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changes in our administration or home policies, merchants and manufacturers from all over the world would build factories and warehouses and establish branches and agencies at this world center for quick distribution, delivery and sale. Many South Americans would establish agencies and branches there to reach the world's commerce. In fact, it would become an immense world's department store where everything for the use of the people of all nations could be found. It would become the greatest trans-shipping port in the world, especially as many boats suitable for the Pacific Ocean are not seaworthy or insurable on the Atlantic Ocean.
As the lawyers would put it, what you have been saying is testimony-give us some evidence of what a free port or city will do toward creating a metropolis of half a million in a few years. Here is the evidence: Hamburg, Germany; Copenhagen, Denmark; Gibraltar; Hong Kong (formerly Chinese, now British); Singapore; Punta Arenas, Chile; Aden-on-the-Red-Sea, and the Island of St. Thomas near Porto Rico.
The definition of a free port is: “A harbor where the ships of all nations may enter on paying a moderate toll and load and unload. The free ports constitute great depots where goods are stored without paying duty; these goods may be reshipped free of duty. The intention of having free ports is to stimulate and facilitate exchange and trade.”
A free city is a city or zone where there is no import or export duty of any kind on goods bought, sold or consumed.
After Great Britain had taken Gibraltar from Spain, and that country would not deal with Gibraltar, the Sultan of Morocco forced the British government in 1705, to make a free port of Gibraltar by refusing to supply the food necessary to maintain the fortress, unless all import and export duty was taken off. The law of necessity caused the most powerful government in the.world, more than two hundred years ago, to establish the first free zone on a little rock pile three miles long by one-half mile wide, controlling the entrance to the Mediterranean Sea. Here is lesson number 1, that should not be overlooked. Today there is a population of 27,000 at Gibraltar and over 4,000,000 ship tonnage cleared yearly. As there is no duty, only a tax on tobacco and liquors, there are no statistics on the annual business.
Hamburg, Germany, is a notable example of the benefits of free exchange. Hamburg, through this wise policy, has become the greatest port in Europe. In 1888, 2500 acres of the harbor of this inland city were set apart as a free harbor, where ships could unload and load without custom duties. A gigantic system of docks, basins and quays was constructed at an initial cost of $35,000,000, which at present day cost would be double. A portion of the old town containing 24,000 people was cleared to make room for this great project. Since that time Hamburg has grown enormously, reaching the third position as a port in the world, and today has over 1,000,000 population, being the second largest city in Germany. Without question the free zone of the harbor has had a great influence on the expansion of Hamburg as a port.
Copenhagen is the most important commercial town of Denmark. The trading facilities were greatly augmented in 1894 by making a portion of the harbor a free port. It has had a marked effect on the trade of Copenhagen and Denmark.
Hong Kong Island and City is a British possession acquired from China in 1841. Hong Kong is a free port and has no custom house, and its commercial activities are chiefly distributive for a large portion of the Far East, much as the Panama Canal Zone would become if made a free port. The only commodity that pays a duty at Hong Kong is opium. Owing to the fact that it is a free port official figures on its trade cannot be had, as in the case of ports that collect custom duties. I find a table showing the clearing of ships from Hong Kong: In 1880 the total tonnage was 8,359,994, which by 1911 had grown to a tonnage of 23,063,108—or nearly 200 per cent increase in thirty years.
Since Hong Kong was made a free port the population has increased from a few thousand to 456,739. From this port there is an immense exchange of commodities between Great Britain and her colonies, the ports of China, Japan and the United States. This fact, investigation shows, is largely due to the advantages arising from the fact that the port of Hong Kong is free from custom duties to all nations. The island of Hong Kong is off the southeast coast of China, from which it is separated only by a narrow channel. It is 75 miles from Canton.
Admiral Chadwick, after my address before the Southern Commercial Congress, wrote me he heartily approved of the plan, and that we could build another Hong Kong on the Panama Canal Zone.
