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Gift ofthe Panama Canal MUseum

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Vol. A, No. 10 BALBOA HEIGHTS, CANAL ZONE, MAY 4, 1954

MAY 4, 1904

Fifty years ago today construction of ifie Panama Canal was formally inaugurated by tfie United States Government.

The years have a way of passing so swiftly that it often takes some important milestone in history

to call our attention to some of the basic facts about such a great project, for they become dulled in our consciousness by day-to-day events of great passing moment.

It is possible to quote formidable statistics on the amount of traffic which has passed through the Canal since if was opened on August 15, 1914 to show its importance to world trade. It is also possible to add up dollar figures on the debit and credit sides of the ledger to tell the f-inancial story of

its construction and operation.

But the Panama Canal is something far more impressive than any traffic J-igures or financial state- ments can show. The impact of its existence is felt throughout the world where nations or people

depend on maritime commerce. There was no enterprise of its nature in the history of man which was so long sought nor so sorely

needed.

The history of the water link between the Atlantic and Pacific oceans is inextricably bound with

that of the Isthmus of Panama and it is here that the Canal's beneficent influence is most firmly impressed.

Since the enterprise was inaugurated on May 4, 1904, it has directly provided a livelihood for a force

of workers, numbering from ten to over forty thousand a year. Indirectly, it has provided employment

for many thousands of other men and women in this immediate area. These thousands are few, however, when compared with the numbers whose employment in distant ports, in manufaciuring plants,

in mines, and on farms depend to a greater or lesser extent on the flow of commerce through the Pan- ama Canal.

The statistical charts show the number of ships which transit the waterway month after month

and the amount of tolls which ore paid for their transit. But these alone axe not true yardsticks of the Canal's value to world commerce. Each ship which transits can subtract many days of travel time

in its journey, and tolls collected annually are measured in tens of millions as contrasted with savings

amounting to hundreds of millions of dollars every year for shipping interests by shortened trade routes. Not only in the field of commerce has the influence of the Panama Canal been felt. Sanitation

of the area, incident to its construction, has had a tremendous effect on public health and sanitation

in many parts of the world. The impact on the Canal has been decisively felt in the world of culture and politics. And, important to our nation's existence as well as that of many other democratic countries, the Panama Canal has proved a life line through two world-wide conflicts and in the present

struggle for the survival of man's individual freedom.

The history of the Panama Canal is a long one. Its story dates back more than four centuries. Consequently, in this supplement of "The Panama Canal Review, " published in commemoration of the fiftieth anniversary of the start of the project as an American enterprise, it is only possible to indi- cate some of the highlights of its engrossing story and some of the basic facts of its construction and

its operation.

As head of the Canal organization, it is extremely gratifying to contemplate the important role which the Panama Canal has played in world events and in the progress of civilized man. The men and women who are associated in its doily operation and maintenance can take great

pride in the part which they have in making it a success. And, the people of the United Slates and

the Republic of Panama can justifiably claim full credit for their joint endeavor in making the Panama

Lonol an actuality.

Truly, the motto of the Republic of Panama —"Pro Mundo Beneficio— " and that of the Canal

Zone -"The Land Divided —The World United" —tell the story of a great achievement.

MAY 4, 1954
THE PANAMA CANAL REVIEW May 4, 1954

Time has an efficient, if sometimes uneasy,

method of effacing the sharp edges of history.

Today, for example, many of the basic facts

about the Panama Canal -the how. why, and

by whom it was built facts have been obscured by the passage of years and an accumulation of far lesser events.

Turn back the clock a half century and the

Panama Canal would be but an imaginary line

drawn across the map of the Isthmus of Panama, a reality only in the minds of a relatively

few bold and imaginative men.

Turn back the clock only 50 years and ships

would sail 5,000 or more weary and hazardous

miles between ports; many of today's busy

harbors would be quiet and unknown; and a hopeful but impoverished young Republic

would be centering its hopes for security and

stature as a nation upon the single objective

of the successful completion of a ship channel

between the two great oceans. Only by a mental reversal of these history

pages does the value of the Panama Canal

become apparentto the nation which built

it, to the country it bisects, and to the maritime nations of the world which freely use its facilities on a basis of complete equality.

Fifty years ago today—May 4, 1904—the

Panama Canal as an American enterprise was

born.

Forty-Million Dollar Receipt Is Signed

Early in the morning of that date Lt. Mark

Brooke, a young officer of the U. S. Army

Corps of Engineers, signed for his country a

receipt for $40,000,000, the largest single financial transaction of the nation up until then.

For it he accepted the rights and properties of

the New French Canal Company which had

been born only 10 years before in a desperate

effort to keep the project alive.

The intervening half century has seen the

completion of the job which a large segment of

the American public believed impossible, and

many of its respected leaders seriously questioned. Impressively, these few decades have

seen a parade of more than 225,000 ships of all sizes and categories pass safely and expeditiously between the Atlantic and Pacific oceans on missions of peace and war. Almost 900,-

000,000 tons of cargo of every description have

been shipped through the Canal from the maritime centers of the whole world.

Debates On Basic Problems Forgotten

So quietly and efficiently has this flood of

world trade been handled that public consciousness of its value has been lulled into forgetfulness. The Canal itself is no longer a burning

public issue. Its problems of today, however

large and critical, are mere sidelights to its actuality.

The average citizen of the United States or Panama, the two nations most vitally con- cerned with its successful operation and maintenance, has long since forgotten the heated

debates over whether the United States could

or should build an Isthmian canal, where it should be located, what type it should be,

deadly yellow fever, crippling malaria, costly

landslides, and innumerable other issues which

invoked serious study and flared tempers intermittently for nearly four centuries.

