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* ADDRESS OF
HENRY L.. STIMSON
SECRETARY OF WAR
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THE COMMERCIAL CLUB AT
CITY, TUESDAY EVENING,
NOVEMBER 14, 1911
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,I PROBLES OF THE PANAXA CANAL.
iery' glad to have this opportunity to meet the representative
imen of Kansas City. I have already had occasion to mark
spirit of your community and the vigor with which you can
Pi n industrial problem. More than five years ago, when I was
oinited Federal attorney in New York City, you were engaged
ueg fight for fair railroad rates to the Missouri River and to
S::end to the rebates and discrimination which had previously
One of my first official duties was to engage in a similar
Stofree from corresponding abuses the trunk lines of railroads
eat of New York City toward the West. I remember very
-tii encouragement which I received in my efforts from the
which you had already attained in yours.
Since I have been appointed to the head of the depart-
lft ichk has in charge the building of the Panama Canal, I have
ith great satisfaction the intelligent interest which your city
gin this enterprise and the farsighted efforts which your
Save been making for the purpose of developing navigation
SMissouri River and thereby placing Kansas City in a position
ii'aW ltawill be sure to share in the great expansion of Gulf trade
must come with the opening of the canal.
t t I wish to say to you to-night concerns some of the present
a which arise out of the construction of that canal. We are
.l .in danger of finding ourselves in a singular position. We are
in completing. the greatest engineering work of the ages.
i: national pride is keenly centered around it. We love to dwell
n lbt spectacuar triumphs which have already been achieved-our
l|ii|G|ist over the dreaded diseases of the Tropics and the splendid
t with which American energy and Amgrican inventive skill
a ting in removing mountains, changing the courses of rivers,
S..h.ge waterway. We dwell on the immense vista of
l cha:n in the,world's trade which will be created by the
i i f this new trnsisthmian route.
:.ld'i t i l same time we are in danger through our own neglect
i.ading-Ourselves with the canal all ready on our hands and no pro-
*a iidj l or it operation. Part of this is due to the fact that our
i;5iits,, lwayseffient and never loquacious or self-advertis-
-r digtiwough thi great work in far less than the schedule
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time. When' the next rainy season comment
will begin to rise in the great ditch until rt is6
it "is expected that it will reach at least th 4'546oot9.
would mean water enough to float small boats thrW g
And unless unforeseen catastrophes occur the6cea6a' 1
ready for ocean traffic more'than a year before the tim.i.s
formal opening. .::
The engineers and the workmen will have done their past
see what remains for you and me.
In the first place, we must create a permanent orgaiztiqt
operate the canal and must train the force of men necessary f;
operation. By the act of Congress of June 28, 1902, known -a .
Spooner Act, the President of the United States was directiS
cause the canal to be excavated, constructed, and completed, a.H.n
authorized for that purpose to employ such persons as he0-.
necessary and fix their compensation. As soon as the canal ii
pleted, his authority and that of every one of his subordinatsJl
cease. Even now as the work is nearing completion the tim S
hand when the skillful force of trained men who have been
in its construction must be gradually disbanded and sent back :
States. This work of disintegration must commence within a
months; and unless Congress gives authority to gradually blen4i
constructing force, or so much of it as is needed, into a trained i
for permanent operation, we shall be reduced to the expensive
somewhat ridiculous proceeding of shipping our 5,000 skilled At
ican operatives back to the States, only to begin immedAi
afterwards the painful process of collecting and breaking inb
operating force. Only those of you who have visited the I:h,:
ahd who have seen the splendid characteristics of the men nowcI.
their trained skill and their superb loyalty to and enthusiasm in i.
work, can appreciate what an economic loss would be involve
such a performance.
