I refer furthermore to the advance of the principle of commercial arbitration
as a substitute for the long and weary judicial procedure, and which is now in
successful operation between the Chamber of Commerce of the United States and
that of Buenos Aires.
Furthermore, the extension of the commercial travelers' treaty under which
the vexatious local tax is placed upon commercial travelers, will be eliminated and
business men will know exactly before sending a commercial traveler to any Latin
American country the precise amount which they will have to pay as a license to
Moreover, the gold clearance fund treaty has been brought to a stage which,
prior to the assembling of the next Conference, will make it an accomplished fact,
at least between some of the countries, and will thus avoid the constant shipment of
gold from one country to another. .
But, gentlemen, I feel that my duties and my conscience are weighing rather
heavily on me this morning and I must therefore summarize the work that has
been done during these four years by the International High Commission in prepara-
tion for the forthcoming Conference to be held in January next.
Before introducing the first speaker of this morning, there is one matter to
which I want to direct your attention. We have become so accustomed to the
phrase that the world is entering upon a new epoch of development that I fear it
has lost its real significance for many of us. I fear that our senses have become
somewhat dulled by reason of the series of deep and moving impressions, which we
have received during the last four years, and that when people now speak of the
world entering upon a new period of development, we regard it as one of a series
of phrases to which we do not give much heed or much thought.
The remarkable address delivered by Mr. Vanderlip last week in New Yor,k
was at once an indication and a warning to the people of the United States to bear
in mind the fact that we are at a turning point and that it depends upon our effort,
whether that turn shall be to the right or to the extreme left. We are at a period
at which Europe looks to America for assistance, for the means of rehabilitation,
for the wherewithal to prevent starvation, and that world situation places new
obligations upon the countries of this Continent.
We have been accustomed to talk and to discuss as if the amount of capital
available were unlimited. Gentlemen, we are now at the point at which there is by
no means an adequate sum of capital goods with which to meet the needs of
Europe and of America, and in the world reconstruction that is now taking place,
the countries of this Continent and especially our neighbors to the south, the
countries of Central and South America, must also feel a new obligation resting
upon them. The entire American Continent might very well be designated, and
probably will be designated a hundred years hence, as the wasteful continent. There
is no part of the world that has any conception, that can offer anything like the
parallel to national and individual waste such as all the countries of the American
Continent can offer.
The United States until very recent years never developed the amount of
capital for its own development which should have been the case. Many years
ago, if we had been a thrifty nation, if we had had any conception of what thrift
meant compared with the French or the Italians or the Belgians or the Dutch
we might have furnished to the countries of Central and South America ten, yes
twenty times the capital that we have furnished; we might long ago have become
a creditor rather than a debtor nation, and it was only under the strong compulsion
of war and of dire necessity that we established our new position.
Gentlemen, it is now a matter of world importance that every country of the
American Continent develops for itself a far larger' amount of domestic capital
than heretofore, and that means that every country of the American Continent the
United States included shall impress upon its people, if necessary through educa-
tional campaigns, the importance as a duty to themselves and as a duty to the
world to develop new capital through thrift, through saving.
That is a campaign which is also quite as necessary in every country of Cen-
tral and South America as it is in the United States. In our discussions we often
assume that these countries are going to be indefinitely dependent on foreign capital.
THURSDAY MORNING SESSION 65
It is not well that they should be. It is not well for themselves ; it is not well foe
Up to the present time we, as well as they, have been permitted to indulge
in the luxury of wastefulness because it did not seem to do great harm to our-
selves and it did not do any real harm to anyone else. But wastefulness today is an
offense against the civilized world, especially when you stop to view the picture
which Mr. Vanderlip has. so vividly painted in his recent addresses, and I know of
nothing that "is so important as a campaign of education in every country of the
American Continent, a campaign which shall have as its purpose that domestic
capital shall meet domestic needs and that it shall do so as rapidly as possible.