These basic issues were alive, real, just 50

years ago.

The signing of the forty-million-dollar receipt

and the transfer of the New French Canal Company's rights and properties took place without

View of Culebra Cut in December 1904 loading of Frencli dumpcars. Much excavation had been accomplished but

the "Cut" was still a formidable task 50 years ago.

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May 4, 1954 FIFTIETH ANNIVERSARY SUPPLEMENT

fanfare in the presence of only a few witnesses

in the Grand Hotel in the City of Panama

which then housed the French headquarters,

and today houses the Panama Post Office. The

momentous event, now relegated to a footnote

of the stirring twentieth century history, was

but a climax to a series of international episodes

which had been piled on top of each other with

startling rapidity during the preceding 10 years.

Events directly relating to the Canal which

immediately preceded this act included the

declaration of independence by the Republic of

Panama on November 3, 1903; approval by

the Provisional Government of Panama of the

Canal treaty on December 2, 1903; and ratifi- cation of the treatv by the United States Senate

on February 23, 1904.

Canal Was Hailed As Modern Wonder

In many respects the construction of the

Panama Canal was a culmination of the "Manifest Destiny" theory which pervaded the national policies of the United States throughout

the nineteenth century. Its completion in 1914

was hailed as one of the modern wonders of the

world, not only for the engineering achievement

but for the conquest of disease in an area that

had the unenviable reputation of being one of

the most pestilential sections of the world.

On this, the 50th anniversary of the Canal

enterprise as an American project, it is timely

and appropriate to review its history, its operation, and its relationships to today's swiftlychanging world of science, politics, and eco- nomics.

Has the Panama Canal fulfilled the mission

originally visualized by its proponents? Is it

Gaillard (Culebra) Cut today. The United Fruit steamer

Esparto is shown passing Gold Hill. This view of the Canal shows it as it was once called: The Big Ditch.

a profitable investment? What is its true value

to the nation which built it? To the nation

which gave it location and name? Has its cus- todianship been faithfully performed? What is its worth to international commerce? What is its future?

Most of these questions would be quickly

answered by the disastrous consequences which

would result if the waterway were suddenly

closed. Such a catastrophe would have repercussions throughout the maritime world by

pinching in two many well-tracked trade routes

and disrupting the flow of raw and finished

products. It would require a complete reevaluation of the Canal from commercial, military,

and political viewpoints.

There is little doubt that any one of these

considerations would have sufficient weight to

require the immediate restoration of the waterway, for the same basic motives which impelled

its building 50 years ago are fundamental in the

national policies of today, and the Canal is far

more vital now to international commerce than

when it was first opened in 1914. Its closure

would make immediately apparent that the

Panama Canal is vastly more important and

valuable than a piece of propertv evaluated at

only $460,000,000. It is, in fact, a multi-billiondollar enterprise vital to national interests and

of immeasurable benefit to world shipping.

Many Ways To Harm Canal Effectiveness

It is also well to consider that there are other

methods than actually closing the waterway by

which its effectiveness could be seriously hampered and its value revealed. Among these:

Failure to provide for increased traffic of the

futui'e; lack of proper maintenance; lessening

of the ever constant vigilance against diseases

endemic to the tropics; sabotage; an inefficient

operating force; and political or administrative
THE PANAMA CANAL REVIEW May 4, 1954

ineptitude which might invoke any of these

conditions.

These and many other important considerations must be constantly borne in mind by

those responsible for its administration, operation, and maintenance.

Any appraisal of the Canal's present-day

value; its operation and administration; the

Canal Zone Government; and the waterway's

future must, to a large extent, be considered in

light of its past history. There are many factors relating to the enterprise and its operation

today which are based on sound historical reas- ons which are often ignored.

For the romantically inclined, the Panama

Canal is a rich and colorful skein in man's history of the past four and a half centuries. Its story embraces wars and peace, discoveries and

conquest, economics and politics, honesty and

intrigue, scoundrels and saints, failures and

successes. Interspersed are such influencing

factors as labor problems, diseases, revolutions,

diplomatic maneuvers, impracticable schemes,

chicanery, honest and heroic endeavor, and

countless other factors and emotions which

shape men's destiny.

Charles V Of Spain Requested Survey

Factually, the history of the interoceanic

waterway began to unfold a few years after

Columbus discovered the New World. The first step leading to its actual construction was taken

in 1534 when Emperor Charles V of Spain

issued instructions to his governor of Panama

to undertake the first actual survey of the Panama route. The discouraging report that "all

the gold in the world would not suffice for its execution" with the labor then available led to

the practical abandonment of serious thought

of a man-made channel for many years.

The idea which had germinated, however, did

not die. It alternately withered and sprang to

life over the next three and a half centuries,

watered by the hopes and aspirations of traders

and navigators for an easy passageway between

the Atlantic and Pacific oceans. During this

period every major maritime nation toyed with

the idea of building a canal and the Panama

route was but one of many which was given

serious consideration. Chief among the others were the several Atrato River routes near the

Panama-Colombian border; the San Bias route

not far from the existing Canal; the Chiriqui

in northwestern Panama; Nicaragua; and Tehauntepec in Mexico. Each of these offered

some natural advantages such as deep indentations in the coast lines, narrowness of land between the oceans, broad natural lakes, or deep

navigable rivers flowing most of the distance

between the Atlantic and Pacific.

