Tempori parendum.
Historical.
In order to understand the causes of the decay of American shipping and to suggest remedies for its revival, a brief review of the rise and fall of the great maritime nations of the past will be necessary.
The Phoenicians were the first of the nations of antiquity to make the sea their domain, and their chief cities, Tyre and Sidon, were early famous for a regal pomp and magnificence that was provided with the riches their ships brought from every quarter of the known world. "Tyrian purple" was appropriately emblematic of the splendor that reigned in Phoenicia during her commercial and maritime greatness. The rise of Phoenician shipping may be assigned to the following causes, viz.: 1. To her extended sea-coast and good harbors. Phoenicia was a long narrow strip, in only a few places reaching back as far as twelve miles from the coast, but stretching out to the north and south for nearly two hundred miles. Thus all Phoenicians were, of necessity, well acquainted with the sea and with ships. 2. To her geographical position. Situated midway between the old civilization of the East and the growing wants of the West, she was naturally the medium through which were exchanged the luxuries and manufactures of the one for the raw products of the other. 3. To her wise policy. She was perfectly willing to trade with anybody, but unwilling to have anybody compete with her ships, and, therefore, did everything possible to increase and foster her own shipping and to ruin that of any rivals. 4. To the fact that shipbuilding materials were abundant and cheap, and that she therefore built her own ships. 5. To her strong navy, without which, having attained to any maritime greatness, she must quickly have fallen a prey to some more far-sighted power. At the time of her greatness she was the first naval as well as the greatest commercial power of the world. 6. To her numerous and rich colonies, that, though doubtless a consequence of her maritime enterprise, were greatly instrumental in augmenting the force that had created them.
Tyre continued to enjoy the most wonderful prosperity down to the time of Alexander, when it was completely destroyed by that murderer of nations. The foundation of Alexandria and the consequent diverting of trade into new channels, rendered vain all her attempts to regain any portion of her old power. For a number of years after the destruction of Tyre the seaports of Greece monopolized the trade of the Mediterranean, Rhodes being probably foremost among them.
A great change was now taking place in the affairs of the world; the centre of civilization was making a voyage to the westward, and with it travelled empire and trade. Carthage, the most vigorous of the Phoenician colonies, inheriting that aptitude for the sea and that commercial enterprise that had made her founders so pre-eminent, found herself in a position to take immediate advantage of this change of affairs. Situated as she was, near the centre of the southern shore of the Mediterranean at its narrowest part, having on her right the old civilization of the East; north of her Rome, with no knowledge of ships and no heritage of nautical skill, but with rapidly increasing demands for luxuries that could only come to her by water; and to the west and south the almost limitless possibilities of new and barbarous countries, Carthage quickly equaled and at length completely outstripped all rivals in the value and extent of her commerce and shipping. France shows to-day, by her seizure of Tunis, her appreciation of the great strategic and commercial advantages of the site of Carthage.
The pre-eminence of Carthaginian shipping was due to exactly the same causes as that of Phoenicia had been. She had good harbors and an admirable position between producers and consumers. She pursued a policy eminently calculated to the maintenance of the supremacy that she was able to achieve when she had no aggressive rivals, making several commercial treaties with Rome that permitted comparative freedom of intercourse with herself, but keeping her colonies closed to all foreign trade; she encouraged shipbuilding, so that her shipwrights soon became famous for their skill, and were able to build ships cheaply and well; she founded numerous colonies, and instituted and fostered a navy whose growth was commensurate with that of her merchant shipping, so that when Carthage was the greatest commercial power, she was, like Tyre before her, "queen of the waters."
Rome seems to have made no attempt at the commerce of the seas until forced to it by the great power of Carthage. Indeed, a very strong prejudice existed in Rome against trade, and against sailors as instruments of trade, which was probably in part, if not wholly, due to an old law that forbade senators to own ships lest they should become rich and neglect their duties to the state. These prejudices, however, gradually died out, and as Rome's geographical position was as favorable as that of Carthage, and her supply of shipbuilding materials apparently inexhaustible, she had only to destroy the prestige of the Carthaginians to make her pathway to commercial greatness an easy one. This she did, notwithstanding that, so great was her ignorance of ships, she had to take as a model for the vessels of her first fleet a Carthaginian galley that had been wrecked on her coast. Having annihilated the navy of the Carthaginians, she completed her vengeance by totally destroying Carthage itself. Thenceforth her progress was unimpeded. Even the transfer of the seat of empire from Rome to Constantinople did not materially affect her trade, but simply transferred its centre from the Tiber to the Bosporus. The position of Constantinople was wonderfully well suited to make her a centre of trade, and the policy of the earlier of the Eastern emperors was calculated to enhance her geographical advantages. Valentinian and Theodosius exempted ship-owners and sailors from the payment of taxes, and Justinian incorporated these principles into his code. From the capture of Rome by Genseric, the commercial progress of Constantinople was very rapid. She had a magnificent harbor, a good position, every facility for shipbuilding, and she protected and increased her navy, so that at the time of her greatest prosperity she was the first naval power of the world.
The power and prosperity of the Roman empire began gradually to decline under the imbecile rule of the Greek emperors, and a new maritime power arose in Venice that was for centuries to monopolize the trade of the world. The centre of civilization was making another voyage, this time to the northward, and Venice and her sister republics, sprung from the ruins of the Empire, found themselves in the direct line of communication between two civilizations, an old and a new; between producers and manufacturers, as Tyre and Carthage and Rome had done before her. The rise of Venice was, however, not due to her position alone; her policy was a most far-sighted one; and it is well to note that, although this policy was, in the main, a protective one, with her, ships were free. She paid great attention to her navy, without which she must speedily have succumbed to some of the rival powers that surrounded her. She also founded a number of colonies along the coast of the Adriatic.
Venice had then the advantages of a good harbor, a position admirably fitted to give her control of the large trade that was springing up between the rapidly developing powers of the north and the older powers of the east and south. She was unable to build ships as cheaply as some of her neighbors; she therefore allowed her citizens to buy their ships wherever they could get them cheapest.
The discovery of America and of the new route to India by the Cape of Good Hope were deathblows to the prosperity of the Italian Republics, while they brought Spain and Portugal to the front rank of sea-powers; but the centre of commerce, still following the track of civilization, settled this time in the Netherlands, whose ships soon became carriers for all the world. Their rise to maritime supremacy was facilitated by a number of circumstances. They had an extended sea-coast and numerous harbors; they were a spirited and enterprising people, and early showed great aptitude for nautical affairs; they were at peace, while their neighbors were at war; they permitted the greatest freedom of intercourse, allowing the free importation of all kinds of shipbuilding materials, and they spent large sums on their navy, fully aware that on its strength depended the permanence of their shipping. They also founded colonies, notably in America and in the East Indies, that had a great influence upon the growth of their commerce. The Dutch then possessed the same advantages that were found in Tyre, Carthage, Rome and Venice at the time of their greatness. They had numerous harbors, a central position, favorable laws, a strong navy and rich colonies. Like Venice, they were unable to build ships as cheaply as some of their northern neighbors; but, unlike Venice, they only allowed the free importation of shipbuilding materials, not of ships.
In the fourteenth century the English began to perceive that their mariners were not inferior to the Dutch in that peculiar genius for seafaring, that compound of skill and hardihood that must generally be found in the sailors of a nation that is to become great on the seas. They therefore began to make some efforts for the extension of their shipping; but, although greatly favored by nature in their many good harbors and in their insular condition, they were unable to make any headway against very adverse laws. In 1467, however, Edward VI, seeing the necessity of vigorous effort, began to amend these laws, making several treaties of reciprocity, and from this year British shipping on the high seas may be said to date. A long and pertinacious struggle then ensued between the Dutch and English for the sovereignty of the seas, and, although the former may be said to have been victorious, British commerce and shipping were brought to a higher position than they had ever occupied before. Cromwell aimed some characteristically hard blows at Dutch shipping in the famous Navigation Laws, that remained in force until repealed after a long discussion and in the face of strong opposition in 1849. These laws destroyed all Dutch participation in British trade, except the direct trade between Great Britain and the Netherlands, and from their enactment British supremacy on the high seas may be said to date.
