I do not intend to be conclusive as to no lumber or petroleum being moved through the canal if a toll be levied. The quantity which would move under that condition is indeterminate. A rise in Atlantic ports' markets of $1 or $2 per 1.000 feet in the price of common lumber would start exports moving. Similarly, a drop of 10 or 15 cents a barrel in the price of fuel petroleum in California will start exports moving. IMPORTS OF PACIFIC COAST PORTS BY PANAMA CANAL. The discussion of the Pacific coast exports has been given first because there is every reason to believe that the export tonnage will very largely exceed the import tonnage by the Panama Canal. The export tonnage will determine how many ships will conduct the commerce. The estimate has been made that the present annual imports aggregate about 3,500,000 tons. It is assumed that this will all take the canal route, some of it from foreign ports, but much the larger part from Atlantic and Gulf coast ports. It is a more difficult matter to anticipate what additional imports will follow the route of the canal westward. Probably iron, steel, cement (until Pacific coast plants increase their production), road brick, and coke. It is difficult, too, to anticipate whether the bulk of these articles will be foreign imports or taken in coastwise. The profit margin on them is not large in the Pacific coast market. It is possible that a canal toll on the foreign articles, with none on the coastwise, would make the bulk of the imports coastwise. With toll imposed on both foreign and coast wise commerce, it is possible commerce in them will be limited. With the canal toll free to both foreign and domestic commerce, iron, steel, and coke from Alabama can probably meet the same articles from European ports on even terms in our Pacific coast States ports, possibly on better than even terms. There seems certain to be free-cargo capacity in the return trips of vessels carrying Pacific coast exports, both in coastwise and foreign vessels. This space will put both coastwise and foreign vessels in competition with the foreign ships which now carry articles from western European ports to ports in north China, Siberia, and Japan. Coastwise vessels will take cotton, for instance, from New Orleans to San Francisco, where it will be transshipped in trans-Pacific ships to its Asiatic destination. General freight from Europe for these Asiatic ports will go by the Panama route in foreign ships for transshipment there. Freight rates will naturally be lower westbound through the canal than eastbound, which will have a tendency to increase eastbound rates to carry the loss on the empty cargo space carried west. For the same reason, if toll be levied, the heavier burden of the toll will be put in the freight charges on Pacific coast exports through the canal. Senator SIMMONS. I must confess I do not understand that. That has been said here several times, that vessels would come from the West east; load and go back from the East west, comparatively empty. Why is that? Have we not got anything here that you want to buy as well as you have some things that we want to buy? Mr. DUNN. The principal reason is that the Atlantic coast market has some 40,000,000 or 50,000,000 people in it, and the European market some 300,000,000 people, and the Pacific market, which gets the return cargoes, only has about 4,000,000 people. We are a much smaller market; we can absorb less. Senator BRISTOW. Senator Simmons, may I suggest that experience will have to demonstrate the accuracy of all these predictions we are listening to? Senator SIMMONS. You say that experience will demonstrate that? Senator BRISTOW. They will demonstrate their accuracy. Senator SIMMONS. If you put it that way I will agree with you. I thought you said it would demonstrate its accuracy. Senator WALSH. He means how much accuracy there is in his statements. Senator SIMMONS. Yes. SHIPS REQUIRED TO CARRY PACIFIC COAST FOREIGN EXPORTS. The total new annual tonnage capacity estimated as required annually to move Pacific coast exports in foreign commerce through the Panama Canal is 2,355,000 net register vessel tons. To reduce this quantity into terms of ships, assumptions have to be made, and I make them as near probabilities as my information enables me, as follows: I assume that about 1,000,000 net vessel tons will be carried in large fast ships, most of them, if not all of them, carriers of passengers as well as articles of commerce. I assume an average net vessel tonnage of 10,000 for these ships, an average hour speed of 20 sea miles, and that they will make 8 round trips annually through the the canal between Pacific coast ports and the ports of European countries. I assume that about 800,000 net vessel tons will be carried in cargo ships of 7,500 average net tonnage, 12 sea miles average hour speed, and that they will make 5 round trips annually. I assume that 555,000 net vessel tons will be carried in cargo ships of 5,000 average net tonnage, 10 sea miles per hour speed, and that they will make 4 round trips annually. With these preliminary assumptions, into which I have undertaken to condense all the variations which may occur in the conduct of the traffic, I estimate, tentatively, that the foreign export commerce of Pacific coast ports through the canal, toll free, will be carried by 16 ships of 10,000 net tons and 20 sea miles hour speed. 