN COMMERCE BY THE PANAMA CANAL. It is significant that the first large shipping contract by the Panama Canel which has been made public is foreign. It is for the transportation of 24,000,000 feet of lumber from Victoria, B. C., to Toronte, Ontario, at a rate of $6 per 1,000 feet. I will say here that was a published statement, and I have since been informed it has been denied, but no alternative figure has been given. Senator WALSH. I have been astonished a little at your figures. You give a figure of $4 a ton for lumber. Most of the gentlemen who have been here have not thought of anything else than $9 or $13. Mr. DUNN. The difference is this: They did not figure in the large cargoes that will be taken. The lumber transported on the Pacific coast now is loaded by the sailors onto the ships. With the larger cargoes I have assumed charges for loading and unloading would be extra. Further, the commerce will be carried in so much bigger ships, if it is conducted economically between the Pacific and the Atlantic, that what would be termed the overhead charges of the ships would be reduced and this is the principal point-petroleum fuel would be used in place of coal, and I do not think any of the estimates given here have figured on that. Senator SIMMONS. You think petroleum from the Pacific coast would come over here and displace the use of coal on the Atlantic coast? Mr. DUNN. No; I mean the fuel used in the transportation of lumber. Senator SIMMONS. Do I understand you, then, by using petroleum in place of coal you think the cost of transporting lumber would be as you estimated, about $4 to $5 a thousand? Mr. DUNN. Yes; $4 to $5 a thousand. We already know from actual experience that the use of oil very much reduces the cost of the ship movement, and I will give you some exact figures further on. Senator WALSH. Do you think that rate of $6 from Victoria or Vancouver to Toronto is a reliable figure? Mr. DUNN. I stated that I gave it on the authority of a newspaper statement, and that I had since been informed that it was denied; but no figure has been given as to what the actual rate is, and my estimate has been made without the substitution of any other figure for it. I think the figure is consistent with the use of oil, but not with the use of coal as fuel in the steamer. It is very probable that British Columbia will export annually through the canal not less than 300,000,000 feet of lumber, about 240,000 net vessel tons, and export of farm and mine products and fisheries 160,000 net vessel tons additional. Having the ships available for this commerce it seems probable that it will become established and settled before our Pacific coast States commerce coastwise becomes fairly started. This Canadian commerce here discussed is entirely foreign commerce not entering ports of our States at all. THE COMMERCE OF MEXICO BY THE CANAL. The commerce of Mexico by the canal from my information will be an export commerce from the west or Pacific coast almost wholly. The import commerce of this western coast of Mexico through the canal would seem destined to be very small compared to the exports, thus making it an unbalanced commerce. This feature may tend to limit its development, since the freight charge on the exports will have to pay the ship charges both ways, and if a canal toll be imposed the exports will have to pay the canal tolls both ways. The principal exports through the canal will be tropical fruits, lumber and hardwoods, minerals, metals, and metal ores. The supply of these exportable products is almost unlimited. The enormous quantity of some of the ore deposits and the large scale of their development which is contemplated consequent on the Panama Canal is illustrated by one of the plans related to me a few weeks ago by a large western mine operator. He said: We have made a plan to ship 1,000,000 tons of ore annually from a Pacific port of Mexico through the canal to Baltimore. It will go coastwise, free of toll, because it will go in American ships which we will send on the return trip carrying cargo to San Francisco. From San Francisco to the Mexican port we will carry any cargo we can get, discharge it, and load up with ore. We would do it now, but we can't get the ships till they are built. We estimate that it will take 17 ore-carrying ships of 5,000 register tons each to do the freighting. Senator WALSH. He intends to carry ore from a Mexican port to Baltimore? Mr. DUNN. Yes. Senator WALSH. And then carry a back cargo from Philadelphia, Baltimore, or New York to San Francisco? Mr. DUNN. Yes, sir. Senator SIMMONS. You are speaking now of American vessels? Mr. DUNN. American vessels; yes, sir. And the figures of ships are additional to those I have already mentioned as coastwise. |