THE PANAMA CANAL TOLLS 13 



of American anxiety to obtain some advantage from the canal in return for the enor- 

 mous cost of constructing it single-handed. For American shipping, in fact, carries 

 only a small proportion of American trade, and there is no immediate prospect of 

 serious competition with British shipping in this respect. According to a report 

 issued by the U.S. Commissioners of Navigation, 1 the percentage of United States 

 exports and imports carried in American vessels fell from 75.2% in 1850 (in 1870, 35.6%) 

 to 8.7% in 1910; of the total American sea-borne trade in 1910, valued at 5,700 million 

 dollars, more than nine-tenths was carried in foreign vessels. 



Apart altogether from the effect of the Civil War, the character of American shipping 

 has changed in later years, the shipping engaged in the foreign trade having steadily 

 diminished from 1,518 thousand tons in 1865 to 782 thousand tons in 1910; the shipping 

 engaged in the coasting trade has indeed greatly increased, especially since 1895, 

 from 3,381 thousand tons in 1865 (3,728 thousand tons in 1895) to 6,668 thousand 

 tons in 1910, but this, of course, is due to the coasting trade being restricted to Amer- 

 ican vessels. The prime factor in the decline of American merchant shipping and 

 shipbuilding, so far as general foreign trade is concerned, and this has been shown 

 conclusively by the American Merchant Marine Commission, is the fact that wages 

 in the shipbuilding industry are about twice as much in the United States as in Great 

 Britain, and freights cannot be earned to compensate for the higher cost of American 

 ships. The advocacy of protection and subsidies for American shipping, which is 

 common to all political parties in the United States, is due to a natural and patriotic 

 revolt against what nevertheless is the fact, namely that the carriage of American sea- 

 borne trade (other than the coasting trade) is, to the extent of nine-tenths, in the hands 

 of Great Britain and Germany in the Atlantic together with Japan in the Pacific, 

 simply because wages in those countries are so much lower. How this can be altered 

 so as to recover American trade for American shipping is a very large question, which 

 will not be solved to-day or to-morrow. Undoubtedly there has been a sanguine 

 expectation that, particularly as regards the trade between North and South America, 

 the making of the Panama Canal would enable some advantage to be gained for Amer- 

 ican shipping at the expense of foreign shipping, and this is at the root of the controversy 

 as to the rights of the American Government under the Hay-Pauncefote Treaty. But 

 whatever may be the rights of that matter, it is well to bear in mind that, "on the general 

 question of the comparative extent of national shipping in international trade, it is 

 really not of much importance. For the American Government to subsidise American 

 vessels engaged in the coasting trade by giving them an advantage in the passage of 

 the Panama Canal whether this can or cannot be done justly and honourably under 

 the terms of the Treaty is of very minor consequence to non-American shipping 

 because in any case it is excluded by American law from the coasting trade altogether; 

 and no subsidy of this kind, consistently with what is economically possible for the 

 working of the finances of the Canal at all, can be enough by itself to enable American 

 shipping to compete in neutral markets with non-American. So far as British shipping 

 is concerned the conditions under which it does so much of the American carrying 

 trade cannot be appreciably affected, at any rate for some time; and any new condi- 

 tions arising in the distant future must be treated according to circumstances. 



Whether it is wise of the United States to raise such questions at all, which chal- 

 lenge international friction and also foreign action in defence of other national economic 

 interests, is, of course, another matter altogether. The making of the Panama Canal 

 was for the United States primarily a strategic undertaking, impelled by the. importance 

 of being able to join up the Atlantic and Pacific Oceans more readily than by sending 

 ships round the Horn as was necessary in the Spanish-American War. As a factor in 

 international commerce the economic value of the Canal cannot yet be safely estimated. 

 Geographically, as compared with land transport across Central America, it has not 

 the same trade advantage as the Suez Canal, and it has been far more costly to make. 

 Owing to its effect on shortening the routes for sea-borne commerce, as between certain 



1 See an article by J. Ellis Barker in the Nineteenth Century and After, for October 1912. 