The supremacy that Great Britain had achieved by the close of the eighteenth century may be assigned to the following causes, viz. First, to her numerous splendid harbors. Second, to her position. Third, to her policy. Fourth, to her strong navy. Fifth, to her colonies. Sixth, to her ability to build and run ships cheaply.
A few general conclusions may be drawn from this review of the six great sea-powers of the past. 1. The relative geographical position of a state is very powerful in determining whether or not it can be great on the seas. Each of these powers has at the time of its greatness been situated between two civilizations, an old and a new, between producers and manufacturers. If the state represent either extreme, that is, either manufacture or produce more than it needs for home consumption, then it may be said to fulfill this condition most perfectly. This amounts to saying that commerce is favorable to the development of a shipping. A country neither manufacturing nor producing a surplus can only be a great carrier when it possesses this favorable geographical position, and this is equally true whether the carrying be done by land or by water. These were the circumstances under which the Netherlands and Venice rose, for although they were doubtless manufacturers, their manufactures were not greatly in excess of their own wants until their commercial marines had been firmly established.
2. A state, to be a great carrier, must be able to run ships as cheaply as its rivals. Since interest on first cost is an item in the expense of running a ship, it follows that it must be able to build ships as cheaply as any or to buy them in the cheapest market, or failing in these, must save enough in the other running expenses to make up this loss of interest on first cost. This condition has been fulfilled by all of these great powers. Tyre and Carthage built the cheapest and best ships of their time. After the destruction of Carthage, Rome for a long time had the field to herself, and it mattered very little whether she could build or run ships cheaply or not; but, when the seat of empire was removed to Constantinople, rivals began to appear, and it was found necessary to aid her shipping in many ways, among others by exempting it from taxation. The Venetians bought their ships wherever they could get them cheapest; and the Dutch, with whom it was the material and not the labor that made ships dear, allowed the free importation of shipbuilding materials. England had cheap labor and the inexhaustible forests of her colonies to draw upon for materials.
3. No nation can have a great commercial marine of any permanence unless she protects that marine by a proportionately strong navy. It does not follow from this that a strong navy will produce a merchant marine; but the reverse does follow, because if the naval force does not increase with the merchant marine, that marine, being unprotected, will surely, sooner or later, be destroyed by some stronger naval power. If a strong navy does not necessarily produce a merchant marine, it goes a great way towards it. The citizens of a nation that possesses a powerful naval force have no hesitation in going to distant and uncivilized countries to engage in trade, confident that the presence of their war-vessels will prevent outrages and insults, and that if by chance any should occur, they will be followed by summary punishment. People, thus settled in foreign countries, naturally prefer vessels carrying their own flags for their trade, and in numerous instances a great increase in the tonnage of certain countries has been the result of such settlements—settlements that would only have been made under the protection of a strong naval force Again, the maintenance of a strong navy is a great encouragement to private shipbuilding interests if, as should be the case, private builders are given such contracts as their enterprise and ability merit. Captain Luce quotes Hamilton as saying that "the necessity of naval protection to external or maritime commerce, and the conduciveness of that species of commerce to the prosperity of a navy, are points too manifest to require a particular elucidation; they, by a kind of reaction mutually beneficial, promote each other."
The past then teaches us that any state to be a great ocean-carrier must have:
1. A favorable relative geographical position.
2. The ability to run ships cheaply.
3. A strong navy.
Other conditions, such as a great commerce, good harbors, a national aptitude for seafaring, and rich colonies, are without doubt desirable, but they cannot be called requisites. Venice and the Netherlands attained their high positions by carrying other peoples' goods, and Venice had but one harbor and that a poor one. Rome became a great sea-power in spite of a decided antipathy for the sea among her citizens, while colonies are rather a consequence than a cause of merchant shipping.
The establishment of the independence of the United States brought forth a new maritime power, whose progress we will attempt to examine in the light of these lessons of the past. They were from the first fully equipped for an immediate competition for the carrying trade of the world; commerce and shipping were nothing new to them, for under British rule a large and lucrative trade had long existed between the West Indian and American colonies, while their extensive fisheries had created a race of bold and hardy seamen, that were within the next fifty years to carry the American flag to every port of the habitable globe. Shipbuilding materials were cheap, and it then seemed inexhaustible. With a very extensive coast and numerous and fine harbors, they were producers of a large excess of raw products and wanted many of the manufactures of the old world. They had a commerce: the only question was who should carry it. No intermediate power existed whose position could give it any advantages over the extremes of this commerce. Should England, the great manufacturing power at one extreme, or the United States, the producing power at the other, have this trade? Their ability to build ships cheaper than the English settled this question in favor of the Americans. The vast and fertile West was then unexplored, manufactures were undeveloped, and men of spirit and enterprise turned with eagerness from the cultivation of the rocky soil of New England to an attractive and lucrative career on the seas.
Congress took an immediate interest in American shipping, inaugurating a system of retaliation upon Great Britain for her Navigation Laws by means of discriminating duties. In 1792 the Navigation Laws, substantially as they exist to-day, were passed. They provide, among other things, that a vessel to be entitled to the rights and privileges (?) of a vessel of the United States in the foreign trade, must be registered in the United States; that to be registered in the United States, it must have been built in the United States, must be wholly owned by citizens of the United States, and must be commanded and officered by citizens of the United States. In 1817 Congress, as another retaliatory measure, passed laws similar to the British Navigation Laws, but repealed them when Great Britain, in 1849, repealed hers; reserving, however, the United States coasting trade to our own vessels. From their independence down to 1862, the absolute growth of the shipping of the United States was steady and rapid, the total tonnage being in 1789, 201,562 tons, in 1800, 972,000, in 1825, 1,423,000, in 1850, 3,535,000, and in 1860, 5,353,000. The registered tonnage was in 1789, 123,893 tons, in 1800, 559,000, and in 1860 about 2,500,000 tons.
The reasons for this growth, other than those already assigned, are not difficult to perceive. The United States not only possessed the three prime requisites, a favorable relative position, cheap ships and a strong navy, for in those days our navy was relatively more than ten times as powerful as it is to-day, but they possessed almost all the secondary advantages, such as splendid harbors, a good commerce, and sailors whose enterprise and daring were only equaled by their skill. The United States were growing in wealth and in population much more rapidly than any other country, and our shipping, in order to simply hold its own, would have had to grow in the same ratio. This was the case; for the first seventy years of our existence our shipping grew, as it should, with the country and nothing more. The total tonnage of the United States was in 1800, .18 ton per capita, and in 1860, .17 ton per capita. The registered tonnage was in 1800, .10 ton per capita, and in 1860, .08 ton per
capita. That our foreign shipping held its own so well during these sixty years, notwithstanding it was greatly harassed by. laws and restrictions, was due to the following favorable circumstances, viz.:
1. American ships were much cheaper than English. This difference was due to the less cost of timber for shipbuilding in America, to improved methods of building and to the superior skill of our shipwrights, and was notwithstanding the fact that labor was higher, and that we had to import iron from England and hemp from Russia. Our ability to build cheap ships was used as a strong argument against the repeal of the British Navigation Laws. It was stated before a committee of the House of Lords in 1847, that a ship that would cost £15 per ton, if built in England, could be built in America for £12 per ton, and that the repeal of the Navigation Laws, making ships free, must destroy British shipbuilding. Their repeal certainly did great damage to British shipbuilding interests, which then consisted almost entirely of wooden shipbuilding, but when they repealed those laws, the British had made up their minds that they must give up the fight with wooden ships, that they could never overcome the advantages in that industry that our vast forests and mechanical ingenuity gave us. They concluded that it was better to attempt to retain the carrying trade by allowing their citizens to get ships in the cheapest market, although to do it they had to give the deathblow to an already expiring industry, than to attempt to postpone an inevitable death and thereby lose the carrying trade. What was the result? British wooden shipbuilding died, but the carrying trade lived and grew mightily, and British capitalists and inventors, perceiving that the demand for ships was great and steadily increasing, set their wits to work to devise means for supplying that demand, and any one who wishes to see the result may do so on the Clyde or on the Tyne, or in any harbor of the world from London to Shanghai, from Liverpool to Valparaiso.
