PANAMA AND THE ISTHMUS.
It may be convenient to deal here with a few detached questions before
inquiring into the commercial and maritime changes likely to be produced
by the canal. The reader understands the position of the United States
at the isthmus. They control a zone of territory ten miles wide running
across from Panama to Colon. These two towns are, however, not included
politically, though they are geographically, within the zone. This
narrow strip of territory with its precious canal runs right through a
foreign country in which the social and political conditions existing
must be a matter of importance to the canal-owners. One cannot help
wondering how long this state of things is likely to continue. Panama,
the youngest of the South and Central American republics, is no better
than the rest in its governmental principles. Indeed, the republic had
scarcely got into being when it was threatened with a military
revolution. A pompous and polysyllabic self-importance, coupled with a
levantine standard of business and financial ethics, scarcely promises a
long continuance of the present political relations with a great
republic which is not likely to see its achievement at the isthmus in
the smallest degree prejudiced or endangered.
Some interesting little details of Panamanian manners have been
reported. For example, Chinese immigration is forbidden by law, yet,
strange to say, most of the retail trade of the isthmus is in Celestial
hands. This is because the law against immigration gave the opportunity
for the formation of a syndicate with the collusion of the authorities,
by which Chinese were introduced at a rate of $200 entrance fee. The
judicial standards which prevail in this little Bumbledom may be
gathered from another story. The mate of a British ship was recently
sentenced to twelve years' hard labour for manslaughter, because he was
held responsible on no evidence whatever for the loss of a ship and the
lives of several relatives of _those serving on the jury_.
It is scarcely to be expected that a people for whom ideals and
standards of this kind are good enough will take much trouble to develop
their country. An efficient and responsible administration might make a
good deal of these narrow lands between the two oceans, a territory of
33,000 square miles, larger, that is, than Scotland or Ireland. It is
perhaps as well that the construction of the canal has not made many
Panamanian fortunes or produced any great boom in trade. Otherwise the
withdrawal of the industrial army from the zone might have had the
effect produced when the French canal works were shut down. A grievous
famine desolated the whole country. This is not likely to happen again.
The zone has been largely an independent and detached enclave, such as
never existed during the French occupation, when the Panamanians became
dependent for work and wage on the industrial invaders. The American
canal employees have done very little shopping in Panama and Colon,
because they could buy every necessity and luxury duty-free in the
United States government stores. Some trade may be lost owing to the
departure of the workers, but it is hoped that this will be more than
replaced by the growing stream of tourists who will come to visit the
"big ditch," and increased business brought by the shipping which will
pass through the canal.
With a little thrift and enterprise the Panamanians might have profited
much more from the long period of construction. They might have supplied
the zone with a good many more articles. As it was, the only
contribution the country made to the zone or to the towns was about
28,000 head of cattle killed annually. The country is almost entirely
dependent on imported supplies, only a small fraction of which it pays
for by exports. Here is a little instructive table of the Panamanian
commerce:--
Imports. Exports.
1908 L1,561,362 L365,410
1909 L1,751,261 L300,495
1910 L2,008,679 L353,866
1911 L1,980,488 L179,941[18]
The excess of imports over exports looks rather alarming, but it is
adequately explained by the British Consul at Colon as "a measure of the
commercial value to Panama of its transit trade and of the trade with
canal employees and tourists." The great bulk of the imports is consumed
in the two towns of Panama and Colon, for, as in most of the South
American republics, the interior is undeveloped and therefore
self-supporting, being still in the "pack-mule" stage of civilization.
In 1911 the imports into Panama from the United States amounted to
L1,024,589, from the United Kingdom to L454,541, and from Germany to
L223,845. France, Italy, and Spain exported to Panama smaller
quantities. The exports from Panama to the United States amounted in
1910 to L301,684 (1911, first six months, L150,990); to the United
Kingdom, to L33,055 (1911, first six months, L15,921), with smaller
values to Germany and France. The reader will be interested to learn
what sort of things Panama exports. Here, then, is a list of the
principal exports for 1910, the last full year available:--
1910. L
Bananas Bunches 3,643,900 184,257
Cacao Kilos 18,021 940
Cocoanuts " 6,305,238 31,534
Cocobolo " 1,203,522 7,132
Gold " 2,748 26,995
Hides " 567,454 16,973
Horns " 6,893 1,410
Ivory Nuts " 2,102,743 26,527
Mother-of-pearl shell " 625,008 10,183
Rubber " 6,305,238 31,534
Sarsaparilla " 32,553 2,099
Skins " 257,740 4,750
Tortoise shell " 3,829 3,334
The United Fruit Company has now, in the province of Bocas del Toro,
32,000 acres of bananas under cultivation and 1,000 acres planted in
cacao, with about 165,000 trees; the bananas being exported to the
United States, and the chocolate to the United States and Europe. There
should be a considerable increase in rubber production during the next
few years, as 150,000 rubber trees have been recently planted in this
province, and these will soon be ready for tapping. Nearly all the
rubber exported at present is taken from the wild trees growing in the
virgin forests of this province. A curious article of exportation is the
ivory nut, or _tagua_, which in value now comes next after bananas.
