PRIZE ESSAY.
"Similia Similibus Curantur."
Our merchant shipping is a subject which is pushing more and more to the front, and it is undoubtedly the most deserving and the most sadly neglected of all our national interests. The story of Cinderella is nothing in comparison with it, but like the forsaken child of fairyland, it is destined some time or other to come into its own. For many years a persistent few have been bending their efforts towards the resuscitation of our ocean shipping, and in the last decade such a momentum of public opinion has been accumulated in its favor that the day can be easily foreseen when the. American flag will again take its, old place upon the high seas. But this will not be until our people are educated to understand the importance of the question, as well as the influences that control it.
In approaching this subject it is difficult to refrain from mentioning the recent attacks made upon the navy by a publication of good standing which has adopted for its motto, "No Merchant Marine, No Navy." This publication justifies itself upon the sup position that the upbuilding of the merchant marine is in some way dependent upon the Navy Department, and that the latter has in some way failed to upbuild the merchant marine. Being in a position to consider such a proposition only in its broadest sense, such propaganda must necessarily be classified as rubbish, as no one who knows anything at all about the conditions of our merchant shipping would seriously entertain such an idea for a moment. We can easily remember the circumstances surrounding the recent order of the Chief Executive which sent our fleet around the world without previous notice or without other than current appropriations; and we can easily conceive that the immediate problem of supplying that fleet with coal could not have been made secondary to the main purpose of utilizing the circumstance as a means of building up the merchant marine, however ineffective such a measure would have been. The merchant marine is beyond the control of the executive branch of our government, the legislative branch has slumbered upon it for a half century, while the actual control lies in the hands of the foreign shipping interests that are stifling it to death; influences that would be only too glad to pull down our navy as they have done our merchant marine. The upbuilding of the navy is due to patriotic sentiments on the part of many of our statesmen who are totally opposed to the merchant marine, and to turn their sentiments against the navy can in no wise benefit the merchant marine; but, on the other hand, the foreign control of our merchant shipping would naturally lie closely in association with those opposed to the policy of upbuilding the navy. It would then be well to examine very closely into the motives and interests of those engaged in such an attack through such a pretext.
OLD FRIENDS.
The navy is a friend of the merchant marine, even though it is long since they have met in home waters or upon the high seas. The report of Senator Gallinger for the Committee on Commerce, December 15, 1905, said: "Nobody who wants the merchant marine built up would have the navy cut down. The great men of the navy are powerful champions of the merchant marine. Every strong friend of the merchant marine is a strong friend of the navy also. The foe of one is apt to be the foe of both." Sea power consists of a navy and a merchant marine, but not of one without the other. The old British axiom, "Trade follows the flag," is the index of national greatness. The navy is an insurance upon the trade it protects, and it is supposed to be that element of sea power which furnishes the pressure necessary to push the flag over all the seas during peace or during war, to permit the uninterrupted control of trade. Trade means wealth, which means power; and it is that sea power which controls the world and which makes history. This is the theme which is to be found threaded throughout the story of sea power as expounded by Mahan in his "Influences of Sea Power upon History." The truth of that gospel is generally recognized as beyond question. All history proves it, and the present is no exception to the past. In the past Great Britain has been pursuing the regular business of dominating upon the seas, and incidentally has controlled our over-sea commerce and has grown rich and fat upon it. She has constantly followed the creed of Sir Walter Raleigh, who said: "The nation that controls the seas of the world, controls the trade of the world, and the nation that controls the trade of the world controls the riches of the world, and consequently the world itself."
The following quotations are from Mahan's "Sea Power":
"Notwithstanding all the familiar and unfamiliar dangers of the sea, both travel and traffic by water have always been easier and cheaper than by land…The ships that thus sail to-and-fro must have secure ports to which to return, and must, as far as possible, be followed by the protection of their country throughout the voyage. This protection in time of war must be extended by armed shipping. The necessity of a navy, in the restricted sense of the word, springs, therefore, from the existence of a peaceful shipping, and disappears with it except in the case of a nation which has aggressive tendencies, and keeps up a navy merely as a branch of the military establishment."
For three hundred years the foremost policy of Great Britain has been to dominate the seas. Mahan gives an insight into the workings of this policy over two hundred years ago and subsequently, thus: "But not one of these gains, nor all together, compare in greatness and much less in solidity, with the gain to England of that unequaled sea power which started ahead during the war of the league of Augsburg (1688-1697) and received its completeness and seal during that of the Spanish Succession (1702-1712). By it she controlled the great commerce of the open sea with a military shipping that had no rival, and in the exhausted condition of the other nations could have done; and that shipping was now securely based on strong positions in all the disputed quarters of the world. Although her Indian Empire was not yet begun, the vast superiority of her navy would enable her to control the communications of other nations with those rich and distant regions, and to assert her will in any disputes arising among the trading-stations of the different nationalities.
