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                             SAN FRANCISCO

                                  AND

                          THE NICARAGUA CANAL.


                               LEGATION OF THE UNITED STATES OF AMERICA,
                                SAN JOSE, COSTA RICA, CENTRAL AMERICA,
                                                     September 15, 1900.

HON. GEORGE C. PERKINS,
    United States Senator,
        San Francisco, California.

MY DEAR SIR:

Your valued favor of August 23d requests me to contest the argument of
a mutual friend entitled to our personal esteem, in regard to the
Nicaragua Canal, to the construction of which he objects. The
admission made by him that _his argument is not made on very broad
lines_ would indispose me to reply, as the Nicaragua Canal is a
national undertaking, not to be considered from a narrow standpoint.
But, confident that even his narrow premises will not stand impartial
investigation, I shall contest his arguments first from his restricted
platform, and subsequently in the brief manner necessitated by the
limits of this paper, on a broader and more patriotic basis.

In examining his statement of navigable distances I note some serious
errors, consequently you will find herewith a statement thereof for
which I can vouch as emanating from the United States Hydrographic
office. During my Central American residence I have visited various
United States naval ships on this station and have found one naval
lieutenant opposed to the canal. On urging him to candidly state his
reason for this opposition, he at first stated that his reason was a
personal one and like our friend's _not made on very broad lines_. He
finally admitted that he opposed a canal because if we do not have one
we shall need two navies, one on each side of the Continent; more naval
officers would be necessary and his promotion would ensue much more
rapidly! Although at first surprised at this view of the case I thanked
him for his friendly candor, and replied that his argument as a
_personal_ one was on a sound basis, much more so than the railway
magnates who oppose the Canal on the erroneous ground that their
overland railways will be injured thereby when I challenge anyone to
cite an instance where any canal has not benefited the railways nearest
thereto: notably the St. Mary's and Erie Canals in our own country.

Our friend starts with the assumption that the canal is _to be
constructed for the purpose of making money_. This I deny _in toto_. The
United States Government will build a canal on a broader and more
beneficent basis, for the _political_ and _military safety_ of our
country, for the _development of its commerce and industries_ and to
secure a _short cheap water_ route to and from our Pacific Ocean
possessions. The Suez Canal which cost ninety-four millions was built to
make money and earns 17 to 20 per cent. annually on a toll of about
$1.85 per ton, whereas our Government should not charge over one dollar
per ton when the Nicaragua Canal is opened and when its traffic
increases, probably half a dollar per ton will pay cost of maintenance
and leave a small percentage for a sinking fund.

Secondly, he states "the Canal will have no business when first
opened." Why not? Will freight continue to prefer ten thousand miles
greater distance around Cape Horn or higher Panama Railway Route and
overland railway charges? The business of the Canal will come from new
interests which it will develop and from other routes which cannot
compete with it in rates. Third. He asserts that it will cost no less
than $150,000,000.00. How much the Canal will cost depends upon its
capacity and its honest construction. Since the Maritime Canal Company
figured on $80,084,176.00 for a 28-feet canal, the majority report of
the United States Commission has increased the _possible_ cost,
including a 20 per cent. contingency to $118,113,790 for a canal two
feet deeper and much wider, with duplicate locks of increased size. But
experts who have investigated the question have no fear of financial
results even at the cost of one hundred and fifty millions.

Fourth. I deny that it will _be much more expensive to operate than the
Suez Canal_, which needs constant dredging to keep it from filling with
desert sands, as against the nominal cost of operating modern locks at
Nicaragua, proof of which we have in the cost of lockage at the Saint
Mary's Canal, which now passes through its locks nearly three times the
tonnage that uses the Suez Canal. Neither is there apprehension of
difficulty in water control at Nicaragua. Nature has provided against
this as any canal engineer who has examined the route can prove. _An
abundance of fresh water under absolute control_ is the _striking
advantage_ developed at Nicaragua, as against the Suez Canal built
through an irreclaimable sand desert, constantly encroaching upon it and
necessitating constant dredging. But I may remark that the Suez canal
with an expensive staff expends only 8-1/2 per cent. of gross receipts
for management while the cheapest and most efficient railway in the
United States uses 47 per cent. of gross receipts for operating
expenses, and many of our railways between 50 and 60 per cent. This is
one of several reasons why a canal can afford to carry cheaper than any
railway; it has practically _no wear and tear_, and _no depreciation_ to
contend with.

