of 1872 were quoted at 185 francs. Ship owners were clamoring for improving the canal by widening it and deepening it, and the stockholders were clamoring for money. Consequently, it became necessary to raise the tolls. This De Lesseps undertook to do. Prior to July 1, 1872, the tolls were levied on the net tonnage as taken from the ship's papers. De Lesseps proposed to change the basis to the gross tonnage, and in March, 1872, the company issued its three months' notice that the change would go into effect on July 1 following. The company claimed that the words "ton of capacity" in the concession meant "ton of utilizable capacity" and not net ton, and they claimed that the word "ton" was a weight ton of about 1,000 kilos of 2,204 pounds or an English ton of 2,240 pounds and not a capacity ton of the Moorsom system of measure. Although the French money had built the canal, opposition to it was so strong in England in the beginning that the people in England never subscribed to the shares allotted to that country. Nevertheless the English, in 1872, were the largest users of the canal, and were the first to appreciate its benefits to them. Consequently, the demand for the improvement of the canal was largely from the British shipowners. The British Chambers of Commerce immediately protested violently against the increase to the British Government, and protests were received also from the Compagnie Messageries de France. The pressure upon the Sultan by the British Government in order to have him decide what the words " ton of capacity" meant in his firman was so strong that the Sultan decided to submit the matter to a conference of the leading ship-owning nations, and all the maritime nations of the world took part in this conference except the United States, but the United States expressed themselves as being in accord with the British views in the matter. The Constantinople conference made the rules under which the canal operates at the present time, as outlined to you heretofore, and as contained in the present Suez Canal regulations. They appreciated that it was necessary to have more money and, consequently, although they provided the system of measurement, which is unquestionably a more accurate system of measurement than the net register tonnage, yet they allowed an additional tax of 4 francs per ton, which was gradually to be diminished and was to disappear as soon as the total net register tonnage had increased to 2,600,000 tons. This provided sufficient revenue for making improvements, and also with a flourishing financial prospect ahead of it the company was enabled to provide for the interest on its stock, which was in default up to July 1, 1874. With the interest coupons as underlying security they floated a loan running for a period of years and applied the proceeds to the payment of interest. The stock, which had fluctuated violently, went as high as 865 francs per share in 1875, and has never been below par at any time since 1876. On the 15th of November, 1875, the British Government received information that the Khedive was endeavoring to float a loan on the stock that he owned through a French bank concern and directed their consul general at Cairo to find out about it. On November 18 the British Government offered to buy the shares outright, and on November 23, 1875, the transaction was closed. The British Government, under the Beaconsfield ministry, bought 176,602 shares out of a total of 400,000 for 100,000,000 francs, or about 568 francs per share. On a par basis they bought at 113.6. Since this date the British Government has owned over 44 per cent of the stock of the Suez Canal. Col. John Stokes, royal engineers, was the leading English delegate to the convention at Constantinople. He had also been a member of the Danube commission and was thoroughly familiar with all canal affairs and transportation questions in the near East. As soon as the British Government's status had changed to that of a stockholder its attitude toward the canal and toward its finances underwent a material change. The company had violently opposed the putting into force the tariffs and measurements prescribed by the Constantinople convention, and only complied when the Sultan directed the Khedive to use force. They had protested strongly at Constantinople, but on February 21, 1876, three months after the purchase by England of the canal shares, Col. Stokes, acting on behalf of the British Government, made an agreement with Mr. De Lesseps that all this opposition was to be withdrawn and that the British would endeavor to see that the surtax should not disappear until January 1, 1884, and that the money should be applied to making necessary improvements in the canal. An agreement was also made whereby the British Government became a member of the board of directors, and Col. Stokes, afterward Lieut. Gen. Sir John Stokes, K. C. B., went on the board and later became vice president of the canal company. The introduction of English H. Doc. 680, 62—2————8 good sense and commercial management in its affairs helped to put this company upon a sound financial basis and improved its administration in every way. Traffic increased, the canal was widened, and later more money was borrowed to make still other improvements, so that by 1899, the fast data that I have on the subject, Suez Canal shares had risen to 3,500 francs. So much for the finances of the