In the next few years to come, owing to the fact that most of the countries of
Central and South America have not the available capital, close financial coopera-
tion will be necessary, but even there we are in a sense trustees. That capital should
be directed to the purposes which will increase the food supply, the supply of raw
material which the entire world needs so greatly. America during the next few
years must regard herself as a trustee for the world at large. By so doing, she will
benefit herself, even to a greater degree than she will benefit the war-stricken coun-
tries. She will benefit herself and she will incidentally carry a step forward the
development of her own industrial democracy and accompanying that large benefit
to herself she will also be doing a real service to mankind.
But, ladies and gentlemen, this is a point which I .hope very much will be
touched upon by the first speaker of this morning, coming as he does direct from
the scenes and from the conditions which require such immediate assistance from
America. I have always regarded Mr. Vanderlip as one of the greatest educators
of the United States. His interests have always been in finance and in banking
and in the formation of great projects, .great statesman-like projects of national
and international betterment. I have always regarded him fundamentally as an
educator, and I venture the guess that his primary interests are educational in the
broad sense. I present him to you, therefore, as the educator of American public
opinion, rather than as a banker. Mr. Vanderlip.
MR. FRANK A. VANDERLIP delivered the address which appears on
DR. ROWE (Presiding): The inspiring address that we have heard from
Mr. Vanderlip must impress every one as indicating that in a sense America, as a
result of this war, has become the Old World and Europe has become the New,
and that the relationship between what was the old and the new has now been
turned into a new relationship with new obligations and with a new duty resting
not only upon each of us but upon each member of the respective countries of
North, Central and South America.
I have such a deep personal affection for the next speaker that I wish I
might introduce him by a recital of his personal traits rather than his financial
achievements. I must, however, exercise self-control in the matter and say to you
that you are now to hear from the leading financier of Chile, and from one of
the leaders of finance of this Continent. Under his direction that great Bank of
Chile Banco de Chile has acquired a position second to none amongst the national
banking organizations of the American Continent.
We had the pleasure of welcoming him as the official Delegate of Chile at
the First Pan American Financial Conference at which time he won our hearts
and we now welcome him not only because of his achievements as a financier, but
also because of the warmheartedness, the enthusiasm, which he has always shown
for the people and the institutions of the United States.
I have great pleasure in presenting to you Dr. Augusto Villanueva, Director
of the Bank of Chile.
SEfiOR AUGUSTO VILLANUEVA: Mr. Chairman, Mr. Director General,
Ladies and Gentlemen: I feel truly ashamed of speaking now of minor and local
topics after the great problems that have been treated by Mr. Vanderlip and after
66 SECOND PAN AMERICAN COMMERCIAL CONFERENCE
the^very kind words of Mr. Rowe. But the Governing Board of the Pan American
Union has honored me by requesting me to read a paper on financial matters
before the Second Pan American Commercial Conference, and although I feel
that a difficult task is imposed upon me, I shall gladly try to do my. duty. (Senor
Villanueva then read the paper which appears on page 131.)
DR. ROWE (Presiding) : After listening to this excellent exposition of
finance, I am now going to present to you a man who, in my mind, embodies, per-
sonifies, incarnates, dynamic America, one of the real industrial statesmen of the
American Continent Charles M. Schwab.
MR. CHARLES M. SCHWAB delivered the address which appears on page 300.
DR. ROWE (Presiding): lam certain that Mr. Schwab's speech fulfilled the
expectation and surpassed the expectation of all of us who are privileged to listen
to him. We have heard from a distinguished Chilean financier and we are now
to hear from an equally distinguished Bolivian financial leader. I know that he
speaks English because night before last at dinner I spoke English with him, but
I also know that he hesitates and in fact today refuses to speak the English which
is at his command and has therefore requested that his contribution to the dis-
cussion be read by one of his fellow countrymen.
I desire, however, that the members of this Conference should know him and
be able to identify him in case you wish to talk to him personally. I refer to the
Honorable Julio Zamora, Special Financial Delegate of Bolivia to the United
States. I have great pleasure in presenting you to him.