Examining carefully the animus of the paper I find only two main points
to contest. First: The Nicaragua Canal will divert commerce from San
Francisco and other Pacific Coast Ports. Second: It is "outrageous and
inexcusable" that the Government shall create a competing route which
will injure railways overland which it has already aided in
construction. Having reasoned from a fallacious standpoint the
conclusions are without foundation and the last one entirely regardless
of the national and public interest. That the Nicaragua Canal will
divert maritime commerce from San Francisco and other Pacific Coast
Ports is a _fallacy_ based upon the proposition that, with the advantage
of five thousand miles navigation and canal toll in their favor the
merchants of Pacific Coast Ports will be unable to compete with their
Atlantic Coast and European rivals. Such proposition implies an
_incompetency_ which I am not disposed to admit. It is a fallacy for
another reason connected with navigation. A steamship from Hong Kong to
Western terminus of Nicaragua Canal, and vice versa, only increases her
distance by calling at San Francisco _twenty_ miles: from Yokohama
_ninety-one_ miles. The steam route from Yokohama to Brito (Western
terminus of Canal) via Honolulu (practically on rhumb line) is _374
miles longer_ and from Hong Kong _367 miles longer_. These two most
important ports illustrate the same fact as applicable to all other
Asiatic Ports within the distance attraction of the Canal, the
_divisional line_ of which from the United States Atlantic Coast is at
_Singapore_. The carriage of fuel being a serious factor in steamship
expense, and San Francisco being practically _a half-way port_ on a run
of over ten thousand miles it _must_ become a port of call for coal and
freight, for all steamships in the Atlantic Asiatic trade, unless such
special limited business offers at Hawaii as will induce them to
navigate nearly four hundred miles additional. Under these conditions
these steamships will often handle California freight to be discharged
and replaced with a _second_ freight for the Atlantic or for Asiatic
Ports while coaling. The increased tonnage using Pacific Coast Ports for
this reason will cheapen freights and add greatly to the business of its
Ports. It cannot be claimed that steamers will prefer the longest route.
Even between New York and Europe, where the shortest (or "great circle"
route) infringes upon Cape Race, the transatlantic steamers run that
dangerous, foggy and iceberg line, in preference to the longer _rhumb
line_ further south, to save a much less distance, and they will
certainly do so on the Pacific where the saving is much greater. I beg
attention to the subjoined third table of distances of proving the
assertions above made.

That the canal will _divert_ some overland traffic from the railways is
an indisputable fact. There must be a new adjustment of conditions. But
there will arise with this adjustment a full compensation which will
soon become _vastly more important_ than the long haul overland of a
class of freights which are only carried overland to avoid the 15,000
miles Cape Horn route. In the increased, vastly more profitable _short
haul_ to and from Pacific Coast tide water and in the increased
passenger travel consequent upon the rapid development of the Pacific
Coast our overland railways will find full compensation--the Canal will
be of great benefit to them. When the short and cheap water way is
available, European shipping to Pacific Ports will be largely steam
freight tonnage. These steamers will load holds with English cargo and
between decks with immigrants, and the Pacific Coast will rapidly settle
up with these to the exclusion of Chinese. To such desirable emigration
the Pacific Coast will for the first time be accessible at reasonable
rates. At present the few that have the means to start for the Coast by
overland railways are induced to settle in the middle West, and
consequently Pacific Coast population increases very slowly. The same
freight steamships will then return to Atlantic Ports, with Pacific
Coast products: Cape Horn will become a memory.

