arrangements with the transcontinental railroads. An arrangement that takes $10,000,000 of revenue from the railroads in one year and saves the shippers $3,000,000 should not be to the liking of the former or displeasing to the latter, and should be as a choice morsel to the most ardent railroad hater. The menace of a Government-owned line and the introduction of bills to grant American registry to foreign-built ships for the foreign trade (the opening wedge to the coastwise trade) are now having a deterring effect upon the steamship owners who have planned to build ships for the canal; one in particular with a fleet of steamers is afraid of Washington and hesitates to build two large steamers which had been decided upon. With regard to foreign trade via the canal, a high rate of toll could be obtained from the limited business to the west coast of South America, Central America, and Mexico, but to compete with Suez much lower tolls would be necessary. The 9,000 miles of Pacific Ocean between Panama and Japan, with only one port of call, Honolulu, will be a great tax on fuel and the displacement of much cargo, as compared with the Suez route serving such extensive and densely populated territory with so many ports of call and opportunities to bunker. It would seem that the Panama route would have the business from United States Atlantic and Gulf ports to Japan, but Suez would retain the business to ports south of Japan. The great development in process in the Canadian Northwest promises a large movement of wheat through the canal to Europe in addition to the tonnage now moving from California, Oregon, and Washington via Magellan and Cape Horn and merchandise returning. It is reported that some of the large North Atlantic steamship companies will establish regular services between European ports and the Pacific coast. There seems to be an opinion that the canal offers an opportunity to encourage the development of an American merchant marine in the foreign trade through the method of rebating the tolls or granting a subsidy to compensate for them, which would be helpful if these benefits were not neutralized by other countries countervailing them for their shipping. The crux of the matter with regard to developing a merchant marine for the foreign trade is that American capital would not be satisfied with the margin of profit now being realized by foreigners in shipping investments in the general freighting business. So that any measure that would place our ships on an equality with foreign ships, both as to first cost and operating, would fail in its purpose. It would be far more practical to work on lines of least resistance and provide, through a free canal, every inducement for American capital to engage in our coastwise business. A fleet of naval auxiliaries, particularly colliers, could be developed to meet all requirements, and they would be available immediately when required, as compared to having ships distributed all over the world, in the foreign trade. A Government line and the admittance of foreign ships to our coastwise trade, even under our flag, would be the finishing blow to our merchant marine. Senator BRISTOW. While we are on this subject, I think that Mr. Drake, who is the vice president and general manager of the Panama Railroad Co., should be requested to make a statement as to the methods by which that company arrives at its rates. It has been stated here by alleged experts who indulged very largely, in my opinion, in theory, that the Panama Railroad Co. is a part of the combine that is being especially benefited by the exemption of tolls. I do not think it is true, and I think these statements grow out of the imagination of some students of economics who have not had practical experience and practical judgment. If they are in such a combination, I think we ought to know it, and Mr. Drake ought to be called upon for a statement. Senator SIMMONS. I am not going to make any objection to additional statements going into the record, if the committee desires that course to be pursued, but, of course, I would claim the right to put in any additional statements that I want to put in. I will say right here that there are three or four, probably much more than that, witnesses who were here, who went home because they could not stay here until they could get a hearing. They were men that had been requested to come here by myself. I might possibly want to get their statements if you are going to put in other statements. Senator BRISTOW. I desire to say that it has been alleged here that the Panama Canal Railroad is in a combine. The Government owns the Panama Railroad Co., and Mr. Drake is the manager, and as a Senator who is a member of this committee I want to know whether that statement is true. Senator SIMMONS. I want to know that myself. The CHAIRMAN. Where is Mr. Drake? Senator BRISTOW. Mr. Drake is in New York. Mr. WHEELER. May I suggest, Mr. Chairman, that with all due respect, that Mr. Drake also be called upon for his figures regarding average loadings of his vessels. Senator BRISTOW. Yes; I think that is a good suggestion. Mr. WHEELER. The effect of the toll charge, gentlemen of the committee, is going to be more particularly harmful with regard to a situation which I