2. American ships could be run for less money than English ships. It was stated before this same parliamentary committee that it would cost £2186 to run for one year a British ship of five hundred tons costing £8750, while an American ship of the same tonnage, and costing but £7250, could be run for the same time for £1828, a difference in favor of the American ship of £358. If we add to this the difference between the interest at five per cent, on the first cost of the two ships, we shall have a total difference of £433 in favor of the American ship. What wonder that the English were unable to compete successfully with us when they had to pay twenty-five per cent, more for their ships and it cost six per cent, more per year to run them! In other words, if both received the same freights, carried equal cargoes, and made the same number of trips, the American ship would be making a profit of five per cent, while the English barely paid expenses. These conditions are almost exactly reversed to-day, and still people wonder that our shipping does not revive. But the American ship was put at a still greater advantage over its English rivals by receiving higher freights, carrying greater cargoes, and making more trips per year. This was due to the following circumstances:
1. American ships were superior to the English. They were faster, of lighter build, and of superior construction. They, therefore, made more trips, other things being equal, carried greater cargoes, and cost less for repairs than their competitors. So marked was this superiority that the American clipper ship, of this period, was the model all over the world for everything that was perfect in ship construction.
2. The American captains were greatly superior to other captains. They were frequently men of education and refinement, sometimes graduates of colleges, who were attracted to the sea by love of adventure or of money; for American ships in those days were the first to explore strange seas, and the successful captains received large profits. Therefore, although they were paid much better than other captains, they, in return, by their superior intelligence, made better passages, with less damage to ship, cargo, and equipment, getting thereby almost a monopoly of certain valuable goods and of the passenger traffic.
3. The American seamen were much superior to others; they were better educated and therefore more intelligent; they had a fertility in resource and an ingenuity in contriving labor-saving appliances that were altogether unknown in the seamen of other countries, and the best of them always looked forward to advancement and frequently owned shares in ship or cargo. So marked was this superiority that it was common to consider twenty American seamen enough to man a ship that would require thirty foreigners, 1,618,000 tons of American shipping that entered New York in 1861 were manned by 44,774 seamen, or 2.8 men to one hundred tons, while 865,000 tons foreign were manned by 33,490 men, or 3.9 men to one hundred tons, a difference probably somewhat due to the greater size of American ships, but more to the superior intelligence of officers and men.
The Decline.
In treating of that part of the subject relative to the decline of our shipping, it will be necessary to distinguish between that engaged in foreign and that in domestic trade. One has declined both absolutely and relatively, the other only relatively, and its decline has been due to natural and not artificial causes; one occupies a field open to all nations, the other one closed to all but United States ships; in one the ships of some nations sail under much more favorable conditions than those of other nations, in the other all competitors are on an equal footing, the citizen of New York or of Pennsylvania having perfect liberty to go to Maine for his ships, regardless of the fact that shipbuilding in New York and Pennsylvania must suffer thereby, and that it would be a good thing for both these States to build ships. Causes that may effect a decline in one might encourage the other, and laws calculated to revive one might destroy the other; in fact, the conditions of the two trades are so widely different that any attempt to deal with both in the same article would be out of the question. Shipping engaged in foreign trade is, doubtless, that referred to in the title, and hereafter the word shipping will be used as referring exclusively to that.
It was shown above that the shipping of the United States was almost exactly the same in tons per capita in 1860 that it was in 1800. If the demand for a foreign shipping was relatively no greater in 1860 than in 1800, it would be fair to conclude that no decline took place prior to 1860. That this demand was relatively greater is unquestionable, for our foreign commerce increased much more rapidly than our population.
In examining the causes of the decline of our shipping, it will simplify matters much to divide the sixty years between 1820 and 1880 into three periods, that before the war, that during the war, and that since the war. It will further simplify matters to separate the first period, extending from 1820 to i860, into two sub-periods; and the first of these sub-periods, from 1820 to 1850, we will proceed to examine. By referring to the above table, it may be seen that during these thirty years our registered shipping increased from 619,000 to 1,586,000 tons, the population of the country from nearly ten to twenty-three millions, and the commerce from 108 to 300 millions. This gives an increase from 64,258 to 68,388 tons to the million inhabitants, and a decrease from 5,731 to 5,286 tons for every million dollars worth of commerce. This increase of 4,130 tons to every million people might, under certain circumstances, have indicated a flourishing shipping, but the next column shows that our shipping was not keeping pace with the demand for it, and hence could not have been flourishing. There was a loss in this respect of 445 tons to the million of commerce; small, to be sure, but still a loss, and a loss that, had this subject been carefully studied, ought to have served as a warning that there was something radically wrong about the conditions under which our shipping was carried on England, in 1838, introduced steamers into the transatlantic trade; and this, followed, as it was the next year, by the Cunard line, and, year by year, by other measures equally sagacious and prophetic, was the first step in her wonderful ascent to the monopoly of the carrying trade and the first cause of our decline. This introduction of steamers threw the passenger traffic and most valuable and perishable freights into British hands, and was a heavy blow to the famous American clippers that had had, until now, these trades in their own hands. The Americans did not succumb easily, but made a desperate, although vain and mistaken struggle, by fitting their clippers with auxiliary engines. Such efforts were only useful in showing how little the change that was to be wrought in nautical affairs by the steam-engine was realized at that time on this side of the Atlantic. From 1842 to 1849 the English were establishing their system of free trade, which, whatever may be thought of it now, gave an immediate and powerful impulse to their commerce, and culminated by giving them free ships in 1849.
During the next ten years, from 1850 to 1860, our tonnage increased to 2,546,000 tons, our population to 31 millions, and our commerce to 708 millions. This gives an increase from 68,388 to 80,972 tons per million people, but a decrease in tons to the million of commerce from 5,286 to 3,596. Here was evidently a decline, and a great one too. Growing as it was (it had increased one million tons in these ten years), our shipping was not keeping pace with the demand for it, our commerce. And why? Simply because it was unprofitable. During the latter part of this decade ships were noticed, for almost the first time in our history, lying idle at the wharves. Shipbuilding almost entirely ceased. The English had introduced the iron steamer, a weapon against which it was futile to contend with arms of wood and canvas. The old wooden sailing ships had met this new enemy bravely, but in vain; they have never since occupied anything but a very subordinate place in the world's trade, and day by day their sphere becomes more and more restricted and their profits less. Yes, the iron steamer, that masterpiece of science and mechanical skill, whose progress has astonished its most sanguine advocates, was undoubtedly the weapon with which England won the fight. She had vast coal fields, her iron mines were rich and productive of ores well fitted for shipbuilding, and her inventors and capitalists far-sighted enough to see that the slow and expensive sailing ship would be no match for the swift and cheap iron steamer. During these years England began to do our carrying for us. Some idea of the revolution that was taking place on the sea, in consequence of this introduction of iron steamers, may be formed from an examination of the shares Americans and foreigners had in the trade of the port of New York during the last years of this decade and the first of the next. In 1857 the per cent, of foreign entries at New York was 25, in 1858 26, in 1859 31, in 1860 31, and in 1861 35. In 1820 but ten per cent, of the entries at New York from abroad were foreign, and in 1861 thirty-five. There is every reason for believing that, had the rebellion not occurred, the iron steamer would have annihilated our shipping just as surely, if not as rapidly, as did war and high taxes.
The decline of our shipping was then due,
1. To the introduction of steamers by the English.
2. To their adoption of free trade.
3. To their introduction of iron shipbuilding.
These three reasons may be stated in one, and the decline of our shipping assigned to the appearance of the English iron steamer and the non-appearance of the American iron steamer.
There can be no doubt that the first serious blow to our shipping was dealt with British steamers. Had our shipbuilders and ship-owners shown that they realized the turn affairs were taking, and exhibited their customary energy in meeting the emergency, there would have been no immediate necessity for their withdrawal from the contest; for so long as steamers were of wood, they could have saved enough in the cost of building to pay for the extra cost of the machinery in America. Instead, however, of putting steamers at once in competition with the English, they lost much valuable time in trifling with auxiliary-engined clippers, and in doing nothing. The English did not confine their progress to the steamer, but very soon began making it of iron, and by the time we had awakened to the fact that an iron steamer was better in every way than a wooden one, the war came, and for a number of years all hopes of building iron steamers as cheaply as they could be built in England were vain. Since the day the English have built iron steamers cheaper than we could wooden ones, they have been complete masters of the situation; all attempts to compete with them, either with wooden or iron steamers of American build, have been as vain as were their attempts to compete with us forty years ago, and for the same reasons.