The United States Government has covered into its Treasury approximately
$113,000,000.00 which it loaned the overland railways; the enormous land
grants they keep. What "injustice or outrage" is there in _again_ using
this money to build another transportation route, national in character,
for the benefit of all the Republic? This is not even taxation of our
people: they have been once taxed to build the overland railways. I have
in mind an instance where 1,500 barrels provisions were shipped from
Sioux City, Iowa, to Jersey City, lightered to the California bound ship
in East River, New York; carried 15,000 miles around Cape Horn, paying
rail freight Eastward, lighterage, Cape Horn freight, insurance, six
months interest and San Francisco wharfage; after all these charges
saving _one third on the rail freight_ westward from Sioux City to the
Pacific. Freight rates eastward on Pacific Coast perishable products are
even higher. You are aware that, to save the onerous westward freight
charges by rail, California merchants have repeatedly shipped heavy
goods by steam from our Atlantic Ports to Antwerp: thence reshipped via
Cape Horn to San Francisco, paying charges before named, and would be
now doing so save for Customs regulations forbidding it. It cannot be
expected that freight can be carried by rail across the continent more
than three thousand miles over two mountain chains and compete in cost
with water transportation which under conditions most favorable to rail
transportation costs only one-fifth, while, with heavy grades, the ratio
is one by water to fifteen by rail. In the effort to control such
freight, the overland railways are _preventing the development of the
Pacific Coast_ to their own detriment and against the interests of our
great country. The day will come when these railway managers will regard
their opposition to the Canal as error born of _unfounded apprehension_.
Even now one of the main overland railway systems is quietly friendly to
the Canal. Water transportation has its limitations, mainly _cheapness
at the expense of time_. Railway transportation also has its
limitations, mainly _speed at increased cost_. One is the complement of
the other--not properly its competitor, and by carriage of cheap and
bulky freight which is frequently unprofitable to railways on a long
haul, water transportation can and is being used to _aid_ railways. Even
Mr. Huntington frequently shipped his railway iron around Cape Horn, as
he would have done through the canal had it been available. While
controlling a railway system from ocean to ocean, he bought out the
"Morgan Steamship Company" between New York and New Orleans and with the
advantage of this _one-third water route_, dictated terms to his railway
competitors. Could he have better expressed his true appreciation of
cheap water carriage and of the inter-oceanic canal?

The limits of this letter forbid a full discussion of navigation
distances, and besides this, distances are not fully conclusive.
Considerations of traffic, ocean currents, available coaling stations,
and return cargoes must be taken into account. But I shall briefly
allude to prominent points in connection with navigable distances which
are proven by U. S. Hydrographic Tables. Considering New York as the
starting point, the _divisional line_ between Suez and Nicaragua Canal
influence in Asiatic commerce is _Singapore_, which port is only 29
miles nearer New York via Suez than Nicaragua. Consequently _all Asiatic
Ports north of Singapore_ are within the attraction of the American
Canal for United States commerce. The immense trade of these ports is an
important factor. In Australia, all ports East of and including
Melbourne are much nearer New York than via Suez. New Zealand, the
coasts of North and South America on both oceans and all Pacific Ocean
Island groups the same. No claim to important diversion from the Suez
Canal can be made, as the distance from the United States to Port Said
protects it. Nor is a claim to diversion from Suez Canal needed. The
Nicaragua Canal had within its zone of attraction, as shown by careful
estimates in 1890, 8,159,150 tons annually. The revenue attainable
therefrom will depend upon rate of toll, but at one dollar per ton, with
10 per cent. for operating expenses (or 1-1/2 per cent. more than at
Suez) it will leave a safe sinking fund even on $150,000,000.00 cost,
or, by an extension of time, on a greater amount. But the earnings will
rapidly increase. You will note that the Suez Canal merely diverted
gradually an _ancient_ commerce, the increase of which has been steady
but comparatively slow. The Nicaragua Canal can depend upon an already
large commerce, yet in its _incipiency_. The resources of the American
continent are _undeveloped_ and its population _limited_. No man can
place a limit upon the future commerce of this great division of the
habitable world. Another feature in favor of the Nicaragua Canal is _the
region through which it will be built_. While its length is 169 miles,
it has 121 miles of free slack water and lake navigation, through a
territory of unsurpassed fertility, blessed with a healthy climate.
Thus, _it is not only an inter-oceanic canal but a line of inland
navigation_ which will so develop the territory on each side that in a
few yew years its commerce will pay the cost of maintenance. The benefit
of a fresh water canal to ocean carriers of steel or iron will be
obvious to experts: they will leave it with clean bottoms and boilers
filled with fresh water. Its location is 11° North of the Equator and in
the North East trade regions, an advantage that will enable sailing
ships to avail of it. Cape Horn is twelve hundred miles South of the
Cape of Good Hope and the American Canal consequently saves greater
distances than the Suez or any other canal that can hereafter be
constructed.

