THE PANAMA CANAL.

Gisborne Standard and Cook County Gazette, Volume II, Issue 237, 20 December 1888, Page 3

THE PANAMA CANAL.

CONFIDENCE IN M, DeLESSEPS. Paris, Dec 18.

Stockholders express their confidence in M, DeLesseps, and state they are willing to subscribe to any future loan for the Panama Canal.

The following letter, written at the end of last year, and though of a hostile nature, will convey as adequate an idea of the difficulties in connection with the Panama Canal M any other description that might be given;— THE VICISSITUDES which have affected the scheme, and the changes of front made by its promoters, have, during the last 15 months, been numerous and important, and require to be recapitulated. The last call upon the shareholders of the company was made and fairly responded to. The necessity for raising a fresh loan was felt, and in July, 1886, an application was made to the French Government for a guarantee, on the ground that the enterprise was a national one. The application was not rejected, but it was deemed requisite to institute a searching enquiry into the affairs of the company and into the prospects of the Canal. Rather than face such an enquiry, M. de Lesseps resolved to raise the money by a lottery scheme, resting on the prestige of his own name. The terms offered were very alluring to the public, but fearfully onerous on the company The result was only a partial success, and M. de Lesseps ostentatiously declared that the unsold bonds would be uestroyed. In the year it was tonnd requisite to raise money by a process similar to that of 'mJwirevious year, but on terms still more alluring. This time the attempt was a failure, for the applications did not cover half the amount required. After a lapse of only four months, during which the works on the Canal have been proceeding but languidly, it is found requisite that another appeal should be made. Early in October M. de Lesseps attended a meeting of the Academy of Sciences of Paris, and made a statement to the effect that the Canal would be OPENED FROM OCEAN TO OCEAN on the second day of February, 1890; that the works would not then bo completed, but that they would be sufficiently so to admit of the passage of 20 ships a day, which would yield a revenue twice as great as that obtained from the Suez Canal. No allusion was made to any specific change of programme or of the well known characteristics of the Canal. Boon afterwards the news arrived that, at the meeting of the American Association for the Promotion of Science, the Panama scheme was denounced as a failure. It was asserted that only one-fifth of the work had been done, and that liabilities had been already incurred to the amount of 20,000,000 dol. per annum. No notice was taken by the company of these assertions. On the 9th of November there appeared in the Messager de Paris, a letter bearing the signature of M. Victor de Lesseps, purporting to be issued by authority, announcing that It would be possible to open the Canal in ISS9, although in an unfinished state; that the January coupon would be paid, and that no more capital would be required prior to the inauguration. This etter has since been denounced as A TOBOEBY.

But it should be observed that it must have been written and published with the intention of furthering the enterprise and benefiting the company. It was, therefore, incumbent on the promoters, in vindication of their honor, to endeavour to discover the delinquent. Instead of doing so they made an attempt, Without any evidence at all, to fix the blame on “a band of dishonest speculators,” whose object was ta lower the price of shares. The declaration tiiat no more capital would be re--2 Hired was described as “ an insidious falseood.” The absurdity of this tirade was evident on the face of it. The statement was false, but for whose advantage was ifuttered ? It merely repeated what M. de Lesseps himself has frequently left to be inferred. That the falsehood (really had a reassuring effect was soon shown in a very peculiar way. Within two days after the forgery had been denounced, the price of the 600 i SHARES FELL AT OXE SWOOP from 345 to 296 f. In the ordinary course of things the discovery of an unfair conspiracy to depress the shares should have sent them up with a rebound. The result showed that the public believed that the conspiracy was on the other side. All the circumstances pointed to the possibility that the letter was meant to he tin ballon d'usai, which might be taken advantage of or repudiated as circumstances might deem to be expedient. Another witness, favourable to the scheme of the [Canal, but adverse to the company, came forward in the person of Senor Armero, the Agent of the Colombian Government at Washington. His contention is that the Canal will certainly not be opened till after 11892, the year in which the concession from the Colombian Government will end. He declares that the works are not in satisfactory progress, that a great many working are almost deserted, that only 5000 men, instead of 15,000, have been employed, and their efficiency and that of the machines have been greatly overstated. He estimates the total excavation required at 161,000,000 metres, of which 34,000,000 has been accomplished. The cost of controlling the Cbagres Biver, not yet seriously taken in band, he sets down at 94 000,000dol. (£18,800,000). Altogether he believes that (£121,000,000) are needed U"Smplete the works, but that the money win be difficult to obtain, since the financial situation is