The effect of free trade upon British shipping, coming as it did along with free ships, was to give it an immediate impetus. Mr. Gladstone says that every dose of free trade, from the repeal of the Corn Laws in 1842 to the passage of the Customs Act of 1860, was followed by an immediate increase of British commerce, which has grown from £47 ,000,000 of exports in 1842 to £190,000,000 in 1878. And it must be remembered that this increase means much more than would a similar or greater increase in the United States. Great Britain has no such rapidly increasing population, and her natural resources are capable of no such extension and development as ours are. British shipping was placed by the repeal of the Navigation Laws in such a condition that it was enabled to profit to the fullest extent from this enormous increase of commerce. Its influence sent British ships with British cargoes to every port of the world, and ship captains and owners were not slow in discovering that they could carry British imports as well as exports; more, that they could carry profitably between two foreign ports.
We made but one serious attempt to compete with the British for the transatlantic trade, and that was by granting a subsidy of $19,500 per trip to an American line that was required to make twenty trips per year. The cost of these steamers proved to be so unexpectedly great, compared with that of the English iron steamers with which they had to compete, that it was found necessary to increase the subsidy to $33,000 per trip, and to require but four instead of five steamers as originally intended, the same number of trips being guaranteed. The American line soon became popular, and succeeded in getting a large share of the passenger traffic; but notwithstanding this and its subsidy of $660,000 per year, it was unprofitable, and the withdrawal of its subsidy in 1858 was followed by its immediate collapse.
Had we been able to build iron steamers as cheaply as the English, or to buy them in the cheapest market, there can be no doubt that we would have retained our full share of the carrying trade, for there is no reason for believing that American skill and enterprise would have been any less conspicuous in the management of steamers than they had, been in that of sailing vessels. But handicapped as we were with costly steamers and antique and cumbersome laws, what could skill and enterprise avail?
The decline of our shipping was then due to causes that were in full force years before the rebellion.
We come now to the second period of decline—that of the war. The outbreak of the rebellion found us with a shipping that, although suffering greatly from causes outlined above, was yet sufficiently large and unprotected to attract the attention of the enemy. It was our weakest point, for our naval force was totally inadequate either to the protection of our shipping or to the establishment of an efficient blockade, let alone both. The efficiency of the blockade was of the first importance, and to it our shipping was sacrificed. Between 1860 and 1865 our shipping fell from 2,546,000 to 1,602,000 tons. A few swift hostile cruisers were able in four years to reduce it 944,000 tons. English steamers were again at work, completing in perfidy a destruction they had begun in honorable rivalry. Of this absolute loss of nearly one million tons, more than one half, or 715 ships of 480,882 tons, was transferred to the British flag. Had England's navigation laws been similar to ours she would have lost this accession of half a million to her merchant fleet. To secure her in the possession of these ships. Congress, early in 1866, expressly forbade their coming back under the American flag. It is difficult, at this day, to understand what could have influenced the passage of an act whose only effect was to deprive us of all hope of regaining a half million or more tons of shipping. Was it only because its owners sought under foreign flags a protection the United States was unable to afford them? The remainder of the shipping lost during the rebellion was sold abroad, transferred to flags other than English, captured and destroyed by the enemy and by our forces, and purchased by the government.
The direct effect of the rebellion was then to deprive us of a million tons of shipping; its indirect effect it is impossible to calculate. The seamen of our merchant marine were taken to man our war vessels. These might have been to some extent replaced by foreigners; but ships must have masters and officers, and in American ships these must be Americans; and masters and officers, as well as seamen, were taken by the government. Had our ships been fully officered and manned without calling on the merchant service, there would have been no escape from transfer to other flags or tying up to the wharves, for a diminished commerce, heavy taxation, and the cruisers of the enemy destroyed all chances of profits. Ships of owners unable or too patriotic to change their colors were compelled to lie idle in port, not only earning nothing, but subjecting their owners to heavy loss from taxation. A combination of these circumstances,—heavy taxation, diminished commerce, and the cruisers of the enemy—was enough to ruin nearly all our ship-owners. Their ships may be seen to-day in every seaport lying just where the war left them, silent proofs, with their gaping seams and rusty iron-work, of the Republic's neglect of servants to which it has owed so much of its prosperity and glory.
The decline during this period was due to a combination of two things: 1. English iron steamers; 2. The insufficiency of our naval force. Had we possessed in 1861 a navy in any way adequate to our wants and greatness, there would in the first place have been no such drain upon our merchant marine for officers and men, and in the second place the hostile cruisers would have been captured or shut up in port long before they had time to do one-tenth of the damage they did. Indeed there seems every reason to believe that had we had any navy in 1861, the war would have been over in two years at the most. Had the bombardment of Fort Sumter been followed by the instant blockade of all Southern ports, the South would have lost the vast quantity of arms and munitions that she received from abroad during the interval that elapsed between that and the establishment of a blockade, and the struggle must have been greatly shortened if not entirely prevented.
We come now to the third period of decay, a period during which our shipping has declined much more rapidly and alarmingly than ever before. We had, in 1865, 1,602,000 tons of shipping, 48,545 tons to the million of people, and 3,832 tons to the million of commerce. To-day we have 1,314,000 tons, 26,280 tons to the million people, and 830 tons to the million of commerce,—26 tons where we had 48 in 1865, and 8 tons where we had 38! In 1860 71 per cent, of our foreign commerce was carried under the American flag; in 1864, 46 per cent.; in 1868, 44 per cent.; in 1872, 29 per cent.; in 1876, 28 per cent.; in 1880, 17.6 per cent., and in 1881 but 17.3 per cent. If anything like this decadence continues, it is a very simple matter to predict the year that will see the total disappearance of the American flag from the high seas. This is a subject deserving of the gravest consideration. That a people, once so bold and enterprising in this field, should stand idly by and see its ancient glories departing, money poured into the pockets of foreigners for doing something which they once did better than anybody else in the world, betokens either an alarming deterioration of the American people or gross injustice in their laws. That the American people is deteriorating is manifestly absurd. The sole difficulty is in our laws; they do not permit American ships to be run as cheaply as foreign ones are run. Americans must pay more for their ships than their foreign rivals; they must pay more for wages to officers and men, more in taxes, higher consular fees, tonnage duties where their rivals pay none; they are charged with the support of destitute seamen; they have to pay higher rates of pilotage, and often excessive port dues.
For many years after the war capital was scarce and fields for its investment numerous and promising. Men would not then have been satisfied with the profits that steamship lines, even the best, make now. To-day all this is changed; capital is abundant, and men are everywhere in the United States seeking new fields for the investment of their surplus. There is every indication that, if the conditions are so modified that American ships can be run with a reasonable chance of moderate profits, there will be capital in the greatest abundance.
The Suez Canal has been another powerful cause of the decline of American shipping,—of the decline of all sail shipping. The old route to India and China is superseded by one that only steamers can profitably follow. The old tea-clippers that annually raced to England and America with the first crops are replaced by steamers that run from Amoy to New York in less than two months. I doubt very much that an American merchant ship has ever passed through the Suez Canal. Much is said of the great advantages to the United States that will result from a canal across the American isthmus. Unless something shall have been done, by the time of its completion, to give us a steam shipping, it not only will do us no good, but will probably result in actual injury.
To properly appreciate the decline of our shipping we must compare our condition to-day with that of the most prosperous time. We had in 1850 1,586,000 tons of registered shipping, we now have 1,314,000; then we had 68,388 tons per million inhabitants, now we have 26,280. We now have 830 tons to carry every million dollars worth of commerce; then we had 5282, or 53 tons where we now have 8! These figures might prove nothing had our shipping been transformed from sailing vessels to steamers, for a thousand tons of steam shipping will do as much carrying as two or three thousand tons of sailing vessels; but such is not the case.