There then comes up the question of what kind of legal b.
nation or government we are to create in order to train this,
and thereafter for all time operate tfe canal and exercise otin'
over the surrounding zone. In deciding this question much be
on keeping the fundamental facts clearly before us and no
led away by loose generalization or false analogies. The |
differs wholly from that which confronts us, for instance, Mi
Rico or any of our other insular possessions. The Canal
tains no place for an independent, permanent population.
over it pretty thoroughly myself last summer, tramping, t
large portions of its jungles on foot with Col. Goethaila,s.k
agricultural standpoint it is the least attractive part, of a |
entire Republic of Panama. It is a strip only 10 miles l
zation~~ or; ::gtr n tra.in t* '** ......
a te e a
-ll T SVlF na w*'a u war a var VIT.LL W VWAAuutau A LOID U LAVC.
The rest of it is either tropical swamp and jungle
A..lk. There are none of the fine grasslands which
i other portions of the Republic. It is preposterous
jl~ sver formidfg a basis for anx American farming settle-
,.y present population, outside of the construction force,
i:.. few 'negro squatters, formerly workmen on the canal,
*0Fa ,Jmped their job and prefer to live on poorly cultivated
idharateristic of the z6ne, this utter absence of all possibility
k "'r independent population, is most fortunate. It gives us a
rlWrame an organization adapted directly to our main purpose
plcated with other problems of government The prob-
Sitself to the management of a great public work, and
ernment of a local republic. The question is that of open-
idiiutting the lock gates and of protecting them in time of
4l;:it is not a question of educating or of uplifting a dependent
i,: The men who are to do this work are not to be the representa-
PitA local democracy on the Canal Zone, but rather the trusted
A: the 90,000,000 of American people whose national welfare is
ingt the canal and its safety. It is essentially an executive
L:a:d there is no more reason for introducing all the complex
, and balances of government which we rightly regard as essen-
aI self-governing community than there would be to permit the
if the Regular regiments which we are sending there to protect
ipL to provide for their own discipline or choose their own com-
WI. Of course we shall have to have local courts in the zone for
.i.pose of administering local justice and safeguarding individual
sand there may be some other minor civil functions to be at-
itto; but the main*function of Canal Zone government will be
administration, and nothing else.
i inotg get away from the fact that at bottom the canal pre-
Lili tary problem. For defensive purposes the Panama Canal
6aply doubles the capacity of our fleet. It is a measure of de-
i most terrific effectiveness. The three hundred and seventy-
ons which we are spending on it not only develop enormous
cities of peaceful trade, but at the same time is virtually equiva-
Sdfe~&ive purposes. to the expenditure of a nearly equal
Wi:S aEm To have it blockaded at a critical moment in our
iT. i:,ther by accident or design, by inefficiency or malice,
il. .asa'is srous as having 20 of our battleships sunk at
pawhiEch that ,mre fact imposes upon any nation
irited titles mf. sy be at war must never be forgotten
". its military effectiveness will
S.n a maintenance of peace.
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Nor must we for a moment forget t e sat
400 years this strip of land was notorious ,a. thei p i
Americas. It has been redeemed and'kept free fro did..
our work. of construction only by the most. uneasin
the constant use of the Executive power. The znecessityi .i
vigilance will continue. In some respects it will be esea'n,
after the canal is opened, when swift vessels passing tluo
become possible media for transmitting to all portions:oftl"
the contagion of the dreaded yellow fever. Only a continual igjl
use of the administrative power can insure us against suph .P" 1
In short, it seems to me that we can safely guide our couare
future by our experience in Panama in the past. The iani
of each problem are the same. To successfully operate and.safji
the canal is as purely an administrative undertaking' as to srgI
fully construct it, although the mechanics of the two tasks
course, entirely different. The canal is being constructed under
flexible system of Executive administration. The President wams
reacted by Congress to build it, and he is building it. As. eacfi
plicated problem of construction or administration has come ti|
system which Congress thus wisely adopted has been fpund.'sI$
ciently flexible to allow it to be developed and changed to meet:!