have not before heard touched upon, and that is with regard to the operation of the itinerant or so-called tramp vessels. It is going to be discouraging to the owners of such vessels to attempt to obtain cargoes knowing that in any event-still preserving for the sake of uniformity and clarity the 5,000 ton example which I think will be about the average net registered ton upon the vessel going through the canal-to know that he is confronted with a toll charge of $6,000 if he carries any cargo at all. I am referring now to the vessel loaded with lumber, even assuming that with a toll charge, which I am not prepared to admit, a lumber vessel can go east laden with lumber, if she discharges the lumber in New York, she would take a cargo at almost any price if it would be quickly offered to her, so that she would not have to remain on berth long rather than go back in ballast. In other words, her cargo is her ballast. Whatever earnings she gets out of that would help her pay expenses to that extent. Senator SIMMONS. You are speaking now of tramps engaged in the coastwise trade? Mr. WHEELER. Yes; the irregular service. When I speak of those I include lumber vessels in that category; that is, not regular scheduled liners. Let us see the position the owner of that vessel is in after discharging his cargo at New York. He is confronted with the alternative of a 72 cent charge if he returns in ballast; that is, 60 per cent of the cargo toll The CHAIRMAN. That gross would be how much? Mr. WHEELER. That gross would be $3,600. The question is, shall I go in ballast and pay $3,600 or can I trust to good luck to pick up enough cargo to cover the difference of $2,400 that I have to pay the moment that I put a pound of cargo on my vessel? In my opinion, the charge for toll is going to eliminate from service this very agency which is the best possible natural regulator of ocean freight rates, and that is just such vessels as I have mentioned. Senator SIMMONS. May I ask you if the same thing will not happen to vessels engaged in the foreign trade? Mr. WHEELER. Yes; but a vessel engaged in the foreign trade, Senator, is more generally a vessel that does not sail upon exact schedule. They are very largely tramp vessels to-day. I do not ! know just what the canal will itself develop in the way of regular service, but even the so-called regular lines Senator SIMMONS. Are you able to give the committee the proportion of foreign trade that is carried in tramps and regular liners? Mr. WHEELER. I should say to-day that all foreign trade from San Francisco is carried substantially in what we would term tramp vessels. It is true they call them the Harrison Line, the Cosmos Line, or the Blue Funnel Line, but they are not vessels sailing on a schedule. The CHAIRMAN. What makes them a tramp in the vernacular of transportation is that they sail on irregular dates? Mr. WHEELER. They stay, Senator, until they get loaded up. When they get a cargo they sail. That can not be done with the regular vessels and give satisfaction to the patrons. They must have a regular service. Senator SIMMONS. The tramp in the coastwise trade, and the tramp in the foreign trade, would each stay until they got a load, would they not? Mr. WHEELER. Going back to the illustration of the lumber vessel that is coming from the Pacific coast to New York laden with lumber, she has her freight engagements of lumber cargo waiting for her, and rather than lose the days that she would have to wait to gather this cargo necessarily to fill her up she would go with only a ballast cargo, enough to make a ballast for her. That is the point I wanted to impress upon the committee. The CHAIRMAN. Then in the case you now cite the result would be that the burden placed upon that shipment of lumber from the Pacific coast would not be confined to the toll charges both ways, but the toll would be charged one way on cargo, and the toll charged the other way would be ballast? Mr. WHEELER. Exactly, Senator. The CHAIRMAN. So that in the case you used for illustration a few moments ago, instead of imposing a possible burden of $3 a ton, it might go as high as $4 or $4.50 a ton? Mr. WHEELER. It might. Senator SIMMONS. We had that matter up here Saturday in the absence of the chairman. The Pacific coast people, as I understood, the lumber people, were insisting that they had lumber they wanted to sell to us, a large part of it low-grade lumber, and it was insisted on the other side that the Atlantic coast lumbermen had also a surplus of the same character of lumber, and that neither had on their coast an adequate demand for this character of lumber, and that that being so, the vessel that came over here loaded with Pacific coast lumber might carry back a load of Atlantic coast lumber. Mr. WHEELER. As an example of the point I have just been endeavoring to make, I would refer the committee to the tabulation appearing at the bottom of page 621, hearings before the Senate Committee on Interoceanic Canals, Sixty-second Congress, second session, on the bill H. R. 21969. The CHAIRMAN. That is the testimony taken by this committee two years ago? Mr. WHEELER. Yes. I will not attempt to read the whole thing, but only the results as they were brought out in my final computations. This tabulation