“SERIOUS, INVOLVED, AND ALARMING.” The ermpany is in debt to the Government of the Uui'ed States of Colombia to the amount of 13,650,880 dol. (£2,730,000), payment of which is urgently demanded. There is reason to believe that the Colombian Government is looking forward to the contingency of the forfeiture of the concessions in order that it may take possession with allien on the Canal for the amount that may then be required for its completion, in which case the whole of the capital previously expen -ed would be treated as utterly lost. It is only in this way that Senor Armero’s belief in the Ultimate piercing of the isthmus can be understood. While denouncing the company, therefore, he endeavors to revive faith in the future of the Canal, M. de Lesseps had no time to reply to these adverse strictures, for he was busily employed in concocting a new

programme, the publication of which became urgent when the disastrous results from the denunciation of the forged letter became evident. He found that it would be ABSOLUTELY REQUISITE TO RAISE MONEY on the unsold (and unsaleable) remainder of the lottery bonds, amounting to 265,00'1,000f and also to float a new loan of 300,000,000 f, amounting in all to 565,000,0001 or £22,600,000. There was no prospect of his being able to raise anything at all unless he could obtain the support of the Government, and he therefore addressed a letter to the Prime Minister asking him to authorise the issue of a lottery loan to the amount set forth. The object he had in view was, to use his own words, “ to assure a passage for the anticipated traffic of 7,500,000 tons, and to reserve for the future the definite completion of the maritime canal by means of a small percentage deducted from the annual profits of the working of the canal.” He appended a brief financial statement, from which it appears that in February, 1890, the canal will have cost 1,500,000.000 f (£60,000,000), composed as follows3oo,OOO.OOOf of share capital, 635,000.000 f < f loans io obligations already issued, 265,000,000 f of loans authorised but hot yet Issued, and the further sum of 800.000.000 f which will be required for the partial completion of the works. The transit receipts, at 15f per ton, will, he anticirates, produce a yearly revenue of 12,500,000 f. This sum he proposes to deal with in this way 72,000,000? for the service of the various loans; expenses of administration, 5,000,000 f ; repairs, 6,000,OOOf; interest on the share capital, 15,000,OOOf; unforeseen expenses, 4,000,000 f ; leaving 10,000,000 f of profit for a dividend. IN REFERENCE TO THESE FIGURES it is requisite to note—(l.) That the statement as to the cost of the canal is inaccurate, and that the total liability of the company will be at least £96,000,000, instead of £60,000,000, aa stated. This is owing to the completed in any shape is doubtful, but it Stay be set down te an absolute certainty that there *lll tav# be S tide level eMHrt,

circumstance that M. de Lesseps assumes throughout that the lottery bonds are for 500 f each ; whereas every subsc iber of 500 f receives a bond for IOOOf, and the larger sum is the measure of the indebtedness of the company. (2.) No provision is made for the prize drawings, which will virtually be the redemption of the bonds for their full nominal value before they become due. The precise amount of these drawings is not st ited, but it will probably range between 10,000,000 f and 20,000,000 f per annum. (3.) The anticipated revenue from the Panama Canal is nearly double that of the Suez Canal, where the gross transit receipts in 1886 amounted to 56,527,390 f. The charges on the debt admitted by M. de Lesseps, without allowing anything for the shareholders’ capital, will be 15,500,000 f more than this gross sum. (4 ) The estimated tonnage is 1, 732,344 tons greater than that which passes through the Suez Canal, and the proposed charge of 15f per ton is s|f per ton above the Suez charge —a difference of 58 per cent, against Panama. Ship owners will be apt to look upon this rate as prohibitory. Is it likely that a single Australian ship will pass through the canal on such terms ’ It is evident that if the promoter of an enterprise is allowed carte blanche in framing his estimates of revenue, and can get people to believe him, the task of the engineer is very much simplified. No matter what the cost may be it is always possible to