The _naval_ and _political_ advantage of the Canal is a technical
question regarding which my opinion is given with deference. But I find
that its opponents are not found in the Government service. Military and
Naval officers discuss the _advisability of fortifying_ the canal _never
doubting its great importance to our country_.

Quotations are available to prove that many of our greatest statesmen
have been its ardent advocates, but space forbids. I may mention among
these Grant, Harrison, Hayes, McKinley and Bryan as well as a nearly
unanimous Senate and House are recorded in its favor. Are all these
great minds dullards on the Canal question? Are they not the men who
_ought to understand_ the great interests of our country, _impartially_
considered?

As my advocacy for this beneficent work for a quarter of a century may
be regarded as warping my judgment in its favor, I will end this already
too extended reply by quoting _Archibald Ross Colquhoun_, an eminent
English Engineer and Government Administrator, who, having personally
examined the Nicaragua Canal route and the plans adopted for its
construction, wrote a standard work _The Key of the Pacific_ (Longhams,
London, 1895) which ends with the following conclusions (page 335):

1. It will render greater service to the New World than the Suez Canal
does to the Old.

2. It will bring Japan, Northern China, Australasia and part of Malaysia
nearer the Atlantic cities of the United States than they are now to
England.

3. It will benefit America in an infinitely greater degree than it will
Europe, which will only use the Canal in trading with the Pacific
littoral of the two Americas, the South Sea Islands and possibly New
Zealand.

4. It will divert little or no European traffic from the Suez Canal.

5. It will give an immense impulse to United States manufactures,
especially cotton and iron, and will greatly stimulate the shipbuilding
industry and development of the naval power of the United States.

6. It will cost more than the estimates show ($80,084,176.00 at that
time) but it will have a traffic greater than is usually admitted.

7. In the interest of the world it must be neutralized, and the true
policy of the United States is to forward that end and thus make this
international highway a powerful factor for the preservation of peace.

To the eminently conservative and disinterested conclusions of this
patriotic English expert, I may be permitted to give my adherence no
less than to the publicly expressed opinions of the great American
statesmen whose names I have mentioned and to the practically unanimous
approval of the Congress of the United States, after having actively
discussed the Canal question for twenty years.

With assurances of my highest esteem I beg to remain,

                            Sir:
                      Your most obedient servant,
                                             WILLIAM LAWRENCE MERRY.




                       NICARAGUA CANAL DISTANCES.


             NEW YORK VIA NICARAGUA COMPARED WITH LIVERPOOL
                               VIA SUEZ.
        New York to Singapore      11,549 m.     29 m. more.
            "     " Hong Kong      11,308 m.  2,363 m. less.
            "     " Yokohama        9,363 m.  5,951 m. less.
            "     " Melbourne      10,000 m.  4,920 m. less.

                               * * * * *

    New York to San Francisco    {10,753 m. less than via Cape Horn.
    New Orleans to San Francisco {11,853 m. less than via Cape Horn.

Distances saved via Magellan Straits vary between different ports, but
may be approximately stated at two thousand miles.




                       NICARAGUA CANAL DISTANCES


       U. S. Hydrographic Office, proving San Francisco to be on
    Asiatic Route to and from Brito, the Pacific Terminus of Canal.

                                                    | Knots. | Knots.
----------------------------------------------------+--------+-------
The shortest practicable route from                 |        |
  Brito to Yokohama                                 | ....   | 7145
  Brito to San Francisco                            | 2700   |
  San Francisco to Yokohama                         | 4536   |
                                                    |--------|
Therefore the distance from Brito to Yokohama       |        |
  via San Francisco is                              | ....   | 7236
Therefore excess of route via San Francisco over    |        |
  shortest practicable route is                     | ....   | =91=
    Brito to Honolulu                               | 4210   |
    Honolulu to Yokohama                            | 3400   |
                                                    |--------|
Shortest practicable route from Brito to Yokohama   |        |
  via Honolulu                                      | ....   | 7610
Therefore excess of route via Honolulu over route   |        |
  via San Francisco is                              | ....   |  374
                                                    |        |-------
The shortest practicable route from                 |        |
  Brito to Hong Kong                                | ....   | 8740
  Brito to San Francisco                            | 2700   |
  San Francisco to Hong Kong                        | 6060   |
                                                    |--------|
Therefore the distance from Brito to Hong Kong      |        |
  via San Francisco is                              | ....   | 8760
Therefore excess of route via San Francisco over    |        |
  shortest practicable route is                     | ....   | =20=
    Brito to Honolulu                               | 4210   |
    Honolulu to Hong Kong                           | 4917   |
                                                    |--------|
Therefore the distance from Brito to Hong Kong      |        |
  via Honolulu is                                   | ....   | 9127
                                                    |        |
Therefore the excess of route via Honolulu over     |        |
  route via San Francisco is                        | ....   |  367
----------------------------------------------------+--------+-------