"The sea power of England, therefore, was not merely in the great navy, with which we too commonly and exclusively associate it; France had had such a navy in 1688, and it shrivelled away like a leaf in the fire. Neither was it in a prosperous commerce alone; a few years after the date at which we have arrived, the commerce of France took on fair proportions, but the first blast of war swept it off the seas as the navy of Cromwell had once swept that of Holland. It was in the union of the two, carefully fostered, that England made the gain of sea power over and beyond all other States; and this gain is distinctly associated with and dates from the war of the Spanish Succession. Before that war, England was one of the sea powers; after it she was the sea power, without a second.
"Is it meant, it may be asked, to attribute to sea power alone the greatness and wealth of any State? Certainly not. The due use and control of the sea is but one link in the chain of exchange by which wealth accumulates; but it is the central link, which lays under contribution other nations for the benefit of the one holding it, and which, history seems to assert, most surely of all gathers to itself riches."
After describing the desolation and ruin of France two years after the peace, he says further: "Thus it was in France, with a population of nineteen millions at that time to the eight millions of all the British Islands; with a land vastly more fertile and productive; before the great days, too, of coal and iron. In England, on the contrary, the immense grants of Parliament in 1710 struck the French prodigiously; for while their credit was low, or in a manner quite gone, ours was at its zenith. During the same war there appeared a mighty spirit among our merchants which enabled them to carry on all their schemes with a vigor that kept a constant circulation of money throughout the kingdom, and afforded such mighty encouragement to all manufactures as has made the remembrance of those times grateful in worse.'"
Still another view is given some fifty years later, just before the American Revolution, in the following quotation: "The English naval historian, speaking of the same period (1756-1760), says: 'While the commerce of France was nearly destroyed, the trading fleet of England covered the seas. Every year her commerce was increasing; the money which the war carried out was returned by the produce of her industry. Eight thousand merchant vessels were employed by the English merchants.' And again, summing up the results of the war, after stating the immense amount of specie brought into the kingdom by foreign conquest, he says: 'The trade of England increased gradually every year, and such a scene of national prosperity, while waging a long, bloody, and costly war, was never before shown by any people in the world.'"
The above gives us an insight into the control of the sea trade prior to the American Revolution which Great Britain has since maintained. Later I shall take it up from that point and trace its main features as occurring in our own shipping down to the present day.
In this day and age new world problems have arisen, our Monroe doctrine is an advanced guard upon the trade of the future, so likewise are the Philippines and the Panama Canal. Our navy has been essential to the acquiring and the maintaining of these assets; it has been created out of pure patriotic idealism, aside from commercial considerations.
In other days, the sailing ships-of-the-line formed the fighting force independently of merchant auxiliaries, and the merchant fleet was not an essential part of the fighting force. To-day, however, the steam navy requires colliers, scouts, repair ships, supply ships, and hospital ships, and all of these are of such nature that they can be converted at once from the merchant shipping in an emergency. A nation, therefore, which has no merchant shipping, as this country, has only an incomplete navy in the matter of material. So, likewise, the personnel as Admiral Sampson said of his own fleet that went to Santiago, "that if the advance force under him should have met with disaster, there was absolutely no reserve force to fall back upon." All the personnel of the navy in the enlisted force was upon the first line of attack and none were left behind. A merchant fleet, therefore, possesses these elements of sea power: (1) The capacity to carry trade in peace and war; (2) the elements suitable for immediate conversion into naval auxiliaries upon the outbreak of war; and (3) the reserve personnel to fall back on in case of disaster to the first line of battle. In order for the government to be in position to utilize the merchant fleet to accomplish either of the above-mentioned functions, it is necessary that the government should supply the wherewithal necessary to set the merchant marine up in business, and put it on its feet upon a paying basis so that it can continue in operation, and perform its two-fold function of ( I) supplying the nation with a means of controlling the wealth of the country through trade, and (2) supplementing the navy with the elements of force necessary for battle; so that, taken all three together, the navy, the merchant naval auxiliaries, and the merchant marine proper, may unite to form the unit of sea power now necessary to place this country upon a respectable footing as a great and independent nation. It is a national proposition pure and simple. No merchant marine exists per se, or can exist in this day and time. It requires governmental creation and support through a capitalization supplied by the government in the shape of money and favorable laws. All nations do it alike that have a merchant marine. The method of capitalization universally applied is called "subsidizing." Subsidizing is a word which has been made frightfully unpopular in this country, and ever since one can remember most of the politicians have had chills to run all up and down their spinal columns at the mention of the words "ship subsidy." The reason of this is because the foreign interests that have been flourishing upon the wealth extracted from the control of our ocean shipping, have taken the pains to educate the people of this country to detest the words "ship subsidy."