French Misjudged Immensity Of Task

The great fermentation of ideas crystallized

in the ill-fated efi'ort of the French to build the

Panama Canal. This attempt needs no apology

in history. Disease, extravagance, labor problems, and inadequate machinery were all con- tributory causes of failure. A basic cause was

undoubtedly a misconception of the size of the

project. Experience later gained in actual construction of the Canal and later advancement

in engineering and medical science lead to the

inevitable conclusion that the ambitious plans were impossible of achievement under conditions then prevailing.

Interest in the construction of an isthmian

canal was aroused in the United States while

the nation was still in its infancy. Benjamin

Pedro Miguel Locks under construction. Some idea oF

the immensity of the task oF building the Panama Canal

may be gained From this picture taken in May 1911.
May 4, 1954 FIFTIETH ANNIVERSARY SUPPLEMENT

Franklin, Thomas Jefferson, Henry Clay, and

John C. Calhoun were among the early states- men to ponder the question.

Early U. S. Interest Shown In Canal

Two events of the mid-nineteenth century

served to heighten American interest in the

project. These were the discovery of gold in

California and the completion of the Panama

Railroad across the narrow Isthmus of Panama

by private American capital in 1855. The

rapid settlement of the Pacific coast after the

discovery of gold gave the United States a national interest and influence in the Pacific which

hitherto had been negligible. The completion

of the Panama Railroad, aided by the California boom, provided a railway connection between the Atlantic and Pacific 14 years earlier

than any transcontinental rail link in the

United States and emphasized the dire need

for a water route.

The history of the Panama Railroad Company and the Panama Canal are so closely

intertwined that it is impossible to separate one from the other. The concession for its construction, granted in 1848 by New Granada

(Colombia), tied it inextricably to the canal project by giving the concessionaires veto rights over the canal's construction. This later necessitated the first French Canal Company buying controlling interest in the company at an

exorbitant price. This stock was transferred to

the United States in 1904 in the purchase of

the second French Canal Company's rights and

properties. The remaining stock in the hands

of private investors was purchased soon afterward and the Panama Railroad Company beU. S. S. "New Jersey" in Pedro Miguel Locks. The

transit of one of the big battleships or carriers is a

ticklish job and clearance in locks is measured in inches.

came an adjunct of the Canal although it was

operated under the original New York charter

until it was incorporated as a Government enterprise in 1948. So closely allied are the Canal

and the Railroad that the term "Canal enterprise" became generally used to denote the two

rather than the waterway itself. There is little to indicate that the military

or defense value of a canal to the United States

was given serious consideration until the closing decade of the last century. Until then

American interest was chiefly concerned with

a possible violation of the Monroe Doctrine or assurance that the canal project, when completed, would be a free artery of commerce

open to all nations alike.

Public Attention Focused On Canal

There were several events during the latter

part of the nineteenth century which served to

focus public attention on the need for a sure and swift means of the transfer of naval power

from the Atlantic to the Pacific. Among these were the Boxer Rebellion; the battle of Manila

Bay and the accompanying near-clash with foreign naval units in the Pacific; annexation of

the Hawaiian Islands; and pronouncement of

the "Open Door" policy in China, to mention

a few. Paralleling these were the SpanishAmerican War and recurring political upheavals in Latin American countries bordering the

Caribbean which invited intervention by European powers. The 90-day trip of the United

States cruiser On-ooii around the Horn to join

American naval units in Cuban waters served

to arouse popular demand for a canal.

All of these, however, were but contributory

factors. The expansion of United States commerce was an impelling force. The tide of migration to the Pacific coast vastly increased the

importance of business on the western seaboard.
THE PANAMA CANAL REVIEW May 4, 1954

In addition, commercial interests of the country had undergone a complete transformation

within a few decades. The pioneer days had

come to an end. The land was settled and the

production of agricultural products and manufactured goods began to exceed the nation's

requirements. Meanwhile, manufacturing interests began to require raw materials from

abroad.

This increasing flow of import-export trade,

especially to the west coast of South America

and the Far East, was seriously impeded by

long trade routes. The lack of a shorter sea route was particularly restrictive in the interchange of bulk cargo between the eastern and

western ports of the United States and this

trade grew steadily in importance after 1850.

Teddy Roosevelt Summarized Reasons

One of the best summaries of these underlying factors and their relationship to United

States' policies was given by the dynamic

"Teddy" Roosevelt in a special message to

Congress in January 1904 when he said:

"The control, in the interest and traffic of

the whole civilized world, of the means of an

undisturbed transit across the Isthmus of Panama has become of transcendent importance to

the United States.

"The course of events has shown that a canal

to connect the Atlantic and Pacific oceans must

be built by the United States or not at all. Experience has demonstrated that private enterprise was utterly inadequate for the purpose

;

and a fixed policy, declared by the United

States on many memorable occasions, and supported by the practically unanimous voice of

American opinion, has rendered it morally impossible that the work should be undertaken by

European powers, either singly or in combinations.

"In all our range of international relations I do not hesitate to affirm that there is nothing

of gi-eater or more pressing importance than

the construction of an interoceanic canal. Long

acknowledged to be essential to our commercial

development, it has become, as the result of the

recent extension of our territorial dominion,

more than ever essential to our national

defense."

A more succinct and comprehensive summary

could hardly be written then or now. The story of the construction of the Panama

Canal is one of the richest sagas of United

States history. It is one which every American

schoolboy should learn, for the Canal is truly

an American enterprise woven of American initiative, ingenuity, ideals, and dollars. Without

the^e, as Theodore Roosevelt so clearly said, it would not have been built, a fact often ignored

by idealistic dreamers and political opportunists.The drama of the Canal's construction has a majestic sweep in the story of mankind. To

no one man nor to any single group can go full credit for building the Panama Canal. The

organization represented one of the greatest

conglomerations of workers ever assembled

since the Tower of Babel. Skilled engineers of

every craft, doctors, lawyers, railroad men,

steamshovel operators, school teachers, preachers, powdermen, file clerks, and bookkeepers

worked side by side with a myriad others of

the skilled crafts and the pick-and-shovel

groups. The story has been told in poetry and

in prose.

