An efficient merchant marine confers certain special advantages upon the nations which share its ownership. Pointing out the importance of the navigation of the United States at the beginning of
its history, Jefferson said: “As a branch of industry it is valuable; as a resource of defense, essential." The distinction here made is important and will be observed hereafter.
The first element of value in the maritime industry is the immense sum earned in transporting international ocean freight. More than $500,000,000 is earned annually in this service, and the ship-owners of Great Britain receive about one-half of this total. The exports and imports of the United States pay more than $130,000,000 annually, less than one-fifth going to American vessels. Two-thirds of this sum, being freight on goods exported, was paid by the foreign consumers of our products. Had it been earned by our own ships, it might be added to the balance in our favor in our foreign trade. It has been computed that the receipts for freight and attendant charges have nearly restored the apparent adverse balance in the trade of Great Britain during the last twenty years. A considerable sum is also earned by carrying passengers, and a much smaller amount by carrying mails; but the freights amount to 90 per cent, of the earnings of the world's shipping, while the mail pay is probably less than 1 ½ per cent. A nation which cannot carry her own ocean freights may have her commerce interrupted, with the result of depressing values and inflicting privations upon her people. This may happen whenever the power owning the shipping employed becomes involved in war, or adopts a policy hostile to commercial and maritime prosperity.
The importance of the merchant marine as a means of defense is not less manifest than its wealth-producing qualities. By training men to the sea it performs the most important part of their preparation for the naval service. This is done without expense to the nation and without withdrawing them from productive employment. The vessels of the merchant marine and the shipyards and machine shops supported by it form a valuable material reserve for the navy.
The competition of a healthy mercantile marine will solve many problems in regard to speed, marine economy, and the use of new materials, that cannot be solved by the navy. The construction and efficiency of our men-of-war depend largely upon the state of maritime knowledge among our people and legislature. The display of the national ensign in foreign waters by improved and powerful merchant vessels raises the general estimate of our national power and resources and secures respect for our rights. The influence of a flourishing merchant marine in promoting the peaceful settlement of international difficulties has been indicated by the least prejudiced of English statesmen. Referring to the concessions by which France terminated a dispute with the United States during the administration of General Jackson, Cobden said: "France knew that America had the largest mercantile marine; and, though at first the battle might be to the stronger in an armed fleet, in the end it would be to that country which had the greatest amount of public spirit and the greatest number of ships and sailors." Our reputation for public spirit will soon be our only support in similar cases.
Considering, therefore, the economical and defensive value of a prosperous merchant marine, we may accept the opinion of Colbert when minister to Louis XIV. He declared, in speaking of the ocean carrying trade in 1669, that each nation ought to share in it in proportion to the power, the numbers of people, and the extent of seacoast which such nation possessed. A brief summary of the history and present condition of our merchant marine will show how nearly we have approached this standard.
II. It would be impossible to hope much for the future of our maritime interests had we no record of past successes to fall back upon. The skill and energy displayed in nautical enterprises by the inhabitants of the North American colonies of Great Britain had built up an important trade before the colonies declared themselves independent. The growth of this trade was hampered by some natural disadvantages, but its principal obstacle was the commercial policy of restriction and oppression pursued by England.
The provisions of the famous Navigation Act closed the colonial ports to all foreign vessels, prohibited the importation of European goods from any country but England, and the exportation of sugar, cotton, tobacco and other valuable staples to any foreign country. Under such regulations the trade of the colonists naturally tended to overstep the bounds of law. The valuable traffic with the Spanish colonies was generally illegal. The rapid growth of American commerce after the close of the war with France aroused the jealousy of British merchants and the suspicions of the ministry. Burke says: "The bonds of the act of navigation were straitened so much that America was on the point of having no trade, either contraband or legitimate." This harassing policy excited great discontent in the colonies, and threw the most enterprising merchants and mariners in the ranks of the revolutionary party. The act of navigation was denounced as a capital violation of the laws of nature and justice by a leading delegate from Virginia in the first Continental Congress.
The protracted severities of the Revolutionary contest almost destroyed our struggling merchant marine, but the return of peace witnessed its prompt revival. Our envoys were sent to Europe, empowered to offer perfect reciprocity to foreign powers in removing restrictions on shipping. The treaty with Holland, signed in 1783, was the earliest formal recognition of this enlightened principle of commerce. The same terms were sought from Great Britain, and our proposals were favorably received by the ablest English statesmen.
In March, 1783, only a few weeks after the signature of the preliminaries of peace, William Pitt, then Chancellor of the Exchequer, brought in a bill for the provisional regulation of trade with the United States. The preamble recites the recognition of the late colonies as free, independent and sovereign states, and declares the expediency of establishing intercourse between the two countries on the most enlarged principles of reciprocal benefit. It then provides that vessels bringing goods from the United States to any British or colonial port shall be subject to the same charges and restrictions as British vessels entering the same ports. The bill failed with the overthrow of the ministry, and a revival of bitter feeling destroyed all chances of its passage. But it is worth remembering as embodying the wishes of the wisest public men on both sides of the Atlantic.
The responsibility for this failure belonged to the malignant Tories and interested ship-owners of Great Britain. Its immediate results were the adoption of retaliatory measures by our government and the destruction of our trade with the British West Indies, causing the starvation of 15,000 slaves in Jamaica alone within a few seasons. Among the more remote results of this action, the international jealousy which brought on the war of 1815, obstructed our interests with Great Britain for more than half a century, and still supports the maintenance of a restrictive maritime system which is now suicidal, may be pointed out.
Trade was, however, rendered possible by the issue of annual proclamations suspending some of the more stringent provisions of British law. Our ship-owners were ready to avail themselves of every opportunity, however grudgingly it might be granted, and our merchant marine began to thrive.
The first return of the shipping of the United States was made in 1789, but those (or the next year show a rate of increase so incredible that it is better to begin with the returns of the year 1790. The advocates of restrictive legislation, however, prefer to use the figures of 1789 to show a large percentage of gain during the next few years. The total tonnage in 1790 was 478,377 tons, of which 346,254 tons were registered for foreign trade. Hereafter the registered tonnage alone will be compared to demonstrate the progress of our merchant marine. The returns of the coasting trade include an immense tonnage of barges, canal boats, river steamers and other non-nautical vehicles which do not belong to our subject.
Our shipping increased with great rapidity during the next ten years, and its tonnage was more than doubled by 1804. The skill and enterprise of our mariners and shipbuilders, the abundance of the best materials for construction, and the special demand for shipping caused by the long series of wars which disturbed the commerce of every European nation, combined to assist the development of our maritime industries. Our ships began to contend for the carrying trade of the world, and our builders sought foreign markets to dispose of their vessels. The fact that most European powers forbade the naturalization of vessels built outside of their own dominions was then considered as a grievous restriction on our trade.
The increasing complexity of European quarrels produced attempts to restrict the commercial rights of neutral nations. The Milan Decree of Napoleon, the British Orders in Council, and the embargo imposed by our own government, successively harassed our mercantile marine. Our progress became slower, and in 1812 our registered tonnage amounted to 758,636 tons only. The persistence of Great Britain in her unjust claims in regard to the crews of our ships intensified the resentment caused by her jealous and selfish commercial policy.
The war of 1812 was undertaken to repel these assumptions and to insure the protection of our maritime interests.
The results of this war were, on the whole, highly favorable to our merchant marine. The capture of many of our merchantmen and the enforced idleness of the rest inflicted great losses on our ship-owners, and rendered the war unpopular in the States most interested in shipping. But the demonstration of the superiority of our ships and our seamen over those of Great Britain aroused the pride of the nation, and secured the support of public opinion for the navy and the merchant marine. Though we were humiliated by the capture of our national capital, England sustained a greater loss when the prestige of her navy was lowered on the high seas.
The termination of this war brought a treaty by which our direct trade with Great Britain was established on principles of reciprocity, but restrictions were still imposed on our intercourse with her colonies, and retaliatory measures were still invoked to break down this regulation. But these were minor matters, and the era of liberal rules for commerce had begun.
With the treaty of 1817 a period of moderate but sustained prosperity began, which lasted about thirty years. In 1847 our register showed more than one million tons of shipping engaged in foreign trade. During the next ten years the rate of increase was wonderfully rapid. Two million tons of shipping were registered in 1854. During the four years ending June 30, 1856, the annual average of shipping built exceeded 500,000 tons. Of this vast increase, about 200,000 tons went to the foreign trade, as much more to the coasting trade, and a large proportion of the remainder was sold to foreign, chiefly British, buyers.
During these years the progress of American shipping was as sound as it was brilliant. We built more ships than any other people and we built the best ships. They were constantly employed in carrying the most valuable freights at the highest rates. They were preferred to the vessels of any other country by shippers of costly goods, and that preference was justified by the fact that they made quicker passages and delivered their goods in better condition than their rivals. They had exactly the same advantages over other vessels as freight carriers that steamers have over sailing vessels at the present day. All of these facts were shown by the evidence before the parliamentary committees appointed to enquire into the effects of the Navigation Act which began their work in 1847.