SUBSIDY.
In general terms, subsidy may be called capitalization. Ship subsidy is the highest form of capitalization that a nation can have. It was discovered by England, and the practice of it led to the control of the shipping trade of all the seas, out of which has grown the greatest world power of history. The returns have warranted the expenditures. England's success was not due to a lack of competition; she has always had rivals in the sea trade. The shipping business left to its own resources must necessarily meet all competitors upon equal terms upon the neutral grounds of the high seas, and if left upon equal terms must share the successes and failures of the others. England took no such chances. In order to possess and hold a positive and certain control of the one profession upon which her national greatness depended she created shipping subsidies, which, though artificial, were positive in effect. The advantage thus gained cannot be offset by her rivals except through like subsidies. Those nations that have been able to build up and maintain a permanent merchant shipping have found it necessary to subsidize. Subsidy is the sine qua non of a merchant marine. This great and ungainly country, lethargic through the gains of internal development, careless through ignorance of her own condition, vulnerable through her political subdivisions, and misguided by the false preachments of individuals and newspapers paid by the foreign shipping interests, is so blinded that she cannot see that ship subsidy is the first essential toward the creation of a merchant marine. To-day both political parties of the country are more or less in favor of creating a merchant marine, but the foreign interests have accompanied our shipping campaigns with offers of quack cures, and we are troubled with all sorts of hallucinations about "free trade," "free ships," "discriminating duties," "tonnage taxes," all of which are variously urged by those who wish our shipping to come to grief, and those who have been misled by these; and where the suckers fail to take these baits, they have on the one hand raised the cry that subsidies are unconstitutional, and on the other hand they have pointed out that, if subsidies are voted, somebody would get the money; and if the individuals thus mentioned already had any money, that was sufficient reason why there should be no subsidies. These heresies are engineered by the foreign shipping interests through their steamship agents in our shipping ports. These agents form a leading factor in the membership of our chambers of commerce, cotton exchanges, maritime exchanges, and sometimes of other commercial and political bodies; and in many instances they dominate these bodies. In all instances they control the shipping rates and conditions, and they utilize their advantages to freeze out competitors by all the methods known to our local politics.
They are said to maintain a lobby at Washington and press bureaus at Washington and New York; they control leading news papers in our leading seaports and influence others through advertisements, and carry on newspaper campaigns against merchant marine legislation. The funds necessary to do this are furnished from the profits they reap in carrying our over-seas trade. They have played our State and city politics to obtain special advantages, through our national weakness of states-rights, with the varying and differing port laws and regulations, all to the exclusion of our own unprotected merchant shipping. In brief, they have broken our bundle of sticks, not in one united bundle, but each stick separately of our scattered, disunited, unkempt maritime policy. Being a country made up of foreigners, more or less recent, with or without a foreign accent, it is our habit to regard all residents in the light of Americans and without the suspicions inherent in European countries. If, therefore, foreign steamship companies have planted foreign agencies and employees, little foreign colonies, on American soil, their facilities for taking part in our commercial and political life, and our own vulnerability to their blandishments, have been correspondingly increased; and our habitual lack of suspicion has been one of the leading causes of our undoing.
To illustrate, let us compare the shipping business to the dairy business. If we were going into the dairy business to compete with other companies for the production and sale of milk and butter, we find that all the competing firms feed their cows upon hay, and their business is thriving. Our own cows we have turned out to graze upon barren and uncertain fields and we have given them no feed. Our business shrinks, our cows die, until we have only a small percentage left. We have got to do something better, or get out of business and buy our milk and butter from our rivals. We stubbornly refuse to feed our cows on hay. We rise up and proclaim that they shall thrive on thistles or go without feed, and we'll be confounded if we feed them on hay, although we have hay to burn all over the enclosed fields and all round about the barn. If our rivals feed on hay, that's the reason why we won't, even though we never knew of a dairy to maintain a permanent business that didn't feed on hay. And our rivals get their hay from us in exchange for the milk and butter we buy from them—but why go further in the analogy between hay and subsidy! And yet we think we are a business nation!
