Panama Canal Tolls.

New York Times 100 years ago today, November 17, 1912:
    The President has fixed Panama Canal tolls in accordance with the advice of Prof. Johnson, who has been guided in his judgment by commercial considerations. The rate is almost the same as that via Suez, but that is largely accidental. The competition between the two routes is one of freight rates rather than of canal tolls, and the toll is only one factor of the rate. The rate fixed is not a cutthroat rate for the purpose of diverting traffic from the Suez route, for the professor finds that policy unjust. The rate adopted is proportioned to the cost of building and operating the canal, and with the intent to provide for economy in movement by that route rather than by a transcontinental route. Even according to these reasonable principles the professor says that the result rests "mainly upon conjecture." Nobody really knows what commerce will prefer the canal, and therefore nobody really knows what the tolls will amount to. The expectation is that after ten or twenty years they will provide something toward repaying the cost of the canal. In that case just so much of the National Investment will be released either for a similar use or for the reduction of taxation. That is good business either way. It is plain that there is a limit to the extent to which even the United States can use taxation for the construction of such public works, but there is no limit if the works are administered in a method not to burden the taxpayers, and to recover the capital sunk.
    There are two important variations from the practice on the Suez Canal. No toll will be collected from passengers via Panama. The professor's argument is that the passenger tolls are included in the tonnage toll, and that a separate passenger toll is a double toll. Also warships are charged differently from the tonnage toll on merchant vessels. The professor says that they are fighting machines, and have no tonnage for profit. Therefore warships are charged for their displacement, at a rate nominally lower than merchant vessels, but totaling higher, and regardless of commercial considerations. In the professor's words, "the United States is not called upon to make the Panama Canal tolls low for the purpose of lightening the naval burdens of foreign countries." All that the United States is required to do is to deal equally with all users of the canal for like purposes. All warships pay via Suez because that is a private enterprise, and there is no excuse for exempting any. The discrimination would be too flagrant, in some respects there is cause for regret that the Panama Canal was not built by the United States through a corporation, in the manner in which capitalists keep their interests distinct, and keep track of their financial operations. The Steel Trust, for example, although owning its subsidiaries, would not allow them to take freely from anything the Steel Trust owned. Strict account is kept of all intercompany operations, but the United States keeps no account of interdepartment operations. Thus it happens that nobody really knows what the franking privilege costs, or the real deficit in the Post Office, which claims a surplus.
    There would be no real discrimination if the United States should fail to collect tolls on its warships, or even if it should rebate them. But there would be ground for a suggestion of avoiding the letter of the treaty, even though complying with its spirit. The exemption of the coastwise marine is a similar case, which hardly could have occurred if it had been resolved to keep the canal accounts in a strict manner. If the canal had been required to support itself there never could have been an argument that rebates to the coastwise trade would not be a burden to taxpayers for private profit. The professor is not responsible for this. His entire statement of his action is contrary to it. The troubles which will result from departure from the professor's principles are not yet apparent, but are coming to a head.