Our merchant shipping has then declined just as we have failed to fulfill the conditions found necessary from the experience of the past. The decline began the day our rivals were able, with iron steamers, to carry freights cheaper than we could with wooden sailing ships; was aggravated by our failure to possess a navy equal to its protection and by our loss of commerce during the rebellion, and has continued in spite of our very favorable position and great and increasing commerce, because we have neither cheap ships nor navy.
The Remedy.
The United States possesses to-day everything that nature can give to make her a great carrying power. She has an enormous commerce, numerous good harbors in the direct line of this commerce, and her people have not lost that genius for the sea that made our flag known and respected in every port of the world thirty years ago. She has the first prime requisite—never more of it—for her relative geographical position has never been more favorable than it is to-day. The other two prime requisites, that she has to depend on man for, she lacks. She has neither cheap ships nor a navy. Give her cheap ships, not only ships that can be bought cheap, but ships that can be run cheaply and laid up cheaply, and as this is done give her a navy, and if she does not then acquire and maintain a merchant fleet it will be the fault of her people, not of the government. I shall attempt to show how this may be done.
The late Secretary of State said in a recent letter to a member of Congress: "But American ships do not sail under the same conditions with ships of European countries. We place burdens and costs and taxes upon our vessels, from which vessels of other countries are exempt. In short, we load them down with exactions and oppressions, and then rub our eyes and wonder that American ships do not hold their own in the international contest for the trade of the world." The Secretary of State was in favor of doing away with all of these exactions and oppressions but that of first cost, and of removing that disadvantage by giving subsidies. Here is the first "exaction." Americans are compelled to pay more for their ships than their foreign rivals. To attempt to compensate them for this loss by subsidies is regarded by most disinterested thinkers as erroneous in theory and pernicious in practice. If subsidies be given to American ships to make up for losses which they would otherwise suffer in a competition with the ships of any nation, then a less subsidy from that nation to its ships will again place them at an advantage. Will England stand by and see her carrying trade ruined by subsidized American ships, their profits coming from the Treasury and not from their business, when she is as well able to give subsidies as the United States, and by giving them she can preserve it? It is hardly to be expected. Both nations would probably start on a race, whose only goal would be disaster, and whose prize would fall to some nation that had sense enough to stand by. The only apparent limit to subsidies under such a system would be the purses of the subsidizing powers.
It is constantly stated by the advocates of subsidies that we can never hope to compete with England on the high seas until we consent to subsidize as she has done and does. Let us see what she has done in this direction. Since 1837 she has paid yearly between four and five millions of dollars to her shipping for postal service. This payment dates from the introduction of ocean-going steamers, and its main purpose, then, was to encourage that introduction. In this way it was at first, doubtless, a subsidy, as the money thus paid must have been largely in excess of the value of the service rendered. But there is a vast difference between subsidies thus paid and subsidies as understood by their American advocates to-day. This money was paid to encourage, not shipping so much as postal communication. The steamship promised certain and comparatively quick communication between England and her numerous and distant colonies. The mail compensation thus paid was never called a subsidy and was never understood as such, nor is it so understood to-day by Englishmen. It is money paid for service rendered. England had in 1880 2,730,000 tons of steam shipping, and paid for postal service about $5,000,000, or $1.83 to the ton. Would our would-be subsidy-grabbers be satisfied with a subsidy of $1.83 to the ton? I venture to say that nothing less than ten times that amount would satisfy them or enable them to compete with English steamers, unless other conditions are greatly modified. Mr. David A. Wells calculates that $35 per ton would have to be given to enable American ships to compete with English. In this connection, a well-known American advocate of subsidies speaks of the "terrible wrong" of compelling American ships to carry the mails for two cents per half ounce. Under this law, he says, American ships received $31,405 for carrying the mails last year. At two cents per letter this would make the number of letters thus carried 1,570,000. The total number of foreign letters mailed last year in the United States was 34,580,000, for which the government paid $198,667. 33,009,750 letters were carried by foreign ships for $167,262, or one-half cent per letter. Foreign ships carry our letters for just one-fourth what we pay our own. Where is the "terrible wrong" of this law? Two cents per half ounce is considerably more than one thousand dollars per ton. Happy the ship-owner who could fill his ship with such a cargo. Had our mail all been carried by American ships last year, it would have cost the government over one million of dollars instead of $198,667, as it did. American ships would then have received a "subsidy" of one million dollars. I venture to say that England, with her four or five millions per year for carrying mails to her numerous colonies, to foreigners, to her soldiers and merchants all over the world, pays no more per letter to her ships than we do to ours. Let us dismiss this subject. England does not subsidize her steamship lines to-day, whatever she may have done when the steamship was a venture and its proper development depended on such encouragement.
A ship that needs a subsidy is one that without it would be run at a loss, if run at all. Giving it a subsidy transfers that loss from the ship's owners to the taxpayers. How are subsidies to be given? If given to any, they must be given to all ships that fulfill certain conditions. Evidently all the ships we would have under such a system would be subsidized ones. With a respectable fleet, the amount that would have to be paid in subsidies would be very great. For a fleet of one million tons only, the amount would be, according to the above-mentioned estimate, thirty-five millions of dollars, and to equal England's fleet, about seventy millions of dollars under our present laws. Increased taxation must result. Increased taxation means increased cost of labor, more expensive ships and less business for them, that is, less commerce. All this means lower freights for the steamers, hence increased loss, and must mean, if they are to be maintained, increased subsidies. The system, as Prof. Sumner says, continually "works down." The more subsidy you give the more you have to give. "But we don't mean to go into such wholesale subsidizing as this," perhaps some will say. Very well, then, you must be satisfied with a secondary fleet, for subsidized vessels will surely drive unsubsidized ones off the seas. Another thing must be remembered in any attempt to force an American merchant shipping into existence, and that is, that the supply of ships to-day is fully equal to the demand for them. If subsidized American ships are put afloat in excess of the demand, as they probably would be, freights must fall, and then comes a new and unlooked-for loss for American shipping: it must have a little more subsidy.
The opponents of free ships point to the great development of many of the protected industries of the country as a strong reason for a continuance of the present system with regard to ships. There can be no doubt that under protection our manufactures have prospered as they would never have done under free trade. There are, however, two very important points of difference between the manufacture of watches or of locomotives and that of ships. In the first place, an American may buy a watch or a locomotive wherever he pleases, which is usually where he can get it cheapest, but he must buy an American-built ship or none, if he wishes it to sail under the American flag. He may not sail a foreign-built ship under the American flag under any circumstances, not if he pays ten times its value in import duties. Counterfeit money, obscene objects, and ships are the three things that the American citizen is forbidden to import. Protection to American watch making and locomotive building simply renders it expedient for the American to buy watches and locomotives at home; protection to American shipbuilding commands him to buy American-built ships or do without, which latter alternative he has been for twenty years persistently adopting. In the second place, there is a constant demand in America for watches and locomotives, while there is no such thing as a demand for ships. A man buys a locomotive to gain money with it, and it matters little to him what he pays for it so long as his competitors must pay the same. A man buys a ship for the same purpose. An American cannot buy a ship for what his competitors pay for theirs, for foreigners are influenced by no sentiment in this matter, but go invariably to the cheapest market. In one industry there is a constant demand that protection enables Americans to supply, a constant stimulus to exertion and progress. In the other there is no demand, for protection has killed it. Of course all this applies to shipbuilding for foreign trade and to foreign shipping. In the coasting trade all competitors are restricted to American-built ships, and they do not care what they cost. Open our coasting trade to foreign ships and see what a howl of discontent at the injustice of restricting our people to American-built ships would arise, and how quickly our domestic shipping would disappear as has our foreign.
It will not do to confound shipbuilding with other industries. It resembles no other. A prosperous shipbuilding industry must surely result from a prosperous shipping, and not, as some would have us believe, a shipping from protected and languishing shipbuilding.
There seems to be a curious diversity of opinion among the opponents of free ships. Many of them favor making American ships equal to foreign ones in every respect but that of first cost, and then compensating them for this difference by means of subsidies. A prominent shipbuilder asks for the removal or diminution of local or State taxation, but says that, because Americans have to pay more for their ships is no reason why they cannot compete with foreigners. It is significant in this connection that this gentleman's line of South American steamers was withdrawn almost immediately after the New York legislature had exempted ships from taxation.