68 ships in continuous operation or their equivalent-total. The new ships which I estimate would be required, after allowance for the commercial changes which the Pacific coast exports will effect in exports of foreign countries, I estimate as follows: 16 ships of 10,000 net tons and 20 sea miles hour speed. 50 ships in continuous operation or their equivalent-total. From my information I believe that about this number of new foreign ships have been built in anticipation of traffic through the canal. If, instead of this foreign export commerce being toll free, toll be imposed on it, the effect will be to reduce the requirement for new foreign ships to carry the traffic to figures about as follows: 16 ships of 10,000 net tons and 20 sea miles hour speed. 3 ships of 7,500 net tons and 12 sea miles hour speed. 19 ships in continuous operation or their equivalent. Senator SIMMONS. You think if they gave free tolls these ships would be built and your trade would at once open up? Mr. DUNN. I think that foreign ships sufficient for a free-tolls trade have already been built-for a foreign free-tolls trade have already been built. Senator SIMMONS. I am talking about domestic trade. Mr. DUNN. I will take that up now. SHIPS REQUIRED TO CARRY PACIFIC COAST EXPORTS COASTWISE. The annual total of new Pacific coast export commerce which would route itself coastwise through the canal, on condition of no toll imposed, is estimated by me above as 3, 920,000 net vessel tons. For the purpose of reducing it into terms of ships the following assumptions, which, from my information, fairly represent what would happen, are made: It is assumed that 1,000,000 net vessel tons will be carried in passenger ships of 10,000 average net tons, having an average speed of 20 sea miles per hour and making 10 round trips annually. It is assumed that 1,000,000 net tons will be carried in cargo boats of 7,500 average net tons, having 12 sea miles per hour speed, and making 7 round trips annually, and it is assumed that 1,920,000 net tons will be carried by cargo boats of 5,000 average net tons, having 10 sea miles per hour speed, and making 6 round trips annually. With these assumptions, I estimate that it will require of new ships to carry Pacific coast exports toll free coastwise through the canal about the following: 11 ships of 10,000 net tons and 20 sea miles hour speed. 102 ships in continuous operation or equivalent, total. From current news reports my information leads me to believe that not more than 10 new ships, if there are indeed that many, are built in anticipation of the coastwise Panama Canal traffic. Regarding the availability for diversion to the new Panama Canal traffic of ships now engaged in coastwise traffic, I believe that I am correct in stating that there are no such ships now on the Pacific coast. Such coastwise ships as there are now on the Pacific coast are practically used to the limit of their capacity, and it is with difficulty that sufficient capacity is maintained owing to the very large annual wastage in wrecks, principally along the poorly protected ses routes along the Alaska coast. The through canal traffic by itself will enormously expand the demand on the present Pacific coastwise ship capacity, creating a requirement for at least 50 new ships from 500 to 5,000 tons capacity to merely distribute and collect the new Panama Canal freight traffic coastwise in the same way in which trans-Atlantic freight traffic is collected and distributed by coastwise ships along the Atlantic and Gulf coasts. From what others who have preceded me in appearing before this committee have said, I have been brought to the conclusion that, as on the Pacific coast, there is on the Atlantic coast no ship tonnage now engaged in coastwise traffic which would be available for coastwise traffic through the Panama Canal. The railroad-owned ships on neither the Atlantic nor Pacific coast are available for coastwise Panama Canal traffic-I am speaking of the existing ships, not of ships which railroad companies may hereafter build. The ships which Atlantic States railroad companies now own and operate have the same relation to the railroads that the railroad bridges have -- they extend the railroad lines by bridging across the wider expanses of water. The suggestion, in effect, was made to your committee, if I understood what was said by the witness, that the Atlantic States railroad companies acquired the Atlantic coastwise ships for the purpose of preventing or minimizing water competition with the railroad companies. It was suggested, in effect, that independent coastwise ship companies became commercial failures through railroad ownership of coastwise ships. Both suggestions are partly false, partly true, and as to their being partly false I do not mean with intention to mislead. It seemed very clear to me that the witness did not understand what he described and spoke from mere