Among the details of this testimony we find that American ships brought all manufactured goods from England to the United States, while the best British ships had to carry salt and iron; that they received higher rates of freight, were insured on better terms, and had the preference in every way. These advantages were alleged to be due to the greater intelligence, sobriety and efficiency of the masters and crews, to the better models and equipment of the ships, and to the greater economy at which these results were obtained. It was shown that the high wages paid in American vessels enabled the masters to select the very best seamen, and to carry a smaller number of them. The actual amount of wages paid was thus less in American than in British ships of the same tonnage, while the former carried more sail, made quicker passages and earned higher freights. British ship-owners talked of combination and patriotism as the causes of the favor enjoyed by American shipping, but the evidence shows that shippers of freight consulted their own interests then as they do now, and sent their freight by the quickest and safest vessels without regard to their nationality.
It is worthy of notice that this astonishing increase took place long after the practical success of steam navigation had been demonstrated. The Cunard steamers had been making regular trips since 1840. The mails, the cabin passengers and the transportation of specie and goods of great value were all transferred to the steamships, but they could not compete with sailing vessels for the carriage of the bulky staples of commerce. Our maritime supremacy was due to the superior advantages our vessels offered for such freights, and it terminated when these advantages ceased to exist.
Our merchant marine reached the culmination of its progress in 1856. In that year our ships carried three-fourths of our own exports and imports, and held the first place in the general carrying trade. It has been estimated that 1,500,000 tons, or more than one-half of our shipping, were employed in the ocean traffic of other countries. But the era of prosperity was about to close.
During the four years ending June 30,1860, the annual average of shipping built was less than 250,000 tons, or less than half what it had been for the preceding four years. Our share of our own trade fell to 66 per cent, of the whole in 1860, from 75 per cent, in 1856. The sales of ships to foreigners and the rates of freight declined. Nor was this decadence confined to the United States.
Universal complaints were made that there was too much shipping in the world and that no profits were to be made. A long and careful investigation ordered about 1860 by the French government terminated its report in 1863, and declared that the merchant marine of France had failed to keep pace with the growth of commerce, and that the navigation of sailing ships had ceased to be a profitable and growing business.
The development of steam freight carriers had begun, and the superiority of iron as a shipbuilding material had been proved. The importance of these facts may be indicated here. Steamers average about three times the speed of sailing vessels on the high seas, but their greater despatch in and out of port and in discharging cargo increases their effective carrying power to five times that of sailing vessels of the same tonnage. Steamers are also safer than sailing vessels on account of their speed and power of avoiding storms and dangers to navigation. Considering the percentage of wrecks for each class in connection with the number of voyages made, we find steamers are seven times safer than sailing vessels. The two qualities of speed and safety make steamers more efficient and also more economical as freight carriers. The use of iron instead of wood gives greater buoyancy, increased cargo space, finer lines and greater rigidity of the hull. The steamers are drier, safer and faster than when built of wood, far stronger in case of collision, and more durable in addition. The substitution of the screw-propeller for the paddle-wheel was also a step in advance.
All of these improvements, and the more recent modifications of steam navigation produced by the introduction of compound engines and steel hulls, have tended far more to reduce the cost of carrying freight than they have to increase the speed for mail purposes or the comfort of the passengers. The Persia, built in 1856, consumed thirty times as much coal per ton of freight carried as is required by the Arizona built in 1879. The progress made in this direction has increased the share of ocean freight carried by steam from 14 per cent, in 1850 to 61 percent, in 1880. This percentage was more than doubled between 1850 and i860, and this explains the beginning of the decadence of the sailing marine.
America was slow in beginning to build ocean steamers, slower still in adopting improved methods of construction and propulsion. The Collins line came into the field half a dozen years later than the Cunard line. Stimulated by national rivalry and a high subsidy, the American company built larger, faster and more sumptuous steamers than any owned by the competing lines. But they did not secure increased freight capacity or marine economy, and the series of accidents which ruined their fleet showed that the conditions of safety had also been neglected. Faster, safer, and more economical steamers were built. The Collins line failed to carry out the mail contract, lost its subsidy and abandoned the business in 1857. Neither our sailing clippers nor our wooden side-wheel steamers could profitably compete with the iron screw steamers of Great Britain, and we were not prepared to build the new type of ocean freight carriers. Although we had an aggregate of shipping equal to that of Great Britain on our registers in 1861, the period of decadence had begun. The decline of our merchant marine was accelerated by the civil war of 1861-5. Shipping to the amount of 104,605 tons was destroyed by hostile cruisers, and 774,652 tons were sold to foreign flags. While those ship-owners who received insurance, indemnity or purchase money for their vessels may be considered fortunate in withdrawing capital from a failing business, it is certain that great losses were sustained by the payment of war premiums on insurance and by the interruption of trade. Had the merchant marine been in a healthy condition it could have furnished the cruisers required to defend it from the Alabama and her consorts, and it would have recovered from the prostrating influences of war with the vigor shown by other industries which had been depressed. But this recovery has not occurred, and the decadence has been most marked in the most prosperous years of our commerce.
III. The most humiliating chapter in the history of our merchant marine is that contained in the latest official returns—the report on commerce and navigation for the year ending June 30th, 1880. The total registered tonnage of the United States has declined from 2,302,190 tons in 1856 to 1,314,402 tons in 1880, a decrease of 42 per cent. The figures showing its employment indicate a more starting decline. In 1856 our shipping carried 75 per cent, of the total value of our exports and imports, in 1880 17.6 per cent. Our share of our own trade has fallen from three-fourths to one sixth. The value of the goods transported to and from our own ports in American bottoms in 1880 was $280,005,497, while in 1856 it was $482,268,274. The decline in values seems to agree with the decline in tonnage, as we have 58 per cent, of each left. But the total amount of American shipping entered from abroad has remained about the same. The figures are 3,194,275 tons in 1856 and 3,128,374 in 1880. Apparently our remnant of shipping must be more actively employed now. But a glance at the business of our principal seaports will show that nearly two-thirds of this tonnage movement belongs to a mere supplementary coasting trade, the limits of which are the Gulf of St. Lawrence and the Caribbean Sea. Were Cuba and Canada annexed to the United States our foreign carrying trade would be trifling in amount. The value of goods moved for each ton of American shipping entered was $150 in 1856; in 1880 it had decreased to $90. The returns show that in the former year American ships carried the most valuable goods shipped, while in 1880 their freights were much less valuable than those of foreign vessels. A comparison of freight earnings cannot be made, but it is known that while rates have everywhere fallen, the decline has been greater for sailing vessels than for steamers, and for wooden than for iron hulls. It is safe to say, therefore, that while we carry one-sixth of our own freight, our ship-owners receive a much smaller percentage of the amount paid for its transportation.
When we examine the character of the vessels which make up our mercantile marine we find that we have only 146,604 tons of registered steamers, only 90,142 tons of which are of iron. The gain in steam tonnage has been very small during the last twenty years, and the aggregate of iron steam tonnage is too small to be encouraging. To replace the vessels wrecked or broken up we find that 157,410 tons of all classes were built in the year ending June 30th, 1880. About one-third of this tonnage was probably registered and about 10 per cent, of it was made up of iron steamers. This amount failed to maintain the figures of the preceding year. The decrease was 137,103 tons in twelve months. The amount of shipping built and the proportion of our own goods carried also decreased rapidly. The fall in the latter case was from 23 per cent, to 17.6 per cent.
Comparing this exhibit with the latest returns from Great Britain, we find that she has a total of 6,519,772 tons of shipping, excluding that of the colonies, and that she has 2,720,551 tons of sea-going steamers. Thus she has five times the ocean tonnage and nine times the carrying power that we have. She has twenty times the tonnage of steamers and thirty times that of iron steamers. She builds no wooden vessels, and only 57,534 tons of sailing ships to 346,361 tons of steamers in 1880. It is stated on good authority that 1,000,000 tons of shipping are now under construction in Great Britain, nearly all iron or steel steamers. The carrying capacity of British shipping steadily increases while ours declines. New methods and new materials are making rapid progress there, though we have adopted none of them. The British sailing tonnage employed in the foreign trade of New York is greater than the American, and ten times as many steamers are cleared under that flag as sail under our own. Two-thirds of our exports and imports navigate under the British flag. It must be noted that the increase in shipbuilding is confined to Great Britain, and that this industry languishes in her colonies, because they cannot build iron steamers, and not as the result of taxation or other causes. The business of navigating ships is still more prosperous in the British colonies than in the United States, but it is carried on with vessels purchased in England in many cases.