Greater first cost must introduce an element of loss. It is only necessary to suppose an American steamer costing one million dollars, to compete with an English one costing one hundred thousand,
to reduce the argument that this is not so to the absurd. The loss may be small, but, small or large, it is one of the "exactions" that the Secretary of State says are so prejudicial to American shipping. If their statements that this is not so are sincere, why do shipbuilders so persistently oppose free ships and ship-owners favor them? The time has come when Americans must decide which of these two sides to favor. It is impossible to please both.
Let us see what this difference of first cost actually means. The shipbuilder already quoted says that his ships only cost ten or fifteen per cent, more than equal English ones, but others equally well-informed and more disinterested say that they cost from thirty to forty per cent more. This gentleman gives the following table to show the wrong done to American shipping by excessive taxation:
Lines. Capital invested. Net Earnings. Taxation.
American, $2,000,000 $160,000 $50,000
English, 2,000,000 160,000 1,600
Discrimination in tax against American line, $48,400
There are a number of inaccuracies in this table. In the first place he supposes the two lines to have equal amounts invested in five steamers, and then puts the net earnings of each at $160,000, forgetting that, with equal amounts invested, the English steamers will be superior and hence earn more. He then puts the tax on the American line at two and one-half per cent, on the whole capital invested, whereas, in New York it would only be taxed on about sixty per cent, of its value. He says the English lines pay but one per cent, tax on the net profits, for which a British shipping journal corrects him, saying that they pay the usual tax on profits, whatever that may be,—last year it was sixpence in the pound, or two and one-half per cent, instead of one per cent.
If the net earnings of the two lines are to be equal the ships must be equal, and the American line will cost at the lowest estimate (this gentleman's) fifteen per cent more. The table should be as follows:
Lines. Capital invested. Net Earnings. Taxation.
American, $2,300,000 $160,000 $34,500
English, 2,000,000 160,000 4,000
Discrimination in tax against American line, . . $30,500
Now let us suppose two American lines to compete, one with $2,000,000 invested in five steamers, the other with five equal steamers for which they have to pay fifteen per cent more. Greater first cost means greater interest, greater cost of repairs and insurance and greater taxes. These two lines will compare as follows in these three items of expense:
Capital invested Interest Repairs & insurance Taxes Total
1st. $2,000,000 $120,000 $120,000 $30,000 $270,000
2d. 2,300,000 138,000 138,000 34,500 310,500
Discrimination against the more expensive line, $40,500
Greater by ten thousand dollars than the discrimination by taxation against American ships, about which this gentleman is so indignant, and greater by six thousand dollars than the whole tax on the American line. This table is based on an interest charge of six per cent, repairs and insurance at six per cent., and taxation at two and one-half per cent. And yet this gentleman, who declaims against theorists and proclaims himself a man of business, says that greater first cost amounts to nothing, and that two and a half per cent, tax is a gross injustice. Two and a half per cent, tax undoubtedly is a gross injustice, but compelling Americans to pay even fifteen per cent, more for their ships is a greater.
The subject of taxation on shipping has been already dealt with in a manner most favorable to it by some States, and there is good reason for believing that no complaints will in future spring from this source.
What shall be done to remedy this evil of greater first cost? But two remedies have ever been suggested,—subsidies and free ships. Some reasons have been given why it is not believed that subsidies will be either practicable or efficacious. The other remedy is a simple one,—easy of application, and sure to result favorably if applied in connection with others suggested further on. Modify Section 4132 of the Revised Statutes so that Americans may buy ships where they please, and so that it shall read, "Vessels belonging wholly to citizens of the United States, or to companies incorporated or which may be hereafter incorporated, according to the laws of the United States, and vessels which may be captured in war by citizens of the United States and lawfully condemned as prize, or which may be adjudged to be forfeited for a breach of the laws of the United States, being wholly owned by citizens, and no others, may be registered as directed in this title, "the only change being the omission of the words "built within the United States," and the insertion of the words italicized. The omission will permit Americans to buy ships for foreign trade wherever they can get them cheapest. If Section 4347 be so modified as to prohibit foreign-built vessels as well as vessels owned wholly or in part by foreigners from engaging in the coasting trade, this need in nowise interfere with our domestic shipping. It may be argued against this that it is only temporizing; that if we throw open our foreign shipping to foreign-built ships, we must also throw open our domestic shipping; that American lines would suffer in not being allowed to take in United States ports on foreign voyages. This is undoubtedly an objection, but not a very important one, as the ports that might be thus included are not numerous, and routes between the United States and foreign countries that would not include such ports are.
The insertion of the words italicized would permit foreigners to own shares in our steamship companies. We were once very willing to have them subscribe to our government bonds; we invite foreign capital to build our railroads and canals. Why not allow them to aid in developing our shipping?
These modifications of Sections 4132 and 4347 will necessitate the repeal of Section 4133, which forbids the registration of any vessel which belongs in whole or in part to any citizen of the United States who usually resides in a foreign country; and of Section 4134, which forbids the registration of any vessel owned in whole or in part by any person naturalized in the United States and residing more than one year in the country from which he originated, or more than two years in any foreign country. With these relics of 1792 and 1804 must go a product of a more enlightened age, but one that exceeds in intolerance and stupidity anything that has been done towards the extinction of our shipping since the establishment of our independence, and that is Section 4135, forbidding the rights and privileges (what are they?) of vessels of the United States to vessels that sought protection under foreign flags during the existence of the rebellion. The only effect of this law, conceived in intolerance and brought forth in spite, was to deprive us of nearly half a million tons of shipping. It was said that such desertion of the government in its hour of need rendered the owners of this shipping unworthy of the protection of the United States; that it would never do to permit such deliberate shirking of the obligation that every citizen is under to aid in sustaining his government. Is not the obligation mutual? The obligation of the government to protect this shipping was just as great as that of its owners to sustain the government. What had these ship-owners been paying taxes for, if not for protection to their property? Had the government fulfilled its part of the compact there would have been no necessity for these transfers. It was not with these men as with others no more loyal, simply a question as to whether they should pay one or five per cent, in taxes. It was whether or not they should suffer absolute financial ruin.
Section 4136, enacting that any vessel built in a foreign country and wrecked in the United States must have repairs put upon her by a citizen of the United States equal to three-fourths the cost of the vessel when so repaired, to be entitled to an American register, should also be repealed.
Section 4137 might be advantageously modified so that a vessel belonging to an incorporated company might be registered in the name of the company, instead of that of the president or secretary as now required. This would repeal the next section, 4138, requiring a new register upon the death, removal or resignation of the person registering.
These repeals and modifications would necessitate corresponding modifications in Sections 4142, 4146, 4155, and the repeal of Section 4165, which forbids that any vessel seized or captured and condemned under the authority of any foreign power, or which by sale becomes the property of a foreigner, shall be entitled to a new register, notwithstanding which vessel should afterwards become American property. Comment would be superfluous. Words are entirely inadequate to express the utter absurdity of this law.
One cannot read the laws for the regulation of commerce and navigation without getting the idea that they must have been enacted to suppress great evils,—evils that could not be entirely abolished, and that must therefore be regulated as much as possible out of existence. The ship-owner was apparently regarded as the most depraved of men, who could only be permitted to exist on condition of taking frequent oaths as to his intentions, and who was only allowed to pursue his nefarious business while paying frequent heavy sums to the government for the privilege, while the unhappy ship captain was a man whose vicious tendencies could only be restrained by the most vigilant supervision. That such laws should exist today on the statute books of a nation that boasts of its advanced civilization, seems incredible. Surely we have learnt something about commerce and shipping since 1792. Nowhere has there been a more complete revolution. Is it not self-evident that laws that suited a small seafaring people with little commerce and cheap shipbuilding materials a hundred years ago, in an age of sailing vessels, are not the laws calculated to revive the shipping of a great nation, half agricultural and half manufacturing, with an enormous commerce and dear shipbuilding materials, in this age of steamers? Other nations have long ago discovered the change of affairs, and their laws are being constantly modified to keep up with the march of progress. Is it not even possible that their framers foresaw the probability of circumstances arising that would necessitate changes in them, and that they did not intend them to be handed down to eternity on our statute-books? It is not only possible, but a fact, for our history teems with proofs that our early statesmen only adopted a policy of protection and restriction after every effort had been made toward "free ships and sailors' rights,"—efforts that were vigorously opposed at every point and by every possible means by England. Prof. W. G. Sumner said, in an able article in the North American Review for June, 1881: "It is necessary, however, to go to Turkey or Russia to find instances of legislative and administrative abuses to equal the existing laws and regulations of the United States about ships, the carrying trade, and foreign commerce. We should stop bragging about a free country and about the enlightened power of the people in a democratic republic to correct abuses, while laws remain which treat the buying, importing, owning and sailing of ships as pernicious, or, at least, doubtful and suspicious actions. I have no conception of a free man or a free country which can be satisfied if a citizen of that country may not own a ship if he wants one, getting it in any legitimate manner in which he might acquire other property, or may not sail one if he finds that a profitable industry suited to his taste and ability."