SECTOR JULIO ZAMORA'S paper, which appears on page 97, was read by
Senor Jorge Barra, his private secretary.
DR. ROWE (Presiding) : I wish now it were possible for me to take you all
to the State Department, to the office of one of the men who is doing a great con-
structive work in encouraging American investment in Central and South American
countries. Quietly, unostentatiously he is building up a splendid governmental plan
and is making effective the interests of the Department of State in the encourage-
ment of American investment. I refer to the Honorable Julius G. Lay, Foreign
Trade Adviser of the State Department, who will address the Conference on the
interests of the State Department in the encouragement of American investments
in Central and South America. I have great pleasure in presenting to you Mr. Lay.
MR. JULIUS G. LAY: Mr. Chairman, Ladies and Gentlemen of the Con-
ference: The representatives of the Department of State have so often addressed
commercial congresses of this kind on its interest in many other phases of Pan
American commerce that I thought' you would like to hear something about the
interest of the Department of State in the investment of American capital in Latin
America. (Mr. Lay then read the paper given on page 302.)
DR. ROWE (Presiding) : I am certain that we all derived a very great en-
lightenment and profit from the important contribution made by Mr. Lay.
I am informed that Mr. Arnold and Mr. Wade are not present and we there-
fore come to what the Director General informs me will be the closing contribution
to the morning session to be made by Mr. Merrick of Chicago, President of the
Chicago Association of Commerce. I may say that Mr. Merrick has been one of
the leaders in arousing and developing interest in Latin American affairs in the
Middle West and I have great pleasure in presenting him to you.
MR. H. H. MERRICK delivered the address which appears on page 306.
DR. ROWE (Presiding): Ladies and gentlemen, before relinquishing the
gavel, I want to express my own appreciation of the privilege of presiding at this
notable session and also to express your thanks to all of those who have partici-
pated in the important contribution, especially the contributions made by the six
THURSDAY AFTERNOON SESSION 67
speakers that have presented to you so much food for thought beginning with the
speech of Mr. Vanderlip and ending with the speech of Mr. Merrick. To one and
all in your name I express our most sincere thanks.
I now relinquish the gavel to the Director General, who will bring the session
to a close.
The Conference was called to order at 3 o'clock by Director General Barrett,
and the session was presided by Mr. Hi. C. Parmelee.
DIRECTOR GENERAL BARRETT: You have a very fine array of talent
here and we are going to have a very interesting session. This afternoon we take
up the relationship of engineering to Pan American commerce, and I am going to
turn the meeting over to a man who stands very prominently in this important factor
of Pan American trade Mr. HI C. Parmelee, the editor of Chemical and Metal-
lurgical Engineering, of New York, and I ask you to give him your best coopera-
tion. Mr. Parmelee.
MR. HOWARD C. PARMELEE: Mr. Barrett, Ladies and Gentlemen: This 1
Conference is announced as a Commercial Conference, and at first glance it
may be a matter of wonderment to you as to just why an afternoon should be
devoted to the general subject of engineering. I think, tlhough, that you will agree
with me that it is very fitting that it should be so because engineering, after all, is
the first aid to the actual carrying out of the aims and purposes of commerce and
the ultimate object of business.
We have an excellent example of that in our own country because without
any stretch of the imagination we can readily see that the great western areas of
the United States could not be so closely united and connected with the great
eastern sections were it not for the engineering works constructed by the railroad
engineer and the highway engineer and if it were not for the means of communi-
cation and transportation that have been established. '
It takes vision, sometimes, to see that engineering works will overcome many
otherwise apparent obstacles. It is a matter of record in the United States Senate
that at one time Daniel Webster, eminent statesman though he was, was wholly
unable to see the potentialities of the great western empire which the United States
now holds, and he is on record in the annals of the Senate as being utterly opposed
to acquiring those great arid wastes, those barren seashores, as he called them,
those Rocky Mountains out of which nothing good could come. But as I say, it
requires no stretch of the imagination to see that as the great Union Pacific Rail-
road System was extended westward, the western part of this country became
more and more closely united to the east until today the works of engineering unite
us into one country, enable us to speak as one, unify us in every respect, and ac-
complish those ends and aims and purposes of commerce and business which
otherwise could not have been accomplished.
