As I stated originally, I am inclined to think that the gross tonnage with corresponding reduction in rate is the best system of all. It is true that there are slight variatitons between the national gross tonnage of nations and of the Suez, and it would be advisable at the present time for an international conference to decide on uniform rules of measuring ships, but it is higher than any other. The geometrical rules, which are the Moorsom system, are the same for all; and I infer that all of them are closer than those used by Great Britain, else Great Britain would not have accepted the tonnage of ship's papers as a basis for her taxes.

As an instance showing the difference between weight and measurement, we had a consignment last winter of mixed shirts and overalls from Indianapolis, Ind., 20,845 pounds, on which the freight to New York was 69 cents per hundred pounds and amounted to $144.87. The ocean rate from New York to Colon is $7.20 a ton, ship's option. The shipment measured 1,191 feet 1 inch, and at 18 cents per cubic foot the freight was $214.39, and the freight at 36 cents per hundred pounds was $75.04.

The railroad rate figures out on this consignment at $168 per 1,000 miles for the total; the New York-Colon ocean rate at $108 per 1,000 miles; and the tariffs at present in force from Liverpool would figure out $62 per 1,000 miles. These figures give some idea of the relative cost of haul, and also show how cheap the rate would be if goods of this kind were taken by weight. The freight from New York to Colon is 2.3 per cent of the cost. You will note from the table above that the percentage of freight to cost of shoes was still lower, although shoes as they are ordinarily packed in individual boxes have a very high measurement-to-weight ratio.

The above discussion has been based on the assumption that the basis of tolls was not computed from displacement proper, which includes weight of ship and cargo, but on difference of displacement in a ship due to weight of cargo. I attach hereto a photograph of the relations between draft, freeboard, displacement, and dead weight, and ship's marks, such as are supplied to ships by builders. This is for the Median, Memphian, and Mercian class of the Leyland Line. In the photograph the circle with a dash across it, marked "BT," is the board of trade mark, commonly called Plimsoll's Line, and is for the summer loading, which is indicated by the letter "S" on the marks to the right. The "W" is winter loading, and "FW" is loading in fresh water; "IS" is the Indian summer loading. You will observe that the Memphian, on light draft, boilers full, no coal, fresh water, or stores, draws 9 feet 9 inches of water, and that her displacement at that time is approximately 3,875 tons; 8,125 tons of cargo, coal, water, and stores loads her down to the marks and gives a displacement of approximately 11,980 tons. You will note that 500 tons cargo gives a difference of about 1 foot in draft. Assuming this ship carries 980 tons of coal in her bunkers, with 175 tons of fresh water and stores, she would have cargo space for 6,970 long tons, which would load her down to her marks, giving a total displacement of approximately 11,980 tons. Her draft will be 26 feet 3 inches. This ship holds about 15,000 bales of cotton, which at 4 bales to the ton, would only require 3,333 tons to fill her up. The total dead weight in her, including coal, water, stores, etc., would only be 4,488 tons, and she would have a draft of about 18 feet, and her bow would be 8 feet 3 inches out of the water. Her total displacement would be about 7,850 tons. Consequently, this ship would actually take in some water ballast to hold her down a little more and steady her.

It might be perhaps suggested that a proper basis for levying tolls is total displacement, including that of ship and cargo, or 12,000 tons. This rule would be vicious in the extreme; as vicious, in fact, as the old builders' rule of measurement. The total displacement is made up, first, of the ship's displacement and the cargo displacement. The result would be that builders would build ships as light as possible and skin them down to just as little iron in them as they could; in fact, they would build them out of aluminum if they could, so that they would have a ship of large cubic contents and carrying capacity with light weight. It would not take Lloyds and the underwriters long to find this out, and the result would be that the insurance rates would go up so that any concessions we might make here would be counterbalanced by the underwriters. While the shipowner might risk his ship, the ship charterer would not put his cargo in such ships on account of insurance.

While it looks hard for ships that are carrying absolutely nothing to pay heavy tolls, nevertheless the best way to handle that situation to my mind would be to charge the ship a reasonable amount under the tolls if she went

through purely in ballast and then rebate part of it if she came back within a reasonable time loaded. Otherwise if we charge her almost nothing for going through in ballast, it might develop that she would come this way and go back some other.