That same policy should be continued as to the operations :1
President'should be authorized and directed to operate the ds
through such forms of administrative government as he may die
This is a policy appropriate to meet the military and naval pro W
which underlie the situation, because the President is the cones
tional Commander in Chief of the Army and Navy. It furnished
most efficient method of government, and we heed efficiency in deui
with a subject matter so vitally important at all times to our NTi
as the smooth working of this canal. Thirdly, it is a method flea
enough to meet the new and uncertain problems which are bag u
I am glad to say that these features have been recognized mi"l
bill reported to the last Congress by the Committee on Int
and Foreign Commerce, which bill, in substantially the same.;
has been introduced into the present Congress. I sincbrely :h
these features will be preserved in the legislation which is e=
adopted, and that such legislation will be adopted soon.
The second problem which lies before us is to providedt
chinery which will determine and fix the proper tolls to be *h
the vessels using the canal. The solution of this conmeraial
is even more pressing than that of organizing the canal':.
The canal is built to secure trade. The great befinefts.
hi& it will only come from its adoption as a route of
i. St u~tdern trade does not change its routes instantaneously.
panCnaa Canal will have at least three great competitors-the
siaI, the- Tehuantepec route of Mexico, and our own trans-
imntal railroads. The amount of commerce which will use it
|pend to a large extent upon the comparative cost of trans-
lian over these different routes. It is said that a dollar per ton
Ight per thousand miles represents the coal consumption of the
og freight steamer. In other words, every dollar per ton
:we charge as tolls for the canal will neutralize a thousand miles
advantage in distance which the Panama route may have over
,mb petitor. Under these conditions the amount of commerce
ft will use it is largely a question of tolls. And in order to make
::!.plns, to build their steamers, to make their contracts, and
no all the other long-time obligations which enter into modern
shipowners must know about two years beforehand what the
Ot toll through the canal will be. For many months already we
rieen receiving letters from agents of ocean transportation lines
Sg upon us the solution of this question, and I know at least
line which has been obliged to take the risk of laying down the
; tive great steamers for use in this traffic without knowing as
conditions upon which the use of these steamships will depend.
p power which fixes the canal tolls must be sufficiently flexible
diast itself to meet changing conditions of time and com-
hf; it must be susceptible of continuous watchfulness pre-
|Qfl for ready action; and it must have the capacity to deal with
~ai commercial facts. These are the characteristics of an ad-
Mrtive officer or board. The legislation which provides for the
Ilt~ll should indicate the broad lines of national policy within
ihe tolls are to be fixed. But it should provide power for the
iant of an administrative officer or board who will be always
., always studying the problem and acquiring information
.IW. .always watchful against new or shifting conditions, and
*di have power, within these broad lines of policy, to fix or
l;thae tolls so as most effectively to insure that this new trade
t'R!if:ulfill the great national and international functions for
involved in this question of fixing the tolls is the question
iei United States has the right to pay the tolls on American
In0the canal. There has been criticism against even the
:of this possibility. There was similar criticism a few
gi the proposition to fortify the canal, until the pub-
i~ip ary Hay's correspondence with Lord Lansdowne
:"Ikness of our negotiations on that subject with Great
... :how clearly Great Britain had recognized our
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nations:Oin perfect fran1,kness and- in b:-oltsiB
pledg-es: .. There will be no violation of ourratie; t
be any evasion of them. When the facts as 1tothi
ined, they are in my opinion so lear as -to Uihavezo
as to. the right of the United States, both' legal and ......l
respect. The clause of thle Hay-Pauncefote treaty which
the question is a declaration by the' Uited States whiet4,,
adopts the rules governing the Suet Canal. It provides
The United States adopts, as the basis of the neutralization of saB.iIwM
the following rules, substantially .asi embdedd in the Convention of Omn4
nople, signed the 28th October, 1888,- :r 1ti^e navigation of the Saei t|
that Is to say: : .. .. :. ..
1. The canal shall be free and open to the vessels of commerce ca4 1 lS
all nations observing these rules, on terms of entire equality, so that i
be no discrimination against any such nation, or its citizens or subjei
respect of the conditions or charges of traffic, or otherwise. Such:ondiM
charges of traffic shall be just and equitable. .