The program this afternoon is in general divided into three parts. We have
considered the subject of, transportation under the topics of railroad transportation
and waterway transportation. Then we have also considered the general subject
of sanitary engineering or sanitation as applied to the development of commerce
and business in any country.
We will reverse the printed order and take up the subject of sanitation, im-
portant as it is, in the development of any country, and for the presentation of that
subject we are honored in the presence of Major George A. Soper of the Surgeon
General's office of the U. S. Army. I need not tell you the excellent work which
the army has done in the way of sanitation in all parts of this country and different
countries to which we have been called to work, and I know that you will listen to
Major Soper with a , great deal of interest. I have great pleasure in introducing him
to you. Major Soper.
68 SECOND PAN AMERICAN COMMERCIAL CONFERENCE
MAJOR GEORGE A. SOPER: Members of the Conference, Ladies and Gen-
tlemen: I was asked a few days ago to prepare a paper on a specialized topic and
what I have to say will be intended to follow the lines that were so designated.
The title was to be "The Effect of Sanitation in Decreasing Municipal Death
Rates." (Major Soper then read the paper given on page 339.)
MR. PARMELEE (Presiding): If there are no questions we will take up the
subject of transportation in the development of the commerce and business of a
country and we have for our first consideration the presentation to the Conference
of the general railway situation in Latin America by Mr. Percival Farquhar, who is,
I dare say, more familiar with the subject than anyone else who could speak upon
it. I have great pleasure in presenting Mr. Farquhar to you.
MR. PERCIVAL FARQUHAR: Mr. Chairman, Mr. Director General, Ladies
and Gentlemen: The Chairman has introduced this subject as one relating to Latin
America. When I received the notification of the Conference, it referred to rail-
ways in the Americas and I suppose one reason for considering the problems in
the Americas under the same heading was owing to certain fundamental similarities
of conditions in contradistinction to those which hold in Europe outside of Russia.
(Mr. Farquhar then read the paper given on page 311.)
MR. PARMELEE (Presiding) : We will continue the consideration of fea-
tures of main trunk line railways and Sefior Juan B. Rojo, Counselor of the Mex-
ican Embassy, will speak on some features of commerce and transportation in
Mexico. I have pleasure in introducing him.
DR. ROJO: I told you yesterday the high figures reached by Mexico in her
external commerce. Now, you can see the plans that we have for trade expansion :
We want all the interoceanic freight we can move across the Tehuantepec Railway.
We have under discussion with the United States Railroad Administration
the resumption of the interoceanic freight service and direct Pullman service to
Mexico City. We are cooperating with the Mississippi Valley Association to send
merchandise direct from the river to the Mexican ports of the Gulf. To encour-
age trade, Commercial Agents of Mexico are established now at New York, New
Orleans, San Francisco, Chicago, St. Louis. We would gladly welcome you in
MR. PARMELEE (Presiding): I now have the pleasure of calling upon Sefior
F. P. de Hoyos, agent of the National Railways of Mexico.
SENOR F. P. DE HOYOS: I would like to say just a very few words in re-
gard to general conditions of our railroads. I believe the best description I have
heard about conditions in general in Mexico was told in a recent Conference in
New York, where one of the speakers said to a permanent New Yorker, "Are you
going to the country for the summer?" And he replied, ''My wife has not yet made
tip our minds," and he went on to say in the same manner that the moving pictures
and the newspapers make up our minds in regard to Mexico and in fact regarding
any other subjects with which we are not in constant contact. In every moment
of my life in the United States I see people most grossly misinformed about con-
ditions in Mexico. They ask me if we use Pullman cars in Mexico. They ask if
we use passenger cars the same as they do here. They even ask me if we have
hotels in Mexico.