The maritime progress of other European nations is inferior to that of Great Britain: none of them have ever attained the position once held by this country, and none have fallen so low in the scale of progress as we now are. Every American who goes abroad notices with feelings of shame the disappearance of our flag from foreign waters. None see this more clearly or regret it more keenly than the naval officer. I have visited forty busy seaports without finding one American vessel, and the sight of one poor brigantine seized by a Spanish custom-house was not calculated to compensate me for a year's search for our national ensign.
I have visited an important port belonging to one of the great powers of Europe where none of the officials of the harbor could recognize the flag of the United States, never having seen it before.
It is necessary to add, that in my opinion the quality of our shipping has also declined. Our sailing vessels are equal to the best wooden ships of other nations, but they are at best awkward and obsolete tools for the prosecution of ocean trade. Our steamers are too often sent to sea worn-out and crippled. Such wrecks as that of the City of Vera Cruz are less strange than some of the escapes of the Ocean Queen and Rising Star on their voyages to Aspinwall. The sea-going steamers produced within the last few years show too many traces of the "steamboat" style of construction which exposes masses of joiner-work to the sweep of wind and sea. For this dangerous system the provision of law which exempts staterooms and cabins above the upper deck from tonnage measurement may be responsible. The latest improvements in marine construction are not in use in our navy-yards or private shipbuilding establishments. Naval vessels are destitute of the requirements of health and comfort, deficient in speed, and continually in need of repairs. Maritime taste and knowledge are dying out, and the approaching extinction of our merchant marine is regarded with general indifference. The causes of this unhappy condition of affairs deserve careful study.
IV. By examining the conditions affecting the growth of our merchant marine we may select the effective causes of its decline. The high price of labor has always seemed to oppose the development of our industries. Until our resources are fully utilized and our territories thickly settled, American workmen will always receive higher wages than those of other countries. This condition might be deemed fatal to our progress in the carrying trade when our ships compete directly with those of other countries where labor is cheap. But no industry specially favored by our position, resources, and the character of our people has failed to establish itself in spite of this apparent drawback. The mercantile marine entirely overcame this disadvantage during the first seventy years after our independence. The superior intelligence and industry of our shipwrights, combined with the cheapness and abundance of shipbuilding material, enabled us to build the best ships in the world at prices lower than inferior ones cost abroad. The same qualities in our seamen combined with the qualities of our ships to make them the most economical as well as the most efficient freight carriers in the world. Just as long as we gave our mechanics and our sailors the best materials and the best tools for performing their work of shipbuilding and freight carrying, they earned high wages for themselves and profits for their employers. It is true that the quality of our merchant seamen has deteriorated and that we now have only an inferior class of foreigners to man our ships. Were our merchant marine to enter upon a period of prosperity with first-class iron steamers, young Americans would gladly go to sea with some prospect of advancement, and the best foreign seamen could be selected where good fare and high wages were offered in fine ships.
The relation of wages to maritime progress is shown by comparing the merchant marine of the three countries which have been gaining most rapidly while our decline has been going on. These nations are Great Britain, Italy, and Norway. The increase in British shipping has been in iron steamers; that of the others in sailing vessels. British seamen are better paid and better fed than those of any other country except the United States, while Italians and Norwegians stand at the other extreme. The success of steam freight carriers left to sailing ships only the slow and cheap freights and the very long voyages. This change destroyed the profits of expensively navigated ships like our own. They no longer could depend upon getting profitable cargoes, and they had to reduce rates to earn any freight at all. The cheap ships of Norway and Italy were able to bid lower, and the demand induced those countries to increase their fleets very rapidly. The Norwegians have as many ships engaged in the trans-oceanic trade of New York as we have, and the Italians two-thirds as many. But they have learned that it is impossible for them to compete longer with steamers. The strenuous efforts of the Italian people and government to transform the obsolete mercantile fleet of wooden ships into an efficient one of iron steamers are well known, but their success is doubtful. From Norway our consul at Christiania reports as follows: "Norwegian shipping has yielded small profits for some years, and constant complaints are heard of sailing vessels being forced out of the market by the increased number of steamers everywhere."
The cause of this decline is evident when we learn that for each seaman of the British merchant marine 436 tons of freight are shipped annually, while for each Italian only 85 tons are moved. This result is partly due to the greater efficiency of the British seaman, but principally to the advantages of steam tonnage, which carries 75 per cent, of the freight in British bottoms and 25 per cent, in Italian. The effect of recent improvements in steam machinery and laborsaving appliances is shown by the decrease of the number of men employed in British steamers, from 4.67 per 100 tons registered in 1870 to 3.25 in 1880, a saving of 30 per cent. The Norwegians carry a little more freight per man than the Italians; they have better sailors but fewer steamers. An English ship-owner can, therefore, spend four times as much per man for his crews as his Italian or Norwegian rival, and still have his work done cheaper. When our merchants send out the most approved and economical vessels they can afford to pay high wages; until then, they cannot. The high rate of wages did not hinder our merchant marine from growing up to 1856, and it has not injured that of Great Britain since then.
The high rate of interest prevailing here has also been brought forward as one of the obstacles preventing the advance of our merchant marine. When the government paid interest on its securities at rates equal to the profits of successful business there was some force in this statement; but when 4 per cent, bonds command a premium of 18 per cent, and the ordinary rates of interest are lower than they ever were before, this argument can no longer be sustained.
Without discussing the general policy of protection, its apparent influence upon maritime interests may be pointed out. A protective tariff checks the importation of foreign goods and lessens the purchasing power of foreign countries, thus unfavorably affecting the export trade. The effect on shipping is to compel them to trade under the unfavorable condition of a full cargo in one direction only. The import trade of any country is largely controlled by its own merchants, and hence imports are more apt to be shipped in vessels of the country ordering them than in those of the country sending them. The articles which would be purchased by the United States under a tariff for revenue only would be valuable goods, paying high rates of freight, and they would be shipped in American bottoms were our ship-owners able to offer equal advantages in speed, safety and cheapness. The manufactured goods which we now export are too small in bulk and value to furnish employment for many ships. They constitute only about lo per cent, of the value and 2 per cent, of the bulk of our total exports.
The tariff of 1847 reduced the average duties collected on all dutiable goods from 44 per cent, during the ten years preceding, to 24 per cent, during the ten years following its passage. During the latter period our registered tonnage increased 240 per cent. The coincidence is striking. A further reduction in 1857 failed to arrest the decline then in progress, and the war tariff of 1861 soon followed, and, with all its anomalies, is still in force. The protective tariff may be considered as having contributed to the decline of our commerce in various ways, and the popular theory upon which such measures are founded is directly opposed to the increase of foreign commerce and the prosperity of the merchant marine.
Allusion has been made to the effects of the war on our shipping, and it is only necessary to point out that our share of our own trade fell from 66 per cent, for the year ending June 30, 1861, to 28 per cent, for the year ending June 30, 1865.
The taxes collected from our merchant marine are a real burden in its depressed condition. The sum realized by all the impositions sanctioned by Congress is not considerable as a part of the revenue, but it seriously oppresses nearly every person interested in shipping. The attempt is made to render all the official machinery, public safeguards, and charitable institutions established by law, self-supporting. Fees are paid to shipping commissioners, to consuls, to supervising inspectors and other officers for performing the duties of their positions, which are frequently made unnecessarily complicated and vexatious, and rarely benefit the persons who are required to pay the fees. The tonnage tax of 30 cents per ton is collected annually from all vessels, American or foreign, entering our ports from foreign countries. This tax does not materially affect the regular steamship lines, but it may absorb a large part of the earnings of the poorer classes of sailing vessels. In measuring our ships for tonnage much space is included that is not counted in British vessels. This increased tonnage entails a corresponding increase in the tonnage tax, and in the light and harbor dues collected in foreign ports. The exaction of three months' extra pay for each seaman discharged by the consul's order in a foreign port is another grievance to ship-owners.
The questions of local and State taxation, quarantine fees and compulsory pilotage need not be closely discussed here. The net income of the ship-owner is all that is taxed in Great Britain, and all that should be taxed here, if our vessels are to compete with theirs. The pilotage collected at our principal seaports is an obstruction to their use by shipping. The generous wisdom which has lined our coasts with lights buoys, and other sea-marks is defeated by the exaction of these exorbitant charges. The rates imposed at New York are as high as they should be were all aids to navigation removed and all charts destroyed. The fees for quarantine visits, fumigations, etc., are too numerous and too large.
The present burdens of taxation, which have grown with the decline of our maritime prosperity, are undoubtedly contributory causes of its complete prostration. The whole system should be swept away by the joint efforts of Congress and the State Legislatures.
The principal cause of the failure of our merchant marine to compete with that of other nations is, in my opinion, to be found in the fact that our ship-owners are not allowed to purchase the best and cheapest ships to sail under the flag of the United States. There are three courses open to them ; they can buy good iron steamers by paying a great deal more for them than their rivals do for theirs; they can continue to trade with obsolete wooden sailing vessels; they can abandon maritime pursuits altogether. Statistics show that a few attempt the first course, that many cling to the second, that most accept the last. We built last year a few iron steamers and a considerable number of sailing vessels, but not nearly enough of either to take the place of the tonnage withdrawn from service.
