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The Panama Canal
coastwise carriers. The most that can be expected, however, is that competition will somewhat limit monopoly in the coastwise rates. If the public is to secure as low freight rates as the coastwise carriers can profitably afford to give — rates as low as the public is entitled to receive — it will be necessary to regulate the services and charges of the coastwise steamship companies much the same as the railroad services and charges are now regulated. It may safely be predicted that within a few years there will be a strong public demand for the effective regulation of the coastwise carriers.
IV. EFFECT OF FUEL COSTS UPON USEFULNESS OF
THE PANAMA CANAL
The usefulness of the Panama Canal will depend upon the economies that shipping can effect by taking the Panama Canal instead of some alternative route. Economies can result from shortening the distance and time of ocean voyages, from enabling vessels to trade en route at intermediate ports more advantageously, and, fortunately, in the case of the Panama Canal, from a reduction in fuel costs — the largest expense incurred in the operation of steamships. Fuel costs by the way of the Straits of Magellan are especially high, there being practically no native coal on the east coast of South America; and only inferior coal can be obtained on the west coast. The cost of coal at the Suez Canal will certainly be higher than at the Isthmus of Panama. The coal sold at Suez and at Mediterranean stations is Welsh and English coal, which costs more than does American coal at home ports, and which has to pay higher freight rates to the Mediterranean and the Isthmus of Suez than will have to be paid upon American coal from the Atlantic-Gulf seaboard to the Isthmus of Panama. The best way to measure the advantages of the Panama route in the matter of fuel costs is to compare the outlay which a freight steamer would have to make for coal via the Panama and the alternative or competitive route.
As there will be no question as to the use of the Panama Canal for all traffic between the two seaboards of North America and for practically all traffic between the Atlantic-Gulf seaboard of the United States and the west coast of South America, it is not necessary to compare fuel expenses via Panama and the alternative Straits of Magellan route. For the trade between Europe and the west coast of South America, however, particularly for the Chilean commerce, the use of the canal is certain to depend, in part, upon relative fuel costs via that route and the Straits of Magellan. In the first part of this chapter, it was pointed out that freight vessels will save only five or six days by taking the Panama route instead of going through the Straits of Magellan on voyages between Liverpool and Valparaiso. The saving due to reduction of time would not be sufficient to justify the payment of $1.20 per net ton for the use of the Panama Canal; but the fuel expenses by Panama would be so much less than via Magellan as to make certain the use of the Panama route by practically all ships en route between Europe and Chile.
The Panama Canal
A 10-knot freight steamer, whose daily coal consumption averages 30 tons, would, in 1912, have saved $9,300 in fuel expenses by using a Panama Canal for a round trip between Liverpool and Valparaiso. The saving in fuel expenses would nearly equal the amount of tolls which this vessel would have to pay for passing through the canal on its outbound and return voyages.
Although Natal coal can be obtained cheaply by vessels making the run from New York to Australia by way of the Cape of Good Hope, fuel expenses will be less between New York and Australia via Panama than by way of the Cape of Good Hope. With the coal prices that prevailed in 1912, a 102-knot freight steamer having an average daily coal consumption of 38 tons while at sea, could save about $3,500 in coal expenses by taking a Panama route instead of one around the Cape of Good Hope for a round-trip voyage between New York and Adelaide. This would have nearly paid this ship's tolls one way. Adelaide is taken for this illustration, because it is that one of the three large Australian ports that will derive least advantage from the Panama Canal. Melbourne, and especially Sydney, which is the largest of the Australian ports, are brought so much nearer to the Atlantic-Gulf coast of the United States by the Panama Canal than they are by the Cape of Good Hope route that the use of the canal by their commerce is certain.
The location of the Islands of New Zealand is such that the trade of the Atlantic-Gulf seaboard of the United States with those islands is certain to be carried on by way of Panama; but the usefulness of the Panama Canal to the trade of New Zealand with Europe will depend largely upon the relative fuel expenses via Panama and alternative routes. As was pointed out above, the distance from Liverpool to Wellington is only 550 miles more by way of the Straits of Magellan than via Panama; but the fuel expenses are so much higher via the Straits of Magellan that a 10-knot steamer using 30 tons of coal a day while at sea would, on a basis of 1912 prices, save $8,470 in fuel expenses by making the round trip between Liverpool and Wellington via the Panama Canal. The saving in coal bills would nearly equal the tolls which this ship would have to pay for two passages through the Panama Canal.
Manila and Hongkong being equally distant from New York via Panama and via Suez, it is certain that the choice of routes will be largely influenced by the relative fuel costs. Fortunately for the Panama Canal, the cost of coal via the Panama route will be much less. On a basis of 1912 prices, the 107-knot freight steamer mentioned above would save $4,041 in fuel expenses for a round trip between New York and Manila by using the Panama instead of the Suez route. This would be half the tolls payable for the round trip.
It is shown by Table VI that the Panama Canal will not reduce the distance between Europe and Japan and China. The Suez route will be shorter than the one via Panama. Fuel expenses by the two routes, moreover, will average about the same. For voyages between Europe and China, fuel expenses via Suez will be somewhat lower, while for voyages from British and other North-European ports to Japan the coal costs will be somewhat less via Panama. This fact will influence freight vessels leaving Yokohama with full cargoes for Europe to select the Panama route, provided, as is probable, the tolls at Panama are no higher than those charged at Suez.
V. PANAMA TOLLS AND REVENUE
The proclamation issued by the President of the United States, November 13, 1912, established the following schedule of tolls:
“1. On merchant vessels carrying passengers or cargo one dollar and twenty cents ($1.20) per net vessel ton — each one hundred (100) cubic feet - of actual earning capacity.
“2. On vessels in ballast without passengers or cargo forty (40) per cent less than the rate of tolls for vessels with passengers or cargo.
“3. Upon naval vessels, other than transports, colliers, hospital ships and supply ships, fifty (50) cents per displacement ton.
“4. Upon Army and Navy transports, colliers, hospital ships and supply ships one dollar and twenty ($1.20) per net ton, the vessels to be measured by the same rules as are employed in determining the net tonnage of merchant vessels."
In fixing the charges payable by merchant vessels for the use of the Panama Canal, the tolls were adjusted with reference to the fulfillment of three conditions: That the tolls should be low enough to enable the canal to compete successfully with alternative