THE PANAMA CANAL

PART VI

COMMERCIAL IMPORTANCE OF THE PANAMA

CANAL

BY

EMORY R. JOHNSON, PH. D., Sc. D.

COMMERCIAL IMPORTANCE OF THE

PANAMA CANAL

Each individual's interest in the Panama Canal, and his estimate of the importance of the canal, is necessarily determined by the point of view. The diplomat and statesman concerned with the promotion of the peaceful development of Latin American countries, politically and economically, and desirous of seeing the United States become increasingly helpful to the countries south of the Rio Grande, will study the canal with regard to the effect it may have upon the international relations of American countries; the military expert will seek to understand how the waterway across the Isthmus will or may augment the offensive and defensive strength of the American Navy, what forts need to be constructed, what naval bases and coaling stations need to be established, what increases need to be made in the Army and the Navy to enable the Panama Canal to enhance the military power and naval prestige of the United States; while the producers and traders, although not without interest in the political and military changes that the canal may effect, are especially desirous of knowing how the shortened ocean route between the north Atlantic and the Pacific will assist the world's trade, will enable American industries to produce for wider domestic and foreign markets, and will reduce

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freight rates by rail within the country and by water beyond and between the seaboards.

The commercial importance of the canal, or the assistance it will render the industry and trade of the people of the United States and other countries, can be indicated: (1) by showing what effects the new route will have upon the length and time of ocean voyages; (2) by stating conservatively the volume of shipping, foreign and American, international and coastwise, that may be expected to use the canal; (3) by estimating the influence which the Panama Canal will have upon the freight rates by rail between the two seaboards of the United States and by ocean carriers engaged in American intercoastal and foreign commerce; (4) by showing how much the ocean carriers will save in fuel costs by using the Panama route and by pointing out how the cheaper fuel costs by way of the Isthmus will assist the Panama Canal in competing with alternative routes via the Straits of Magellan, the Cape of Good Hope, and the Suez Canal; (5) by studying the relation of tolls to the traffic and revenues of the canal; and (6) by considering what policy the Government should adhere to in the management of the canal in order that the canal may best serve the welfare of the entire country.

The Panama Canal is being constructed to shorten the length and time of ocean voyages between the countries of the north Atlantic and those of the north and south Pacific. To recite textually and in detail

the distances from the several Atlantic ports, American and foreign, to the leading ports of each of the principal countries bordering the Pacific would be wearisome to writer and reader; but by resorting to a few short tables, which the reader may skip or may study in accordance with the degree of his interest, it will be possible to present with satisfactory completeness the changes which the canal will make in distances and in sailing time.*

The maximum effect of the Panama Canal upon ocean distances will be the reduction in the length and time of voyages between the Atlantic-Gulf seaboard of the United States and the Pacific coast of the United States and South America. Table I gives the saving for trips from New York and New Orleans to San Francisco and to four selected ports having central and southern locations upon the west coast of South America.

The saving in time is given both for freight steamers, most of which are run at an average speed of 9 to 12 knots, and for steamers that carry both freight and passengers, which usually average 14 to 16 knots. Except upon the north Atlantic, passenger steamers seldom average above 16 knots. In calculating the saving in time of voyages, as stated in the table, a half day is deducted to allow for the detention due to passing through the canal.

The tables are taken from Chapter XI of the Report upon Panama Canal Traffic and Tolls. Chapters I and XI discuss fully the effect of the Panama Canal upon ocean distances.