We have two great systems in Mexico, one known, as the National Railways
of Mexico, which connects Mexico City with four United States borders, and the
other the Southern lines of Mexico which connect the city of Mexico with all the
southern and southeastern cities as well as the Guatemala border. Therefore, we
have a through rail connection from New York to the Guatemala border, every
one of these lines running with more or less regularity at the present time.
Just to give you an idea of conditions in general, our earnings at the present
time are greater than they have ever been in normal times, notwithstanding the
fact that we have lost during the revolution through destruction and wrecks and
other causes about ten thousand of our cars, and our earnings have not been in-
creased over 20 per cent to 25 per cent in freight, and the passenger rates remained
the same, which goes to show that our volume of business is greater than it has
ever been and we are handling it with more or less promptness. Of course, we are
largely handicapped with shortage of power, especially, and we are trying to make
THURSDAY AFTERNOON SESSION 69
arrangements with the United States to secure some more power which will enable
us to re-establish our through building arrangement which we had years ago.
This will give you a general idea of conditions, and if anyone in the audience
would like to know either now or after the meeting anything about some par-
ticular point, I would be very glad to answer it. .
MR. VOGEL (Philadelphia) : I would like to ask Mr. de Hoyos whether
engines in Mexico are running with fuel oil or whether they are run on coal?
MR. DE HOYOS: About 80 per cent of our engines are run with fuel oil.
One or two of the northern divisions which are quite a way from the oil regions
are burning coal. We have coal mines in northern Mexico and the old Mexican
International, which supplies part of this coal, and some of it is brought from
MR. VOGEL: Are you familiar with the number of tank cars they have in
the Mexican railways?
MR. DE HOYOS: I could not say off hand, but I would be very glad to look
it up and send you the information.
MR. PARMELEE (Presiding): Now, it must be apparent that when we have
gotten our main trunk line railways established, that it is impossible to branch
them out into all parts of the country, and as a consequence, we extend our means
of transportation by highways and automobiles and industrial railways and aerial
tramways and various other methods of transportation, so we will proceed to a
discussion of these various methods of feeding trunk line railways, and the first
phase of that matter that we will consider is the matter of highways and for the
discussion of that I have pleasure in introducing Mr. Charles Whiting Baker of
New York City.
MR. CHARLES WHITING BAKER read the paper given on page 323.
MR. PARMELEE (Presiding) : Another type of feeder which can be made
effective for supporting main line railways is the light industrial railway. Mr.
Lloyd Brown of the Lakewood Engineering Company of Cleveland will read Mr.
Lang's paper on this subject.
MR. LLOYD BROWN: This paper was prepared by Mr. Lang, President of
our Company, who was detained by sickness.
MR. CHARLES F. LANG'S paper appears on page 313.
MR. PARMELEE (Presiding): The subject of aerial tramways as feeders for
trunk lines will be presented by Dr. Walter C. Kretz of the Roebling Company,
DR. WALTER C. KRETZ read the paper given on page 316.
MR. PARMELEE (Presiding) : We had prepared a symposium on the use of
waterways in transportation and as one item in the use of waterways we had
thought of considering the use of the water either before or after its use in trans-
portation for irrigation. On that subject, Mr. Charles W. Sutton, who is a con-
sulting engineer specializing in irrigation and who has for ten years been at the head
of the National Irrigation Service of Peru, will speak to us. Mr. Sutton.
MR. CHARLES. W. SUTTON read the paper given on page 320.
MR. PARMELEE (Presiding): Has anyone any questions to ask or topics to
discuss in connection with these points?
MR. W. N. DICKINSON (New York) : Mr. Chairman, I have one question.
I think it is in Mr. Baker's paper. He spoke about the cost per ton mile. I would
like to know whether or not those figures which he mentioned covered the operating-
costs plus the maintenance cost plus the interest charges, or just how far they went
so far as the figures he mentioned are concerned.
MR. BAKER: The cost under usual conditions is very hardly down in gen-
eral figures because it depends so much on the volume of traffic you have to move
and on the character of it. It is very hard to lay down anything except general
FOREIGK COMMERCE 1917