The only argument against free ships is that they would destroy American shipbuilding. Let us see if this is so. It will be observed that it is not proposed to permit ships for domestic trade to be purchased abroad. That would remain as firmly closed to foreign-built ships as it is to-day. Evidently then the building of ships for domestic trade would not be affected. In 1880, of our 4,068,035 tons of shipping, there were engaged in foreign trade 1,314,402 tons, and in domestic trade and the fisheries 2,753,633 tons. Of this 1,314,402 tons engaged in foreign trade only about one hundred thousand tons were of iron. Our shipbuilding interests have been brought to their present position by building one ton of iron shipping for foreign trade to every forty tons of other shipping. Does the destruction of
a business that consists of building one-fortieth of our shipping mean the destruction of American shipbuilding? Must a trade that is fed with one steamer this year, two the next, and then for a few years none, be nourished at the expense of our material interests and future prosperity?
"But the building of iron ships for foreign trade to-day would not only be destroyed, but all hope of our ever being able to build them would be likewise destroyed by free ships," you say. On the contrary, there are the strongest reasons for believing that free ships not only would not destroy this industry, but would give it an impulse such as protection never has. For thirty or forty years it has been so pampered and protected that it can have no conception of existence under natural conditions. All incentive to exertion and all stimulus to invention have been from the first withheld. Take away this shelter of law and let us see if it will wither under the sun of competition, or will put forth new branches and prove itself vigorous enough to justify the tender nurture of the past. What if it wither? A few men who have grown rich on the nation's shame will lose, but their loss will be the people's infinite gain.
It is my very firm conviction that free ships not only would not destroy our shipbuilding, or any part of it, but would, on the contrary, encourage it. Allowing Americans to buy ships for foreign commerce where they please, and so amending our laws that they may run them as cheaply as any one, would create something that cannot be said to exist to-day—a demand in America for iron ships for foreign trade. Iron ships would be bought somewhere and run under the American flag; they would frequently, of necessity, be repaired in the United States. The shipbuilder seeing this demand a fact and likely to be a growing one, would, if possessed of the energy and ingenuity so characteristic of his predecessors, begin to devise means to save the 15 per cent, that would be sending Americans abroad for ships. This, it seems, would not be difficult if gone about under a strong incentive. It would be especially easy if, as is stated, 95 per cent, of the cost of a ship be labor. Steel will probably be the material of the ship of the future. Let an interest in shipping and shipbuilding be once aroused in the United States and there is no reason why we should not enter the field of steel shipbuilding as fully equipped as England. We are not behind her in knowledge of the manufacture and manipulation of steel: why should we not as successfully compete with her in the manufacture of steel ships as of steel cutlery or agricultural implements? Under this system there will be the same home demand that has built up these other industries, and the same foreign competition that has stimulated progress and reduced prices.
The truth of the whole matter is that our shipbuilding is an artificial industry. Its growth has been anything but natural. No one but those interested wants it to remain longer in this abnormal condition. The present system has had a fair trial and has given us neither shipping nor shipbuilding. Let us try the other, which at least will give us the former, and at the worst can only destroy a monopoly that has lasted long enough.
The next exaction to which American shipping is subject, that it is proposed to consider, is that of tonnage duties. Section 4219 of the Revised Statutes establishes the following tonnage duties for vessels entered at custom-houses of the United States: On vessels of the United States, thirty cents a ton; on vessels built within the United States, but belonging wholly or in part to foreigners, sixty cents per ton; on foreign vessels from ports to and with which vessels of the United States are not ordinarily permitted to enter and trade, two dollars and thirty cents a ton; on other vessels, thirty cents per ton: Provided, that the President of the United States shall be satisfied that the discriminating duties of any foreign nation to which such vessels belong, so far as they operate to the disadvantage of the United States, have been abolished; otherwise, eighty cents per ton: And provided, that nothing in this section shall impair any rights and privileges which have been or may be acquired by any foreign nation, under the laws and treaties of the United States, relative to the duty of tonnage on vessels. A treaty between the United States and Great Britain, ratified December 22d, 1815, provides that "no higher duties or charges shall be imposed in any of the ports of the United States on British vessels than those payable in the same ports by vessels of the United States," and similar clauses are found in our treaties with other powers. Therefore, since the vessels of countries not discriminating against vessels of the United States must, upon entering ports of the United States, pay only the same duties that are paid by vessels of the United States, this law cannot be said to operate to the disadvantage of ships of the United States competing with foreign ships between a port of the United States and any foreign port. It is only when ships from our ports attempt to compete with ships from foreign ports for other foreign ports that the injustice of this law is felt. For instance, suppose an American line from New York and an English line from London, each carrying cotton to Shanghai. If each line owns twenty-five thousand tons and all conditions but that of tonnage duties are equal, the American line will start each year with a discriminating tax of seven thousand five hundred dollars upon it. The English line will pay nothing in tonnage duties. If we each manufacture cottons at the same cost, it is evident that ours will be dearer than the English by the time they reach Shanghai. It may be said that this is a small item. So it is; but by saving just such items as this England is able to command foreign markets. These duties are simply a direct tax of thirty cents per ton on all registered American ships that are in service, while they only affect that foreign shipping that runs to ports of the United States.
The most logical remedy for this exaction would be to abolish these duties for American vessels and to require foreign vessels to pay, not the same duties as our own, which would be nothing, but the same duties that our ships have to pay in their ports. The rule adopted, that of only requiring vessels of countries not discriminating against our vessels to pay the same duties that ours pay, seems very illogical, for under it a country that sees fit to tax its own ships two or three dollars per ton may tax ours the same, while if we exempt our own vessels we will be compelled to exempt hers. The only objection to the remedy proposed is that it would require revision of many of our treaties. A much simpler remedy would be the total abolition of tonnage duties. Restrictive and discriminating duties upon shipping are not in keeping with the spirit of the age. They answer no purpose except to oppress our shipping. They are relics of the last century when it was thought necessary for a state to annoy, as much as possible, the shipping of every other state, but the amendments to the statutes establishing these duties, and our treaties with other powers, have diverted them from their original purpose to a discriminating tax upon American shipping. The loss of revenue that would ensue from their abolition is altogether too paltry to be considered. Abolish tonnage duties and American shipping will have one less exaction to grumble about.
With cheap ships, light taxes and no tonnage duties, American ship-owners will have but two or three disadvantages to contend against that it is in the power of the government to remove. First among these, as being easiest of removal, is that of excessive consular fees. A secretary of state occasionally points with pride to the fact that our consular service is self-supporting. He means that it is supported by our shipping. Last year the amount received in fees at our consulates was $745,000, while the amount paid for salaries and fees was only $450,000. Our total registered shipping was 1,314,000 tons. Supposing all this shipping to have contributed this $745,000 in fees, our shipping will have paid for the support of this service a tax of 57 cts. per ton. All of our registered shipping did not contribute to this sum, nor was all of it received from that source, but each figure would be reduced in about the same proportion, so that we may fairly take 57 cts. per ton as the average paid by each ton of American shipping for the support of this system. Some of this tax is undoubtedly just, other very unjust. The consul is equally the servant of the government and of the commercial and shipping interests of its people. As the first, his duties are numerous and important, varying greatly with his post. He is everywhere an aid in the enforcement of the customs laws of the United States; in barbarous and semi-civilized countries his powers are very extensive; he is charged with the preservation of order among his fellow-countrymen; he is both judge and jury for the trial of civil and criminal cases; he is frequently the only diplomatic representative of the United States in the country where he is stationed. Why should American shipping be compelled to pay him for these services?
