THE ultimate transit capacity of the Panama Canal will not be reached in the next seventy-five years. This confident forecast is made with an assurance justified by a knowledge of its design, construction and latent possibilities, as well as of its functioning during the fifteen years since it was placed in service. It is a fact that the Canal is not now being operated even to 50 percent of its present capacity.

Descriptions of the Canal have often been published, but some details will be of interest even to readers who are not generally concerned with technicalities. The length of the Canal from ocean to ocean is 50 miles. Its highest water elevation above mean sea level is 87 feet; in other words, that is the average lift and consequent descent which a ship must make in passing through. The elevation of the bottom of the lake channels is 40 feet. The minimum depth of water on the miter sills of the locks is 41 feet, and in the sea level sections is 40 feet. The narrowest parts of the Canal are the locks, and throughout its entire length, excepting in the locks, there is ample room for ships to pass each other. The width of the channel through Galliard Cut is 300 feet, thus providing safe room for the meeting and passing of ships of any present or probable future beam.

There are double (or twin) locks in three steps at Gatun on the Atlantic side, double locks in two steps at Miraflores, and double locks in one step at Pedro Miguel on the Pacific side. The locks are 1,000 feet in length; the lock chambers have a usable length of 1,000 feet and a usable width of 110 feet, and by intermediate movable gates they can be divided into two sections of 650 and 350 feet respectively, permitting lockages of small ships to be made with the minimum loss of water. The average time required for passing a ship through the locks is about fifty minutes, and the average time used in passing from ocean to ocean is about eight hours.

As no occasion has as yet arisen which required the use of the locks to their maximum capacity for the entire twenty-four hours, one can only calculate the full-time capacity of the locks on the basis of shorter periods. A calculation of that sort indicates that 48 passages in twenty-four hours can safely be taken as an average. Incidentally, it may be noted that on one occasion 57 transits were successfully made in one day. This average, however, is based upon an assumed uniformly spaced time of arrival of ships desiring transit, which does not always occur. Making the necessary allowances, one may say that, to avoid peak delays, 32 transits per twenty-four hours can easily be made. Such peaks, however, are of infrequent occurrence, and an adjustment in tolls might be made in each particular case to compensate ships for delays.

A brief analysis of the actual movements of ships through the Canal for the past few years will enable a fair judgment to be formed as to the truth or falsity of the oft-repeated and vociferous claims that traffic at Panama is increasing by "leaps and bounds" and is rapidly reaching the point of saturation.

The great increase in the number of transits through the Canal between the years of 1919 and 1923 was largely caused by the readjustment of trade routes dislocated by the war, which readjustment required several years to accomplish and should, therefore, not be used in the determination of averages. During 1924 there were 26,994,710 tons of commercial traffic carried through the Canal in 5,230 ships. During 1929 there were 30,663,000 tons of such traffic carried in 6,413 ships. The increases in a period of six years were not at a uniformly accelerating rate, as 1925 showed a substantial decrease in both tonnage and transits, and 1929 a slight decrease in the number of transits and a small increase in tonnage as compared with 1928.

The largest amount of tonnage passed in any one year was 30,663,006 in 1929. During the past six years -- years during which our own and all world-wide trade has expanded at a record rate -- the increase of tonnage through the Canal has been only 3,668,296 tons, or 13.6 percent, an average increase of only 2.27 percent a year. In this connection we must remember that the true measure of the capacity of a canal is not the amount of tonnage, but the number of transits which it can regularly provide for in any given period. The increase in the number of transits during the six-year period has been 1,183, or 22.6 percent, an average of only 3.8 percent a year. The monthly average during 1928 was 538; during 1929 it was 534. The daily average of commercial transits for 1929 was 17.57; for 1928 it was 17.60. There has been no great increase in the number of these transits for the past three years, the daily average being less than 17. It would appear, therefore, that the alleged "leaping and bounding" of traffic is purely imaginary.

Applying the same percentage of increase in the number of transits that has prevailed during the past six years to the coming years, in six-year periods, it will be found that not until 1960 will the calculated limit of 48 daily transits be reached, and such a forecast assumes that the past phenomenal increase in general business will continue, which assumption is not a safe one. It also ignores the certainty that larger ships mean heavier loading, with a relative reduction in the number of transits per unit of cargo.

The increases in the number of transits during the period from 1920 to 1924 were almost wholly caused by the large number of oil tankers, and the slowing down in the rate of increase since then has been occasioned by the development of oil fields on the Atlantic coast; the product of these fields does not pass through the Canal. Whether the lost oil traffic will ever return cannot safely be predicted; in any case, the hope of its return is an absolutely unsafe basis upon which to predicate an increase in the present rate of traffic. If it does come back the Panama Canal can take care of it.