The work of building the Canal involved

three main problems—engineering, sanitation,

Colon Hospital in the early 1900's. Only the oldest of the Canal old-timers recall when the buildings of the

hospital extended out over the waters of Manzanillo Bay.
May 4, 1954 FIFTIETH ANNIVERSARY SUPPLEMENT

and organization. Of tlie three, organization

proved to be the most troublesome.

Its successful completion was due primarily

to the engineering genius and administrative

skill of such men as John F. Wallace, John F.

Stevens, Theodore P. Shonts, and Col. George

W. Goethals; to the solution of sanitation and

public health problems of first magnitude by

Col. William Crawford Gorgas and his associates; to the statesmanship and political acu- men of such leaders as Theodore Roosevelt and

William Howard Taft; and to the loyal and unremitting toil of thousands of workers whose

high morale during the years of its construction

is one of the proudest stories of its history.

The engineering problems were primarily ones of magnitude which could be solved by

imaginative men. Chiefly they involved digging a ditch wide and deep enough to float the

largest ships; constructing the largest earth

dam ever built; creating the largest artificial

lake then in existence; building the most massive canal locks ever conceived; constructing

the biggest gates ever swung; inventing and

fabricating intricate electrical and mechanical

equipment for operating the waterway; relocating a 50-mile railroad ; and conquering landslides of monumental proportions.

Sanitation Was One Of Biggest Jobs

Sanitation involved tasks of similar proportions. It required a general clean-up of a large area where yellow fever, malaria, dysentery,

and other tropical diseases had thrived for four

centuries. It required the provision of a pure

water supply; proper sewerage and drainage;

mosquito, fly, and other insect control; saniGorgas Hospifal today. It was built on the eastern slope

of Ancon Hill by the French and wards were once crowded

with victims of the dreaded "yellow jack" and malaria.

tary food handling facilities; adequate quarantine measures; hospitals to treat the sick, and

doctors and nurses to staff them ; and an unending fight against many malign diseases which

thrive in the tropics.

Most of these public health requisites, like

the Canal itself, were virtually unknown on

the Isthmus 50 years ago. There is no debate

today as to the great value of the sanitation

work to the actual construction of the Canal.

The lessons learned here on the Isthmus have

had a marked effect in wide areas of the world,

especially in tropical areas, for many measures adopted in the clean-up campaign to make the

Isthmus a healthful place to live were given

their first large-scale tests even before final

plans for the Canal were approved.

Spooner Act Hampered Men In Charge

The organizational and administrative diffi- culties in building the Panama Canal were by

far more numerous, more complex, and more

controversial than those of an engineering nature. They arose from various sources but

during the critical early days of the construction period they stemmed from the Spooner Act,

the basic legislation authorizing the construction of the Canal, and living conditions on the

Isthmus.

The Spooner Act hamstrung the men hired

to head the job by denying them the necessary

authority. It required the President to appoint a commission of seven members to conduct the

work. This restrictive clause proved to be one

of the most disruptive factors in the early construction period, and one which had a decisive

efl^ect on the permanent organization for operation, maintenance, and government when it was established in 1914.

As long as the Canal plans were in a formative stage the plan worked admirably. Diffiriir-*

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THE PANAMA CANAL REVIEW May 4, 1954

culties soon arose, however, when actual work

was begun and decisive and prompt action was

of utmost importance.

President Roosevelt and Secretary of War

William Howard Taft, under whose supervision

the Canal work was placed, soon perceived that

the job with its many problems of engineering,

sanitation, labor, supply, and government,

could not be accomplished under the direction

of seven men 2,000 miles away from the scene. Remedial legislation, requested by Roosevelt,

passed the House but failed to pass the Senate.

The President, using the red-tape-cutting procedures for which he was famous, resorted to

the broad powers accorded him in the Spooner

Act. He appointed a new Isthmian Canal Commission and directed by Executive Order that

the Chairman, the Chief Engineer, and the

Governor of the Canal Zone constitute an ex- ecutive committee.

This only partly solved the vexatious question and conflicts of opinion and political interference continued. In March 1907, Theodore

P. Shonts resigned as Chairman of the Commission, and President Roosevelt moved a step nearer to centralized authority by appointing

John F. Stevens as Chairman and Chief Engineer, and vesting in him the authority of Governor of the Canal Zone.

Roosevelt Calls For Army Engineers

The resignation of Mr. Stevens a month later

resolved President Roosevelt on another course which has had an indelible imprint on the or- ganization since. He decided then to appoint

an officer of the Army Corps of Engineers to

head the job, using then the famous expression

that they would stay until he got ready to

move them. This was followed by the appointment of Col. Goethals under whose capable

leadership the construction of the waterway

was completed.

The final step in eliminating administratively

the hampering provision of the Spooner Act

came in January 1908 when the President

issued a directive making the Isthmian Canal

(Commission an advisory body to the Chairman

and Chief Engineer. It also required all members of the Commission to reside on the Isthmus.

The effect of this action was eloquently ex- pressed to the President by Colonel Goethals

when he said: "Now, I have both feet on the

ground and PU build the Canal."

Thereafter, the broad organizational problems were eff'ectively settled by "the Colonel"

whose genius as an administrator is equally

recognized with his ability as an engineer.