It is frequently asserted that the difference in the cost of iron steamers here and in England is too small to exert any real influence on the progress of our shipping. It is claimed to be less than 10 per
cent, higher here, but this assertion hardly seems credible. The prices of tonnage are regularly quoted in Liverpool, but there are no similar quotations here. In January, 1881, the prices were stated by our consul at Liverpool to be as follows: for screw-steamers rated 100 A1 complete and ready for sea, $126.53 per registered ton for the finest passenger steamers, and $77.86 for plain cargo steamers.
Among the reasons for doubting the possibility of approaching these low rates, the large importation of iron and steel may be adduced. During the fiscal year ending June 30, 1880, these imports amounted in value to $45,466,986, and the enormous duty of 42.19 per cent, was paid on this valuation. The bulk of these products were not further advanced in manufacture than the plates and beams required for shipbuilding. While such duties can be collected, it is evident that iron ships must be more expensive here. This importation was even larger in 1881 than during the preceding year. The maintenance of the present tariff is insisted upon by all manufacturers of iron and steel, and their ruin predicted in case it is repealed. There are some who demand the advancement of rates upon certain kinds of steel specially suited to the purposes of shipbuilding. But even if all dudes on shipbuilding material were removed, the freight and other charges would still make them more costly than in England, and ships would continue to be more expensive when built in the United States.
The price of tonnage has been an important factor in the progress of our merchant marine. During the period of its prosperity ships were always cheaper—quality and carrying capacity considered—than in any other country. In 1791 the relative cost of the best ships in France and America was stated as from $55 to $60 per ton there, and $33 to $35 here. The British parliamentary investigations held in 1833 and 1847 showed that a similar relation still prevailed. The evidence collected during the latter year showed the superior advantages enjoyed by the American ship-owner, and led to the repeal of the Navigation Act and the admission of foreign-built vessels to the British register.
The fact that our merchants continue to build wooden sailing vessels instead of iron steamers shows that they cannot afford the more efficient vessels. British ship-owners, untrammeled by restrictions imposed by law, build six times as many steamers as they do sailing ships, and our intelligent ship-owners would not fall behind in the race could they be liberated from their burdens. Wood is still used as a material for river and coasting steamers in spite of the dangers incident to its employment. The use of iron or steel would give greater speed, lighter draught, greater capacity, and unsinkable and fire-proof hulls that would rob collision of half its dangers. The extra cost mast be the reason of this neglect of safety.
The only transatlantic line carrying the American flag has provided for its increasing business by chartering British steamers to make regular trips. These steamers pay the same tonnage tax, pilotage, etc., as the American-built steamers of the line, which are also exempt from local taxation, and the same classes of seamen are shipped for all the vessels. The legitimate prestige of the steamers under the national ensign must have attracted passenger traffic, but the line could not afford to maintain it by the purchase of American built steamers.
No attempt has yet been made to construct steel steamers in the United States, though the largest establishments of Great Britain are transforming their methods to make use of this material. The Naval Advisory Board of 1881 speak of “the certainty that steel is in the very near future to almost entirely supplant iron in the construction of vessels." The imperfect development of our shipbuilding industry, and the manufactures upon which it depends, is shown by their inaction in regard to the production and employment of steel plates.
The effect of increased first cost of vessels upon the profits of navigating them may be shown in the following manner: The life of a steamer being only twenty years, an annual deduction of 5 per cent, of her cost must be made from what is left of her earnings after expenses and the cost of repairs and insurance have been deducted, before any interest or profits can be reckoned. If the cost be increased 20 per cent, a deduction of 6 per cent, must be made; if it be 40 per cent, more, 7 per cent, of the same capital must be withdrawn before any gains can be made. Business must be very good to be profitable under the drawback imposed by the higher prices. The regular interest charge is also increased in the same proportion and a double burden thus imposed.
These considerations seem to justify the assertion that the high cost of efficient vessels is the chief among the effective causes which have depressed our maritime interests. This disadvantage is entirely due to the provisions of our statutes which forbid the grant of an American register to a vessel built outside of our territories. Scores of shipbuilders are ready to compete with each other for contracts to build any desired class of vessels at the lowest rates. The shipyards of the Clyde and Tyne are open to all the world, and resorted to by all the world except the American purchaser. There is no question
of paying duties on ships bought abroad as on other manufactures which demand protection at home. For ships there is only absolute prohibition. The establishments protected by this prohibitory legislation are not half a dozen in number. Their growth is not large, their operations are not extensive, and their methods are not progressive. But the business of owning and navigating ships is sacrificed to their demands.
More than a century ago Burke said of the British Navigation Act: "If it be suffered to run the full length of its principle and is not changed and modified according to the change of times and the fluctuation of circumstances, it must do great mischief and frequently even defeat its own purpose." Has not this prohibition, the last effective survival of the principles of that act, reached the full limit of its usefulness?
V. If it be admitted that the revival of our merchant marine would be a benefit to the nation, every artificial restraint and every obstacle created by legislation should be swept away.
The tonnage tax should be abolished, the fees to shipping commissioners for enlistments and discharges, the marine hospital tax, the fees paid by officers of steam vessels for certificates of competency, and the charges for registration and inspection of vessels should no longer be exacted. Supervising inspectors should no longer be allowed to impose useless and expensive patented devices for life-saving purposes on vessels inspected by them. This corps should be reformed, and its members should be required to show that they possess the "knowledge, skill, and experience in the uses of steam for navigation" which the law specifies as their qualifications. Should the present system of appointment fail to secure properly qualified men, there might be found officers of the navy specially fitted by education and experience for the work.
The whole system of public safeguards should be made as simple and as free from vexations as possible, and its expenses should be borne by general taxation and not by the industry to be regulated. The responsibility of owners and commanders of vessels should be strictly defined by law and enforced by the courts. No captain should be allowed to hold a certificate, and no owner should be permitted to earn profits, if found guilty of endangering life and property by reckless navigation or the use of unseaworthy ships.
Our consular service should undergo a thorough reform and its fees should be reduced or abolished. Appointments and promotions should be governed by rule, and not by caprice or political influence. Candidates should be subjected to a competitive examination before they are admitted to the service. Its standing and efficiency would be vastly improved were some knowledge of the forms of business, the principles of international and maritime law, modern languages and history required of each of our representatives abroad.
All of these reforms are within the powers of Congress, and it is believed that the questions of local taxation and compulsory pilotage of vessels engaged in foreign trade can also be regulated by that body. A register might be granted at the national capital, and local taxation thus avoided, as proposed by Senator Beck. The recent action of the legislatures of New York and Pennsylvania shows that the injustice and bad policy of crippling our merchant marine by local taxes is at last recognized. The removal of all such burdens is demanded by every one interested in shipping, but there are other measures of relief of equal or greater importance which have to contend with the active opposition of interested parties.
Congress passed an act in 1872 providing for the importation of shipbuilding materials free of duty, but a narrow construction of this law excludes iron and steel plates from the list, and thus prevents it from aiding the construction of iron steamers. This law should be amended to carry out the principle upon which it is based. Stores required for use on foreign voyages should also be allowed to be taken out of bond without payment of duty. No theory of revenue or protection should be allowed to stand in the way of such obviously necessary measures of relief for shipping. But such action will be only partially effective, and our ship-owners will still be at a disadvantage in competing with foreigners.
They can be given equal facilities only by repealing the law prohibiting the grant of American registration to foreign-built ships. The tonnage markets of the world will then be open to them, and they can buy the most efficient instruments for the carrying trade as cheaply as their competitors. But this act of liberation is strenuously opposed, and the grounds of this opposition must be considered.
The arguments advanced by those most active in denouncing the free ship remedy are, in character and in manner, those of interested and therefore prejudiced persons. It is said that shipbuilding in the United States depends upon the maintenance of this prohibition for its existence. The claims of this industry as a producer of wealth and a provision for defense should neither be neglected nor exaggerated. In both respects it is less important than the business of navigating ships. The freights earned by our feeble mercantile fleet engaged in foreign trade in one year are probably more than all our shipyards earn in five years by building vessels for that trade.
Were the nation to become involved in war, the possession of a respectable number of efficient steamers and the seamen required to man them would be a greater addition to the military power of the country than the possession of all the private shipyards fostered by present legislation. When it is proposed that this system be retained without change, the question arises how long the greater industry is to be sacrificed to the requirements of the lesser one.