The conditions as to the distances in Trans-Pacific Navigation apply
approximately to all United States Pacific Coast Ports.




    TABLE OF DISTANCES IN NAUTICAL MILES BETWEEN PORTS OF THE WORLD,
              and Distances Saved by the Nicaragua Canal,

 Compiled from data furnished by the United States Hydrographic Office.


========================================================================
  BETWEEN         |        |        |       |       |         |
                  |Around  |  Via   |       |       |Advantage|Advantage
                  | Cape   |Magellan|  Via  |Via    |   over  |   over
                  | Horn   |for full|Cape of|Nica-  | Sailing |  Steam
                  |  for   |powered | Good  |ragua  |  Route  |  Route
                  |Sailing | Steam  | Hope. |Canal. |   via   |    via
                  |Vessels.|Vessels.|       |       |  Cape.  | Magellan
                  |        |        |       |       |         | Straits.
------------------+--------+--------+-------+-------+---------+---------
New York and      |        |        |       |       |         |
  San Francisco   | 15660  | 13174  | ..... |  4907 | 10753   |  8267
  Puget Sound     | .....  | 13935  | ..... |  5665 | .....   |  8270
  Hong Kong       | .....  | .....  | 13750 | 10692 |  3058   | .....
  Yokohama        | .....  | .....  | 15217 |  9227 |  5990   | .....
  Melbourne       | 13760  | 12860  | 12830 |  9862 |  3898   |  2998
  Auckland, N. Z. | 12600  | 11599  | 14069 |  8462 |  4138   |  3137
  Honolulu, H. I. | 15480  | 13290  | ..... |  6417 |  7063   |  6873
  Callao          | .....  |  9640  | ..... |  3744 | .....   |  5896
  Valparaiso      |  9420  |  8440  | ..... |  5014 |  4406   |  3426
                  |        |        |       |       |         |
New Orleans and   |        |        |       |       |         |
  San Francisco   | 16000  | 13539  | ..... |  4147 | 11853   |  9392
  Callao          | .....  | 10005  | ..... |  2984 | .....   |  7021
  Valparaiso      | .....  |  8805  | ..... |  4254 | .....   |  4551
                  |        |        |       |       |         |
Liverpool and     |        |        |       |       |         |
  San Francisco   | 15620  | 13494  | ..... |  7627 |  7993   |  5867
  Auckland, N. Z. | 12130  | 11919  | 13357 | 11182 |   948   |   737
  Callao          | .....  |  9960  | ..... |  6464 | .....   |  3496
  Valparaiso      |  9380  |  8760  | ..... |  7734 |  1646   |  1026
  Honolulu        | .....  | 13610  | ..... |  9137 | .....   |  4473
  Yokohama        | .....  | .....  | 14505 | 11947 | .....   |  2558
------------------+--------+--------+-------+-------+---------+---------




                           Transcriber Notes:

Passages in italics were indicated by _underscores_.

Passages in bold were indicated by =equal signs=.

Small caps were replaced with ALL CAPS.

Errors in punctuation and inconsistent hyphenation were not corrected
unless otherwise noted.

The tables at the end of the book has been reformatted to fit the page
 width.

On page 2, "will he injured" was replaced with "will be injured".

On page 2, "maintenace" was replaced with "maintenance".

On page 2, "per centage" was replaced with "percentage".

On page 3, "Nicaragura" was replaced with "Nicaragua".

On page 3, "overand" was replaced with "overland".

On page 7, "extention" was replaced with "extension".

On page 9, "personallly" was replaced with "personally".