No Labor Pool Was Available For Job

It had been recognized before the beginning

of the work that, given the time, capital, machinery, and man-power, the construction of

the Canal could be accomplished. The neces- sary capital and equipment were virtually as- sured when the United States Government

undertook the work, but the recruitment and

retention of a satisfactory force proved complex

and trying.

There was no pool of skilled or unskilled

workmen on the Isthmus. Neither were there

houses to shelter them nor food to sustain

them. Many bitter lessons were learned during

the early construction period before a cohesive

force was available for the job.

The recruitment of a common labor force

was a complex but not a difficult problem.

Workmen by the thousands in the nearby West

Indies, inured to tropical living, were ready for

Gorgona School in 1904. There was no "little red school- house" in the Zone in those days and temporary shacks were converted for use until better buildings were provided.
May 4, 1954 FIFTIETH ANNIVERSARY SUPPLEMENT

any kind of work at even subsistence level.

Some 30,000 of these were hired under contract.

They were supplemented by an approximately

equal force of migi'ant laborers attracted by

wages even then much higher than the general

level in the area. To these were added over

10,000 contract workers from southern Europe

who proved to be diligent and effective workmen.

The hiring and keeping of a skilled force,

however, was another matter. And it was this

type of employee most needed. Without skilled

technicians of all classes, the advice given

Charles V nearly 400 years before would have

still held good, for unskilled workmen by the

thousands could have labored for a hundred

years and never created Gatun Locks nor dug

away the millions of cubic yards of volcanic

rock from Culebra Cut.

Widespread unfavorable publicity throughout the United States concerning health and

living conditions, coupled with criticism of the

Canal project itself, hampered recruitment during the first few years of the work and was a delaying factor in both planning and action.

While it is difficult to comprehend in the

modern Isthmian community of today, low

standard living conditions was one of the big

basic obstacles to real progress in construction

work.

Living Conditions In 1904 Described

Miles P. Duval, one of the most accurate

historians of the Isthmus, in "And The Mountains Will Move," graphically described these

conditions as follows:

"As the number of employees increased,

Balboa High School and Canal Zone Junior College.

The Canal Zone school system today ranks with the Finest

in the United States in staff, plant, and equipment.

rents and food prices rose until it became increasingly difficult to live within income. Eating places were few, and no effort was made

to provide***** more.

"There was no cold storage for meat on the

Isthmus. All meat was bought fresh from

horse-riding peddlers on the streets. There was

no ice, no fresh milk, and nothing but tinned

butter. Local bread was dirty, and fresh vegetables decayed so rapidly that employees had

to depend on canned foods.

"Water was the greatest problem of life in

the early days. In the dry season it was

peddled along the streets, and a daily bath was

a privilege only of the wealthy."

^ IfC if* i^ T* "Employees had to find quarters of their own. Rooms that in the United States would

rent for $5 a month, in Panama cost $20— a

rate too high for $100-a-month clerks."

Private Sources Unable To Meet Needs

The law of supply and demand was never

better illustrated. Private business then on the

Isthmus was unprepared and unwilling to meet

the challenge. The question of properly provisioning the employees, which was as vital to success of the project as the machinery and

equipment, came to a head late in 1905.

During the visit of Secretary of War Taft in

December 1904 to iron out difficulties which

had arisen with regard to customs and other

governmental matters, it was agreed to maintain for American employees only the Panama

Railroad commissaries, which had always existed for Panama Railroad employees and which

were operated by the French during their Canal

construction work.

Prices rose so exorbitantly that the common

labor force could not eat. An offer made in

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10 THE PANAMA CANAL REVIEW May 4, 1954

1905 for a sjoidicate of Panama merchants to

operate the commissaries at a nominal profit

was refused. John F. Stevens, Chief Engineer,

in a formal report in August 1905 reported that

staple food prices had risen from 100 to 1,000

percent within 18 months, and subsequently a new agreement was reached to extend the commissary privilege to all employees.

The cooperative spirit displayed between the

United States and the Republic of Panama in

adjusting the Commissary problem at that time

has characterized the relations between the two

countries also in many less fundamental questions during the 50 years of their close and

amicable relationship.

Early Elemental Problems Still Exist

Although 50 years have elapsed since the

construction of the Panama Canal was undertaken by the United States, many of the elemental problems of that period are inherent in

the operation and maintenance of the waterway

today.

The Canal Zone is still an isolated community 2,000 miles away from a ready storehouse

of supplies. Sanitation and healthful living conditions are still prime requisites for employees

and their families. Technical skills are as vital

to the operation and maintenance of the Canal

as they were in its building.

All of these are responsibilities which weigh

heavily on the men who are entrusted today

with the administration of the Canal.

The Canal enterprise today is a many-faceted

operation, all geared to the primary mission of

expediting the movement of ships between the

Atlantic and Pacific oceans and subordinate or

auxiliary to this purpose.

Like the personnel, supply, and health problems, many of the basic features of the Canal

organization today stem fi"om experiences of

the construction period. Long before the S. S. Ancoii made its historic trip through the new

waterway on August 15, 1914, Colonel Goethals

had given deep consideration to the organization required for its operation and maintenance,

and government in the Canal Zone.

The spectre of divided authority which hung

so precariously over the enterprise during the

early part of its history and which seriously

threatened the successful completion of the project made a deep impression on him.

