The San Francisco call. [volume], April 19, 1908, Page 7, Image 7

About The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913

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The San Francisco Sunday Call.
The PANAMA Canal a SOUND BUSINESS PROPOSITION
PROFESSOR EMORY R. JOHN
SON OF THE FIRST CANAL COM
MISSION ESTIMATES THAT THE
FIRST TEN YEARS WILL SHOW A
PROFIT OF $150,000,000.
THE MOST RECENTESTIMATE /
OF THE CANAL'S COST IS PLACED
AT $300,000,000,
- .yTTSONSIDEREr) r.-.ercly as an invest
•"\u25a0}..|. •": . m'ent the Panama canal gives
\. -.\>..':- every promise of being an ex
;.'. ':'\u25a0" I ceptlor.aliy -profitable business
".• Wterprise. The strategic value of this
.••\u25a0\u25a0 rfj.tx?rway betivern the two oceans, both
'-'/tfi-pekc€ and war. is of course general
.•:"\u25a0 Ij. -accepted.
<\u25a0 //AVith the United States controlling
J.'t.h*-. canal zone Uncle Sara . will have
\ : \ilv .finger eventually on the greatest
", : '. : .'artery cf trade "in the world, and it is
'\u25a0'\u25a0\u25a0 : -'. generally believed that almost any «x
i .;p.enditure would be justified for this
- .reason alone.
."{•/"* yUi to the actual return upon the
\u25a0•":", himdreds of millions of dollars which
-< : a*e being poured into the canal zone,
: - : ;-ma.ny have serious misgiving*. . The
-government experts who have made a
"^ special study of the situation believe
V that the canal will pay handsomely
it* ?r<>m the first and that the profit will
> "_. - : increase in years to come. Such estl
;.; %ates may be made with reasonable
?-. •- 'accuracy. The experience of the Suez,
:•-.'. ; 'ianal Is of great assistance in such"
/ - tijtitoates, while the government re
'\u25a0\u25a0.\u25a0\u25a0: ports on trade among all the countries
'.: tfjfected by the canal supply a definite
/.\u25a0 basis for calculation.
\u25a0i T Is conservatively estimated that the
I canal will yield an Income of $100,
*'•• 000,000 during the first 10 years of
its operation. With the impetus which
fhe canal will doubtless give to trade
in this period alone it is believed that
the income may even be at the rate
of $16,000,000 a year or more. The cost
\u25a0of building the canal has been various
ly estimated; the most recent figure
mentioned authoritatively has been a
:maxlmum of $300,009,000. Speaking In
round, numbers It seems reasonable to
'^calculate a return of 3 per cent upon
• \u25a0t;:is enormous expenditure in the first
10 years of Its operation alone. In
years to. come the profit may reason
ably be estimated at considerably In
excess of this figure.
".. The data upon which these estimates
are based have been collected by Prof.
.'.Emory R. Johnson of the first canal
commission, who has made .a special
study of the probable Income of the
banal. His estimates are doubtless the
.most reliable obtainable. The. toll for
ships passing through the canal has
not yet been definitely fixed, but it is
.probable that it will be regulated at
•$1 per vessel ton net. This figure may
.vary slightly, but it is safe to assume
.for a general calculation. It is also
.assumed for • the purpose of such an
.estimate that the first ship will pass
•from sea to sea through th« canal on
January 1. 1815.
According to Professor Johnson's es
timates there will be. by thy end of
1914 some 6.598.773 tons of traffic
whjch will use the canal passing: in
both directions. The data upon which
this estimate is made will be reviewed
later. Now .counting the increase in
traffic at 62 M per cent for the next
JO years, which Is considered reason
able, there will be by 1924, some
11,372,941 tons.
'Taking the gradual increase from
year to year between 1915 and 1J24.
it will be found that between 100.000.
•OOO and 150.000.0u0 tons of traffic will
clear the canal. This estimate is
based upon the increase in the trade
which would undoubtedly have : used
the canal in the last 20 years had it
been available.
A fairly accurate estimate may be
made In this way of the number of
ships and the amount tonnage
which will pass through as soon as it
is thrown open. The exact figures de
pend of course upon how rapidly our
trade develops in the expanding mar
kets of the western hemisphere and
how long it will take to readjust the
trade to lit new conditions which the
canal will establish.