Taking the entire number of transits, toll and free, for 1929, which were 7,029, a daily average of 19.26, we may note that even at infrequent peak occasions the present Canal would be worked only to 60 percent of its calculated limit, and under usual conditions of arrivals of ships, only to 40 percent. Only at times when a lock is out of commission for the purpose of being reconditioned, which occurs once every four years, is that particular lock (or rather, its double) operated for twenty-four hours; otherwise there has as yet been no occasion when press of traffic necessitated the operation of the Canal or any part of it for more than sixteen hours. Let me repeat, then, that the Canal is not being operated up to 50 percent of its present capacity.

The Spooner Act, under which the Canal was planned and constructed, directed that it should be of dimensions sufficiently large to pass any ship then afloat, or any that might be reasonably expected in the future. The Canal has already passed successfully and expeditiously the largest ship afloat, and only once has the limit of the locks been reached, when a United States plane carrier was passed through the locks with some inches to spare. As the inevitable tendency is to build everything larger, it is reasonably certain that larger ships, with increased width of beam, will appear and call for passage, but this demand can be met at Panama.

When the Canal was planned provision was made for room to install an additional set of locks alongside the present double installation, making each group triple, instead of double as at present. The length of locks is practically unlimited, and it is certain that, mechanically, new locks can be built and operated to handle the larger ships. The apparently inexhaustible capacity and flexibility of electricity as a means of supplying power for mechanical purposes has made quite simple the solution of problems which in the past have handicapped our mechanical engineers.

The installation of the new locks, together with some mechanical improvements, would increase the capacity of the Canal at least 75 percent. That places the date of "saturation" too far in the distant future for us to be warranted in making predictions or calculations.

It would even be practicable to install a fourth line of locks for the use of small vessels, but such a proposition, like that to change the present lock canal to one of a sea-level type, can be left for later generations to consider and deal with.

The cost of installing the triple locks has not been estimated, but a rough guess puts it at from seventy-five to one hundred million dollars. The length of time required for their construction would depend upon the urgency with which they were needed and also upon the size of the yearly appropriations which Congress might authorize. The work of installation ought to be complete when the daily average lockages (with the present facilities) reach an average of 32. Unless the lockages increase much faster than they have for the past few years, the work of installing the additional locks need not be initiated for years to come. It is safe to predict that the cost of the triple locks, including that of an additional water supply, would not be more than one-sixth the cost of a second canal, built elsewhere.

No occasion has yet arisen when the operation of the Canal has been hampered or even threatened by lack of water for lockage purposes; but an unusually light rainfall during the wet season, followed by an abnormally long dry season, would probably bring the water supply too low to be comfortable. Plans for providing ample additional reserves of water were made before the Canal was built. The storage capacity of a dam to be constructed at Alhajuela, some miles up the Chagres River from Gatun Lake, will so increase the available supply that fears of a shortage will be laid for practically all time to come. The cost of the dam, with its appurtenances such as highway, railway, hydroelectric generating plant, and housing, is estimated at $12,000,000 and the time necessary for its construction is put at six years, though this could probably be cut if urgency demanded and if Congressional appropriations were forthcoming. Congress has already appropriated some funds for preliminary work, which is now in progress.

Meanwhile, in case of threatened shortage of water, the supply can be conserved by closing down the hydroelectric plant at Gatun Dam and using the Diesel installation at Miraflores to generate electricity. Lake Gatun can safely be drawn down enough to augment the Canal's water supply to the amount necessary. In fact, no anxiety need be entertained as to the water supply of the Canal, and the situation is explained here for the reason that periodically reports go forth that a shortage of water is imminent at Panama. Such reports are as baseless as are those of traffic congestion.

A mass of reliable data could be given to substantiate the assertions as to the certain, safe and working capacity of the Panama Canal. Plans, records and statistics are available, and are public property. Any person accustomed to the use of ordinary business figures can investigate, and if he does so in an unbiased manner he can come to but one conclusion, namely that the constantly recurring reports of congestion of traffic at the Canal are without any foundation in fact. The Canal's present yearly capacity is more than double the maximum tonnage which it has carried; and as its ultimate capacity is more than one hundred million tons yearly it will -- as far as human foresight can judge -- be capable of handling all the traffic for seventy-five and possibly a hundred years to come.