When the time came to form the pennanent

organization, his views largely prevailed. He

was insistent on several fundamentals. Briefly

these were that: The organization be continued

as a separate governmental entity under the

supervision of the Secretary of War (Army);

a single head be appointed with full authority

to execute the mission assigned ; the head of the

organization and the second in command be

officers of the Corps of Engineers to provide

continuity in management without political

considerations; the organization be purely civilian in nature and subordinate to the military

only in times of national crisis; and everyone

not connected with the Canal project be kept

out of the Canal Zone.

Organization Based On Solid Principles

In the main, these fundamental principles

have been followed throughout the 40 years of

the Canal's operation and the wisdom of leaders

in establishment of the permanent organization

has been amply demonstrated by the success of

the enterprise since. The solidity of that foundation has been highlighted by the fact that

the Canal has performed satisfactorily its prime

Gatun Locks in December 1909. An elaborate system

o( automatic railways and aerial cableways was set up to handle concrete and steel used in building Gatun Locks.

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May 4, 1954 FIFTIETH ANNIVERSARY SUPPLEMENT 11

mission; the Canal organization has been kept

remarkably free from political influence; the

men who have headed the organization have

invariably performed their complex and trying

duties with integrity and distinction; and, in

comparison with other government operations,

it has had a remarkably successful financial

history.

To obtain a clear picture of the success or

failure of the Canal's principal mission, it is necessary to examine the operating results apart

from the various subsidiary activities.

The Canal's main business of providing for

the transit of vessels is influenced by the ebb

and flow of world commerce as governed by

innumerable economic and political trends over which its administrators have no control.

Canal Is Geared To Commercial Shipping

Although the Canal has been and is a vital

element in national defense, the long-range policies in its operation are, in the main, geared to

the trends and requirements of world commerce. The traffic pattern of the Canal has largely

followed the course of world history during the

comparatively brief span of its operation.

While the waterway has had a vast influence on world commerce and the development of

new trade areas, its traffic is vitally affected by

wars, depressions, strikes, and other recurrent

political and economic upheavals which affect

wide trade areas or large segments of the

world's population.

It was natural that the opening of the Canal

would have a vitalizing effect on world trade.

Since its opening, new trade routes have been

Gatun Locks in operation. A ship entering the lower

lock chamber at Gatun is starting a three-step lift o( 85

feet to Gatun Lake level for its journey to the Pacific.

developed and many countries in isolated trade

areas have been brought within the radius of

world markets. The saving of thousands of

miles in ship movements with the consequent

economy in the transportation of commodities

highly stimulated the development of manufacturing, mining, agriculture, and industry in

wide areas. The vast movement of commodities has also had an indirect but important influence in the promotion of culture, improvement of health and living conditions, and in the

strengthening of political ties among the nations of the free world, particularly those of

the Western Hemisphere.

The Canal was opened to traffic only a few

days after the outbreak of the first World War.

Largely as a result of the disruption of world

economic conditions by that catastrophe, commercial traffic did not reach normal peacetime

levels until some years later. It was not until

1920 that commercial transits exceeded 2,000

in one year and not until 1921 when cargo

shipments totaled more than 10,000,000 tons.

With the revival of world trade after the war,

Canal traffic rose sharply after 1922 and

reached a peak at the height of the world boom

and prosperity era in the late 1920 's. The

number of ocean-going commercial transits in

each of the fiscal years 1928, 1929, and 1930

exceeded 6,000, while cargo tonnage annually

averaged over 30,000,000 tons during that

three-year period.

Depression Reflected In Canal Traffic

The world-wide depression of the 1930's was

mirrored in Canal traffic statistics. By the

fiscal year 1939. however, the number of ships

and amount of cargo moved through the Canal

had nearly reached the level of the late 1920's.

Commercial traffic became a negligible factor

in the Canal's operation during World War II,
12 THE PANAMA CANAL REVIEW May 4, 1954

and reached an all-time low in the fiscal year

1944 with only 1,562 transits and only 7,000-

000 tons of cargo.

Despite world tensions which have continued

to exist among the major powers since the

close of the war, commercial traffic has increased spectacularly since 1945. During the

past fiscal year new all-time records were established in total traffic, number of commercial

transits, net tonnage of vessels, tolls, and

amount of cargo shipped through the Canal.

Traffic statistics are maintained on about 64

trade routes through the Canal, but these are

generally grouped under eight major headings

which are: United States intercoastal ; east

coast of the United States and west coast of

South America; east coast of the United States

and Canada and Asia; east coast of the United

States and Central America; Europe and the

west coast of the United States and Canada;

Europe and Australasia; Europe and South

America; and the east coast of the United

States and Canada and Australasia.

Wide Fluctuations On Main Trade Routes

There has been a wide fluctuation in the

movement of shipping over these main trade

routes during the course of the Canal's 40

years of operation. The traffic pattern has

been particularly fluid since the close of the

past war, being markedly affected by such factors as the Korean conflict, the Iranian oil dispute, troubled political conditions affecting the

Suez Canal and other parts of the Middle East,

and serious political tensions in other parts of

the world.

Comparisons of the movements of ships and

commodities over the principal trade routes

during the two peak periods of the Canal's operation reveal the constant flux in world trade

as reflected in Canal statistics. Illustrative of

these are: Cargo shipments in the United States intercoastal trade aggregating over 10 million tons

and making up more than 25 percent of the

total tonnage of commodities moved through

the Canal in 1929 were less than half that

amount during the past fiscal year and represented less than 15 percent of the total.

Comniodity Shipments To Far East Triple

Commodities shipped between the Far East

and the eastern coast of United States and

Canada last year amounted to 7,848,000 tons,

practically triple the amount moved just 25

years ago.

Cargo tonnage over the trade routes between

Australasia and the United States, Canada,

and Europe last year was practically double

the 1929 figures.