-p-HE fixing of the toll rate Is one of
I the roost serious problems before
* the canal commission.* If the rate
be too high It will be difficult to de
flect trade from Its present courses.
while If it be too low the income on
this enormous Investment will of
course suffer. It will come as a sur
prise to most laymen in the matter to
is considerably higher than can be
charged at Panama.
The charge for passing through the
Suez canal is 8% franco ($1.70), or
"nearly twice the probable charge at
Panama. Incidentally, the traffic re
ceipts of the Suez canal from 1870 to
date amount to about $385,000,000. The
receipts for 1870 were only .' $995,750,
as against $7,689,214 in 1860. In 1890
the receipts had risen to $12,927,912,
and by rtOO they had grown to $17,
490,356. A similar increase in the
traffic and the income at Panama
would obviously bring to the United
States a most gratifying return upon
its investment. Since 1900 the receipts
of the Suez canal have increased at
the rate of about $2,000,000 a year.
From IS9I to 1901. Inclusive, the re
ceipts were $174,786,109. In view, of .
these figures the estimate of $100,
000,000 income for the first 10 years
]earn t that the toll for the Sues canal
of the Panama canal is obviously very
\u25a0conservative. ; .V^
In fixing the rate of toll at Panama
elaborate calculations have been made
as to the exact caving In tlmo and ex
pense to the various trade routes by
using the canal, it is not believed
that the rate of $1 a ton will be ex
cessive for the ships of any of the regu
lar; routes. By passing through ; the
canal on the way fro :» Kurnpe to Chile,
for instance, a vessel would save from
10 to 11 days. The cost of oper-itlng a
ship at sea for this additional time. It
is . estimated, would alv • balfiuce the'
price paid for permission to pass
through the canal.
-pHE comparative cost ; of the old
I route and the new has been esti
' mated (n the case of a modern
freight steamer of 2,600 tons register.'
which ii taken as a unit of measure.
The cost, of operation a day i« placed at
$11 R, whJslv Includes > the wagos of 'ho
crew, the cost of coal and provisions,
u.c'interest on the capital lnvo«t»<l, the
insurance and the general wear and
tear. A saving, of $175 a day for 16
days would amount to $2,C2;».Th0 cost
of "clearing the canal wo'uJ 1 bn at;t!ie
$ 1 a ton rate $ 2,600. The rate, it will
be seen, would not be evccsslye.- In,
case a - ship carried a perishable cargo
the'savlug of time would, of eourae, bo
invaluable. It is belieyed that V at ; this
rate the saving by "passing: through' tha
canal will goffer sufficient , inducement
to deflect the present! enormous traffic
to the new route. " The illustration cited
.is. an extreme, one! In the case of a
vessel sailing between; New York ' and
San Francisco, for example, tha eCoao
my of the canal route would be ,lrr«;
sls'tible. \u25a0 ' '[',
<- The Isthmian canal . commission has
made an ' exhaustive . study of ' th* '. trade
routes affected by the canal, which:
forms the basis for these calculations.
•.The commission points out that the'Of-'
tent of: the canal on the pre.?cnt route "
'will be a' double one. Tb<V car.al -vTsil
facilitate the, movement of commerce
arou'nd the world. It will cause vessels^
lulling from. Europe, as well its from
the eastern pnrt of tlie.TTnite.l .States',
to carry on "trade with the /orient. 7 AnX
Immense amoi>i.t (if'coramers;) whiehij
novr piles between Europe or lhe enai-.V
.em coast' of North America and South -
Amrrica may- be expected in tha furure,
\u2666if ter passing through the i'una ma ca
nal, to continue on' and maUt tholclr-1
cult of the globa by way, of \u2666he^Suea
canal. Th«r«? Is always, niore I'oraraer-;.'
clal.advanta.se to the merchant' in f.ol-'
lowiny this route than to re-urn over,
the first line 'of traffic. The Panama
canal will thus start *in motion an
enormous fleet of merchant vessels con
stantly nrotin'l the worW. . ;
The canal is expected to attract and
'deflect four great jl ln eV; of trade,; whose
. volumeVmay be calculated with; reason
able accuracy. - 'The;'; traffic between, C
\u25a0 Europe and the Pad! flc "coasts of iNoftb'
and South -America: may reasonably? b«
t expected to use . the - canal. The .great \u25a0
fleet .which: plies:; between .Europe 'and
the orient-will 'find, for,' the* most part a
shorter and" moire direct rout© by way
of Panama. ,- The .third great line of
trade is that between Atlantic and P»
cine (America. ;" At present ; this ; Is large*':
ly confined \to /the -trade between the.