Compare the transit figures given with those for the three American "Soo" locks in use at the outlet of Lake Superior. These three locks during the open season of 1929 handled a total number of 19,793 vessels, or an average of 80 each day. They passed, during the 245 days they were in service, 92,622,000 tons of cargo. Of course many of these vessels were comparatively small, and it is equally true that the chief commodities carried -- coal, iron ore and grain -- load heavily. At the same time, the locks were in operation but 67 percent of the year (instead of 100 percent, as at Panama) and it is claimed that they are not worked to their full capacity even while in service. They carry more tonnage in eight months than crosses the North Atlantic in twelve months. They carry 50 percent more tonnage in eight months than the total tonnage carried in twelve months by the Panama and Suez Canals combined. But with the installation of the triple locks, the Panama Canal will have a larger carrying capacity than has the present "Soo" Canal.

The general public visions the Panama Canal as a huge moneymaking machine; but considered as a strictly business undertaking, divested of theory and sentiment, it is not. The error in the public mind is occasioned by the fact that the figures given in government reports do not tell the whole story and do not paint the picture as it really exists. The above statement rests solely upon a commercial basis, eliminating any theoretical money benefit which might accrue to the United States by reason of the Canal being considered as an asset to the national defense of the country in time of war. In the minds of some it is a moot question whether in such an event the Canal would not be a weakness rather than an element of strength. But this is a question which cannot be settled by theory, but only by actual experience.

The government allocated $113,000,000 of the reported original total cost of the Canal to national defense. There remains a capital investment, for purely commercial purposes, of $273,000,000. The annual interest charge on this sum, at 4 percent, is $10,920,000, which is not included in the liabilities as reported.

From the report of the Governor of the Canal Zone for the fiscal year 1929 we learn that the net (presumably the operating) profits of the Canal, including those of its auxiliary appendages such as the Panama Railroad, were in round figures $20,162,000 (about 2 percent less than in 1928); but, states the report, "Considering the capital invested and accumulated interest on the investment, the present total capital liability is such that the Canal is not as yet earning the annual interest charge at 4 percent, the current borrowing rate of the Treasury of the United States." This is not the whole story.

The United States paid Colombia $25,000,000 as compensation for that country's claim of equity in the Canal Zone. It paid $25,000,000 for the Virgin Islands, avowedly to secure another outpost to add to the security of the Canal. By these two moves it has incurred a further capital charge of $50,000,000, with an annual interest charge of $2,000,000, which does not appear in the published reports of Canal finances. Altogether, the omitted interest charges would reduce the reported profit of $20,162,000 to $7,242,000, or about 2.7 percent even on the $273,000,000 of reported capital investment. On the whole this is a surprisingly good figure in view of the usual result of governmental business operations.

But there is some further figuring to be done. Since the opening of the Canal, for example, many millions of dollars have been spent in improvements, equipment, etc., which are properly chargeable to capital account, and which are not included in that account as reported. If included, the percentage of profit would approach the vanishing point.

During 1927, moreover, there were quartered along the Canal about 9,000 soldiers of our regular army, probably about the average yearly number; a contingent of our naval force was also present in the harbors and in the air service. These forces, aggregating a large personnel and millions of dollars of equipment, were there for no other purpose than the protection of the Canal, excepting perhaps a few to meet contingencies which might arise in the Republic of Panama. The annual expense of maintaining this display of military and naval strength must be at least $20,000,000, which would change the apparent profit of $7,242,000 to a yearly deficit of $12,758,000. The annual interest charge at 4 percent on the $113,000,000 allocated for national defense would be $4,520,000. If we now add this to the yearly deficit it reaches a figure above $17,000,000.

It may be argued that the forces in question are a part of our regular establishment and as such must be maintained anyhow, but the fact remains that they are there because of the necessity of safeguarding our peaceful possession of the Canal, and even if plans for universal disarmament prevail, the people of this country would never allow such a very vital and vulnerable organ of our economic body to remain unguarded from the attack of a possible enemy. Therefore the expense must go on indefinitely, and the money which is spent in this way all comes out of the public pocketbook in the last analysis.

The annual interest charges upon the real cost of the Canal, together with the expense of maintaining the armed forces for the past fifteen years, would change the surplus of $117,000,000 as shown in government reports to a huge deficit at least equal in amount to the reported surplus resulting from the Canal operations for the fifteen years past. But until business methods prevail in governmental bookkeeping, we shall probably go on deceiving ourselves in the good old way.