Aside from the constant rise and fall in the

amount of commodity shipments between given

areas as a result of economic pressures. Canal

statistics also reveal a constant shifting of demands for specific commodities. The movement of mineral oil through the Canal, for ex- ample, has practically been reversed within the

past 10 years. For many years mineral oils

constituted the leading commodity moved from

the Pacific to the Atlantic with five to seven

million tons shipped annually. During the past

two years the shipments have totaled less than

half million tons annually. Meanwhile, the

movement of oil from the Atlantic to the Pacific has greatly increased. During the peak

1920's oil shipments in this direction were less

than a million tons a year. Last year a total

of 4,936,000 tons were shipped through the

"D" Street in Colon before paving. Replacement of open drainage ditches, such as this one, by underground

sewers was important in the big sanitation job required.
May 4, 1954 FIFTIETH ANNIVERSARY SUPPLEMENT 13

Canal from Atlantic to Pacific ports.

Year in and year out in the Canal's operation since it was opened in 1914, the leading

commodities shipped from east to west and

from west to east have reflected the development or lack of development of industry. Manufactured products have generally led the commodity lists from the heavy industrial centers

of Europe and North America to the Pacific,

while raw products, such as ores, lumber, nitrates, metals, and copra, together with such

bulk foods as wheat, sugar, coffee, fresh and

dried fruits, and bananas, have been the leading commodities shipped from the Pacific to

the Atlantic.

It would require a book-length report to give a comprehensive analysis of commercial traffic

through the Canal and these fragmentary statements serve only to illustrate the vast influence

the waterway has had on world commerce.

Importance To National Defense Shown

The importance of the Panama Canal to

national defense was demonstrated during

World War II by the transit of more than

5,300 combat vessels and about 8,500 other

craft serving military needs in the transportation of troops and cargo. Even these figures,

fail to portray the full value of the Canal

during that critical period.

While the value of the Canal as an instrument of national defense is no less today than

its opening 40 years ago, events of the past 15

years have shifted the emphasis of this value.

Commercial ly and defensively the United States

began to face east and west only after the

settlement of the Pacific coast line. From then

Cristobal mole and piers. More than 1 ,000,000 tons oF cargo were handled last year at the Canal terminal ports, providing steady employment for more than 2,000 men.

until near the close of World War II the nation

had a one-ocean Navy and the Canal was an

all-important link for its movement between

the Atlantic and Pacific.

The simultaneous threat to the safety of the

country in both oceans during the war required

the building of naval forces sufficient to protect

the nation's maritime interests wherever re- quired. This consequently relegated the Canal

into the background as to its need for the

movement of fighting ships.

But the possession of a two-ocean Navy does

not eliminate the need for speedy movement

of men and materials for winning a war. Conclusive evidence of this, if any were needed,

was given during the Korean War when only a fragment of the nation's military and econ- omic strength was involved. During the fiscal

year 1953, the last full year of the conflict,

1,064 U. S. Government vessels, mostly cargo

ships carrying supplies and materials to the

Far East, transited the Canal. This is approximately twice the number using the Canal under

peacetime conditions.

The factor of logistics is not only important

in warfare; it is a vital element today in the

survival of nations in peacetime.

The steady progress in the fields of transportation and industry has vitally altered logistical problems for the United States. The

nation no longer can depend wholly on its own

natural resources for existence. This dependence on foreign markets is even more acute for

other nations which are allied in the gigantic

stiTiggle for Democracy's survival.

Old Concept Of Plenty Is Now Changed

The old concept of plenty of raw materials

is no longer true in the United States. It was

never true in the highly industrialized nations

of Europe. Consequently, more and more de-

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14 THE PANAMA CANAL REVIEW May 4, 1954

pendence is being placed on the vast undeveloped areas of the world for vitally needed

materials. This need is particularly true of

mineral oils and various metallic ores upon

which both industiy and modern transportation depend.

Aside from the requirement of raw products

and the interchange of finished products for the

suivival and progress of industralized nations,

the need for shipment of food and manufactured goods into undeveloped territories has

consistently increased during the first half of

this century.

Thus viewed from a logistical standpoint, the

I'anama Canal today is far more important to

national welfare and defense and to world commerce generally than ever before in its history.

All Parts of Operation Are Essential

The day-to-day operation of the Panama

Canal is far more prosaic and less likely to

attract world attention than its construction

so long as it is efficiently done.

Although all parts of the operation are merged into the primary mission, the smaller

and less publicized activities are essential to

the whole.

Most of the principal functions of the Canal

enterprise today, except for operation and

maintenance of the waterway, are essentially

the same as when the first Isthmian Canal

Commission took charge of the work in 1904.

These include, not necessarily in order of their

importance, civil government; public health;

labor; supplies and personal services for the

employees and their families; the servicing of

vessels using Canal waters; correlation of its

diverse activities with those of the Armed Forces and other U. S. Government agencies on

the Isthmus; and the fulfillment of many international commitments of the Federal Government.

The supporting facilities or activities for

these functions, of necessity, have a wide range.

In civil government they include police and fire protection; schools; hospitals and public health

sei-vices; a postal system; and customs, quarantine and immigi'ation services.

Municipal facilities normal to any modern

community are provided, such as streets and

public highways; sewer and water systems; electric power; and communication facilities.

Other subsidiary services include the operation of commissary stores for food and other

supplies for employees and dependents; housing; port facilities; storehouses for ship chandlery and other supplies; marine bunkering and

ship repair facilities; a railroad line across the

Isthmus; a steamship line between the United

States and the Canal Zone; service centers for

recreation and the sale of sundries; restaurants;

and others.