Suez Canal. In a letter of instructions from the British foreign office of September 6, 1873, to Col. Stokes and Sir Philip Francis, who had been selected as delegates to the Constantinople convention, Earl Granville said: "You will have observed that the board of trade, in the letter dated the 8th of April, 1872, quoted in inclosure No. 2, expressed an approval of the principle of charging dues on the gross tonnage; the question of the relation of dues to the standard by which they are levied was not entered upon." Earl Granville further quotes a dispatch sent to the British ambassador on the 31st of August, 1872, as follows: "Her Majesty's Government are aware of the difficulties and inequalities caused by the deductions for engine-room, etc., in the English net tonnage, and by the different systems of different nations. Putting aside the question of amount, and putting aside also the question of the meaning of the concession, Her Majesty's Government in this case, as well as in that of the Danube and in other similar cases, would, as at present advised, be disposed to look favorably on the adoption of the gross British tonnage as the best standard of taxation. But they express no final or positive opinion on this point, more especially when it is considered that passenger ships of high power and troop ships would, according to that standard, have to pay far more in proportion to other ships than they now do, whilst they have also under the present concession to pay a tax of 10 francs per passenger; or, in other words. they have, unlike other ships, to pay for the cargo they carry as well as for the space it occupies." He further says: "Some difficulties may also be avoided by making it the universal practice to state on the ship's papers what is her gross tonnage without deductions, and what is her net tonnage with deductions, so that it shall be possible by the help of these papers to determine in all cases what is the amount to be charged, whether the charge is made on the gross or the net tonnage. "But supposing these expedients to be adopted, the commission should determine, with care and accuracy, what the deductions should be. "With regard to measurement for tonnage dues, it is probable that the commission may not adopt the English net or register tonnage, which in some respects is admitted to be defective, and which, as shown in inclosure No. 2, it is now proposed to amend." In letter of the British Board of Trade to Earl Granville on the 8th of April, 1872, the secretary of the board says: "I am directed by the board of trade to acknowledge the receipt of your letter of the 27th ultimo, inclosing copy of a resolution passed by the council in accordance with which the dues on vessels passing through the Suez Canal will on and after the 1st of July next be levied on the gross tonnage of the vessels as calculated by the British method of admeasurement. "In reply, the board of trade desire me to inclose a specimen of the British certificate of registry, and to state that, in accordance with this resolution, the tonnage on which dues will be paid is that marked with a cross. "I am to add that the board of trade are glad to find that the company have come to this decision, as the board believe that the principle of charging dues on the gross tonnage of all ships is correct." In further instructions of September 10, 1873, to the British delegates, Earl Granville said: "The only really satisfactory standard is the gross tonnage, meaning by that term the whole internal capacity of the ships, including all covered-in spaces on deck without any deductions. There will be no dispute that this should be measured according to the rule known as "Moorsom's." And further on: "The difficult subject of deductions from gross tonnage is one which it will not be possible ultimately to avoid in settling the larger question of international tonnage. But if gross tonnage be adopted as the standard for the Suez Canal, it may not be necessary to enter upon that subject at Constantinople. "If gross tonnage be adopted as the standard, the maximum of the dues must be reduced. In order to settle what the reduced maximum should be, it will be necessary for the commission to enter into the whole question of the financial position of the company's undertaking." On March 18, 1873, Prince Bismarck wrote to the German ambassador at Constantinople: "By the ship-admeasurement ordinance issued on the 5th of July, 1872, the process of admeasurement for seaships is made uniform throughout Germany, and is regulated on the method, originally English, now introduced in almost all European States. We are, therefore, no longer in a position to treat this question as an open one, of which the solution for Germany should depend upon an international commission. Germany would not be able to take part in a negotiation which treated of altering the aforesaid British-German system." I take it that any system of measurement which should be used as a basis for levying tolls should be fair, first, between ship and ship. It should not unduly favor any ships or class of ships at the expense of another. Second. If we should find that any class of foreign ships are already favored by their own governments by means of heavy subsidies, our system should be such that in case we should build similar ships in the future there will be no discrimination in view of the fact that it is extremely