It is argued that the value of the Canal as a factor in eliminating the necessity for, and consequent cost of, a large fleet in the Pacific Ocean should be placed as a credit to the Canal finances. Perhaps so, but if the Canal is such a factor in our national defense it is pertinent to inquire why the United States was allowed the same ratio as Great Britain at the Washington Conference on the Limitation of Armaments. Was the Canal's value as a factor in naval power considered negligible at that historic conference?

Then there is the question as to what effect the Canal has had in reducing the cost of transport in the United States between the coasts and the hinterlands of the two oceans. Vast sums are loosely stated to have been saved the American people by the operation of the Canal, but an analysis of this question would disclose that the ultimate consumers have not been the beneficiaries; the benefits have gone to the producer and the middleman. So far as the rates of the transcontinental railways are concerned, that is a matter entirely in the hands of the Interstate Commerce Commission, which can make any rates that it chooses, regardless of canal competition.

Considerable space has been given here to these financial features of the Panama Canal because the operation of a second canal would seriously and adversely affect the receipts of the present Canal, besides probably creating a large yearly deficit for itself.

The administration of the business affairs of the Canal, and its technical operation and maintenance, have been carried on by the Governors and staffs of the Canal Zone with a high degree of ability and efficiency, and reflect great credit upon the branch of the national service to which these officials belong. These men, who from their very duties are close students of the trend in volume and routing of sea-borne traffic, are without exception emphatic in their judgment as to the capacity of the Canal to meet all demands of transit that may be made upon it in the long future.

General Walker, former Governor, stated in 1927: "In my opinion the correct policy now is to proceed at once with the construction of the Alhajuela storage project, to watch the situation and commence the installation of the third locks when indications warrant, and to entirely dismiss the Nicaraguan Canal from consideration for a long time to come." And Colonel Burgess, the present Governor, stated as late as September 1929: "It seems a fairly safe prediction to estimate the growth of traffic as not over ten million Panama Canal tons per decade, and to state that the third locks will be required in from thirty to thirty-five years." Again: "Since the ultimate capacity of the Canal is over 112,000,000 tons per year, it seems entirely safe to say that it can take care of all the demands of commerce to the end of this century."

If these officials, with their years of practical experience at the Canal and their comprehensive and intelligent studies of the situation, cannot be trusted to give a correct opinion of the present and future capacity of the Panama Canal, then no one lives that can. The writer -- who from his intimate connection with the planning and construction of the Canal, and from his study of the weekly official detailed reports of the operations for years past believes that he has a fair degree of information as to the situation -- heartily agrees with them.

Nevertheless, the call for a second canal to supplement the Panama Canal is loud and persistent. The major reason put forth in support of it is the allegation that the present Canal will soon be unable to handle the traffic. Other reasons set forth are military, political, economic and financial, together with some that are too farcical to mention.

The location selected by the proponents of a second canal is in Nicaragua. If such a canal is to be built, this is without doubt the correct place for it. The story of the efforts made for many years to promote a canal at Nicaragua -- the investigations, surveys, plans, expenditures, voluminous reports, Congressional actions and recommendations -- is not relevant here. That it is practicable from a physical standpoint to build and operate in Nicaragua a canal designed to meet modern requirements cannot be gainsaid. As a commission of engineers under the authority and orders of Congress is now investigating that route, and as the final report of this commission cannot be expected for a long time, any comments made now as to characteristics, cost and time of completion of such a canal are obviously useless. However, some of the conditions which exist there -- to which any plan must conform -- are fairly well known.

Many people have the impression that a sea-level canal is what is projected at Nicaragua. Such a canal can probably be built there, but it has never been recommended by any competent authority, a lock type canal always being advocated (although the present commission may report otherwise). Lake Nicaragua at its present elevation has always been regarded as the key to the situation.

The eastern terminus of a Nicaraguan canal would be at Greytown (San Juan del Norte) on the Caribbean Sea and the western at Brito, near San Juan del Sud on the Pacific Ocean. The length of the canal would be about 185 miles, nearly one hundred miles of it lying along the San Juan River, which is very crooked and would require modern canalization. Some seventy miles of Lake Nicaragua would be utilized, necessitating twenty miles of dredging in order to obtain the depth of water requisite for navigation. Then a cutting of some fifteen miles through the Continental Divide would bring the canal to the Pacific Ocean. So far as reported, its alignment for many miles would be very tortuous; this would necessitate slow speeds and would be dangerous in night navigation.[i]