HISTORICAL.
From the foundation of this republic up to 1815, and in part to 1828, and even 1849, the historic policy of the fathers of the republic was in vogue, namely, discriminating duties. In those days we had not entered into the forty reciprocity commercial treaties with other nations which now forbid us to practice upon other countries the discriminating custom duties and discriminating tonnage dues, and vice versa. No nation now practices discriminating duties, though several have tried it but gave it up on account of retaliations. Under our discriminating duty system our ocean tonnage began in 1789 at 124,000 tons, and increased to 855,000 tons in 1815. Here, at the end of the war of 1812, we received a setback, due to our signing one of the above-mentioned treaties as the price of peace with Great Britain, in which "our government gave way and signed an agreement with England for the mutual suspension of discriminating duties in the direct commerce of the two countries" and that "despite the fact that we had defeated the English in eleven out of thirteen engagements on the sea." Thereafter our foreign shipping declined by 25 per cent, and it required a quarter of a century to bring the tonnage up to the point before the war of 1812. In the meantime, in 1828, "since England had broken down our discriminating duty system by compelling that an exception be made in her case, the government decided that it was not fair to practice discriminations against other nations, Congress repealed the Jo per cent differential duty."
It will thus be seen, now, that a return to the obsolete discriminatory system as a means of resuscitating the merchant marine is wholly out of the question. A single move in that direction would bring retaliation from the nation affected, and place us without the pale of present-day commercial practice. There are certain spokesmen, parading up and down as American patriots, now vociferously advocating a return to discriminating duties, either willingly or unwittingly subservient to the foreign shipping interests in the desire to steer our present merchant marine campaign to its destruction upon the breakers.
In 1835 England first subsidized the line across the Atlantic to New York, which line was supplied with the new iron steamships put in competition with our celebrated clipper ships of that period, with the result that our shipping soon found that it could not compete upon equal terms with the early Cunarders. This country, in 1845, sought to equalize conditions by passing the first mail subsidy law, signed by President Tyler, a Democratic President. Under this law the Collins Line came into existence in 1849, and within two years the monopolistic freight rates of the Cunarders were reduced by nearly one-half. Our ocean shipping jumped forward with a bound, and lines were established belting the world. We were at once competing closely with the Cunarders, and the shipping policies were continued under President Polk, another Democratic President, and a Democratic Congress. While the support of our maritime policy at the period was non-partisan, yet the Democrats appear to have taken the leadership in its advocacy, and a number of speeches made by the leading Southern statesmen at that epoch have been unearthed, sufficient to show that the spirit was prevalent North and South to vote subsidies for the Collins Line to excel the Cunard Line. In 1855 our over-sea shipping had reached its zenith, when the rumblings of the Civil War cast their shadows ahead, and the national policy was being swallowed up in the fierce partisanship of the coming strife. A reversal of sentiment was begun under President Pierce, whose Secretary of War was Jefferson Davis, and had no doubt in view the coming conflict; for opposition broke out from the South and at that time it was well known that Great Britain was encouraging the Southern leaders, as she aided the Confederacy afterwards, in breaking up the merchant shipping of the country.
