that form the great bulk of the market of the west coast? The majority of them are non-Spanish-speaking Indians. The people whom you meet in the cities, as you travel up and down the coast, are, most of them, Spanish-speaking descendents of the early Spanish conquerors and former Spanish colonists. But when you get in to the back country you find hundreds of thousands of civilized Indians who do not use the Spanish language. These people are extremely conservative. They have very few wants, and they do not form an active purchasing class. Their wants have got to be carefully studied by the American exporter, and in particular the wants which they are going to develop during the next generation. Ecuador, Peru, and Bolivia are governed by Spanish-speaking people, and if you visit the cities of Guayaquil, Lima, Valparaiso, and Iquique, or even interior cities like Arequipa and Santiago, the people whom you meet, and most of the people whom you see, speak Spanish. But the great mass of the population of the Andes, both north and south, is still primitive Indian, speaking Quichua and Aymará.

The Indian problem is a very serious thing; it is in fact the most serious thing that confronts the governments of Peru and Bolivia today. In eastern Peru the rich man, the well-to-do man, the man of culture and refinement, almost without exception gets his money from land on which he has planted either coca, the source of cocaine, or sugar cane, from which he gets sugar to a certain extent, but to a far larger extent aguardiente or "fire-water."

The cost of transporting coca leaves or "fire-water" bears some fair proportion to the value of the product in a land of mule transportation. Consequently it pays to raise and develop these crops, but unfortunately it results in an entire economic system based on the production and consumption of two deleterious things, cocaine and fire-water, and the chief consumers are the Indian laborers, the majority of the people of the Andes, whose efficiency is thereby steadily diminished. It is a vicious circle and one of the greatest problems that confronts those countries. Personally, it seems to me possible to establish in these interior valleys planta

tions of cotton, and to utilize the tremendous resources of power from the streams, and so to build up a circle which will provide to the Indians something besides two things that damage them and take away all ambition and progress.

Furthermore, as I have previously said, the Indians are extremely conservative; their habits are very difficult to change. You may show them the best form of the most efficient spade to work with-they prefer the old kind. You may provide them with steel plows, but unless you make them use them, they will continue to use the pointed stick. Consequently, there is a difficult problem to meet there, an ethnological problem that demands earnest attention and first-hand study. The Indians are not ready for a boom. Finally, let me recapitulate:

Keen optimism prevails in some circles in the United States and, to a greater extent, on the west coast, as to the probable results of the opening of the Panama Canal. Many people believe that a veritable economic revolution is going to set in and that the west coast is on the verge of an era of great prosperity.

It is difficult to estimate exactly the psychological results of the opening of the Panama Canal. At the same time, there is no question that the great optimism which prevails will cause many business ventures to be undertaken. Some of these might well be done now, but actually they will not be begun until after the opening of the Panama Canal, because many business men firmly believe that the opening of the Canal means the opening of very great opportunities. The inhabitants of the west coast are likely to be disappointed in the extent of the prosperity which is about to come to their shores. At the same time, their ardent optimism is likely to arouse them to greater economic efforts. The psychologic effect on the business men of the United States is likely to lead them to believe that the opening of the Canal will open to them a new market and will make it possible for them to secure trade in regions heretofore inaccessible. If the economic and geographic foundations exist for such an extension of trade as will follow great optimism on our part, then the future has in store for us many wonderfully attractive fea

tures. If, on the other hand, sufficient broad bases do not exist, a crash is bound to follow unless we have foreseen the danger and avoided going further than we are warranted in doing.

The geographic bases of the future expansion of the west coast may best be seen by a careful examination of the physiographic, rainfall, and vegetation maps of South America. These show that the west coast is a narrow strip bounded by lofty mountains and the ocean; that the larger part is not provided with adequate rainfall, but is really a desert; and that there are no navigable rivers on the west coast. The great well-watered plains, the navigable rivers, the enormous stretches of agricultural and ranch land, are east of the wall of the Andes. It almost paralyzes the imagination to attempt to estimate the enormous development which would speedily follow the opening of the Panama Canal if the geographical conditions of South America were reversed. The tremendous shortening of distances which is going to take place so far as ocean transportation is concerned, will not bring the great bulk of South America one day nearer than it ever has been. The great future for American commerce and investment lies in Argentina and Brazil. This is not saying that there are no opportunities on the west coast, but those opportunities are chiefly connected with the development of oil fields and of mines of copper, tin, and nitrate, and the building of railroads in connection with the development of mineral industries.