We have a right to anticipate that the business of building ships will, in time, be promoted by establishing the practicability of owning and sailing them profitably. With foreign competition will come increased inventive activity, and new motive-machinery and systems of construction may restore all the advantages we have lost by their adoption abroad in the past. With the natural advantages we enjoy, the time may soon come when our shipbuilders will be willing to compete with the world in turning out first-class vessels at moderate prices. When the British Navigation Act was repealed in 1849 our shipbuilders were the best in the world, but within a few years a new material and a new type of vessels were created which transformed the conditions of maritime progress. Changes equally great may occur in the near future. The discovery of some quality of steel exactly suited for shipbuilding which could be produced rapidly at a low price, or the invention of a safe and economical method of using petroleum as a fuel, or electricity as a motive power, might effect another revolution. In the meantime our shipbuilders could earn as much by repairing the ships of a merchant marine proportioned to our needs, as they now earn by building the few ships which our merchants can afford to buy.
The great bulwark of protection is invoked to shelter the shipbuilding industry as it does so many others. But there is a great difference between levying duties on an article and prohibiting its entrance. In one case the government makes a revenue, and the consumer has his goods if he can pay the increased cost. In the other the government receives nothing, and the ship-owner abandons his trade for want of efficient instruments. The protective tariff is supposed to give our manufacturers an advantage over their foreign rivals by shutting out direct competition. The ship-owner cannot be protected from competition, and he is placed at a ruinous disadvantage with his foreign competitors by our navigation laws. The shipbuilder is apparently protected at the expense of the ship-owner, but the prosperity of his trade is really dependent upon that of the merchant marine, and neither of them has shown any healthy growth for many years.
To secure popular favor the assertion is made that the present standard of wages for mechanics required in building ships and seamen employed in sailing them can only be maintained by adhering to the present system. The repairs of the shipping employed in carrying one-half of our ocean freights would amount to more and employ a larger number of shipwrights than the building of new tonnage does now. The wages of seamen would tend to rise with any increase in the number of ships. The number of men trained to the sea must be compared with the total amount to be expended for wages. The revival of the merchant marine would increase this sum and elevate wages until the demand for seamen was fully supplied.
It is also charged that our merchants would buy unseaworthy ships if foreign markets were open to them. There is no reason to believe that the majority of our ship-owners are so destitute of business capacity as this charge implies. If they are, a certain classification at Lloyds or some other reliable standard, and a rigid inspection of all vessels purchased abroad, might be required to protect the public interests. Great Britain builds more steamers than the rest of the world combined, and the skill and experience thus acquired, the natural effects of competition on a large scale, and the vigilant inspection exercised by the government and the underwriters, have made those vessels the best in the world. Until we are prepared to build as well and as cheaply, our ship-owners should be allowed to go there to buy.
We are told that it would be a humiliating spectacle to see the American ensign flying on board a vessel built abroad. There is more humiliation in seeing that ensign disappearing from the highways of commerce or shown only by inferior and obsolete ships. It is said that resorting to England to buy ships would place us in a position of dependence upon that country. It may be pointed out that we are now completely dependent upon that power for the tonnage required to export our surplus productions and to return the foreign goods demanded here. Our freights, our mails, and our passengers now cross the ocean under the British flag. The purchase of steamers might restore some portion of this traffic to the American flag, and secure us from its interruption should England become involved in war. It would, therefore, tend to relieve us from such dependence. The scruples of false pride and the fear of so-called dependence have not prevented the great powers of Europe from buying men-of-war, yachts and mail-steamers from British builders. Those who have seen the magnificent vessels of the North German Lloyds and the French Transatlantic Company would hardly feel that our flag would be disgraced were similar fleets sailing under it. Wherever subsidies and bounties are paid for the navigation of steamers, British-built vessels come in for a share.
In making appeals for the maintenance of the present prohibition of the purchase of foreign-built ships for the protection of the few shipbuilding establishments we now own, it is gravely stated that these concerns have claims on the country because they have gone on supporting workmen and their families for years, simply to promote the welfare of the nation and the interests of labor. Those who can believe that capital is invested in business schemes with any higher motives than a creditable desire to make money may attach some importance to such claims.
The culminating charge against advocates of free ships is that they are theorists and inspired by British gold. It is worth while to follow the recent course of the agitation of this question, to investigate the probability of such statements as the following, which I find in a serious and well-written work on the subject of shipping. It is to the effect that " this agitation is the result of British cupidity and conspiracy, stimulated by business depression and idle ships." The veteran ship-owner. Captain Codman, opened the discussion in 1857, and has kept it alive ever since. During the war all such questions were neglected, but soon after its close the decline of our shipping attracted the attention of business men. Among the organizations which have taken action upon the subject is the National Board of Trade, composed of delegates representing commercial interests in every part of the country. In 1868, 1870, 1871, 1873 and 1877, the repeal of that clause of our navigation laws which prohibits the registration of vessels foreign-built was supported by two-thirds of the delegates, and a similar resolution presented in 1879 received the votes of a majority.
The report of the executive council of this body for 1880 contains a complete summing-up of the case in which this measure is advocated with clearness and force. The same action was recommended to Congress in a special message from President Grant in 1870.
This policy has the support of the leading journals of all parties in the commercial capital of the country, and has the endorsement of practical men and students of economical sciences everywhere. This position does not rest upon novel theories or those of foreign schools. The question was debated long ago, and I find the following argument extracted from an American periodical published in 1791. Speaking of a report that France had decided to allow her merchants to buy American ships, which were then the best and cheapest in the world, he says: "If France had rejected American vessels, she would have so far sacrificed her carrying trade to the manufacture of ships. She wisely purchases, upon the cheapest terms, the cradles for her marine nursery. The first and great object of the maritime powers ought to be the increase of the number of their sailors, which is best done by multiplying the chances of their employment." After stating the prices of tonnage in the two countries as 60 per cent, higher in France than in America, he goes on to say: "No argument is necessary to show that such a nation, ceteris paribus, must produce seamen more rapidly than those who refuse these cheap vessels. It would appear much less unreasonable that the government of the United States should prohibit the sale of ships (the means of obtaining naval strength) to foreign nations, than that any of them should reject the advantages of so cheap and excellent a supply." If the names are changed to suit the present conditions, this argument will have the force of a demonstration, although it was published in Philadelphia before that city became the chosen seat of political economy and iron shipbuilding.
VI. The means here proposed for the revival of our merchant marine are general measures of relief and liberation. The most important features of this plan are the repeal of duties on shipbuilding materials, and the removal of the restriction which prevents our merchants from buying ships abroad, and both these measures are vigorously opposed by powerful advocates of another policy. This alternative policy may be described as one of restrictions and subsidies. Restrictions are demanded to drive foreign ships from our trade, and subsidies are implored to build up a fleet of American ships to take their places.
The favorite forms of restriction include the imposition of heavy discriminating duties upon foreign bottoms and upon goods imported by them, and the enforcement of the direct trade rule requiring goods to be imported in American ships, or in ships of the countries in which they are produced. The advocates of this policy demand the abrogation of the treaties which bind us to a more liberal policy, and demand the strict enforcement of those provisions of our navigation laws which have been suspended by reciprocal agreements. The arguments used in support of this proposal to abandon the system under which our commercial development has taken place, and to return to the policy of the middle ages, are based upon certain versions of history which require examination.
The British Navigation Act is the foundation of the system to which we are invited to resort. That act was passed in the time of Cromwell as a hostile measure against the Dutch, who had acquired the leading place in the carrying trade. That place was lost as the result of a combination of causes, among which the provisions of this act may have had some effect. Its immediate success as a means of making England a great naval power was not brilliant, as we read of Dutch ships, partly manned by English seamen, sailing up the Thames and threatening London within a few years after its passage. In time, however, the power of Holland declined, and England acquired that supremacy in maritime affairs which she still enjoys, and which has never been threatened except by the progress of the United States. The efforts made by the American and English statesmen to secure the establishment of a liberal system of reciprocity between the two countries failed, and our legislators reluctantly adopted the principles of the Act of Navigation as the foundation of their retaliatory legislation.
But the hostile provisions of the laws of both countries were never strictly enforced, they were gradually abrogated by the adoption of new treaties, and the growing commerce of the two nations was thus allowed room to expand. The maritime activity shown in this country alarmed the interested classes of Great Britain. Parliamentary investigations were held in 1833 and in 1847, and both of them established the fact that the merchant marine of Great Britain had failed to compete successfully with that of the United States. The causes of this failure were found by the committee of 1847 to be the enforcement of the surviving provisions of the Navigation Act. The effective clauses then existing were those applying the direct trade rule to certain imports, and the refusal of a British register to foreign built ships. In the face of the evidence collected it was felt to be ruinous to maintain these provisions, and in 1849 the whole fabric of the restrictive maritime policy was swept away. This was done when the United States was the greatest shipbuilding and navigating country in the world, and the opponents of the measure, led by the late Earl of Beaconsfield, loudly proclaimed the ruin of British shipping and of British shipbuilding. The success of iron steamers as ocean freight carriers had not been proved, and no evidence bearing upon their capabilities was sought. The years immediately following were those of the most rapid development of our merchant marine. English merchants employed our ships gladly, and bought many of them to sail under their own flag, while their shipbuilders worked out the problems of new material and new means of propulsion, and in less than seven years produced the iron steam carrier of ocean freights which has re-established the supremacy of the British merchant marine.
