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The Chairman. Commodities, yes; which do not require too rapid transportation, but one that is cheap and safe, would you not prefer to ship your commodities on a sailing ship if you could save freight by doing so??

Mr. Simpson. Do you mean, if they were going to the Orient, to take them to Honolulu and then ship them to the Orient??

The Chairman. Or as a place of refreshment for ships?

Mr. Simpson. In that case it undoubtedly would be of great advantage.

The Chairman. I do not agree with your assumption that steam transportation or steam navigation is going to supplant the sail. I think it will be found, after a while, that the supply of coal is so limited, or the price will be so great, that for the heavier commodities it will not be used for transportation and sailing ships will come in vogue and be an important part of the commerce of the world.

Mr. Simpson. One reason why I take that ground is, when I was in Honolulu I saw a bill of lading issued by the Southern Pacific Railroad Company of goods shipped from London and routed across the Atlantic and the United States by the Southern Pacific Railroad Company, and from San Francisco to Honolulu by steam navigation. Arbitrary rates exist across the American Continent and between San Francisco and Honolulu. The rate fluctuates on the Atlantic according to the displacement of cargo offered, and that transportation was 31 shillings and 6 pence. The same articles taken from New York City to Honolulu overland would cost us in American money $5.30. The same articles taken in a sailing vessel from London to Honolulu, occupying some eight months in time, (and it would be a good trip to make it in eight months), would cost $4.85, according to the then existing rate. Now, the persons shipping those goods preferred steam across the Atlantic and the American Continent, over a sailing vessel, from the fact that the money invested in the cargo in transit would be greater than the cheap rate on the return cargo from Honolulu, except the ship struck there in the sugar season, when they could get a return cargo to the Pacific coast. There would have to be that difference arranged for.

The Chairman. As a general proposition, I suppose, it is not to be disputed that over a long distance the transportation of heavy articles of commerce would be cheaper by sail than by steam?

Mr. Simpson. That was the generally accepted idea, except where you get cheap fuel. The resources of the Pacific Ocean for fuel are greater than on the Atlantic. They have three distinct bases of supply where there is an enormous amount of coal. I speak of the Japanese coal fields, the Australian coal fields, and the coal fields of the Northwestern Pacific coast. The Japanese coal fields and the Northwest Pacific Coast fields are almost inexhaustible. An enormous amount of coal can be produced there. The methods of handling in the Northwest Pacific coast are very crude in comparison with the manner the business is handled in well-settled and well-worked coal fields. It is so much in its infancy that it has hardly gone beyond its experimental stage.

The Chairman. As yet the real value of the coal out there is not known, and can not be known, until they go further down into the seam or vein?

Mr. Simpson. No. Known coal fields are so numerous and known deposits are so numerous at this time that it would be a waste of money to expend it in finding new fields.

The Chairman. You mean in our own country?

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Mr. Simpson. In the State of Washington, I know that to be true.

The Chairman. Give a general statement of the commercial relations between Hawaii and the United States.

Mr. Simpson. The Hawaiian Islands are to the Pacific Coast and to the country west of the Mississippi River what the West Indies are to the Atlantic and the country east of the Mississippi River. They raise and can raise the same products. They are at present nearly identical in formation, in methods, and manner of doing business, and of articles actually handled. There is, to my mind, no alternative for the United States except to provide conditions and manner of doing business with the Sandwich Islands, from the fact that the country west of the Missouri River is practically dependent upon those islands for the commodities which are raised in the islands, to procure them at anywhere near the price at which the same commodities are sold east of the Mississippi River. In the West Indies sugar, rice, and the fruit culture is in its infancy, but it will be augmented very fast. The principle article, sugar, is dependent upon the Pacific coast market, so called, and the Pacific coast is compelled to reciprocate. For this reason sugar raised in Cuba and refined in the Eastern part of the United States is compelled to pay too great a transportation fee to reach the markets of the Pacific coast. Were there no sugar raised in the Hawaiian Islands the sugar would be received from China and Japan rather than from Cuba, on account of this transportation. The sugar business is controlled by the American Sugar Trust, of which Spreckels and his interest are a part. During the winter of 1892-'93 contracts were made by the American Sugar Trust, through Spreckels as agent, for their product of sugar for five years. The stipulations of that contract are these:

The trust agrees to pay to the grower for sugar laid in San Francisco the same price, that Cuban sugar brings in New York City, less a quarter of a cent per pound. This quarter of a cent per pound difference is for the purpose, as claimed by the sugar trust people, to compensate them for the difference in freight that they would have to pay if they had to take Cuban sugar to the Pacific coast. It is simply a subterfuge for the purpose of obtaining the advantage of a quarter of a cent per pound. That contract also states that all sugar running in grade of 96 per cent saccharine shall pay a thirty-second of 1 cent per pound for each degree over 96 per cent saccharine, and a sixth of 1 per cent on each degree under 96 per cent saccharine. All the planters in the islands engaged in the sugar business have signed this contract from the fact that there is no other outlet. When I was in Honolulu in the winter of 1892 the growing price of sugar was about $90 per ton. The cause of that was that the previous crop of Cuban sugar had been practically a failure, and they were enabled to get a much better price than they are getting at present. The last quotations which I received from Honolulu they were paying for Hawaiian sugar laid in San Francisco 2⁷/₈, almost the lowest price it has ever reached, and which price does not pay even a small interest on the investment.

The rice business of the islands is carried on principally by the Chinese and Japanese. The rice they raise grades with what is known commercially as No. 1, or as good as any rice in the South Sea Islands or off South Carolina.

The Chairman. How is it raised?

Mr. Simpson. By irrigation; different from what it is in the fields in the South.