The opening of the Panama Canal will enable the west coast of South America to secure necessary machinery and railroad equipment somewhat more cheaply, but probably the saving will not amount to more than $1 per ton. The greatest benefit so far as the United States is concerned, will be in the ability of the Mississippi Valley states to secure cheaper fertilizer from the nitrate fields of Chile and to secure a nearer market for their own manufactured products. The greatest benefit which the west coast will receive will be in lessening the time it takes her copper, tin, and nitrates to reach Europe and America, and her machinery and manufactured articles to arrive. The saving on shipments which

THE JOURNAL OF RACE DEVELOPMENT, VOL. 5, No. 1, 1914

have heretofore gone by the Panama Railroad will be considerable, but the actual saving in cost on each shipment which has heretofore gone in tramp steamers from New York through the Straights of Magellan will not be very great after the Panama Canal tolls have been paid. It is possible that this saving may not amount in many cases to as little as 50 cents per ton.

The more cautious the American manufacturer and capitalist is, the less will he lose in time and money, and the less the west coast will lose in reputation and good prospects. At the same time, it is undoubtedly true that, Panama Canal or no Panama Canal, the west coast of South America offers many opportunities to American manufacturers and capitalists which are not being taken advantage of today, but which are likely to be taken advantage of in the future after we get people acquainted with the west coast. The running of through first-class passenger steamers from New York to Peru and Chile by the Panama Canal will undoubtedly enormously increase travel to those countries. The intimate knowledge thus gained will lead to an extension of trade and investment. With the lack of delays caused by congestion of shipping at the Isthmus of the west coast, merchants will be encouraged to increase their purchases, since they will be able to count on the date of delivery with far greater exactitude than at present.

In conclusion, I cannot urge too strongly the necessity for first-hand investigation of the field. The economic condition of each west coast country should be studied from the point of view of the different manufacturers who are interested in promoting their foreign commerce. Millions of pounds sterling have been invested in South America by British capitalists, without their having secured adequate return, because they formerly rushed in without securing first hand knowledge of the particular fields in question. It is not to our interest nor to the interest of the west coast countries, to have an inflated boom followed by disastrous conclusions. At the same time there is no question that the American manufacturer is not taking full advantage of the opportunities offered him by the actual and steady economic de

velopment of the west coast. He has not, as a rule, made a careful study of things, and of the problematical purchasing power of the millions of Indians, inhabiting the highlands of Colombia, Ecuador, Peru and Bolivia. German manufacturers are far ahead of him in this particular thing, owing to the far greater number of German wholesale merchants in the mountain cities and towns.

While it is true that the opportunity for enormous development is far greater in the highlands of Brazil and on the plains of Argentina than in the rocky fastnesses of Chile and Peru, the fact remains that there are great mineral deposits awaiting development, and awaiting such a careful study of the conditions incident to their development as will overcome the obstacles placed there by Nature, and make possible the extraction of these minerals economically and profitably. The opening of the Panama Canal will allow cargoes of ore to be brought to the United States more cheaply than before. This will stimulate activity at the mines and improve the economic status of the laborer, and consequently increase the demand for manufactured products which could be exported from this country.

Finally, if the American manufacturer and exporter will secure first-hand information in regard to the peculiar conditions of the various countries, and will not expect more than Nature gives him a right to expect, he can take a part in the development and up-building of the economic future of the west coast, which will bring profit to himself, credit to his country, and prosperity to the west coast. Such a result would be a most desirable effect of the opening of the Panama Canal on our relations with the people of South America.