DRAW UPON THE IMAGINATION for an increase of revenue, and great latitude is usually allowed to an enthusiast without rendering himself liable to a suspicion of deception. In the present case there are many reasons why the estimates -pf M. de Lesseps should be rejected. He has shown his incapacity to estimate costs, and estimates of revenue are much less tangible. In the first place he cannot increase the number of ships afloat, and it is evident that whatever tonnage is to be allotted to the Panama Canal must be subtracted from that passing by other rentes. Whatever revenue is to be collected at Panama in connection with the Australian, Indian and Chinese traffic must be taken from Suez, for, if the ships now preferring the ocean route are not attracted by the comparatively low rates payable at Suez, they certainly will not be drawn to Panama by higher charges, especially as the Panama route is the longest. It is certain that no Indian or Australian mailship will ever pass through the Panama Canal, because by that route it will be impossible to. accelerate the mails by more rapid land carriage. And yet we have seen that even if the whole traffic of the Suez Canal could be transferred to Panama it would not come up to more than one-half of the required estimate. There only remains the Western coast of South America, with mailships to Callao and Valparaiso, to make up the Panama revenue —probably less than one-tenth of the inflated estimate. THE MOST IMPORTANT ALTERATION in the Panama programme now remains to be noticed. M. de Lesseps has definitely accepted the alternative of constructing a highlevel canal with locks. He says that thi< is only to be a temporary expedient, and that the oeean level canal will be constructed out of the profits of the high-level canal. But this may be dismissed as little better than a sham, for if the high-level canal does its work, and earns an income twice as big a? that of the Suez Canal, what more is wanted ? The new programme is a stultification of the old, and its production now is a proof that that the greatest enemy of the only practicable canal has been M. de Lesseps himself. But the conversion of M. de Lesseps comes too late to save the company, for so much money has already been fooled away that neither cash nor credit remains to finish the construction of the canal on any possible plan. The company stands on the brink of bankruptcy, and cannot even take a step to save itself. It is not likely that the Government which was incredulous a year and a half ago will now assume any responsibility. Even if the lottery loan be authorised without a guarantee it will prove a failure. But even the authorisation should be witheld, for if there are to be prize drawings there ought to be an enquiry as to where the money to pay them is to come from, and no satisfaction can be given on this point.

THE LENGTH OF THE LOCKED PORTION of the canal will be about nine miles, but no information is afforded as to its height above the sea level or as to the number of the locks la the execution of these recourseis to be had to none but French labor—a bit of Chauvin ism net quite in keeping with the international character of the enterprise. Is this the small bribe that is offered to the Government and to the working men who have clubbed together to invest in the company’s shares, or will there be another French scandal over the business ? There have been not a few already. The new programme will, M. de Lesseps says, effect a saving in the cutting, inasmuch as there will be only 40,000,000 cubic metres of soil to be removed before the opening of the canal. Even according to this estimate there remains more than half of the work of excavation to be done, and it includes 10,000,000 cubic metres of hard ground and rock. Theie is no better gua-

rantee for the new estimate of cost than there has been for any previous estimate. Some three or four years ago M. de Lesseps announced that contracts had been actually

entered into for the whole of the excavation required. Where are the contracts and the contractors now ? The original estimate for the whole of the works required for a tide level canal was £24,000,000 ; already £37,400,000 has been spent on one fifth of the undertak-

ing, and the new programme sets forth that another fifth, required to make the c»nal a high level one, will raise the amount to £60,000,000, which is barely two thirds of the truth, as the company will then be burdened with A debt of £96,000,000. If it be wrong to seek to depress the market in order to buy cheap—and M. de Lesseps says that it is u abominable ” —it is surely equally wrong to endeavor to raise it, as has been done persistently from first to last, by representations which are afterwards disproved by facts. The real value of the shares just now is not more than 12| francs, the amount of the January dividend, which may be paid before the final collapse takes place. The scheme was bad from the beginning, and now the new programme is worthless. Whether the canal will ever be