You will observe that last year the administration of the Suez Canal set apart 5,000,000 francs-approximately $1,000,000-as an extraordinary reserve. (Table 2, right-hand column.) Mr. DOREMUS. That was my understanding. Mr. CHAMBERLAIN. You will notice a little higher up in the same column that the sinking fund of the canal already amounts to upward of 57,000,000 francs. Evidently, it seems to me, with a view of preparing to compete with the Panama Canal the administration of the Suez Canal was authorized by a vote of its shareholders last June to negotiate a loan of 100,000,000 francs-that is, about $19,400,000-which is to be drawn upon from time to time to deepen the canal and to broaden it. Mr. KNOWLAND. In ballast they charge a lower rate, do they not? Mr. CHAMBERLAIN. Oh, yes; considerably lower. Mr. KNOWLAND. 82 cents? Mr. CHAMBERLAIN. Yes; about 82 cents. Mr. KNOWLAND. And $1.93 for adult passengers? Mr. KNOWLAND. And half rate for children between 3 and 12? Mr. CHAMBERLAIN. Half rate for children between 3 years and 12, and under 3 nothing at all. Mr. KNOWLAND. I have heard the statement made that the Suez Canal is controlled by the British Government. Mr. CHAMBERLAIN. No; the Suez Canal is a private corporation; a corporation just like any other corporation. Mr. STEVENS. It has its headquarters where? Mr. CHAMBERLAIN. It has its headquarters at Paris. Mr. SABATH. Is it about such a corporation as the Panama Railroad Co. ? Mr. CHAMBERLAIN. Oh, no. Mr. MARTIN, of Colorado. The British Government owns nearly half of the stock? Mr. CHAMBERLAIN. They are the largest shareholders. Mr. MARTIN, of Colorado. England does not control the stock? Mr. CHAMBERLAIN. Oh, no; the British Government is the largest shareholder. Out of the total number of voting shares-379,421the British Government owns 176,602, which is not a majority of course. Being such large shareholders they are represented on the directory by three directors. Mr. CULLOP. Of what nations are the stockholders members? Mr. CULLOP. I will ask, then, what nationality owns the next largest number of shares to England? Mr. CHAMBERLAIN. I could not answer that. I presume that citizens of France must, because the administration is from France. The majority of the directors, as I recall it, are French. I can not tell exactly about that because these shares are listed, you know, on the Paris Bourse, and I have no doubt they are listed elsewhere. Mr. DRISCOLL. What is that stock worth? Mr. CHAMBERLAIN. The shares sell at about 4,700 francs on a par value of 500 francs. Mr. HAMLIN. Are there any other nations that own any of these shares? Mr. CHAMBERLAIN. No Government except the British so far as I am aware. The British Government acquired those they own under rather extraordinary conditions, as you will doubtless recall. The Khedive of Egypt was the largest shareholder and he became somewhat embarrassed Mr. KNOWLAND. Financially? Mr. CHAMBERLAIN. Financially, and in other respects, too, and had to sell out. As you probably recall, it was one on Beaconsfield's master strokes of policy to buy these shares. The British Government bought them at the rate of about $1.12, so as a financial proposition it was a very prudent investment. Mr. DRISCOLL. That is $112 for a $100 share? Mr. CHAMBERLAIN. The equivalent of that. I am talking in dollars so far as I can. Mr. KNOWLAND. In other words, the British Government does not control the Suez Canal? Mr. CHAMBERLAIN. In no sense. Mr. KNOWLAND. It is a private corporation entirely? Mr. CHAMBERLAIN. It is a private corporation entirely. It has its annual meeting of its shareholders just as any other corporation does. Mr. CULLOP. It is not controlled then by any Government? Mr. CHAMBERLAIN. Oh, no. Mr. MARTIN of Colorado. The Suez Canal has been a very profitable enterprise? Mr. CHAMBERLAIN. Of late years; originally it was not. If you will look at that same statement to which I was referring (Table 2, upper right-hand column) you will notice that in 1867 to 1868 the company had to issue a large number of bonds; that was to complete the canal. In 1871, 1880, and 1887 they made other loans. Those loans of 1880 and 1887 were rather in the nature of improvements. The earlier ones were to make the thing go at all. Mr. MARTIN of Colorado. Of course, I am referring to the canal since it was completed. It has been a tremendously profitable