The elevation of the water of Lake Nicaragua is about one hundred and ten feet above mean sea level, or twenty-three feet more than that of Gatun Lake. Thus there would be required one more step of locks than at Panama. An extra step of locks would be necessary also at some point or points west of Lake Nicaragua. There is undoubtedly an ample supply of water for lockages to any reasonable number and at all seasons. There are no existing facilities to aid in the work of construction and so a railroad would have to be built through approximately two hundred miles of tropical jungle swamps, where construction would be both expensive and long drawn out. At the Pacific end conditions are such that a harbor and terminus can be constructed at a reasonable expenditure of money and time. At the Caribbean end the conditions are particularly bad, but it is possible to construct and maintain the necessary facilities at a heavy expense. Such are the natural conditions. What the costs would be no one knows. It is safe to predict that to build a canal here today would cost in money more -- much more -- than it cost to build the one at Panama. As to the time which would be required, one experienced engineer's guess now is as good as another's -- possibly a minimum of ten years.

Wild statements are put forth as to the vast amount of new business that would spring up almost overnight as the result of the operation of a canal at Nicaragua; but its proponents are singularly silent as to the nature of such business, where it would originate, and how and where it would move. Some local business would naturally develop in Nicaragua, but it necessarily would be comparatively small. A railroad costing possibly $25,000,000 would develop as much local business as would a canal.

The records kept at Panama disclose that approximately 75 percent of the traffic through the Canal moves to and fro between the Atlantic and the North Pacific, and undoubtedly some of this traffic would benefit by using a canal at Nicaragua. A theoretical calculation, using only the factor of comparative distances, indicates that ships in such traffic would save two days in their voyages. But this figure of the saving is overdrawn, for while the total distance is less, the time required to pass the additional locks, the slow speeds necessary to negotiate the poor alignment, together with the additional 135 miles of canal, would eliminate a large part of the assumed saving of time via Nicaragua. The time a ship would take to pass through a canal at Nicaragua has been variously estimated at from one to one and a half days; probably the latter time is more nearly correct. It would likely be five times as long as it is at Panama.

The remaining 25 percent of the traffic -- including that portion passing to and fro between the Atlantic and ports on the west coast of South and Central America, the Orient, and the South Sea Islands -- would move as it now does, through the Panama Canal whether a second canal were built or not. If the second canal is built, and if it takes over any part of the traffic first mentioned from Panama, that Canal will lose part of its revenue but it will have to be maintained and operated just as it is today, thus increasing its present deficit and putting it deeper and deeper in the hole.

If a canal is built at Nicaragua, it will certainly have to be guarded by our army and navy in the same way that Panama is guarded. Sometimes the claim is made that a second canal would be an additional protection to the nation in time of war. Any canal is vulnerable and might be put out of commission by an enemy. It seems reasonably safe to assert that as yet no adequate means has been found for defending the locks of a canal or ships in its waterways against attacks from the air. The absolute safety of no canal can be assured in time of war unless the enemy can be kept away from it, and this is a problem not yet solved. If one canal can be put out of commission so can two. It is difficult for a layman to comprehend how two danger spots located four hundred miles apart could be of mutual assistance.

Some patriots aver that in order to impress other nations with our wealth and power we should build the second canal, whether it is needed for economic reasons or not. The United States does not need to resort to such practices. Other unthinking people have suggested that Lake Nicaragua would be a fine place to keep a part of our navy. If we need a fleet at all (and we most assuredly do), it will not be kept in a place where it could be bottled up in time of need.

We are told that if we do not build the Nicaragua Canal some other nation will build it, or build one somewhere else. Possibly so, but when it is considered that commercial ships of all nations have the same unrestricted rights as have ours at Panama, at the same cost and under the same conditions, enabling them to compete on equal terms with us for the trade of the world, it is not easy to understand what policy would justify another nation in building a second canal at the expenditure of millions of dollars, incurring at the same time the certain antagonism of the United States; for the Monroe Doctrine would be sure to be invoked against any such project. Every nation can pass its warships through the Canal in time of peace. And certainly our financial experience at Panama would not be an inducement for any nation to build an interoceanic canal as a means of profit. The foreign bogy is just another herring dragged across the trail to lure the traveler from the path to the real facts and the correct decisions.

[i] This brief description of the general features of the route of the proposed canal is taken from rather sketchy data, and the studies of the commission of engineers may modify it to some extent.

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  • JOHN F. STEVENS, Chief Engineer of the Panama Canal, 1905-07; President of the Inter-Allied Board supervising the Siberian Railways, 1919-23; President in 1927 of the American Society of Civil Engineers
  • More By John F. Stevens