Senator BRANDEGEE. 1898. The treaty was finally concluded in 1901? Mr. WHITE. Yes. Senator BRANDEGEE. You knew that our American shipping in the foreign trade was comparatively an insignificant thing, did you not? Mr. WHITE. I did, indeed. Senator BRANDEGEE. You knew, on the other hand, that our ship. ping engaged in the coastwise trade was a very important thing, did Senator BRANDEGEE. A very large interest? Mr. WHITE. I have always understood so. Senator BRANDEGEE So that when the question of our right under any treaty that might be negotiated to exempt our ships in our domestic or coastwise trade, when you were negotiating, knowing these circumstances, the difference of our interest in foreign shipping and our coastwise trade, the question of our right to exempt our coastwise trade was never raised at all? Mr. WHITE. Never. Of that there is absolutely no question. The CHAIRMAN. Are there any further questions to be asked of the witness? We are very much indebted to you, Mr. White. STATEMENT OF PROF. EMORY R. JOHNSON, PROFESSOR OF TRANSPORTATION AND COMMERCE, UNIVERSITY OF PENNSYLVANIA, PHILADELPHIA, PA. The CHAIRMAN. Prof. Johnson, give your full name and address to the stenographer? Prof. JOHNSON. Emory R. Johnson, Philadelphia, Pa. The CHAIRMAN. What is your occupation? Prof. JOHNSON. Professor of transportation and commerce at the University of Pennsylvania, member of the Public Service Commission of Pennsylvania, and from August 1, 1911, until October 4, 1913, I served as special commissioner on Panama Canal traffic and tolls. The CHAIRMAN. Senator Simmons, I think it was at your suggestion that we invited the professor to appear. Perhaps you would like to propound your questions. Senator BRANDEGEE. Were you engaged in this same line of work in relation to the Panama Canal before 1911 ? Prof. JOHNSON. From June, 1899, until March, 1904, I was a member of the Isthmian Canal Commission. Senator BRANDEGEE. The reason I am asking this question of a preliminary nature is this: My recollection is that you were employed by President Taft to bring some previous work you had done, or some previous investigation in relation to the probable shipments that would pass through the canal, down to date Prof. JOHNSON. I was appointed on the Canal Commission in 1899 by President McKinley as the economist member of the commission, with the understanding that I should devote my time largely to the study of the several routes from the commercial point of view, which I did, and I prepared for the Isthmian Canal Commission a rather extended report upon the industrial and commercial value of the Isthmian Canal, which report was made a part of the report of the Canal Commission that was published in November, 1901. And in answer to your question I was appointed by President Taft in 1911 to bring that previous report down to date and to do two things: To recommend a schedule of tolls and to prepare and submit for consideration a set of tonnage rules to determine the tonnage upon which the tolls should be paid. Senator BRANDEGEE. I beg your pardon for asking the witness the question, Senator Simmons. Senator SIMMONS. I am perfectly satisfied with the course of the inquiry. Senator BRANDEGEE. You conduct the examination. Senator SIMMONS. Go right on with your statement, Professor. There is no use in asking an intelligent man like you more than one general question to elicit what he knows upon one subject. Pruf. JOHNSON. I wish to serve the committee in the way the committee desires me to serve it. Since receiving the invitation of the committee Senator SIMMONS. I think before you go into that, Professor, that you ought to make a pretty full statement along the line that you were pursuing a little while ago, showing what you did and why you did it, so that the committee may see your opportunities of knowledge, and the extent of study and consideration that you have given to the subject. Prof. JOHNSON. I am acquainted with a number of the members of the committee individually, and I think that the members of the committee are fairly familiar with the public work I have done, and unless you wish me to go further into my life history I would rather stand on the record. Senator SIMMONS. Nothing, Professor, except your study of these questions, the amount of consideration and investigation that you gave to these questions relating to tolls and traffic. Prof. JOHNSON. In the preparation of the original report which was published at the end of 1901 I spent two years and a half of work, and made as thorough a study as I could make, with competent assistance, of the traffic that would make use of the canal, and of all the conditions affecting the use of the canal by the