doubtful that we will ever have any ship subsidy at all-certainly never as heavy as those that are granted to foreign companies. Third. In view of the fact that this canal will be a competitor against our own railroads, it should not be such as to discriminate against our railroads if the charges made by them are reasonable. Fourth. The system should be one based upon a system of measurement that is universally adopted by all the leading maritime nations of the world and upon one about which there is little dispute. The measurement to be adopted for the basis of this system should be the simplest one and the one which contains the fewest exceptions and deductions. It should be in general use by the maritime nations of the world, in order that the Government of the United States after the opening of the canal shall not be troubled by inquiries and by pressure of foreign Governments caused by variations and exceptions from the rule. Fifth. In order to avoid detention of ships actually in transit the system should be one so that the necessary information can be taken immediately from the ship's papers, or in which the figures serving as a basis can be taken from Lloyd's Register, and in order to prevent delay and to avoid disputes between the operating officials of the canal and the ship's officers and, consequently, protests which would be made by the foreign Governments to the United States. No system will fulfill any two of these conditions except the system based upon gross tonnage. I hand you herewith Table I, which shows part of the fleet of the Cunard Steamship Co. The data is from the British official register of shipping. The speeds are taken from Whitaker's Almanac, and the percentage of net to gross tons I have worked out on a slide rule. These percentages, in consequence, may vary a figure or two in the third place. In this table and in Table II the ships are arranged according to speed. I have assumed a rate on the basis of $1 per net register ton. You will observe that the Mauretania, with 12,300 more gross tonnage than the Caronia, will pay $1,500 less tolls. It will also be observed that the Mauretania, with more gross tonnage, will pay less tolls than the Lusitania and less than four other ships of the Cunard Line. Table II is part of the White Star fleet. The information is from the same source as Table I. Taking into consideration the ships of Table I and Table II, all sorts of incongruities appear in the rate based upon the net register tonnage. It will be seen, therefore, that a rate based upon a net tonnage is not fair between ship and ship, because the fast passenger ship, with large deductions for engine-room space, receives a heavy subsidy from its home Government, while the slower ship receives none. They carry but little cargo; they demand high differentials in their favor for passenger traffic; and they are disturbers of rates and general commercial conditions. They will compete with our own transcontinental passenger systems of railroads, and our passenger rates are reasonable. In my opinion, there are enough reasons in Table I and Table II to show why a system based upon net register tonnage should not be adopted. Table III is a list of ships of which I have been able to obtain the gross and net tonnage according to Suez measurement. The Suez measurements are taken from the French book, The Isthmus of Suez and the Suez Canal, by Charles LeRoux, Paris, 1901. It is a list of the largest ships going through the canal, and apparently for the year 1900. The register tonnage, dimensions, and horsepower for the British ships are taken from the official British register, and for the German ships and Japanese ships from Lloyd's Register for 1905. Lloyd's rule for the calculation of the nominal horsepower gives a much lower horsepower than the British official rule. Consequently, the German and Japanese ships have probably 50 per cent more horsepower as compared with the ratings of the others. I have worked out the percentages with a slide rule, and, consequently, they are liable to error in one or two figures in the third place. It may be well to describe these lines. The seven Peninsular & Oriental Steam Navigation Co.'s ships, at the head of the list, run from London to the Orient, touching at Marseilles, where they pick up passengers and part of their mail; thence to Port Said, where they pick up later mail which is brought over in small but very fast twin-screw turbine ships, which run between Port Said and Brindisi. It is the leading English mail line to India and China and is very heavily subsidized. The Orient Steam Navigation Co. is the leading British mail line to Australia, and follows the same route as the Peninsular & Oriental as far as Colombo, where it takes on coal, thence to Australia. It also is heavily subsidized. The British India Co. maintains a fleet of passenger and freight steamers to India. Of the three Peninsular & Oriental Steamship Co.'s ships, the Candia is a cargo steamer, and I understand the other two are what they call intermediate steamers. These intermediate steamers are passenger steamers with large cargo capacities. The Harrison Line is largely a freight line running to the Orient, and they also have a branch coming here to Colon. The Ocean Steamship Co., which controls the China Mutual Co., runs to China and Japan with a service from China and Japan to our Pacific coast ports, Seattle, and, I