The abrogation of our treaties with all civilized nations and the destruction of the enlightened system of reciprocity which we were the first to introduce into the international code of Europe, would be attended by many difficulties and would entail the loss of cordiality and commercial relations with many countries. But, even if these practical difficulties were overcome and the change effected without any sacrifice of the national honor, the desired result would not be secured.
The direct trade rule is the favorite device for substituting American for foreign ships in the movement of our own commerce. Its effect may be estimated when we see that 55 per cent, of our trade is carried on with Great Britain and 25 per cent, with other European countries, all of which are better prepared to transport the goods than we are. This leaves only 20 per cent, of our trade to be carried on with countries imperfectly supplied with shipping. If our vessels took the whole of this, their share would only be increased from 17.6 to 20 per cent., which is a trifling gain. But they would get only a small part of it. China and Japan are quite ready to buy English steamers whenever they can find employment for them, and such a measure would afford them a long-sought opportunity. The result of the adoption of this rule would probably be to confine our shipping to the West Indian and Mexican traffic which now forms their principal resource.
The adoption of a system of hostile discriminations would greatly diminish the total amount of our commercial transactions with foreign countries. Vessels would be deterred from seeking our exports when they could no longer land imports. Freight tariffs would be raised, and the increased cost of imported goods would be borne by the American consumer. At the same time the exports would decrease in quantity and the surplus products of the country would be almost worthless. The President of the New York Produce Exchange stated in October, 1880, "that the difference of one penny in the cost of laying down grain at Liverpool may determine the question whether millions of bushels shall be supplied from this country or shall be drawn from the ample fields of Hungary or Southern Russia."
It must also be remembered that our shipping can be excluded from employment in the trade with any foreign country by the application of the system which it is proposed to inaugurate in our own ports. The simplest measures of retaliation will entirely defeat the object of such action. The principle declared by Jefferson in the last century is one that will always be obvious to foreign legislators. In a report made to Congress he said, "Free commerce and navigation are not to be given in exchange for restrictions and vexations." Common sense forbids us to disregard this maxim.
We next come to the plan of encouraging steam navigation and building up a merchant marine by the payment of subsidies. It is frequently asserted that the payments so persistently demanded are
not properly called subsidies, but are only a fair compensation for services rendered in carrying the mails. It is assumed, however, that liberal appropriations of public money are all that is needed to promote the building of American steamers. No one will object to our postal authorities showing a natural preference for American steamers in making mail contracts. If there is any important mail-route over which communications are not properly maintained it is their duty to establish them and to expend the sums necessary for the purpose. Nor should they be limited to the ocean postage on the matter transported. But the end sought is to replace the foreign steam lines, now carrying the mails, by American lines dependent upon mail-pay for their support. In making contracts for this purpose the value of the service performed and the rate at which it can be secured in open market are to be disregarded, and the demands of American ship-owners are to be satisfied and their profits assured by the government. No limit to the amount to be appropriated is assigned by the advocates of this scheme, and no estimate can be made here. An attempt may be made to give an approximation to the sum required to secure the necessary facilities for carrying our mails to Europe. Nine weekly mails are now dispatched from New York by as many different steamship lines. More than forty first-class, full-powered steamers are required to make the regular trips on these lines. From the demands made heretofore the sum of $3,000,000 would have to be paid annually to secure a similar service by American steamers. The cost of this service is now only $150,000 annually, and the steamers carrying the mails do not complain of the present rates. An attempt to divide the service between our own lines subsidized according to the proposed rates, and foreign lines paid at the rates of ocean postage now allowed, would hardly be successful. If an American company gets $300,000 a year for dispatching a mail steamer every Tuesday, a foreign one will hardly accept $15,000 for sending out every Thursday an equally powerful vessel.
The result of an attempt to supplant foreign steam lines as mail carriers by subsidizing our own would, therefore, tend to multiply the cost of the service and to diminish its efficiency. The proposed scheme for establishing a line of steamers to cross the Atlantic in five or six days, carrying mails and passengers only, will not deserve encouragement involving the expenditure of public funds. The success of a small number of vessels in this enterprise would confer no great benefit upon the mail service, as the frequency with which mails can be dispatched is, in these days of ocean telegraphs, more important than a slight gain in speed. The creation of a large fleet of steamers so extravagant in first cost and running expenses would require an immense appropriation, which could not be called anything else than a subsidy.
It is the duty of legislators, before inaugurating a subsidizing policy for our merchant marine, to count the cost of such action. The cost of transporting the mails sent out from the New York post office to steamers built in this country would be at least $3,000,000 annually, or twenty times the sum now paid for this service. But New York is only one of a dozen ports which will demand subsidies if this system is adopted. The claims of other localities, backed by legislative votes, will secure a division of the spoils. The wholesale grabbing of the Rivers and Harbors Appropriation Bill will be repeated. If the measure be made general and the subsidy be paid in the form of mileage, its benefits will be claimed for all classes of vessels. The owners and builders of sailing ships will insist upon sharing the public bounty, and they have advocates not less eloquent than those of iron steamers. The cheapest and least efficient classes of vessels will make the most profit from this form of aid. If the act is made special, designating specified routes and describing the vessels to be employed, the contracts will fall to some of the very small number of men now ready to buy or build such vessels, and the rest of the merchant marine will be further depressed by the favor shown to them. If the legislation which has prostrated American shipping is maintained, and persons are induced to embark capital in that business by the implied promises of the Government to guarantee their profits, the business will never adjust itself to economical conditions, but will become an increasing burden upon the country as long as this scheme is pursued.
The American people have learned to dread the enactment of any subsidizing measure. The national treasury has been plundered, officials and legislators have been corrupted, and commercial enterprises shipwrecked by the success of every such measure. Their impolicy is no less evident than their injustice. The scandalous record of the Pacific Mail subsidy has not been forgotten. The increase of its subsidy was procured by bribery, and the sums received were never legitimately employed in renewing its fleet or increasing its business. The speculators who acquired control of the company made it a means of gambling. They lost its steamers, sacrificed its business, cut down the salaries of its most efficient servants, and brought disgrace and ruin everywhere. The unsavory memory of these transactions will baffle the advocates of like schemes for a long time.
No other line which has been promoted by subsidies has attained any lasting success. The simple fact that the Collins line to Liverpool, those running to Havre and Bremen, and both of the lines to Brazil, have failed to establish themselves by such means has great significance. They failed while our commerce on the high seas was rapidly increasing. They were beaten by non-subsidized foreign lines, navigated according to business principles. The subsidy received by the Collins line was higher in proportion to the service performed than that paid to any of its competitors. This subsidy was not withdrawn until the mail contract had been repeatedly violated. The managers of the line had staked its success upon the maintenance of the subsidy. Its steamers cost too much to build and repair and were too expensively navigated to earn legitimate profits. The Garrison line to Brazil received $150,000 annually for ten years for running its inferior wooden steamers, and withdrew them, worn-out and worthless, as soon as the contract expired. When steamship lines are made dependent on Congressional action, the uncertainty of their position promotes speculation and discourages solid improvement.
Some of the arguments used in favor of subsidies twenty-five years ago have a certain historical interest now. It was gravely proposed to develop the subsidy system until all foreign steamers were excluded from our coasts and their captains prevented from learning the soundings and approaches to our ports. The senator who advanced this argument must have been ignorant of the labors of the Coast Survey. But the reliance of all advocates of subsidizing measures was the calculation by which it was proved that ocean freight could never pay the cost of steam transportation. Volumes were written to prove the truth of this statement, and it was supported by the science and practical knowledge of the country. Now that it has been overthrown by the facts of progress, the need of a subsidy can no longer be claimed on commercial grounds. Those who foresaw the success of steam freight carriers demanded that the conditions of speed should be fixed so high that only those vessels which carried no heavy goods could compete. The valuable part of the trade was to be sacrificed to gratify our national vanity in the speed of our steamers.
We are told, however, that we must learn from our rivals, that England has built up her steam marine by the payment of subsidies, and that we have failed only from lack of persistent liberality. When it is seen that Great Britain pays over $3,000,000 annually for the carriage of ocean mails, that less than one-half of this sum is returned in postage receipts, and that this subsidy has been much larger in the past, this reasoning seems plausible. It is evident that some other purpose than that of offering facilities for the transmission of private correspondence has affected the policy of Great Britain in regard to steamship subsidies. The secret of her policy and its influence on her shipping may be disclosed by examining her situations and interests.