Now, in the case of the Suez Canal, it has never been consid
violation of this rule of neutralization for a nation to pay t
upon the vessels flying its flag. This is done directly by the .(1
ments of Russia and Austria-Hungary, which have made appdeig
tions for the express purpose of paying the tolls of vessels "o t
merchant marine. Furthermore, substantially every other E iui
Government appropriates from its treasury and pays to vess
the Suez Canal, in the form of subsidies, sums of money fu1i
partly equivalent to the tolls of the canal. In the case of GOe'i"
France, Japan, Italy, and Spain, the amount thus appropriain
regularly more than sufficient to pay the tolls. In the case' so
Britain the subsidies paid, to the Peninsula & Orientl Co.--the
cipal line which uses the canal-amount-to nearly six-sevenths oi
tolls. These subsidies were not all limited to mail steamers; mai
them were paid likewise on freight steamers.
It is perfectly clear, therefore, that when the Panama, Gpi
opened, the English vessels which use-it, the German vessel :
use it, the vessels of practically all of our competitors whidi:
will be in receipt from their respective Governments, of .-
money, either given them directly for the purpose of- payofI
tolls or perfectly applicable in their discretion to such use. t;
impossible for the United States to prevent this; for undeEn
rules which we have thus adopted for Panama, such pay n
not amount to a discrimination or a violation of the termst fr
equality for which those rules provide. Is, then, the Unitdjj ,
which built the canal, to be the one nation whose vessels
have such assistance? Will any rule of construction o-
Paunicefote treaty or any rule of honor prevent the pUtli
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ments o sa d s n ,h he.: .
iip..mDeen ummrea, m our case, oy me nay-rauncezote treaty-
jit by plain and express covenant, but by indirection and
$tw.t Would Great Britain dream of making such a con-
gmaist the United States when she herself is paying annual
' Ito her merchant marine of between six and seven million
ai year? Has the United States, in her covenant to insure
iltirt of the canal on terms of entire equality" so shackled
p :powers that she can not resort to the universally established
which her competitors will use in respect to their vessels
i .trough the canal Does equality to all other nations mean
~ity to the United States? The answer is self-evident.
SLelause was never intended to forbid a nation to assist her own
Wi.with her own funds. By it the United States barred herself
uing her power over the canal to injure the trade of another.
ild not isolate or discriminate in any way against another in
e0trs use of the canal. But it was never dreamed that she
istuse the resources of her own treasury in favor of her own
Therefore, that the United States has a clear right to
sate to the vessels, paying the same the sums paid into its
-::by those vessels in the form of canal tolls. This being so,
i:; no- difference, save in form, whether she makes this appro-
a out of her treasury to such vessels by receiving the money
&em first and repaying it to them, or by simply relieving them
i~: payment of those tolls. In either case the money in ques-
btilOgs to the United States. In either case it amounts to a
:A-jhe Uxted States of her own funds to the vessels in question.
isitence of the right is clear; the need or wisdom of its asser-
p~ui its a broad question of policy. The exercise of this power
4e.d upon the conclusion, based upon full understanding of
that the National interests will be furthered by securing
to American vessels engaged in trans-Isthmian trade.
of tolls has thus far been discussed mainly in respect
traffic. This coastwise trade presents a special
FOiL, he respect it has less need of a canal subsidy than our
4 b ecausit already has a Government monopoly. While
A'ein foreign trade have been virtually driven off the
competition our coasting trade still exists because no
ipcai~ :n iuaels are permitted by law to engage in it.
e hind, our coastwise traffic is subject to the compe-
,ltEi.p tiemtal railroads, and this is really the con-
i problem. One of the main benefits which the
: the canal is its effect upon transconti-
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nental rats. It virtually makes our east and htwe t oMW
It gives us water transportation to regulate our4' aflrol at .
history of the Panama route for the last half centi .fun
indication of the danger which we have to fear. spite obf it.i
advantages, the present Panama railroad roite has ne erw..