These nuts are collected by Indians on the Caribbean coast, brought to
Colon, and there bought by merchants and shipped to New York and
Hamburg. They are used to make the big buttons which are now so
fashionable, and probably a good many English girls who are wearing
coats "made in Germany," are carrying about a number of these ivory nuts
which not long ago were lying on the tropical shores of the Caribbean.
The timber exports from Panama would grow rapidly with proper
exploitation. Exports of mahogany, cedar, and cocobolo have already
begun.
The gold exports come mainly from the mines of the Darien Company, a
French company which has been working for years. The whole isthmus is
strongly under suspicion of gold. All the streams show evidence of it,
and prospectors are always searching the Darien country and the
provinces of Los Santos and Veraguas for the saint-seducing metal. No
other minerals are worked in the isthmus. There are "coal-deposits" of a
sort in the canal zone, but the coal is of no commercial value.
The only railway at present existing in the republic is that between
Colon and Panama, the entire stock of which is owned by the United
States government, and is worked as a company under the laws of the
state of New York. This line, which has had to be largely reconstructed
owing to the course of the new canal, was opened in 1855. It is rather
surprising that it should not have been more extensively employed for
traffic between the Atlantic and Pacific coasts of America. As a matter
of fact, it was the main highway of transcontinental traffic until 1869,
when the Missouri River was first linked up with the Pacific coast by
the Union and Central Pacific Railroads, and the first continuous line
across the States came into existence. After that date the traffic fell
off very rapidly. The causes of this decline are various. To begin with,
the great trunk-lines across the States competed ruthlessly with the old
isthmian route, getting control of the Pacific Mail Steamship Company,
which was for long the only regular line between the west coasts of the
United States and Panama. Then the French and American construction work
has seriously interfered with the route by limiting the amount of
commercial freight that could be handled across the isthmus.
Another cause of depression has been the opening of the Tehuantepec
route in South Mexico. In 1906 the American-Hawaiian Steamship Company
made an agreement with the Tehuantepec National Railway, which runs
across the isthmus, and withdrew its vessels from the old Magellan
route, establishing regular services between New York and Puerto Mexico
on the Atlantic side, and on the Pacific between Salina Cruz, the
Pacific terminal of the canal, and the west coast ports of the United
States and Hawaii. The route so organized was opened in 1907, and has
proved very successful, chiefly owing to the enormous increase in the
sugar exports from Hawaii. The intercoastal traffic by Tehuantepec from
New York to Pacific ports advanced from 114,900 tons in 1906 to 295,800
tons in 1911, and from Pacific ports to New York from 32,000 tons in
1906 to 162,500 in 1911.
All this competition hit the Panama route very badly. The Atlantic to
Pacific traffic by that railroad rose from 25,914 tons in 1906 to 46,394
tons in 1910, and the Pacific to Atlantic from 24,937 tons to 32,482
tons between the same years. But in 1911 there came a sudden expansion
to 96,420 tons (Atlantic to Pacific), and to 115,508 tons (Pacific to
Atlantic), owing largely to the development of shipping services on both
isthmian terminals. In fact, the commercial freight has had to be
seriously held up and restricted in the interests of canal construction
and the shipment of canal material.
The reader will perhaps ask whether the Tehuantepec route is likely to
compete seriously in the future with the Panama Canal. The distance from
New York to San Francisco is 1,016 nautical miles less _via_ Tehuantepec
than _via_ Panama, and from New Orleans 1,573 miles less. The difference
to Honolulu in favour of the Tehuantepec transit is almost exactly the
same. But the difference in time will be a good deal less than these
figures indicate. The cargo has to be transferred from shipboard to
railroad on one side of the isthmus of Tehuantepec and retransferred on
the other. This means on the average about four days' delay. At Panama,
a vessel can pass through the canal in half a day, or, reckoning other
causes of detention, coaling, etc., the total isthmian transit should
not take more than one day. Then there is the question of expense. The
cost of transferring freight at Tehuantepec could not be less than $2.50
per cargo ton. A Panama toll of $1.20 per vessel ton, net register,
would be equivalent to about $0.60 per cargo ton, giving Panama an
advantage of $2 over Tehuantepec. And the inconvenience and damage
resulting from transhipment, from which a through service through the
canal is free, will also be a considerable point in favour of the
waterway. It is not likely, however, that Tehuantepec will be ruined by
the opening of the canal. Considerable short-distance coasting trade is
sure to continue along that route, and it will share in the general
benefit of the developments which await Isthmian and Central America.
