IT IS only recently that the Panama Canal has begun to operate under normal conditions, free from the effects of the World War, and with the slides sufficiently under control to make the operation of the canal continuous. The canal tolls for the fiscal year ending June 30, 1922, amounted to $11,197,832 while the cost of operation was $7,407,998, leaving a net revenue of $3,789,834. Since the present canal commenced to yield a revenue over and above the cost of operation, suggestions have been made by various parties that another canal be dug across the Nicaragua route. While there are arguments in favor of another canal, the need is so remote that the undertaking of another canal at this time would be a poor investment.
It is good business for a manufacturing concern to have the manufacturing facilities expand in proportion to the demand for the articles produced, but it would be poor policy to double these facilities years before the capacity of the original plant is reached. In other words the plant should grow in proportion to the required output and not so far in advance of it as to make the business a poor investment. In the case of the Panama Canal we have only about twenty-five per cent of the possible capacity utilized, yet there is considerable agitation for the construction of another canal doubling the ultimate capacity of the present canal. If we could worry along without any sort of canal until 1914, it seems that we should be able to get along with the greatest canal in the world at least thirty or forty years. Especially is this true when it is known that the possible capacity via the Panama Canal is something like 50,000,000 net tons per year.
Granting that several years would be required for the construction of the Nicaraguan Canal, yet if the capacity of the Panama Canal should be reached in the near future it would mean such a business boom that we could well afford to push the construction of a new canal to the limit regardless of the cost of the work.
BLASTING AWAY A PORTION OF PITA POINT WHICH CAUSES ONE OF THE SHARP TURNS IN THE CANAL. This work is not necessary for safe transit by the largest ships, but may be compared to expensive grading work done on railroads to straighten the road. The force employed on this work is available for work removing any slides which might occur.
This, no doubt, would cut the time of construction below the original estimate, and would embarass shipping only a few years if at all. It is far better to invest the relatively small sum in increasing the capacity of the present canal before we undertake the tremendous task of building a new canal.
Some of the principal advantages of a Nicaraguan canal would be: (1) The amount of traffic could be doubled provided there is sufficient shipping; (2) The military advantage of having two routes; (3) Shorter distances via the new route; (4) Preventing any other country from undertaking the construction of such a canal. The principal argument against the canal are the first cost and the fact that the capacity of the present canal can be increased four-fold at relatively small cost. At present about 12,000,000 net tons of shipping pass through the Panama Canal each year. The traffic is handled between 7:00 A. M. and about 10:00 P. M. By continuous operation for the entire twenty-four hours the transits would be increased a proportionate amount. After the capacity of the canal has been reached in regard to the physical operation of handling the traffic, the number of transits might be limited during the dry season to the available water supply. The water from Gatun lake is distributed approximately as follows: fifty per cent through Gatun spill-way; twenty-five per cent for hydro-electric power; eleven per cent to evaporation on the lake surface—164 square miles; eleven per cent for lockages, and three per cent for municipal and other purposes. These figures vary from year to year depending on the run-off and the number of transits through the canal. Either by saving more of the water which is wasted over the spill-way, or by restricting the amount of water employed for hydro-electric purposes, the amount of water for lockages can be increased. The evaporation is nearly constant from year to year, and the amount of water used for municipal and other purposes is negligible. From May to November, which is the wet season, the water supply is greater than needed. The lake is filled to the maximum level of eighty-seven feet above sea level after which the surplus water is wasted over the spill-way. A higher level than eighty-seven feet would flood the motors operating the lock gates. During the dry season, lasting from about December to April, the water supply is not sufficient to maintain the lake level at eighty-seven feet. During the dry season of 1920 the lake reached the lowest recorded level, eighty-one and seven tenths feet. The minimum level should not be less than seventy-nine feet as this would give a minimum depth in the canal of thirty-nine feet. In order to reduce the amount of water now used for generating power, fuel must be supplied to generate the power, a costly make-shift.
ABOUT 25,000,000 CUBIC YARDS OF MATERIAL SLID INTO Tin CANAL AT GAILLARD CUT (FORMERLY CALLED CULEBRA CUT).This tremendous slide has been overcome and as an extra precaution a basin has been excavated where further slides might occur so that this basin will have to be filled up before the Canal proper is obstructed.