Singapore is another good example. It is the capital of the British Straits Settlements, and lies about midway between Hong Kong and Calcutta, India, and close to the Malay Archipelago. It is less than 100 miles north of the Equator, or 500 miles farther south than the Panama Canal Zone. It has good advantages of position, but above all, the policy of absolute free trade has made Singapore the center of a trans-shipping trade that is surpassed in the Orient only by Hong Kong and one or two of the great Chinese ports. The continuously rapid growth of Singapore and the Straits Settlements, of which it is the capital, has fully demonstrated the wisdom of this policy. In 1819 when the region was ceded to Great Britain that portion of the country had almost no business or population. At present Singapore's free exports and imports exceed $500,000,000 annually, or about one-seventh of the total imports and exports of the whole United States. There are no custom duties except on opium. The population is about 275,000.
The number of vessels clearing in 1911 was 11,533, with a tonnage of 15,455,476. The commodities were distributed between India, China, Japan, England, the United States and other countries. Neither Hong Kong nor Singapore is as well situated for international trade or enjoys as good and healthful climate as the Panama Canal Zone. We have had 5000 white men, women and children on the Panama Canal Zone for the past seven years, and the death rate is less than that of any big American city.
Port Said is a case in point. The building of the Suez Canal created the city of Port Said on a sandpile at the entrance to the Canal from the Mediterranean Sea, with fresh water 125 miles away. It is about the “livest wire” of any city in the world—at least that I have ever visited. It has over 100,000 population, and except for an Egyptian duty on many articles would be a great trading center for others than tourists.
Aden, situated on a strip of British territory in Arabia, on the Red Sea, where nothing grows and fresh water must be brought a long distance, has 50,000 population on account of its being a free port and city.
Punta Arenas, Chile, on the Straits of Magellan, the farthest south of any city in the world, is a free port and city, and has a population of 15,000. I was surprised at its importance and its fine stone buildings and good streets. The only local support of Punta Arenas is wool and sheep, mostly from the old Patagonia country of Argentina and the Island of Tierra del Fuego. Evidently its importance arises chiefly from its being a free city and free port.
The free exchange of commodities, on account of there being no duty, import or export, put the Island of St. Thomas, near Porto Rico, belonging to Denmark, on the map. It is a good example of what no export or import duty will do for a poor, out-of-the-way island. Nearly every excursion to the West Indies docks there to trade. Its one port carries the largest stock and does the greatest Panama hat trade in the world. Many vessels coal there. It has a great trade with all the West India Islands.
England has tried out the free port and free city idea thoroughly and this is what the Encyclopedia Britannica says:
In countries where custom duties are levied, if an extension of foregin trade is desired, special facilities must be granted for this purpose. In view of this a free zone sufficiently large for commercial purposes must be set aside. English colonial free ports, such as Hong Kong and Singapore, do not interfere with the regular home customs of India and China. These two free harbors have become great shipping ports and distributing centers. The policy which led to their establishment as free ports has greatly promoted British commercial interests.
The reason I have brought this question up is because I believe it the paramount one in the development of our
THE JOURNAL OF RACE DEVELOPMENT, VOL. 5, No. 1, 1914
commercial relationship with South America, and that it will make the Panama Canal pay. If we do not act soon some other country owning one of the West India Islands, well located to trade with ships passing through the Canal, will take advantage of the situation. The Panama Republic intends now to benefit from our investment in the Canal by creating a free city bordering on the Zone.
How to SECURE AND RETAIN SOUTH AMERICAN TRADE
1. Make the goods the market requires; manufacture, pack, measure and invoice everything the way the South American people want it.
2. Build a large commercial city on the Panama Canal Zone and get as many merchants as possible from all over South America to visit, locate branch houses and buy goods there. They will not come to the United States; they do not speak English—they do not feel at home, but will be at ease in a city in a Latin country where Spanish will prevail and every language in the world is spoken.
3. Establish agencies at the capital of each republic and its chief seaport towns. Put in charge young unmarried men from the United States who can speak, or would soon learn, Spanish, and who would marry into the good families of the country. Their future will be secure and your trade also. This plan is followed by all other countries.
4. Work at home in every honorable way to secure a merchant marine that flies the Stars and Stripes. How can you expect South America to think of trading with us when they never see a ship from this country? I covered 40,000 miles in visiting South America and never saw our flag on a North American merchant ship.
5. Price your goods in the money of the country in which you offer them so they will understand your price and what they are paying. Be prepared to give as good terms, credit and prices as your competitor from Europe. Take your pay in drafts on London, Paris or Berlin, and stand the loss in exchange into Uncle Sam's dollars, or better still, keep agitating the question of a chain of United States banks