enterprise, as I indicated, for instance, by the figures in the upper left-hand column of Table 2. Mr. CHAMBERLAIN. Oh, yes. Mr. MARTIN of Colorado. Showing that the total investment up to the close of the year 1910 was approximately 656,178,000 francs, or approximately $131,000,000. Last year the profit for distribution, for the fiscal year ending December 31, 1910, was 88,000,000 francs, or in round numbers $16,000,000. Now, that was a dividend, as you see, of 31 per cent Mr. CHAMBERLAIN. It is 158 francs on a 500 franc share. Mr. MARTIN of Colorado. A dividend of 31 per cent on the capital stock, but it would also be a dividend of about 12 per cent on the entire investment, including the construction, improvement, and so forth, of the canal. Now, another indication of the great success on the part of the canal is that whereas it had for the year 1881 a net transit tonnage of about 4,000,000 net tons, in 1910 it had 16,500,000, and it shows almost without exception a constant and rapid increase of tonnage. This, I think, establishes the fact that the Suez Canal has been and is a very profitable institution, notwithstanding the fact that beginning with January 1, 1912, the present month, it has only reduced its tolls to what would be $1.30 in American money, but which under the system of registered measurement in all other parts of the world would amount to $1.50. That is a fair statement of the entire case. Mr. CHAMBERLAIN. That is, I think, an admirable statement. I think that is one of the matters which it is very important for this committee to bear in mind, that any time the administration of the Suez Canal wishes to reduce those tolls it could cut them down. You can figure it out for yourselves. They could cut it down to a great deal less than the current rate, even to a dollar, on a ton basis, and still pay what in this country would be regarded as a very fair dividend. Mr. SABATH. What is the maintenance cost of the canal and the operating cost? Mr. CHAMBERLAIN. I think you will find that stated in Table 1, left-hand column. Mr. SABATH. Gross annually? Mr. CHAMBERLAIN. You mean the actual operating expenses as distinguished from what we might call the fixed charges? For example, the expenses of administration; that is, for the administration at Paris and the administration in Egypt? Mr. SABATH. Can you give me the total? I do not desire to take the time of the committee. Mr. HAMILTON. I think you had better differentiate for the benefit of the committee. Mr. CHAMBERLAIN. That I assume is 2,275,000 francs. The expense of transit-that is, what we might call the direct working expenses right on the canal itself is 3,613,000 francs. That is, you see, something over $700,000. The company also administers some land there-738,000 francs-while for repairs of the canal and accessories 4,863,000 francs. The total working expenses were stated in the report as 27,883,000 francs, which of course is a little over $5,000,000, but that includes that payment on interest up above. Mr. KNOWLAND. Eliminating interest? Mr. CHAMBERLAIN. Eliminating interest, I should say it would be 12,000,000 francs, or in round numbers about $2,500,000, or $2,600,000. The tables when printed will give you the exact figures. The CHAIRMAN. That is the cost of maintenance and operation? Mr. CHAMBERLAIN. That is for maintenance and operation. The CHAIRMAN. Here is what I want to ask. Is there in force now any surtax or additional burden on commerce going through? Mr. MARTIN of Colorado. Going through the Suez Canal? Mr. CHAMBERLAIN. None whatever. Those charges were made at the beginning. Mr. STEVENS. I wish Mr. Chamberlain would analyze the tolls and show why the tolls were fixed at about these rates and what factors enter into the making of such tolls-what is the basis for them in the world's trades. Mr. CHAMBERLAIN. I will just give the rates first. Mr. STEVENS. I just asked the chairman to have that subject pursued. Mr. CHAMBERLAIN. With regard to the rates, the British Government is so keen on the subject that they print every year a statement --not a financial statement, but the general statistical returns of the canal. The year the canal was opened, 1869, there were only ten vessels went through the canal and the rate was 10 francs at that time. In fact, 10 francs was the maximum under the concession; theoretically they can not charge more than 