Chairman and Chief Engineer, Culebra, Canal Zone. SIR: I return herewith Prof. Johnson's letter. Our estimate that coal can be sold at a profit at $4.50 a ton at Colon agrees with his. The profit will be greater, however, than he figures, as dispatch money for prompt dispatch to ships is not included, and a modern coaling plant will handle it cheaper than it is handled now. His conclusions that it is imperative that the United States should control a coaling station here is unquestionably correct.

In reference to port charges, there are no port charges at Suez. They have a berthing charge of 2 centimes per ton per day, but this does not begin until the ship has been in 24 hours. (See p. 21, par. 8, Suez Canal Regulations.) There are no pilotage charges at Suez for daytime. A pilotage charge of 25 francs ($5) is charged steamers at Port Said at night. There are no pilotage charges at all at Suez or Port Thewfik. (See p. 27, art. 13, Suez Canal Regulations.) I assume that there will be none here.

I hardly believe that the average price of coal is a fair way to compute coal costs, for the reason that the same terminal prices figure in the computations by both routes. It is the total cost of the coal for the round trip that counts. Prof. Johnson discusses the competition of the Suez Canal with the Panama Canal for trade from the Atlantic seaboard to Manila, China, and Japan. By his tables, from New York to Manila via Panama is 11,548 miles and via Suez is 11,589 miles. To Hongkong via Panama is 11,691 miles and via Suez is 11,673 miles. We may say, practically, that a line drawn from Hongkong to Manila is commercially equidistant from New York by either route. To Yokohama via Panama is 9,789 miles, but via Suez and Shanghai is 13,566 miles. My compilation gives Yokohama 9,805 miles by way of Panama and 13,202 miles by way of Suez and Hongkong direct to Yokohama, a difference in favor of the Panama route of 3,400 miles. And this is 100 miles greater than the distance from Panama to San Francisco. Lying between the line Hongkong, Manila, and Yokohama is the entire Chinese trade, embracing tea and silks coming down the Yang-tse River to Shanghai, the important tea exporting seaports of Foo Chow and Kang Kow-in fact, the entire oriental trade that we have any hope, in the first place, of ever getting, and, second, of ever wanting. There is nothing between the line Manila and Hongkong and the Suez Canal that we want or are taking anything to speak of except Java sugar, of which approximately 400,000 tons come to the United States out of their average production of 1,000,000. It would be well for us as a Nation not to worry about this 400,000 tons of sugar so far away, or to disarrange the tolls on the Panama Canal in order to try to compete with Suez for it. The sugar productions in Peru, Ecuador, and along the west coast of Central America are such that, with the greater traffic which will immediately spring into existence with the completion of the Panama Canal, we will have all the sugar we want much closer home and with people to whom we can sell supplies and can furnish ships and outbound cargoes from the United States. The principal productions lying west of the Line Manila-Hongkong are spices from Singapore, teak and rice from Siam and Burma, linseed oil, cotton, and jute from India. The higher class merchandise, such as bric-a-brac, will always be handled in the regular fast liners and will always be distributed through London and Hamburg, even if we make the tolls free. Some of these productions are our own competitors; the rest are not worth trying to reach after by way of the Panama Canal.

It is not correct, from a traffic standpoint, in trading with the Orient, to take into consideration a single port like Manila alone. The whole section, some H. Doc. 680, 62-2-9

1,700 miles long, lying between Yokohama and Manila, the Chinese ports and their hinterland, should be viewed as one commercial district, for the distances are so short between these large ports that a ship can travel from one to the other and pick up a cargo.

The controlling feature in the competition of the Atlantic seaboard with the Suez in traffic in this country is the fact that by the Panama route we approach it from the east or Japanese side, where the coal is cheap, while by the Suez route it is approached from the west, or the Sabang-Singapore side, where coal is high.

Sabang is a very small island at the northwest end of Sumatra, at the entrance to the Straits of Malacca, about 670 miles from Singapore.

There is nothing there but a coaling station, which, I am informed, was established and is controlled by the great London firm of Hull, Blythe & Co. I note, also, in the shipping papers that they are establishing there now an oil depot for ships that burn oil. I have seen some of Messrs. Hull, Blythe & Co.'s contracts and, if the amount of coal taken is over 50 tons, the port charges are absorbed in the price of coal.