In addition to these duties to the government, the consul is charged with the performance of certain duties toward the shipping and commerce of the United States. He authenticates signatures; grants certificates of various kinds; administers oaths; ships and discharges seamen; receives and delivers ships' papers; and settles disputes between masters and men. Certain of these acts are required by law, others only when requested by the ship-captains. Let us have at least an equal division of the cost of this service. Let the government pay its share, and our shipping will have no cause of complaint on this ground. The British consular service, filled with men compared with whom our consuls are, in general, neither efficient nor admirable, is supported in the most liberal manner by the government, while the fees are merely nominal. The result is that the British consul, wherever one goes, is a gentleman, an honest, zealous servant of his country, secure in his position and certain of advancement according to his merits, while British ships enter and clear at foreign ports without any delay and at trivial expense. The British consulate is always one of the finest places in the city, and famous for a hospitality that is not the least of the influences that gives its host the political power he usually has with the authorities. The American consul is too often a man who has received his office for services hardly consistent with the upright, dignified character most becoming in a consul. He is usually selected without reference to his qualifications (Guiteau aspired to a consulate); is naturally totally unfitted for that social prominence that is everywhere recognized as one of the most important factors in successful diplomacy, whether on a large or small scale. And were he a Chesterfield, what could he do in an American consulate with an American consul's salary? Cases have been altogether too frequent in which he has tried to make the shipping supplement his scanty income. One of the most fertile causes of fraud and, at the same time, one of the greatest injustices to American shipping, is the law requiring men discharged in foreign ports, under certain circumstances, to be paid three months' extra wages. Our shipping must not only support the consuls, but destitute American seamen as well. And as all men regularly shipped on American vessels are considered as American seamen, our shipping has to support destitute seamen of all nationalities. American ships entering foreign ports are required to deliver to the consul the ship's papers, and to pay him for receiving and returning them a fee of one cent per ton of the vessel's measurement, if less than one thousand tons, and a half cent additional for every ton over one thousand, should it exceed that measurement. British ships pay nothing for receiving and delivering the ship's papers. It costs an American ship just twice as much to ship or discharge seamen as it does British ships. In fact, with one or two unimportant exceptions, American ships pay twice as much for everything that the consul does for them as British ships do for the same things, while the fees required by consuls of the former are much more numerous than those required of the latter. It will probably be greatly in excess of the actual amount, but for want of accurate information as to the total fees paid per year by British shipping to consuls, we will estimate the amount per ton at one-half that paid by American shipping. Our American line, supposing it to have five steamers of thirty-five hundred tons each, will pay for the support of our consular service at 57 cts. per ton, a tax of $9,975, while an equal English line will pay but half that, or $4,987.
With regard to the relief of distressed seamen, the law provides that seamen shall be paid three months' extra wages, 1st. When a ship is sold abroad and her crew discharged; 2d. When a seaman is, with his own consent, discharged in a foreign country; 3d. When a vessel is condemned by inspectors; and 4th. When the seaman is discharged because the voyage is continued contrary to his agreement. Of the three months' wages thus paid, two-thirds are for the man and one-third for the government. The man's two-thirds are to be expended by the consul for his support on shore until he can be sent home. Should it not all be expended in this way, the remainder is to be paid him at his departure. The expenditure of this two-thirds has been productive of fraud in more instances than one. Collusion between consuls and boarding-house keepers has not usually resulted to the pecuniary advantage of the men.
Of the four cases in which three months' extra wages are to be paid, the first and fourth are those in which the ship ought properly to be compelled to support the men until they can be sent home. When a ship is sold abroad and her crew discharged, and when the voyage is continued contrary to the seaman's agreement, the three months' extra wages may be justly demanded. The second case is one that gives rise to frequent injustice to ship-owners, and, on account of the latitude allowed consuls in deciding whether or not seamen should be discharged, to frequent abuses and frauds. With regard to the third case, when a vessel is condemned by inspectors through fault of the master or owners, the extra wages may be justly demanded; but is it justice to compel a ship rendered unseaworthy by gales that wreck the staunchest ships and baffle the judgment of the most skilful captains, to support a lot of men of all nationalities, who have no claim upon her, and through whose very inefficiency or neglect the ship may have been wrecked, and who may be discharged within a stone's-throw of their own homes? Why should the shipping more than any other industry be compelled to support its discharged employees until they can find work?
Let the government charge itself, and not its shipping, with the support of destitute seamen; let the tonnage dues for receiving and delivering ships' papers be abolished; let all other consular fees be reduced at least one-half; and let the government appropriate liberally for the support of the consular service, and send out as consuls only men whose intellectual and moral qualifications have been carefully ascertained, and American shipping will receive another "subsidy" to which no one will object.
These things being done, American shipping will have but one serious disadvantage to contend against. They will still have to pay more for their labor than their rivals. This will be more especially the case with regard to officers, which are required by law to be Americans, but will be to a less degree true with regard to seamen, because in American ports, where the crews of most American ships are engaged, the prices paid for seamen's labor are, like those paid for other labor, higher than those paid abroad. Were the American seaman as superior to all others to-day as he was forty years ago, our ships would suffer no disadvantage from being restricted to American officers; but such is unfortunately not the case, for, while other nations are adopting every means to increase the efficiency and elevate the standard of their officers and seamen, we are doing nothing. The captain of a large American ocean-going steamer receives four thousand dollars per year; the captain of an equal
English one but two thousand. The first officer of the American steamer receives one hundred and twenty-five dollars per month; of the English, eighty-five dollars. The difference between the pay of the junior officers is not so great as this, but it is enough to make the officers' pay-roll of an American ship at least twenty-five per cent, greater than that of an English ship of the same tonnage. The officers' pay-roll of an English steamer of thirty-five hundred tons foots up about twelve hundred dollars per month; of an equal American ship, fifteen hundred. This makes the difference in favor of the English steamer three thousand six hundred dollars per year, in this single item of officers' pay. If, for this greater pay, American ships get better service, as they did forty years ago, no disadvantage can result from this element of pay; but they do not. The remedy for this loss is, not to permit American ships to get their officers where they please, but to adopt measures to increase the efficiency of our officers and seamen, so that, for their twenty-five per cent, better pay, they will do, as they used to, fifty per cent, better work than their rivals of other nations. The establishment of school-ships for the training of both officers and seamen, in connection with the passage of an act requiring all ships to take apprentices from the school-ships in numbers proportionate to their tonnage, would be the simplest and most efficacious method of remedying this disadvantage of greater cost of labor.
There are other exactions and oppressions of which our shipping complains, such as excessive compulsory pilotage, the more expensive ration required by law to be given our seamen, and higher interest and insurance charges, but with the exception of compulsory pilotage no remedy can be suggested for these disadvantages. Compulsory pilotage should either be abolished or the fees reduced to about one fourth what they are at present. When, as was stated by a ship-owner not long ago, the pilot who takes a large steamer into New York harbor receives more for his services that her master does for taking her to Cuba and back, it is time something was done.
Let the disadvantages that result from greater first cost, greater tonnage duties, higher consular fees and labor, and compulsory pilotage be done away with, and American steamers will be able to enter the field of competition with a reasonable prospect of success. To summarize these exactions, let us suppose equal English and American lines running from home ports to some common foreign port. Suppose each line to have five steamers of thirty-five hundred tons each, the English line costing $2,009,000 and the American line fifteen per cent. more. We will take the interest charge for both lines the same, although the English line would probably pay one or two per cent, less than the American, which would increase the difference in favor of the English line by from twenty to forty thousand dollars.
The American line would therefore be running at a loss when the English line was making five per cent, profit. Absolute accuracy cannot be claimed for this table, but it is believed that the correction
of any errors that may exist would still further increase the difference in favor of English ships.
The cause of the present decline of our merchant shipping may be assigned to the difference that exists between the two sides of the above table, and the remedy for the revival is to make this difference equal to zero.
There is room for great diversity of opinion as to how this may best be done. I have only attempted to indicate the methods that seem to me most practicable.