effective competitor of our great transcontinental railod
public have never received any real benefit from its compe
The matter has been investigated congressionally, and the hist
the way in which the railroads have throttled this -sSibei
petitor is a matter of record. In early days the Panama 1a
Co. was frankly paid $75,000 a month, with the object of duppR
its traffic. In later days, through other and more indirect iarr.ag
ments, transisthmian business has been discouraged and kept dfti
and the rates over the Isthmus have been kept up, with the result tl
at the present day it is said that not less than 90 per cent of our tbr
between our east and west coasts is carried by our tirnscontinenM
One thing is perfectly clear-we must be more successful in t
future than we have been in the past. The country has not pt*,
money into the canal merely in order to allow this new route 0i
throttled as the old one was. And the public temper will see t6
this is prevented. If the influences which have united against ti
old route are unwise enough to attempt to stifle the competition
the new, means more and more drastic will undoubtedly be resort
to in order to frustrate such an attempt. I say "unwise" becij "
the history of the world is full of such attempts and furnishes ci
elusive proof of their shortsightedness. I believe that the opening d
the canal instead of being a loss will ultimately be a benefit to,'i
railroads themselves in the new local trade which it will encoura
and develop. That has been the history of the opening of practical
every new trade route or improved method of transportation.
It has already been suggested, as a means of keeping the canal Sf
from railroad control, that we establish a Government-owned lia
of steamers through the Panama Canal. But this method wo4A
be such a radical departure from the policy on which our"hJ
tional transportation systems have been hitherto developed ta
think it may well be kept in the background until other u
usual methods have been attempted and found wanting. I b
that there is abundant opportunity for the employment of
capital in the development of our transisthmian treaffi, and
it should be the policy of the Nation to encourage the develop,
by independent capital of as many lines and as ituch
through the canal as possible.
I am inclined to believe that the most effective solutiont d.'
problem will be to extend over this new transsthmian :*o
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Is.: thIterstate Commerce Commission, including its regu-
O I'. b;errates. Such a method would permit the develop-
ii tsi new form of interstate commerce along the same his-
9as those which we have followed successfully in our in-
commerce development hitherto. I personally believe it
i&e more effective in keeping down water rates than a negative
bin against railroad ownership or control, although the nega-
hlibition is strongly urged by many persons thoroughly
r with the situation. Both methods could be tried at the
time if desired.
:'a:m up, our legislation on canal tolls should, in my opinion, au-
Sathe President, through such administrative process as he may
iih for the purpose, to fix these tolls and change and readjust
a. meet the lessons of experience. If Congress shall decide upon
lcy of encouraging American shipping by a subsidy of canal
..i should authorize the President to apply that policy to such
it and in such manner as will best subserve the purpose intended.
finally hope that Congress will so decide. I believe that this
HEshould put itself in a position of readiness to wisely assist
iiantile marine in this respect. Experience may show the
wee to be more necessary as to some classes of shipping than
ithers. Experience may show, for example, that our coast-
tee can meet their railroad competition without this additional
TiE give it under such circumstances would not lower rates;
pi simply add to the profits of the shipowner. But such legis-
ai Mis enacted should be enacted promptly and with due regard
wnte elements of the problem to be met.
.iC completion of the Panama Canal will practically coincide with
ibe turning points of our national life. Hitherto we have been
t in the domestic problems of a young Nation. We have
frihed the conquest of our own unoccupied land. Now that
l '.i2s gone we are necessarily turning to foreign markets as
saicetivi~ity. With each advancing decade our manufactures
foreign trade will become more vitally important. Each
Ft1aea : our citizens turning their eyes toward the ocean-
wRDtBmrcial future which lies over seas. The reestablish-
zti'onal merchant marine is a necessity which will be-
;rwith every year that passes. Let us take our firstt steps
I$t Uies for future growth. Let us prepare for the
I -H of-:this great canal which we have built by a
,treatment of its problems, which will tend at
ttii the establishment of that national commerce
Ligus any benefit from the canal. The problems
p :I lines. It is a national problem demanding
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UNIVERSITY OF FLORIDA
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