If, therefore, it can be shown that we have an advantage to Manila by way of Panama in the matter of coal consumption, we will have an advantage at all other ports on account of less distance. If you will look at the map on page 43 of Bartholomew's Atlas of the World's Commerce, which I sent you some time ago, you will get a clearer idea of the routes in that part of the world.

Prof. Johnson gives figures for a ship engaged in the Manila trade whose speed is 10 knots, coal consumption 38 tons. This ship burns 4,475 tons of coal on her voyage to Manila and 5,275 tons on voyage to Yokohama, an average of 2,237 tons to Manila and 2,637 tons to Yokohama. She burns abut 1,800 tons to Sabang on her way out to Manila and about 1,675 on the way back. Taking into consideration the distance and speed of the ship and her coal consumption the amount of coal actually consumed is 25 per cent in excess of the calculated amount from the speed and coal consumption. The distances from New York would be about as follows:

It is 5,115 miles from New York to Port Said, 4,416 miles farther to Sabang, and 2,056 miles farther to Manila. By way of Panama :

New York....

Balboa__

San Francisco_

Yokohama__.

Manila.

Miles.

0

2,028

5,305

9, 805

11, 548

I have used the distances 3.277 miles from Balboa to San Francisco, 4.400 miles from San Francisco to Yokohama, on the great circle from San Francisco to Yokohama, and 1,743 miles from Yokohama to Manila. You will note that Yokohama is but 273 miles farther from New York via Panama than Sabang is from New York via Suez.

Based upon the assumption that the ship must burn 4,475 tons of coal, that she will require about 1,800 tons to Sabang, and about the same amount to Yokohama. I give below a compilation for the coal for a ship by the Panama route.

Assuming that the ship loads at New York and takes on only enough coal to take her to Newport News, where she can get the best coal and get it cheaper. I assume further that it is not desirable to put into this ship more than 1,050 tons of coal at one time, which is the maximum amount given in Prof. Johnson's letter. I assume that her coal consumption overruns her distance 20 per cent as far as Yokohama, the same as she does as far as Sabang. This 20 per cent would give her in her bunkers the usual margin of safety, as we have the computation as follows:

Takes on 50 tons at New York at $3.25; proceeds to Newport News and loads 1,050 tons at $3; thence to Colon, burning en route 370 tons, leaving 730 tons in her bunkers, and at Colon purchases 320 tons at $4.50 and filling her bunkers up again to 1,050 tons; thence to San Francisco, requiring 610 tons en route, and arriving with 440 tons in bunkers; 815 tons are required to Yokohama. The ship buys 375 tons at $6.90-this is the price the Quartermaster's Department is paying at the present time for Comox British Columbia run of mine coal. At a Japanese port she takes on 900 tons of Japanese coal at $3.40 per ton, or 14 shillings, and this is what this coal is worth, and would be a better coal than the $3.25 coal quoted in Prof. Johnson's letter as, judging from the price, that coal would be run of mine. With this 900 tons, and I can not conceive how a ship would consume that much, she travels down as far as Manila and comes back empty, coaling back for the return voyage at, say Nagasaki or Mojo, filling up her bunkers with 1,050 tons at $3.40. She required 815 tons to San Francisco, arriving there with 235 tons, and requiring 610 tons to Colon. She buys 375 tons at $6.90 at San Francisco, and at Colon buys 370 more at $4.50 to take her home.

The amount paid for coal is as follows:

50 tons.

1,050 tons. 320 tons.

375 tons..

Total to Yokohama..

At Japanese port: 300 tons.

Homeward:

1,059 ans.

375 tous.

370 tons..

Total homeward....

Total for voyage..

The total coal bill as given by Prof. Johnson is as follows:

750 tons.

1.030 tons.

1,000 tons.

700 tons.

275 tons.

700 tons.

Total......

Difference in favor of Panama route, $2,646.25.

