Chapter VII

THE COST OF THE CANAL

OF the existing canals for ocean-going ships, that of Suez was built by a company as a commercial undertaking to earn dividends by tolls. It cost $90,000,000.

The Manchester Ship Canal was partly commercial, partly industrial, i.e., the large contribution of the city of Manchester was made not as a financial speculation, but in order to promote an undertaking likely to develop the industries of the city. This canal, partly commercial, partly industrial, cost $75,000,000.

The Kiel Canal has further a military purpose, providing a short line of communication for warships. It cost $40,000,000. The Panama Canal is commercial, industrial, and military, and will cost more than all the above put together.

PALACE OF PRESIDENT OF THE REPUBLIC OF PANAMA.

OLD FLAT ARCH AT PANAMA.

Up to June 30, 1908, the United States Government have spent $126,047,062 on the Panama Canal, made up as follows:—

Payment to New Panama Canal Company $40,000,000, and to Republic of Panama $10,000,000 $50,000,000

Expenditure on work prior to July 1, 1907 43,172,408

Expenditure on work July 1, 1907-June 30, 1908 32,874,654

Total 126,047,062

The amount authorised to be appropriated by the Act of June 28, 1902, was $135,000,000, plus $50,000,000 purchase money, that is to say, $185,000,000 in all, for "the canal, harbours, and defences."

What the total cost will be is unknown, but Colonel Goethals stated in evidence (January, 1908) that the Canal would cost at least $250,000,000, and possibly as much as $500,000,000.

The combined cost of the Suez, Manchester, and Kiel Canals has been $205,000,000.

The following important ship canals have been completed for smaller sums:—

U.S.S. St. Marie (somewhat more than) $6,000,000

Canadian ditto nearly 4,000,000

Amsterdam 10,000,000

Corinth (about) 5,000,000

Cronstadt (about) 10,000,000

Welland (Lake Erie-Lake Ontario) 24,000,000

Total 59,000,000

Adding these figures to those already given, we have a grand total of $264,000,000 for the cost of nine of the greatest existing ship canals, which is about the same as the lowest current official estimate for the final cost of the Panama Canal.

In the case of a commercial company undertaking such a work as the Panama Canal, the charge for compounded interest increases as the unremunerative years advance at an appalling rate, which would surprise anyone not versed in the cumulative capability of figures which increase in "geometrical progression."

Fortunately it is not necessary for the United States to reckon the cost of the Canal in this way, and the Government have been in a peculiarly advantageous position for financing the Canal.

The bonds bear interest at 2 per cent., and in December, 1907, were slightly above 103. As all American banks have to deposit gold with the United States Treasury it evidently pays to take up and deposit these bonds, which reckon as gold, receiving 2 per cent. interest.

Moreover, the small amount of securities with Government guarantee in America renders such issues convenient, so that the Government can raise money more cheaply than with us, although for industrial purposes the rates may be higher.

At the present time the payments of Government pensions in connection with the Civil War are yearly diminishing at a rapid rate. Finally, there has been in the Treasury a large surplus of cash. Thus from one cause and another the expenditure already incurred has not yet been felt.

As I write the last lines of the account in which I have endeavoured to state the salient facts relating to a great undertaking at only moderate length, I recall our departure from Colon harbour on the R.M.S. Orinoco homeward bound. I confess that after the Canal Zone most places seem only half alive, and I long to be back where one can watch human activities so great and so intelligent, while the spirit is soothed by the balmy air which blows warm and fragrant from the tropical forest.

May the arduous labours of the Isthmian Canal Commission be crowned with success!