England is dependent upon her commerce for her existence, and upon her colonies for her position as one of the great powers of the civilized world. To secure those possessions her army is scattered over the world, and her navy is compelled to maintain the first place among similar establishments.
By no other means can the control of the "British government over all these widely scattered interests be so readily and cheaply maintained as by the transmission of regular and rapid mails. The expenses and humiliations of the late wars in Afghanistan and South Africa might have been spared, and a longer lease of power have been granted to the late Conservative ministry, had they been able to regulate the action of distant and over-zealous subordinates in accordance with the public opinion of England.
The early contracts for carrying the mails by steam show the force of these considerations. Cunard was compelled to modify his plan of running his steamers to Boston and New York. The government insisted upon making Halifax the terminus of their mail route. The needs of commerce, the conditions of navigation, and the competition of American clippers were all neglected to secure close communication with the colonies. The contract with the Peninsular and Oriental Company was also burdened with onerous conditions. The route required for mail transportation was a difficult and uncommercial one, a double force of steamers being required and no freight traffic possible. These steamers relieved men-of-war from the duty of carrying the mails, and the change greatly reduced the cost of this service. The Royal Mail line to the West Indies was the next important line to be established, and it was compelled to send steamers to many ports and islands destitute of trade and difficult of access. The contracts with these lines were made when the practicability of making long ocean voyages with regularity and safety was doubtful, when speed was costly, and freight-carrying on a large scale impossible. The subsidies were liberal and probably rendered some aid in the experimental stages of steam navigation. These three companies have had their contracts renewed from time to time, and, though the subsidies have been greatly reduced, they still receive the larger part of the total sum expended by the British post office for ocean mails. The Cunard line has submitted to very great reductions, and has voluntarily shared the contract with rival companies for many years. During the early years of its business as much as $800,000 subsidy was received, but the high rates of postage then collected are said to have brought a handsome profit to the British exchequer. The mails to India and China are the most unremunerative of all, but even there the reductions have been large and the requirements of speed have been increased and enforced by heavy penalties, so that the subsidy still has a close relation to the actual cost of the service. The mails from Brindisi to Bombay are still carried by steamers which do not avail themselves of the Suez canal, but forward mails and passengers through Egypt by rail, to escape the penalty of $500 imposed for each twelve hours' delay. The average reduction on all contracts renewed within the last few years has been 36 per cent, and the total loss to the government on contracts for mails to foreign countries is now about $600,000 annually.
Whatever effect the mail subsidies may have had thirty years ago in developing the ocean steamer, and whatever importance they may still have over routes not available for commercial navigation, it is certain that the present superiority of the steam merchant marine cannot be attributed to them. The total mail-pay amounts to about 1 ½ per cent, of the freight money earned by British shipping, and the latter source of revenue increases constantly while the former diminishes. There are about 450 British steamers engaged in the trade of New York, of which not one In ten receives any mail pay. The aggregate sum paid for this mail service is about $270,000 annually, which would average about $600 for each steamer, or about $6000 annually for each of those which carry the mails. Their total freight and passenger earnings are probably forty times as much. The success of such magnificent non-subsidized lines as those of the Pacific Steam Navigation Company, the Liverpool, Brazil and River Plate Company, and many of the lines running to New York, shows that success Is possible without government aid. Wherever there is an important highway of commerce we find Independent lines competing successfully with subsidized ones, and lines which receive subsidies often Increase their trade by employing other steamers which do not receive any.
None of the nations of Europe have ever been able to compete with Great Britain in the carrying trade, though many of them have subsidized their steamers more liberally. In France and in Italy, and everywhere that a subsidizing policy has been adopted, the decadence of the merchant marine is announced, and higher subsidies and more protection are demanded. Though labor and living are cheaper in every country on the continent of Europe than they are in England, they cannot compete with her in building and navigating ships. France has the second-best steam merchant marine in the world, but she has admitted her failure in the race by adopting a system of bounties on vessels and machinery and subsidies on mileage for all French vessels. The provisions of the latter clause apply to vessels built out of the country, though there is a slight discrimination in favor of those built in France. English economists anticipate that the increased demand for tonnage will help their shipbuilders quite as much as their ship-owners will be injured by the measure.
The influence of subsidies upon those vessels which do not receive such aid must also be examined. The building of sailing ships and their employment in our commerce can no longer be considered beneficial to the interests of the country. They are inefficient instruments for the carrying trade, and cannot earn enough freight to make them profitable investments or liberal employers of American seamen. To expend public money in promoting such an industry would be injurious and wasteful. But these vessels have deserved well of the country for their past services, and their prospects of earning some return for the capital invested in them should not be destroyed by artificial competition. The representatives of this interest will insist that the aid given to steamers shall not be withheld from sailing vessels, and if they fail in this they will demand that such regulations in regard to size, speed, etc., shall be imposed upon steamers as shall prevent them from competing for the transportation of cheap freights. The iron freight steamer for the general carrying trade will, therefore, be excluded from our steam merchant marine. This type of vessels are not elaborately finished, do not possess great speed, are not adapted for mails and passengers, and have none of the qualities for which subsidies are proposed to be paid. They are constructed to secure the greatest cargo space with the lowest rate of coal consumption. They are strong enough and fast enough to serve as transports or blockaders, and their lack of passenger fittings leaves them in a condition to be made promptly available for war purposes. Their convenience and economy render them the most popular class of vessels for the carrying trade. The greater part of the steam tonnage now building in England is in this class. But the creation of such a commercial fleet will not be prevented by the passage of any of the subsidizing measures now before the public. The freight traffic of the world is capable of indefinite expansion, but these schemes neglect it, and base all their claims upon the mail and passenger traffic, which do not increase so rapidly, and which can never maintain a merchant marine proportionate to the greatness of the country. The conditions of success in freight carrying are economy in first cost and running expenses, and efficiency and adaptability to the trade of different ports and different staples of commerce. The steamers described in the proposals for subsidy appropriations are required to be of American construction, of more than 3000 tons in size, and capable of a speed of more than 15 knots per hour. Such vessels satisfy none of the conditions of commercial success as freight carriers, and must be dependent upon subsidies for support, except on those routes where they can secure many valuable freights and a large passenger business. The freights of the world will soon be transported by a special type of steamer evolved by the process of trade competition. No legislation can prevent this development, and the measures under discussion would exclude our vessels from any share in its certain gains.
VII. The defensive importance of an efficient merchant marine has been pointed out, but the discussion of the means to be taken for its promotion has been postponed, because it is essential that it should not be confounded with the economical and commercial considerations already detailed. The value of our merchant marine as a means of defense is increased by anything which insures its healthy growth as a profitable industry. But there are certain directions in which that growth may be assisted with advantage to our naval preparation for war. It is evident that such preparation is the duty of the general government, and its cost is chargeable to the general revenue. It should not be borne by the maritime interests alone. Moreover, the application of public funds to distinct purposes of this kind can be effectually controlled by Congress, while any attempt to reverse the conditions of maritime progress by general appropriations involves the unchecked expenditure of immense sums which cannot be computed beforehand.
The training of seamen is the most important work of the merchant marine considered as auxiliary to the navy. The boys turned out by the present system of training-ships will be valuable to the nation as a naval reserve just as long as they continue to follow the sea. The graduates of the training system might be encouraged to join the merchant marine by the hope of advancing to responsible and well paid positions, if it were prosperous and growing. Some allowances might be paid to retain their connection with the naval service. Such payments should depend upon their continuing to go to sea and to keep up their nautical skill and knowledge. Regular inspections might be held at which all members of such a reserve should report, and short courses of drill and instruction might be made, a part of the system. Of course they must be fed and paid while so engaged, but the offer of gratuitous instruction in navigation, steam engineering, and other branches of knowledge which might aid them in advancing themselves in maritime pursuits, would attract the more intelligent members of such an organization. Those who acquired a certain proficiency in such subjects might receive certificates, and if any of them were afterwards promoted to positions of trust, their progress might be recognized by the assignment of honorary rank in the naval reserve proportionate to their length of service in places of responsibility. The benefits of this system might be extended to men of good character in the naval service, and to any Americans possessing a certain amount of education and nautical skill. A prosperous merchant marine could maintain a naval reserve equal in numbers and not greatly inferior in efficiency to the present naval force of the country, and the expense would be comparatively small. The present condition of the merchant marine will repel all sober and intelligent young Americans who might otherwise go to sea. If that condition is altered for the better and some additional inducements offered, there are many who might find employment there.