available traffic. Then, in 1911, I continued the study of traffic, bringing the statistics and other data down to date, in order that I might prepare a schedule of tolls with as accurate a knowledge as I could obtain of the traffic that would pay tolls, in order that the revenues might be determined as intelligently as possible. That work occupied something over a year, that second study of the traffic leading to the recommendation as to tolls. For somewhat over a year following that; that is, during the year ending in October, 1913, I devoted my time almost entirely to the preparation of the tonnage rules, and of the report which accompanied the Panama tonnage rules. Does that answer your question? Senator SIMMONS. You are professor of transportation and commerce of the University of Pennsylvania? Prof. JOHNSON. Yes, sir. Senator SIMMONS. If there is any line on which you would especially wish to address the committee, we shall be glad to have it. Prof. JOHNSON. Upon receiving the letter from Senator O'Gorman, requesting me to attend this session of the committee, I at once set about preparing a brief statement which I thought might be of value to the committee. The statement is longer than your patience, I am sure, and I shall not attempt to read it. Possibly I could make an oral summary of the principal points in this prepared statement, and possibly you would permit me to file this statement. The statement would probably occupy 15 or 16 printed pages in the record. The CHAIRMAN. You may consult your own pleasure, Professor. Senator SIMMONS. I suggest that you give an analysis of the statement as you suggest. Prof. JOHNSON. I promise you not to read it, Senator. I shall endeavor to make my statement brief, and if the questions which my statement give rise to seem to call for a fuller statement, I will make the statement more complete. Anything that I may have to say to-day will deal with the economic aspects of the question. I do not wish to testify on legal questions. The question of the exemption of the coastwise shipowners from the payment of Panama tolls raises questions of domestic policy and also of international relations, both of which have economic phases. As a question of domestic concern, toll exemption must needs be considered with reference to two general questions: First, the revenues which the United States will secure from canal tolls, and, second, whether the general public or the corporations and individuals who own the coastwise ships will profit from the toll exemption. In considering that second question it is obviously necessary to take up the effect which toll exemption may be expected to have upon the freight rates charged by the coastwise carriers and, what is more important, by the railroads connecting the eastern and western sections of the United States. To take up first the question of tolls in their relation to canal revenues. In considering the effect of the exemption of the coastwise shipowners from toll payments it is possibly well to bear in mind. that the tolls that President Taft fixed-which, as you remember, were $1.20 for each 100 cubic feet of earning capacity of the vessel, with 40 per cent discount for vessels without passengers or cargowill not restrict traffic; they are not the highest rates that might have been imposed without restricting traffic, and the tolls have been fixed not with a view to securing the maximum possible revenue. It is also obvious that the revenues we secure must depend upon two factors, the rate of tolls and the tonnage upon which the tolls are paid. These statements are near truisms. There will be nothing new or unusual about the Panama Canal finances. If the canal does not support itself, the taxpayers must support it. The amount required to meet the current expenses and capital cost of the canal can be derived only from the tolls or from the taxes paid by the public, who own the canal. And as regards the income from tolls, the sum received must be affected by the rate of charges and by the share of tonnage that is subject to or exempted from the charges. It is estimated, and the estimate is based upon Col. Goethals's figures in part, that it will require $3,500,000 a year to operate the canal. Senator BRISTOW. Is that submitted in detail? Prof. JOHNSON. It was submitted in the hearings before the Senate Committee on Interoceanic Canals in 1911 (S. Doc. No. 191, 62d Cong., 2d sess.). Senator BRISTOW. In detail, was it? Prof. JOHNSON. Yes. The CHAIRMAN. Does that embrace the expense of fortification and maintenance of troops? Prof. JOHNSON. No; it does not include fortifications nor any military or naval expenses. The estimate is of the operating expenses. The CHAIRMAN. Have