ignorance. Senator SIMMONS. What witness are you talking about? Mr. DUNN. I am talking about one of the witnesses I think it is Mr. Chamberlain who made that statement. Senator SIMMONS. The Commissioner of Navigation? Mr. DUNN. Yes. Senator SIMMONS. You think he spoke from ignorance? Senator SIMMONS. Then I think we ought to get another commissioner. He has been there about 20 years, I think he said. Independent Atlantic coastwise ship companies did not become commercial failures primarily through a railroad ownership of coastwise ships. They became commercial failures primarily through the competition of railroads. The effect of the railroad competition was to take away the passenger traffic of the coastwise ships. The railroads offered a more attractive facility for travel between coastwise ports on the Atlantic. It is obvious, for example, that the saving in time to passengers desiring to travel between, we will say, New Orleans and New York, which the railroads offered, was sufficient to more than counterbalance the cheaper rate of sea travel between these ports. And the same proposition holds true between any Gulf port and any Atlantic port. The superior facility of the railroad counterbalanced the cheapness of the sea route. The The peninsula of Florida, which had to be rounded by the sea route and which was cut across by railroad routes contributed materially to cause the abandonment of the sea route by passengers in favor of the rail route. On the Atlantic coast the coastwise passenger traffic between ports was under relatively less disadvantage from competition with the superior facilities offered by the railroads, but the situation of Baltimore, Washington, and Philadelphia, on waterways far inland from the main coast, so lengthens the sea routes between these ports and the port of New York that they are not attractive to passengers in comparison with the shorter railroad routes between these ports and New York. On the other hand, between New York and Boston the combined water and rail route easily maintained itself as an attractive route for passengers against the all-rail routes because it is no longer in distance nor appreciably longer in time. The further reason is that the populations of New York and of Boston, respectively, are each large enough to maintain both rail and water routes in competition with each other. Naturally, the railroad-owned steamers in the coastwise trafficthe railroad bridges of wide waters-are able to handle the small passenger traffic which gives its preference to the water routes. There is not enough of such traffic to support competitive independent lines of ships between these ports. The other traffic condition which has contributed to cause the failure of the independent Atlantic coastwise ship lines is the fact that such ports as Galveston, New Orleans, Mobile, Pensacola, Savannah, and Charleston, do not possess the manufacturing industries the products of which would be exports consumed to a sufficient extent in other coastwise ports such as Baltimore, Philadelphia, New York, and Boston, and particularly New York, to support independent ship lines, even if competing railroad-ship lines were not there. That these economic conditions, which have followed the development of the railroad systems of our country, are the causes of the failure of independent coastwise ship lines on the Atlantic coast, and not the presence of the railroad-owned coastwise ships competing with them, is supported by the economic conditions of coastwise ship and railroad competition on the Pacific coast. For instance, consider Los Angeles and San Francisco in California. These places are 500 miles apart. Originally passenger and freight traffic between them was conducted wholly by coastwise ship linesprincipally by a single coastwise ship line. Then one railroad was built, but the traffic continued to support the coastwise ship line in competition with the railroad. Now there are three railroad lines between the two coastwise ports and a fourth railroad line projected. There are at the same time three regular lines of coastwise ships between the two ports and several lines which can be described as occasional one or two ships every week. It is probable that the ship lines in the aggregate carry more passengers than the railroad lines. They are more attractive because while the time is about the same or very little more by the ship lines, the price is less, and the trips more attractive. Also Los Angeles and San Francisco both originate sufficient exchange freight traffic to support the ship lines as well as the railroads. The railroads do not own steamship lines between San Francisco and Los Angeles, and the ship-line rates are materially lower both for passengers and freight. The same condition is true of coastwise traffic between San Francisco in California and Portland in Oregon. There is one railroad between the two ports and several lines of coastwise ships, only one of which is owned or controlled by a railroad company. While it parallels the railroad line, it really does not compete with it, but with the independent ship lines which survive and increase in spite |