east -and west coast* ; the '\u25a0\u25a0
States, but with i the Impetus which the
canal ,will ;\u25a0; iglv* -it isl hoped > thWi the
trade with South America on both sea- 1
boards Vwili^be ; brought ;into_ more! con f ;
tlnuous communication with , . both ':
shores of the - North conti
nent. Ther* "is also 'the ; trade : between
Atlantio America \u25a0 and th c or lent, , which
Is even now rapidly increasing. . . H
IN estimating the incom* of the canal
;.\the ' records^ kept by the, Panama
.- corapahyj haye 1 been used as a basis
for (Calculation. It would 'seem safe") to~
assume- that ; when >';a-^ line .of '-trade
chooses the Panama Toute, : ; even when
lt'^must'f^bVeak^.'eargoi-to^ycr'ossVithy
Isthmus/ it! may^.be ' counted ' upon as a
customer -when ; it .: can . make Z th* all
water,; rout* from' ,: sea >to > sea. \u25a0 V .Thes*
records - show ! that In 1899, ', wh*m th*
canal was fir^t. contemplated, three of
the trade routes just cited, the Europe
and orient trade excepted, • might have
eontriouted -3,843,577 tons net register
cf traffic to the canal had It been ready
for, use .'at .'that date. •-\u0084 '
This estimate, however, does not in
clude any vessel tonnage for the com
merce crossing the isthmus of Panama,
which was \336.995, .: thus raising the
total to 4,185,575 tons. Meanwhile the
entrances and clearances for the fovn^
merce of the eastern seaboard of the
United Statea wltft \u25a0 Paciflo America and
wi th : Australia; '-. Oceania. Wi the : Phillp
plnes, [. Japan.V China and \u25a0 81b«rla.v to>'
gstherj with- th«\vesself movements 'b*-'
tween the' western coasts of th* Ameri
can continents and the] Northi Atlantic
and European ports, wefe'^bund to
amount to 4,074,858 vessel tons n*t reg
ister,' including the ; commerce crossing
the isthmus of Panama.- This tonnage
Includes^ It iWillib* seen, only^trafao
"-.\u25a0\u25a0••-'.fi.. ' -.•...' \u25a0\u25a0•:\u25a0\u25a0\u25a0\u25a0-\u25a0:\u25a0
originating or terminating in America.
• The enormous, trade 'between Europe
and the orient which now goes the
other way ' around tho world is. be
sides, certain to be deflected in large
.•neasure to the new route. It is raere
.ly a question of geography. The Pan
ama canal offers the shortest route be
tween, the two points. Most .of the
commerce of,: Europe and New Zealand
will pass this way,' as well as that be
tween Europe and the other islands of
tho Pacific east of Australia. * .
The attraction of the new route for
all this commerce is certain to prove
irresistible. It is not generally real
ized.- for instance, that New Zealand
will be 1.318 miles nearer Liverpool" by
the Panama canal than 'by the Suez,
and 2,222 miles nearer than by way of
Good Hope. The distances from Liver
pool to the most important groups of
the South Pacific Islands north of New
Zealand will be from 500 to 5,500 miles
less by. way of Panama than by way of
Suez. : The entrances and clearances of
New Zealand's trad* with northwestern
Europe, that } ls, France and countries
farther north, amounted to 481,173
tons net register, in 1899. and tha com
merce of that part 7>f Europe with the
otEer islands of the South Pacific east
of Australia ; amounted ' to; 1 8 1,74 3 tons.
Orthls" r total traffio^of.f632,92l-tons,
probably not less .than 600,000 - might
have \u25a0 advantageously used \u25a0 th* Panama
canal, which amount could be add*d to
the tonnage of the canal traffio origi
nating and terminating in America.