Has Panama any danger to fear from its old rival the Nicaraguan canal
project? The United States seems to have forestalled this possible
challenge of Panama's monopoly of water transit over the isthmus. Just
as I write comes the news of a new treaty between the United States and
Nicaragua, securing to the former, for the payment of $3,000,000, the
exclusive rights to construct a canal through Nicaraguan territory. The
United States are reported also to have obtained under the treaty
possession of Fonseca Bay, one of the few places on the west coast of
Central America affording ample deep water facilities.
Moreover, the Colombian Charge d'Affaires in London recently made the
following communication to the press:--
I have received from my government the following information
respecting certain propositions made to Colombia by the
government of the United States, which the government of
Colombia has not accepted. The American propositions were as
follows:
1. That Colombia should grant the United States an option
for the construction of an interoceanic canal, starting from
the Gulf of Uraba on the Atlantic to the Pacific Ocean,
through the region of the Atrato River.
2. That Colombia should give to the American government the
right to establish coaling stations in the islands of San
Andres and Providencia, which are located in the Caribbean
Sea.
3. In consideration of the above, the United States to pay
to Colombia $10,000,000 and to use their good influence for
the settlement of pending differences between Colombia and
Panama. Also to grant Colombia preferential rights for the
use of the canal and the settlement by arbitration of the
claims of Colombia against the Panama Railroad Company.
The government of Colombia declined to accept the above
proposals, insisting, at the same time, that all questions
pending between Colombia and the United States should be
settled by arbitration.
It is evident that the United States are not going to permit any
competitive canal scheme in Central America if they can help it.
What will be the effect of the opening of the canal on Panamanian
prosperity? The local merchants fear that the system of state-supply,
which has prevailed in the zone during the constructional period, will
be continued after completion and extended to the shipping which will
pass through the canal, and that coal and ship-chandlery will become
American government monopolies. Much depends on whether the Panamanian
merchant will be allowed to import freely through Colon and compete in
the supplying of the ships in transit.
No serious development can be expected in Panama until the country is
better provided with railways. The only other line in contemplation is
one from Empire, on the Culebra Cut, to David, a town close to the
Pacific near the far western frontier, in the province of Chiriqui. This
line would be 289 miles in length, and branches from it are proposed to
Anton, 5 miles, and to Los Santos, about 67 miles.
It is pretty safe to prophesy that the blue streak through the isthmus
of Panama will have a gradual but sure effect on the politics of Central
America. The need to protect the canal, and to surround it with orderly
conditions, social and political, will compel a good many states to put
themselves to amendment or force the big republic responsible for the
canal to provide them with good government whether they like it or not.
If the United States had to intervene in Cuba in order to put down
anarchy or misrule, they may be persuaded by an even stronger necessity
to intervene in the affairs of Central America in the defence of the
Panama Canal. It would be no surprise, especially after recent events in
Mexico, if the south-western frontier of the States gradually advanced
down the broad and narrow isthmus until it reached and passed the line
of the canal. This would be quite in accordance with the law which makes
it almost inevitable that a great and well-governed Power should absorb
weaker states along its borders, especially when these are unable to
keep their houses in order.
There is always the danger that foreign Powers will intervene in the
affairs of these republics in the interests of their bondholders, and
this would compel in turn the intervention of the United States in order
to make good the Monroe doctrine, which is directed against any such
foreign interference in American affairs. In order to avoid these
complications Mr. Taft actually proposed not long ago to refund the
debts of Honduras and Nicaragua, placing the custom-houses under the
control of American officials. The object was partly to secure loans
advanced by American bankers, but partly also to satisfy European
bondholders and to make the politics of these republics more stable.
Nothing came of this significant project. But I should not care to
ensure, except at a very high premium, the permanence of the political
arrangements now existing in these regions when the Panama Canal is in
working order and becomes more and more essential to the safety and
prosperity of the great republic. The canal may in the long run be not
"virtually" but actually "a part of the coastline of the United States."
FOOTNOTES:
[18] Six months.