you any estimate on that point? Prof. JOHNSON. I have none here. I have the information only that has been presented from time to time in hearings before the Military Affairs Committee. The CHAIRMAN. What is the information that you have on that point? Prof. JOHNSON. Some $8,000,000 to $10,000,000, I think, to start with. I do not wish, however, to testify on that, Senator. The CHAIRMAN. We are simply asking for whatever information you have on that point in connection with the estimate of $3,500,000 a year to maintain and operate the canal. Prof. JOHNSON. On that point my estimate has nothing to do with military or naval expenses whatever. Senator BRISTOW. Could you embody a detailed statement of these expenses, of what they consist? Prof. JOHNSON. I could append to my formal statement, if you so desire, pages from the annual report of the Isthmian Canal Commission, Col. Goethals's estimate of operating expenses. (The estimate called for follows:) Senator PAGE. What is the entire cost you name? Col. GOETHALS. $3,500,000, according to this schedule, which was prepared a year ago. Senator OVERMAN. You say there will be 2,400 employees engaged in the operation of the canal. What would be the population of the zone by reason of their presence; that is, what would they number with their families? Col. GOETHALS. About 5,000 people. In connection with my previous statement: This $3,500,000 is estimated for all operation, including certain dredges, which will have to be maintained in connection with the canal operation, and includes labor and material for maintenance. I have considered, in arriving at this figure, the amount of business handled at the Sault Ste. Marie, which has the largest traffic of any canal in the world. In connection with Senator Overman's question, I will say the figure given does not include any military population. (The tentative draft of organization subsequently furnished by Col. Goethals is as follows:) TENTATIVE DRAFT OF ORGANIZATION FOR OPERATING CANAL AFTER COMPLETION. [Civil government and sanitation not included.] Panama Railroad to remain as now, and to purchase all supplies for canal, including subsistence. No independent home office provided. Five departments are proposed, namely, the operating department, the engineering department, the quartermaster's department, the electrical and mechanical department, and the accounting department. A general chart is shown on page 23. At the head of all departments is a general superintendent, who is also head of the operating department. OPERATING DEPARTMENT. The duties of this department embrace the operation of docks and wharves at the terminals, pilotage, lockage, and lighting the canal. Page 18 shows a general chart of the proposed organization. No details are available for the terminal estimates. The Panama Railroad now pays approximately $275,000 for maintenance, exclusive of dredging, and for operation of docks and wharves, with the necessary tugs and lighters. Lights and beacons... 150,000 This includes $100,000 for maintenance of the lights and beacons and $50,000 for maintenance of two tugs to patrol Gatun Lake. Pilotage: 60 pilots, at $1,800... $108,000 The Suez Canal maintains about 102 pilots, but the passage through the canal consumes 18 hours, and a single pilot takes the vessel only half way. Each pilot averages 10 ships per month. Lock force... 326, 260 434, 260 and pro The proposed organization of the lock force is shown on page vides for one shift. It is thought that no more need be provided at first. It is based, in general, upon the assumption that to take a vessel through the locks will require 1 assistant superintendent on board the vessel, 4 locomotives, and a crew of 1 first-class lockman and 6 lower-grade men on each wall carrying lines; and that for each shift 4 such crews must be provided for Gatun, 2 for Pedro Miguel, and 4 for Miraflores. Total for operating department..... The department includes about 730 men. ENGINEERING DEPARTMENT. 1,040, 460 To have charge of all construction and repair work pertaining to the canal proper and of all excavation and dredging in the canal. The total cost of the department, including maintenance and dredging, is estimated at $914,700 annually. The organi zation is shown on page 19. Excavation and dredging: Superintendent of excavation and dredging. Assistant superintendent of excavation and dredging. Operation and repair of 1 seagoing suction dredge... 1 large ladder dredge.. 1 small ladder dredge. 1 dipper dredge... 4 Scows.. 32, 100 4, 500 3,000 175,000 200,000 60,000 40, 000 I The seagoing suction and large ladder dredge are supposed to work 24 hours. The remaining plant is manned for but one shift. |