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A comprehensive scheme is proposed whereby the greater part of the water now lost through the spill-way may be utilized for lockages. The plan is to construct across the Chagres River at Allahuela, about ten miles up the river from Gamboa, an impounding dam 157 feet high which would raise the level in the storage lake to 227 feet above the sea. The amount of water thus stored during the rainy season would be sufficient to raise the level in Gatun lake three feet, i.e., the amount of water storage would be increased about forty per cent. The estimated cost of the project is about $5,000,000. Since the discharge from the Chagres River is more than half the total water supply of the lake, such a dam would give practically full control of the water supply.
By constructing another set of locks alongside the present ones, making the locks triple instead of double ones, the capacity of the canal would be further increased by fifty per cent. It is estimated that after these proposed alterations have been made the canal can handle 50,000,000 net tons of shipping annually. At present the canal is handling about 12,000,000 net tons annually. In other words by making a comparatively small investment on the present canal, its capacity can be made to handle four times more tonnage than is now being handled. Experts estimate that these improvements will be sufficient for at least thirty years, after which the canal might be outgrown.
Thirty years is a mighty long time. By 1953 air routes may be in competition with the water routes. At any rate any calculations made for thirty years hence have an excellent chance of being thrown out by changing conditions. Even supposing that the canal should draw more shipping than it could handle, the inexorable law of supply and demand could be utilized, and the amount of shipping decreased by increasing the tolls. It would be almost beyond all expectations to have the maximum number of ships sent through the canal with the toll rates raised, say twenty-five per cent.
After considering these points it would seem more logical to hold full rights in Nicaragua, but to postpone actual construction of another canal until its need is clearly seen. The reduction in the distances via the Nicaragua route would be comparatively small. The military advantage is an important consideration yet with a small portion of the amount necessary to build another canal, a force could be built and left on the west coast to compensate for the ships which might be cut off through the destruction of the Panama Canal. If we give due credit to General Goethals' judgment, the danger of complete destruction of the Panama Canal is not so great as some would have it. General Goethals stated that in order to put the canal completely out of commission it would be necessary for the enemy to place bombs behind the gates of the locks, and he wondered what our force would be doing in the meantime. Doubtless the destructiveness of bombs has been greatly increased since the General made this statement, yet the mere dropping of bombs in the vicinity of the locks or spill-ways would not necessarily put the canal out of commission. The solar plexus of the canal, to judge from casual observation which anyone may make who passes through the canal, would seem to be the Miraflores spillway. This could be corrected in large measure by the construction of a second dam near the present one. The construction of a second canal would entail the expense of its defense, and would give the enemy one more outlying point to attack.
From a commercial standpoint, the present canal seems to be a paying proposition. Last year a new accounting system was put into operation. The value of the canal was estimated as for any commercial concern and hereafter the financial reports will be based on the estimated valuation. The canal activities have been divided into three classes: (1) Canal transit property, (2) Canal business property, and (3) Defense capital expenditures. The value of the canal transit property was estimated to be $246,418,990; that of the canal business property, including the docks, repair shops, etc., at $28,760,308, and for defense capital expenditures $110,997,602, making a total of $386,176,900, which was the approximate cost of the canal. The amount of the canal defense expenditures might be said to be the amount the property was written down, in order to place it on a purely commercial basis.
The canal transit property was amortized on the basis of a life for fixed property as 100 years, with allowed interest at three per cent, and with the business property depreciated on the basis of its estimated life. Hereafter if the yearly report shows a revenue above the operating expenses including the annual amortization, the canal is on a sound financial basis, and in 100 years the entire value of the canal would be written off. Of course we hope for even better financial returns, and these hopes are more than justified by recent performance.
However bright the present prospect of the Panama Canal, the expenditure of $300,000,000 in the construction of another canal via the Nicaragua route would appear to be a risky adventure. Let us wait for the day when the capacity of the present canal is reached before we undertake the construction of another canal. By canceling a few "ifs" we would not have the present canal; therefore it seems that we should try to be satisfied, for at least a little while, with what is easily the greatest canal since the world began.