Company-Government Are Service Units

In addition, the Panama Canal Company

and Canal Zone Government are service agencies for other U. S. Government establishments

and their employees on the Isthmus. The

strictly governmental and municipal services are provided on a Zone-wide basis. Except for

housing, which is generally provided only for

Canal employees, other services and facilities are available to personnel of the Army, Navy,

Air Force, and other U. S. Government agencies. Because of this, the plant and equipment

are far more extensive than would be required

if only the Canal force were supplied.

The Panama Canal Company makes extenPanama City in 1919. This view, taken from Ancon Hill,

shows the outer rim of houses which were then clustered along the Panama Railroad and on Via Espana.
May 4, 1954 FIFTIETH ANNIVERSARY SUPPLEMENT 15

sive purchases of local products when available.

Last year such purchases amounted to over

$2,500,000, exclusive of those made by the

Armed Forces or by individuals employed in

the Canal Zone. This was approximately five

times the value of local purchases 15 years ago.

This increase is due to some extent to the difference in the dollar purchasing power, but it may be attributed largely to the development

of Panama's cattle industry and the increased

production of sugar, coffee, and fresh fruits

and vegetables.

Further development of the agricultural re- sources of the Isthmus should greatly augment

these figures because of the advantages of buying locally.

Daily Provisioning Is Major Problem

Because of the Zone's isolation from ready

sources of supply, the provisioning of the working force is a day-by-day problem essential to

the efficient operation of the Canal.

The working force of the Canal enterprise is a hetrogenous group. At present there are approximately 15,000 employees of whom about

3,850 are engaged in administrative, supervisory or clerical work and in the various skilled

trades. The others are employed in unskilled

and semi-skilled work of a varied nature.

At the time the Canal construction was

undertaken, both skilled and unskilled workers

had to be imported. Except during the past

war when the force was tripled in size the local

labor supply for unskilled work has been ample

to meet all requirements. This condition is not

true of the skilled force which still must be

recruited largely from highly industrialized

Panama City today. All available ground space for several miles into suburban Panama is occupied with fine residences or modern apartments and office buildings.

areas in the United States.

Except for the Panama Government, the

Canal is by far the largest employer of skilled

and unskilled labor in the area and since 1904

its wage standards have been well above those

of any major employing agency outside the

Canal Zone.

The Canal organization has undergone a tre- mendous change since the close of World War

II, as a result of the force reduction to peacetime requirements, the reorganization in July

1950, and the incorporation of Canal operations

in July 1951. The fact that these changes have

been made without interference to the primary

function of the organization—the expeditious

handling of shipping—is indicative of the solid

foundation laid many years ago for the operation of the international waterway which has

been followed by every administration since the

organization was established 40 years ago last

month.

Few organizations have the complexities

of the Canal, and few can boast its outstanding record of a half century.

Waterway Is Still Dominating Factor

However complex or acute the problems of

administration of the Canal enterprise, the

waterway itself is the dominating factor. The

convenient passageway for ships between the

Atlantic and Pacific oceans, dreamed of for

four centuries and accomplished just 40 years

ago, has had and will continue to have a commanding influence in world affairs, and its

efficient operation will continue to be of immediate and deep concern not only to the United

States and the Republic of Panama, the two

nations so closely joined in the international

undertaking, but to the entire maritime world.
16 THE PANAMA CANAL REVIEW May 4, 1954

The Panama Canal is a high-level lake and lock-type waterway with

a summit elevation of 85 feet.

Its construction was begun by the United States Government May 4,

1904, and it was opened to commercial traffic August 15, 1914.

Its construction required the excavation of 208,000,000 cubic yards of

earth and rock, of which 103,000,000 were removed from the Gaillard Cut

section.

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The original construction cost (net) was $380,000,000.

The total capital investment—exclusive of defense—at the end of the

fiscal year 1953 was shown in the accounts as $459,758,633.

The Canal is 50 miles long from deep water in the Atlantic to deep

water in the Pacific. It requires an average of seven to eight hours for a ship to transit the Canal.

A ship sailing from New York to San Francisco saves 7,873 nautical

miles by using the Canal, or nearly three weeks in sailing time for the

average merchant vessel.

The average amount of tolls paid by ocean-going commercial vessels

during the past fiscal year was $4,318.

Mineral oils, coal and coke, and the manufactures of iron and steel, are the three leading commodities shipped through the Canal from the

Atlantic to the Pacific.

Ores, lumber, and wheat, are the three leading commodities, in tonnage, shipped from the Pacific to the Atlantic.

Many astronomical figures are used to show some of the statistical

totals in Canal operations since it was opened. Among these are the following on transits, cargo, and tolls up to April 1, 1954:

Total transits by ships of all categories

^226,351

Total transits by ocean-going commercial vessels 170,759

Total amount of cargo, tons 881,293,238

Tolls collected on commercial vessels $727,984,445

The peak year in the Canal's operation was in the fiscal year 1953 with

10,170 transits, of which 7,410 were made by ocean-going commercial

ships of more than 300 tons, net. Cargo tonnage carried by the latter

during the year amounted to 36,000,000 tons and tolls collected on commercial ships totaled $31,918,000.

Some popular conception of the vast amount of the world's goods

which are moved annually through the Panama Canal may be gained

from the following:

It would have required 1,000 trains of 50 carloads each to haul all the

wheat that was shipped through the Canal during the fiscal year 1953.

A total of 2,300 trains of 50 tank cars each would have been necessary

to carry all of the mineral oil shipped through the Canal in the twelvemonth period ending June 30, 1953.