think, San Francisco. The Bibby Line is the leading passenger line from England to Rangoon and Burmah via Colombo. It is heavily subsidized. The North German Lloyd and the Hamburg-American run all over the Orient, and the Japanese line runs also all over the Orient. These three lines are subsidized, and the Japanese line is very heavily subsidized. An examination of the percentages of net tonnage to gross tonnage, both for register and for Suez tonnage, shows that the passenger steamers percentages do not vary much, but that the percentage of the net register tonnage to the gross register tonnage is very much less than the percentage of the net Suez tonnage to the gross Suez tonnage. In other words, the effect of the Suez rule by means of deduction for engine-room space and failure to allow for deductions for steward's department very materially increase the percentage and very materially removes the discriminations that exist between the faster ship and the slower ship. Table IV contains very valuable data. The Banca, Candia, and Pera are cargo boats belonging to the Peninsular & Oriental Steam Navigation Co. The Median, Memphian, and Merican are sister ships of the Leyland Line that come to the port of Colon. The Median class represents the highest development in the modern regular line cargo boat. Their dimensions, horsepower, etc., are taken from the British official register. I have been able to obtain their Suez net tonnage and also their cargo capacity in ships tons of 40 cubic feet each. The percentages I have worked out on a slide rule. Rejecting the fast passenger ship above 18 knots, you will observe from the Cunard table, the White Star table, and from Table IV that the percentage of the net tonnage to the gross tonnage is not far from 64 per cent; in fact, ships built at the present time with a large cargo-carrying capacity and no passenger-carrying capacity run around this per cent. You will observe also from Table III what ships are freak ships or specially built and, rejecting the fast passenger ship, that this percentage is around 64. To my mind passenger ships not faster than 18 knots, with percentage of net register tonnage to gross tonnage of about 64 and also the modern cargo ship as given in Table IV, should be the type adopted as the basis for levying tools through the canal. All modern shipbuilding is tending toward this type and to these percentages. In Table III, I have rejected all ships whose percentages of net to gross register tonnage is less than 60, and with these rejections the total gross register tonnage is 262,772 and the total net Suez tonnage is 186,277. The total net register tonnage is 166,752. Multiplying the total Suez tonnage by the Suez rate of 6.75 francs, equal to $1.306, we have the total Suez tolls to be paid for these 35 ships $243,277.76. I tabulate the other results below. $243,277.76-262,772=$0.9258, equivalent gross register tonnage rate. $243,277.76÷166,752=$1.459, equivalent net register tonnage rate. $166,752-262,772×100=63.45 per cent, net register tonnage to gross reg ister. $186,277-262,772×100=70.88 per cent, Suez net tonnage to gross register tonnage. This table, I believe, is a very fair and representative average of the relations between the various tonnages as they existed prior to 1901. At that time during the year there were 3,607 separate passages made by 1,234 ships belonging to 308 owners. Of the 308 owners 44 regular lines furnished three-fourths of the tonnage. Of that tonnage 70 per cent was from cargo ships and 30 per cent was from mail ships. This date may be checked in another and independent way from Table IV. We can also deduce the relations that exist between the gross and net tonnage and the Suez tonnage in ship tons of 40 cubic feet each. For this purpose I have selected the Banca, Candia, and the Pera, belonging to the Peninsular & Oriental Line, and one ship of the Median, Memphian, and Mercian class of the Leyland Line. These represent the best type of the modern cargo ship with two or more decks carrying general merchandise. The tonnage of these ships is as follows: 44,689÷16,972=2.633, ratio of net register tonnage to the cargo tonnage of 40 cubic feet each. 44,689 26,418=1.691, ratio of gross tonnage to cargo tonnage of 40 cubic feet each. 19,139 $1.306 $24,995.53. $24.995.53-26,418-$0.9461, equivalent gross ton rate. $24,995.53÷44,689=$0.5593, Suez freight rate per cargo or ship ton of 40 cubic feet each, English. 16,972÷26,418X100=64.24 per cent, net register to gross register tonnage. 19,139 26,418X100=72.45 per cent, Suez net tons to gross register tons. The total gross tonnage of 18 White Star and 4 Cunard ships, whose per cent of the net to gross register is 60 or above, equals 321,006; net tonnage equals 205,567; per cent of net to gross, 64.04. We have the following table for the per cent of the net to gross tonnage: For 4 cargo ships taken from Table IV. For 35 Suez ships prior to 1901---. For 22 modern White Star and Cunard ships_-_ Average of the three_____ 64. 24 63.45 64. 04 63.91 Tabulating the foregoing results we have the following table giving the equivalent rates for the various tonnages enumerated: It is seen from previous pages that the average per cent of the net register tonnage to gross register tonnage is 63.91, and the tendency of modern ships is greater than this. We would be perfectly safe in assuming that 64 per cent |