This is a difference of almost 13 per cent in favor of the Panama route. Total coal consumed by the Panama route, 4,490 tons. Total coal consumed by Suez route, 4,475 tons. The difference at the present time is greater than this. Judging from the price of coal furnished at Algiers and Port Said the coal is No. 1 Welsh coal, and was probably bought under a contract made prior to January 1, 1911, which is the custom with all steamships. These contracts guarantee that the coal should not exceed a certain sum, but provide that if the market falls that the purchaser should have the benefit of it. Cardiff coal at the present time is worth about 3 shillings a ton more than it was on the first of January, 1911. Of this, a shilling a ton is due to increased price at Cardiff, and about 2 shillings is freight rate. It will never be any cheaper at Cardiff, due to the fact that by law they have an eight-hour day, and the miners are now organizing a strike. Freight rates will never be much cheaper for the reason that during the last three months wages were advanced 10 per cent

on nearly all British ships and, consequently, this advances the rates. Rates from ports to Colon were advanced December 1, 1910, 10 per cent. An advance of 2 shillings, or 50 cents, would be conservative for several years to come, and applying this advance to the coal purchased at Port Said and Algiers we have a credit of $1,062.50 to the account, making it stand in all $3,708.75, or about 18 per cent in favor of the Panama route; that although the Comox price is higher it is at least a 10 per cent better coal than the Japanese coal. From the best information I can obtain a ship that burns 24 tons Pocahontas coal such as we get would burn between 29 and 30 tons of Indian or Japanese coals, both of which are obtained at Sabang.

I have seen the Japanese coals used in transports in San Francisco and was on a board of survey once to pass on a lot of it, and it is the poorest and chaffiest stuff I ever saw. We estimated it at that time on a basis of run of mine Comox at $5.50; this by the corresponding value of Japanese coal would be about $3.50.

There is one point that has been overlooked so far, I think, and that is this: That we are discussing coal supplies with the Suez Canal which are already established, due to the Suez Canal itself, but are taking things as they are in the Pacific Ocean before the opening of the canal to base canal prospects on. The more it is studied the more it will be found out that the absolute controlling feature of the Pacific Ocean is Pocahontas coal. No. 1 Cardiff is certainly not 6 per cent better than Pocahontas, and the No. 1 Cardiff coal, at 17/- or $4.15, f. o. b. Cardiff, and Pocahontas coal, at $2.40, f. o. b. Newport News, it will be seen how much this dominates the situation as compared with the Suez situation. As soon as the canal is opened I think there will be a coaling station established in the vicinity of Acapulco, where Pocahontas coal ought to be sold in and around $6. If that is done, the San Francisco high-price inferior-coal situation is cleared up for good, because but little of it will have to be taken. If the Government were to put in a coaling station at Magdalena Bay, and would go in the coaling business itself, there would never be any worry about competition with Suez. Prof. Johnson gives figures in relation to the west coast South American competition. This would absolutely be dominated by the Pocahontas coal.

In 1909, Chile and Peru imported approximately 900,000 tons of coal. Almost all of this was Australian coal, which had come by tramp ships from Australia, these ships returning with cargoes of nitrates at the ports of Iquique and Antofagasta. It can readily be understood from Prof. Johnson's figures that it would not pay a ship to take cargoes of coal through the Straits of Magellan, as far north as Callow, but it will pay a ship to take cargoes of Pocahontas or New River coal from Norfolk, Newport News, clear down as far as Valparaiso, freight not to exceed 10 shillings, and pay canal dues besides at the Suez rate, and make big money getting a cargo of nitrate to bring home. The present freight rates on nitrates via Magellan, to the United States, are 21/-, und 20/- to the United Kingdom. The present rates at St. Lucia, quoted in Shipping by Messrs. Harris and Tidswell, of London, for bunker coal, are as follows:

Twenty-two shillings is $5.40 and 23 shillings is $5.65. The coal at Montevideo or the River Plate is always Cardiff and Pocahontas, and Cardiff is never worth less than $8.75 to $9 in that vicinity. Coronel is a couple of hundreds of miles south of Valparaiso, and the coal there is of exceedingly poor quality. The ratio between Admiralty Cardiff and Coronel is given at 3 to 4. Admiralty Cardiff, however, is double screened and is never used in the merchant service. From the best information that I can get, and I believe it is correct, a ship that burns 24 tons of Pocahontas burns at least 30 tons of Coronel. This ratio is 4 to 5.

I have some figures worked out, that I will present to you in a few days, which will show that a ship, following the course laid out by Prof. Johnson, will lose 12 days' time and $1,800 extra cost of coal by going through Magellan to New York, from points as far south as Valparaiso itself. There is no trade south of Valparaiso worth much to us. The exports of nitrate from Chilean ports to the United States are increasing rapidly, and will probably be around