The merchant marine is also a reserve of ships and dockyards which may supplement the resources of the navy in time of war. During the civil war these resources were severely tested, and the result showed the weakness of our material reserve. Of all the steamers purchased by the government, it would be hard to name one that proved itself an efficient and economical cruiser or blockader. Our commerce suffered from the depredations of cruisers which could have been destroyed by any one of the better class of freight steamers which may be seen by scores in our ports, were a proper armament furnished. When we come to the constructive capacity of our shipyards and machine-shops, the failure is not less marked. While two-thirds of the tonnage and nine-tenths of the engines built were the work of private yards, no proper return for the money expended was realized by their use. The brilliant inventive talent displayed was not seconded by adequate scientific knowledge or mechanical skill. Our best monitors even have never been more than crude experiments, and at present they are all better suited for historical monuments than for weapons of warfare. The materials employed in building our ships and supplying defensive armor were defective, and the methods of construction wasteful and untrustworthy.
The failure of the contract system to secure good designs and honest workmanship, and the enormous losses thereby entailed, have disposed many naval officers to question the possibility of securing good results by its use. In case of war it must, however, be resorted to, and it is best to test its working in times of peace. A special corps of inspecting officers might be selected from the officers of the navy, by means of an extended competitive examination on the proper technical and scientific subjects. Such a body of men, practically acquainted with the management of ships and engines, provided with proper testing machinery, and experienced in the performance of their special duties, could be relied upon to inspect any work done by contract. A considerable amount of sea service should be required as a qualification for candidates for these positions, and by allowing those selected the sea-pay of their grades, they would be enabled to perform these responsible duties without entailing any great expense to the government. To a board made up of such officers, all new maritime inventions and appliances should be referred for examination. No such devices should be purchased by the government until they have been thoroughly tested by such a body. Standard tests for iron and steel plates and bars, chain cables, etc., should be devised, and manufacturers should be encouraged to have their products tested and their quality certified. Even food preparations might be inspected, and reports of their keeping qualities and fitness for use in sea-going vessels might be made. Improved methods of packing and preserving our food products will not only greatly promote the health and efficiency of the crews of our men-of-war and merchant vessels, but will also increase our export trade more certainly and more profitably than any other industry can be expected to do. The market for honest and attractive goods of this kind is practically unlimited, and a guarantee of their soundness and freedom from adulterations would secure our best goods an immense sale.
The amount of shipping required to maintain a decent semblance of a navy will compel the building of at least 100,000 tons during the next eight years. As our naval constructors have no experience in the construction of iron or steel vessels, and our navy-yards are unprepared to do the work, it would seem that such vessels should be constructed in private yards. The interests of the government might be guarded by rigid specifications, the employment of qualified inspectors, and the enactment of a law forbidding the payment of any sum appropriated for the building of these vessels until they have satisfied certain conditions in regard to speed, displacement, etc., which form the basis of each contract. It might be well to invite the best designs for improved vessels by the offer of a liberal reward for each of the various types required. This competition should be open to the world, and the prizes should be large enough to secure the best talent. In no case should any of them be paid for any design not possessing great merit, and the whole sum should not be handed over until a vessel has been completed fulfilling the specified conditions. The immediate construction of such a fleet in our private shipyards would insure them more employment than they have been able to get under the present policy of protecting their business at the expense of the carrying trade.
A special class of merchant steamers, adapted to increase the naval force in case of war, should also be constructed under similar supervision. The qualities of a transport, a blockader, or an ocean cruiser could be secured without depriving vessels of the economical character required for freight purposes. Speed and handiness, with the necessary strength of hulls and machinery, would be the main conditions. Some extra cost would be entailed by the additional compartments, extra strength of decks and bows for ramming, and the arrangement of engines and boilers for protection by coal or water. This addition to the cost should be carefully ascertained, and should be borne by the government under a contract which should provide for the employment of these vessels during war at a moderate rate of compensation to the owners. Representatives of our nautical and commercial interests should be appointed to assist in preparing the specifications under which designers should be invited to compete. In this work and in the subsequent selection and carrying out of plans, the inspection corps of the navy should be employed. The designs should include the special fittings necessary to prepare the vessels for war or for the transportation of special classes of freight, such as live animals, perishable goods, etc. The naval arsenals should provide all the details belonging to the fighting outfit, and they should be made to correspond to this type of vessels and tested on board exemplars to be built and retained by the government. Were good designs procured and economical construction secured by the repetition of the type, merchants would be enabled to secure vessels of a class suitable for the general carrying trade, and the extra strength paid for by the government would increase their safety and durability without entailing higher cost to their employers. A careful and deliberate resort to this plan of securing a naval reserve of ships would enlarge the defensive power of the nation, and would be safer and less demoralizing than the lavish general appropriation so often demanded. The creation of such a reserve force is simply an economical means of building up our navy.
VIII. In the preceding pages I have pointed out the measures best calculated, in my opinion, to promote the revival of our merchant marine, and I have attempted the discussion of some of the schemes presented by those who differ with me. I believe that measures of liberation, including the removal of taxation and the opening of the tonnage markets of the world to our merchants, are those best adapted to promote a healthy and natural growth of our maritime industries. But that increase must be slow, and the present depression is so great that it may require a whole generation to give our merchant marine a respectable standing. Some great expansion of commercial operations is needed to give room for more rapid development.
There are two measures which will tend to produce a movement specially favorable to the carrying trade and to the merchant marine of the United States. It is within the power of our government to make them effective within a few years.
The first measure is the prompt completion of the Panama canal. I say the Panama canal, because that is the only one which proposes to provide the conditions required by steam navigation. It has been argued that we should build a canal with locks to put sailing vessels nearer to an equality with steamers. But no such action can reverse the judgment of the age in favor of steam for all purposes of navigation. The success of a canal adapted to the use of steam vessels will give immense increase to their employment. If we are ready we shall have every advantage in competing for this trade; otherwise, it will be done under the British flag. The opposition of those interested in sailing ships or Pacific Railway stock should not be allowed to affect the national policy. The coasting trade between our Atlantic and Pacific ports would be rapidly increased by this change of route, and all its advantages would be felt most directly by the commerce of this country. Among the benefits of such a change would be that of compelling the Pacific railroad companies to apply themselves to their proper work of assisting the development of the interior of the country, and to abandon the policy of discriminating against the very sections which should furnish them with freights. The insolent and oppressive action of this monopoly in combining to extort high rates of freight and high prices for necessaries of life from those people who have no other means of communication, is well known. We see great prominence given the fact that this line carries tea overland, but the fact that they have imposed a prohibitory rate on sugar to aid the extortions of speculators in California is not less significant. The difficulties encountered by the government in collecting its claims against these companies and their general overbearing policies are not likely to encourage the extensive application of the national revenue to the purpose of subsidizing private interests.
The other and more important means of promoting our commercial activity and reviving our merchant marine is the liberal revision of our present tariff. Our import trade would greatly assist our exporting power, and the whole effect would be favorable to the employment of American shipping. If proper discrimination were used and the duties on raw material and the instruments of industry removed, no sound or necessary branch of manufactures would be crippled, while many would be benefitted, and a respectable export trade in manufactured goods might be expected.
It may be asserted that both of these large measures require a change of public opinion and a reversal of popular decisions which cannot be anticipated during this generation. It may be admitted that strong prejudices stand in the path of advancement. But the alternative policy of subsidies has the condemnation of the American people stamped upon its record. The grant of public money to promote speculation, and the payment of vast sums "ostensibly for carrying imaginary mails," have produced too many scandals and developed too many public beggars and public plunderers. Until the criminal courts have completed the trials of the men who established the star-route system on land, that system will hardly be extended to the sea.
Legislative action is slow and uncertain upon such questions as we are now considering, and public opinion has not yet awakened to the unfortunate reality of the decadence of our maritime prosperity. In the meantime that industry which has done most to extend the reputation and influence of the United States among the nations of the earth is almost ready to perish. Its tonnage, its earnings, and its efficiency are all steadily declining. We do not replace our worn-out and rotten ships, we fail to compete with foreign vessels on the high seas, and our vessels have abandoned the international carrying trade to engage in a mere supplementary coasting trade. The magnificent growth of our foreign commerce has been accompanied by a steady decline in our shipping. The protected coasting trade is languishing, and the protected shipbuilding establishments demand subsidies to prevent their dissolution. The commercial interests, the defensive power, and the national honor of our country all suffer from these deplorable circumstances.
Our navy has gone down with our merchant marine, until a naval officer visiting a distant seaport in one of our men-of-war, often finds himself confronted with two hard questions. The first is: "Why do you come here, where no merchant vessel ever shows your flag?" And after the questioner has examined the ship he proceeds to ask: "How did you get here in such an antiquated and clumsy craft?" We may escape these questions when our legislators realize the present condition of our shipping. It may be decided that we have no further use for a navy when we cease to have a merchant marine. Let us hope, however, that the liberty and encouragement necessary to revive our merchant marine may soon be granted, and the dignity and usefulness of the navy thus established. In conclusion, I will say that, while this essay has insisted at some length upon the humiliating condition of our merchant marine, I have never asserted that its decay was inherent or without remedy. I can only repeat, with the cheerful pessimistic philosopher of France, the pregnant phrase, Mais il faut cultiver notre jardin.