The Browser Review Daily Letter 13

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The Cost Of The Panama Canal


The Times,  2nd July 1913

PANAMA — The construction of the Panama Canal offers an excellent instance of the futility of estimates for a work that extends over so long a term of years that conditions cannot accurately be foreseen.

In 1901 it was estimated by a board of competent engineers that the Canal could be constructed for £28,800,000. In 1906 another board, equally skilfully, estimated the cost at £27,800,000. In 1908, after four years of experience to guide it, the Isthmian Canal Commission estimated the total cost at £75,000,000.

On June 30th, at the end of the fiscal year of the United States Government, the total expenditure for the Panama Canal was approximately £60,000,000, distributed as follows:

Purchase from French £8,000,000
Purchase of Canal Zone £2,500,000
Construction and engineering £37,500,000
Sanitation and health £3,000,000
Civil administration £1,400,000
Fortifications £600,000
Relocation of Panama railroad £2,000,000
Miscellaneous £5,000,000

It is probable that the final total will be about £70,000,000, and this will include many large items not contemplated in the estimate of 1908, the savings being due to great and unexpected increases in the efficiency of the working force.

The most important of the elements that have contributed to making the cost so much greater than was anticipated is the human factor.

Experienced contractors in the United States expected to pay £25 a month to steam-shovel men who are actually paid £42; and 3d to 4d per hour to common labourers who actually get from 5d to 10d. They also calculated that the labour efficiency in Panama would be almost as high as in the United States, whereas it is not over 60 per cent.

Into the great excess in labour costs there enters the element of Government as opposed to private construction. In the beginning it was the intention to have the work planned by the Government and executed by contractors under Government supervision — a plan followed extensively in the United States, and adopted by the French in Panama. After studying the situation on the Isthmus, the second chief engineer, Mr John F Steven, recommended that the work be done entirely by the Government.

Under Government management skilled artisans and administrative employees in Panama live on a scale of great comfort, in many cases in comparative luxury; while the common labourer from the West Indies has comfortable quarters, all health advantages, and wages from two to four times higher than he has ever had before.

An estimate of £5,000,000 as the amount spend by the United States in procuring the health and comfort of its employees on the Canal would not be excessive, whereas it was contemplated that not over £1,000,000 would be spent for these purposes.

Changes in plans form the second in importance of the elements in the increase of costs per estimates.

The increase of the length of the locks by 110ft, to 1,000ft, represents an increase of at least £1,000,000.

The widening of the channel in Culebra Cut from 200ft to 300ft, with the consequent increase in the slides of the banks, represents an increase of over £2,000,000.

The change of location of the Pacific locks from Balboa to Miraflores, a point three miles further inland, represents an increase of about £1,000,000.

The steady rise in the price of all commodities in the United States is another cause of increase that could not have been foreseen. In all the materials that form any considerable part of the construction or equipment of the Canal, there has been an increase of from 10 to 50 per cent within the past decade.

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