10 francs per net ton. The second year 400 vessels went through. The rate of tolls from 1869 to 1873 was 10 francs. The canal was not making both ends meet; in fact they had to put out that second loan that is referred to there. At that time an international conference was held at Constantinople, after which, by an arrangement with the Sultan of Turkey, they were authorized to put on this surtax until they came nearer meeting expenses. That was three francs, and later two francs and a half, making the rate 12 francs for two years, then 12, then 11, 10, 10, 9, and since then it has been gradually decreasing. Since then the business of the canal has been increasing so rapidly that it is inevitable that the tolls must be reduced. There is no escape from that conclusion. Of course, in a sense, there is a conflict of interest; in fact that is indicated in the address of the President. Mr. MARTIN of Colorado. Would you let me insert here from your report a very interesting fact, showing both the great growth and the great profit of the Suez Canal, to be found on page 228? It shows on that page that the total receipts in francs from ship tolls in the Suez Canal for the year 1898 was 82,657,421 francs; while on page 224 it shows that the profits available for distribution for 1910 were 82,427,042 francs. In other words, the profit available for distribution in 1910 was nearly as much as the total receipts in 1898. Mr. SABATH. Where do you get these figures? Mr. MARTIN of Colorado. From Mr. Chamberlain's report. I would like, in some consecutive way, at the proper time, to ask Mr. Chamberlain some questions on his report, but I do not want to interfere with Mr. Stevens. Mr. STEVENS. I agree with Mr. Martin; I think I see what is in his mind. Mr. Chamberlain is going to be a fountain of varied information for us. I think we are adopting the right plan by insisting upon one step at a time. The subject I had in mind was to have Mr. Chamberlain place on record an analysis of the Suez situation so we could see why these tolls are fixed as they are. I think that ought to be done before we leave the Suez subject. Mr. CHAMBERLAIN. I trust I may have done something toward establishing the fact that general tolls through the Suez in the course of a very few years must necessarily be considerably less; that if there comes to be competition between the two canals, the Suez tolls must be considerably less than the present rate. The Suez Canal administration has shown its ability to cut the rates down 1 franc (19 cents) a net ton in 12 months and still make good money. I saw in one of the English papers, which I forgot to bring with me, a statement of their business during the first six months under this scheme, and the decreased tolls had been pretty nearly made good by increased tonnage, and I may add that the latest figures show that against the receipts for 1910 on tonnage of 127,251,000 francs, the receipts for 1911 just closed from the same source were 131,024,000 francs, an actual increase on a lower toll. Mr. MARTIN of Colorado. Was the 10-franc rate ever in effect? Mr. CHAMBERLAIN. Oh, yes; for quite a number of years, From 1869 to 1873, and than it was in effect again in 1884. Then from 1885 to 1894 it was 91; from 1894 down to 1903 it was 9 francs; then for two years it was 8. In 1906 they dropped the rate to 7 francs and 75 centimes, and it continued at that until 1911 when they dropped it to 7 francs and 25 centimes. The following summary from the British Parliamentary return will give you an outline of the Suez business from the beginning. Yearly return of shipping and tonnage that passed through the Suez Canal from its opening until the year 1910, together with the transit receipts. Mr. DRISCOLL. When did this canal first begin to pay dividends? Mr. CHAMBERLAIN. I could not answer that directly. I think it was in 1875. The CHAIRMAN. If we continue to use a different method of finding space on a vessel-tonnage if we maintain a differential of 18 per cent, it would be possible for them to go 80 cents when we charge a dollar, and still maintain practically the same charge? Mr. CHAMBERLAIN. That would be superficial, of course. That would not fool anybody. The CHAIRMAN. I understand; but under the different system of counting, wouldn't that be apparent? Mr. CHAMBERLAIN. That would be the appearance, but it would not be the fact. |