A great part Zi Eurcps's trada w*ta
Australia and Japan will find tha Pan
ama routs advantageous and will ulti
mately be deflected from th* .present
route. This traffic is enormous and will
yield a considerable Income to tha oanal
in years to come. 1 The distances be
tween Great Britain and Sydney and
Yokohama by the Sues and by tha Pan
ama routes are about the same, but tha
Panama route will have the advantage
that vessels In going by America la
either direction on their way b«twe«a
Europe and Japan or Australia will
pass many ports from whloh thar* Is
heavy export tonnaga, thus making tiia
new routs more profitable than th* old.
IN estimating the amount of traffla
which will be drawn to th* n*w
rout* a very conservative propor
tion has been counted on. It haa baea
asumed that 10 per cent of tha vassal
tonnage* of the Australian trada with
the ports of northwestern Europe may
be counted on. and at least 5 per cent
of the tonnage between these ports
\u25a0
and Japan will bo drawn the sama way.
Event this trifling percentage would
total 316.222 tons. In all probability
it would be several times this figure.
To total this estimate, therefore, we
have 4.047,852 tons, representing tha
traffic beginning and terminating in
America, plus the 500,000 tons of Euro,
pean trade, plus 516.223 tons, or In all
4,931.075 tons — in round numbers
5.000,000 tons — which would have passed
through the Panama canal In 1839. It
is obvious that this estimate Is. if any
thing, less than may reasonably b«
expected.
This tonnage is. of course, based
upon figures 10 years old. and la by
no means a fair estimate of tha traf
fic between these same ports today.
The statistics show that the tonnaga
of vessels trafficking between the two
coasts of the United States and be
tween the eastern United States and
the orient and between Europe and tha
Pacific Is increasing rapidly from year
to year. . Between 1839 and 1895 tha
gain in tonnaga available for the canal
was . 25.01 per cent, while from 1899
to the present time the gain has been
even more remarkable. The commerce
between Chile and E«"rope increased
from 575.890 tons in ISSS to 914,091
tons in 1893. or a gain of 53.7 par cent,
and this remarkable rise has certainly
not disappeared since that data.
THE estimate of 5,000,000 tons ol
traffic available In 1899 is clearlj
much too 10-w 'today. In *very
branch of traffio the amount of ton
nage that could advantageously use
the canal has increased. With this rats
of increase as a. guide It will be found
that the available canal traffic in 1909
will be 6.257,249 tons. By the closa of
1914. or. about tha time of the proposed
opening of the canal the available
tonnage, estimated at the present rat*
of increase, will be 7.000,000. By th*
year 1924, at the same rate of increase,
the estimates show a tonnag* of 11,
372.941.
It will be seen that the estimate of
$100,000,000 Income for the first 10
years of the canal is practically as
sured. If any mistake has been made
in this estimate the failure has been
not to make the figures high enough.
The calculations have not allowed for
the Immense stimulus which the open
ing of the canal is certain to glvs to
trade on both seaboards of th* Amer
ican continent.
At present it is a matter of rexTst, al
most of shame, that by far the greatest
purt of the trade of South America goes
directly to Europe. It is only a short
time since it has been possible to sail
from New York to South American
ports without first going to Europe.
With the opening: of the Panama canal
the traffic between the east coast of tha
United States and the western coa3t of
South America, and again to mention
only one route, is likely to be awakened
to the great interest of both seaboards
'and the profit ot the canal. The trade
between the two seaboards of the t^**
ed States again is likely to grow with
leaps and bounds. An immense amount
of \u25a0 the traffic which now crosses the
continent by ralU will be deflected la
large ' measure by way o( . the canal aa
soon as tt lj poasloio io amp cargoes
in unbroken packages. It is this trafllo
which is expected to show the most
rapid rateTof Increase, although the In
come has not received proper considera
tion In the estimate,
The figures thus arrived at have to do
- with the gross Income from the canal.
Until tha work of construction has been
further advanced and o»»ui» engineer
ing problems have been worked out.
especially. in connection wltlt tin b^HA-
Ing of the great; locks, it la dlfflcult-t*
estimate with any accuracy the possible
cost lof maintenance.. During tho first
decade of the canal operation, at least.
It Is not anticipated that any consider
able work* of repairing or new con
struction-will have to be met. Infu
ture years the greatly increased incoms
of the canal will readily offset any ad
• dltlonal expense. Since a conservative
estimate of the income of the waterway
may be placed at $130,000,000 for 10
years, or at th« rate of i^i per cent.
the estimate o* a return of 3 per cent
and over certainly appears consarva-