shows in short, gentlemen, that on the basis of an assumed rate per net registered ton of $1-which was at that time the assumed rate the Cunard steamship, sailing from Boston during the year 1909, covering 27 sailings, would have been obliged to assess their freights $2.50 per ton; the White Star sailing from Liverpool, $2.82; and the Leyland Line, sailing for London, $1.17: and the Warren Line, which is the lowest of all, 95 cents per ton, based upon the actual average carryings of that year. These were figures furnished by Mr. David O. Ives, the manager of the transportation committee of the Boston Chamber of Commerce. The tabulation is as follows: I want to touch for a moment, if the committee please, upon the attitude of some of our representatives from the Middle West-by no means all of them. They have seemed to take it for granted, for some reason or other, that any competition by water between the two seaboards would result in an increase in their own rail rates. Nothing can be further from the truth than that idea. I do not think it is necessary to read the remarks, but I would just like to refer to certain paragraphs of Senator McCumber's speech and Congressman Stevens's speech, where it is alleged that the competition between water and rail between the seaboards would force up rates in the interior, that they would get no benefit from it whatever, and on the contrary it would react on them disadvantageously. Senator WALSH. That is to say, the railroads losing the through traffic would recoup themselves by increasing the local rate? Mr. WHEELER. Exactly. The CHAIRMAN. Have any of the great railroads, for instance, the railroads with which Mr. Hill is associated, claimed that would be the result? Mr. WHEELER. No, sir; not to my knowledge, and it never will be the result. Senator SIMMONS. Do you mean to say by that that if the railroads should lose all of their through traffic to the steamboats they would not attempt to recoup themselves by increasing any of the rates of any kind? Mr. WHEELER. Senator, I do not think they are going to lose all the through traffic. Senator SIMMONS. Assuming they should lose it all-I do not know how much they carry, but some witnesses estimated that 3,000,000 tons, or as it is stated by some, a little higher than that, 4,000,000 tons-is it your opinion that they would not make any effort to recoup themselves by charging higher rates upon some traffic? Senator WALSH. It does not seem to me as important to inquire what they might attempt to do as what they would be able to do. Senator SIMMONS. Well, do you think they would be able to do it then? I will change the question. Would they not do it? Mr. WHEELER. I think the railroads will always raise rates, if they can do so, at all times. Senator SIMMONS. If by the result of that loss of through business they could not continue as going concerns without increasing some other rates, they would have a right to do it, would they not? Mr. WHEELER. They have a right to increase rates up to a reasonable basis if they are below a reasonable basis now. They would have the right to increase the rate between San Francisco and New York to-day upon canned goods, for example. The rate is 85 cents. The CHAIRMAN. A hundred ? Mr. WHEELER. A hundred pounds. I think that any man will admit that, measured solely by the yardstick of reasonableness, for a 2,300-mile haul 85 cents per hundred as a railroad rate is less than any commission would determine to be a reasonable rate. But why do they not get more? Because they can not in competition with the sea, even as at present constituted. In fact, they are getting very little business to the Atlantic seaboard proper at 85 cents. Senator SIMMONS. That is $17 a ton? Mr. WHEELER. That is $17 a ton. Senator SIMMONS. As against $9 now, and probably less than that if the ships went through free of tolls? Then it would be down to $6, would it not? Mr. WHEELER. Yes; that is what we are expecting. Senator SIMMONS. They would probably lose that business. The question I wanted to direct your attention to was if they should lose it all as the result of these greatly reduced water rates and it should become necessary for them, in order to continue as a going concern, making a reasonable profit upon their investment, they would have a right to do it, and do you not think they would exercise that right by increasing some other rates? Mr. WHEELER. They would have to increase the entire schedule of rates. It is not canned goods alone. Senator SIMMONS. That is exactly the point I am asking you, not whether they would increase the rate on canned goods, but whether they would not increase it on something else? Mr. WHEELER. It would be a good deal like a merchant saying, "I am not making money enough in my business". The CHAIRMAN. Perhaps we can get more clearly what Senator Simmons would like to get and what I should like to get myself. You have stated that Senator McCumber's statement and the statement of Congressman Stevens were erroneous, were wrong. Will you indicate which statement that is? Mr. WHEELER. I am coming to that. I should be glad to do that. Senator SIMMONS. I wish you would get my question in mind. Mr. WHEELER. I can best come to that by putting in the language already prepared. |