So, when the bill was passed in 1855 by both houses of Congress. after a bitter fight, extending the contract with the Collins Line, it was vetoed by President Pierce, and three years later the Collins Line went to the wall, after a heroic struggle and many disasters. Its finest vessel, the Adriatic, that had just made her first run, was sold to one of the British lines, and the British flag replaced the stars and stripes upon her mast. Our ocean shipping had received its death blow. In 1861 we had about 2,500p00 tons; in 1865, only about 1,500,000 tons remained. At the beginning of the war we carried about 62 per cent of our imports and exports; in 1865, only about 28 per cent. The Confederate cruisers furnished by England destroyed 110,000 tons of American shipping and forced a great number of other vessels to adopt foreign flags, and were directly and indirectly responsible for the loss to this country of over 1,000,000 tons of American shipping, valued at more than $150,000,000.00. Rather than lose Canada, which we threatened to take, England paid us $15,500,000.00 as the amount of the award of the Alabama Claims, a rather cheap cost with which to encompass the complete destruction of her chief rival upon the seas. Since then our ocean shipping has continued to dwindle, until now we carry only 6 per cent of our imports and exports, and year by year additional lines have been forced to go out of business. In 1886, the International Navigation Co. of Philadelphia, which owned three steamers operating under the Belgian flag between Philadelphia and Antwerp, and receiving a subsidy of over $100,000.00 a year from the Belgian government, bought the Inman Line of British mail steamers; thereupon the British government promptly cancelled its contract with the Inman Company, and the Americans were given to understand that the British government would not give mail pay to a company owned entirely by American capital. At the same time, the White Star, the Cunard, and the German companies were being paid several hundred thousand dollars a year for carrying the mails of this country. The City of New York and the City of Paris, the two finest ships of their day, were then nearly completed on the Clyde, and the new owners of the Inman Company, not being able to operate them without the aid of subsidy, found themselves in a serious predicament. They appealed to our Congress to be permitted to sail under American registry, and be granted a mail subsidy; and Congress came to the rescue by the Act of 1891, the company agreeing to build in this country two additional vessels, the St. Louis and the St. Paul, which were accordingly built at Cramps' Shipyard, Philadelphia, in 1894-1895. Mrs. Grover Cleveland christened the St. Louis in 1894. These vessels now form the American Line in transatlantic traffic. For the year 1905, the American Line of five ships received about $663,000.00 of the U. S. Mail Subsidies, while $548,000.00 of our subsidies went to the North-German Lloyd, Hamburg-American, Cunard, and White Star lines. During the Spanish-American War, the St. Paul and the St. Louis became available as auxiliary scout cruisers and did good service in the navy, whereas the Columbia and Normania of the Hamburg-American, and the Havil of the North-German Lloyd, were sold by these companies to the Spanish government after the war broke out, and were employed to operate against us—vessels produced out of the profits of United States trade and United States subsidies. One or two of these vessels were employed in the fleet under Admiral Camara, which sailed from Cadiz to intercept Admiral Dewey, but returned when the American fleet was organized to strike the Spanish seaboard.
If we wrote a comprehensive history of our modern merchant shipping, it would be mostly occupied with foreign ships, since we have employed and depended upon them to do our carrying and have subsidized them liberally with our abundant wealth. We are now spending $400,000,000.00 building the Panama Canal for the use of foreign ships, one clause of the Hay-Paunceforte treaty being as follows: "The canal shall be free and open to the vessels of commerce and of war of all nations observing these rules, on terms of entire equality, so that there shall be no discrimination against any such nation, or its citizens or subjects, in respect of the conditions or charges of traffic or otherwise. Such conditions and charges of traffic shall be just and equitable." We have spent fully as many more millions dredging the Ambrose channel into New York harbor, the channel into Boston, the Delaware river most of its length, the channels leading into Galveston, Savannah, and Charleston, and dredging and jettying the Mississippi river leading into New Orleans; all of which has, in effect, been contributory to the subsidizing, with our wealth, the navies and merchant marines of these foreign nations. The government locks at the Sault St. Marie, and the improvements to waterways in the Great Lakes, are likewise enjoyed by Canadian shipping. We have built and maintained a magnificent and complete system of lighthouses and coastlights touching each other throughout the entire span of our territory and dependencies, and a complete system of buoys rendering every river and harbor safe for navigation. We have likewise built and maintained innumerable lifesaving stations, all comprising the most complete and up-to-date aids to navigation possessed by any country in the world. All of this has been generously paid for out of our treasury without any adequate returns from the foreign shipping which has so greatly profited thereby.
To control is to fix and to determine; to be controlled is to be dependent upon, and await the pleasure of. Foreign steamship companies determine our shipping freight rates; they determine the ports through which shipments are made, thereby building up one port to the detriment of another; and in case a foreign war breaks out, these ships are subject to be withdrawn and employed in the war, in which case our goods would lie upon the wharves awaiting the further disposition of the remaining foreign shipping of countries not engaged in the war. At the outbreak of the Boer war in 1899, Great Britain withdrew 250 steamships, of about 1,000,000 tons, from commerce, and converted them into use for transport and supply service. The ships of the North Atlantic being, as a rule, large and swift and most suitable for this service, were drawn upon for the most part, and the export trade of this country was the hardest hit, it was then we had a rude lesson of our dependence upon foreign ships. When the best ships had thus been withdrawn to undertake profitable government charters, some were replaced by a few old, cheap, and inefficient craft, with which to carry our goods. In the port of Boston alone the number of sailings in 1900 with grain, flour, provisions, and cotton, was 46, or 13 less than the year before, and some of these were in inferior vessels of smaller tonnage. According to the Boston Chamber of Commerce, the tonnage cleared at that port in the first four months after the outbreak of the war was 215,960 tons. The Boston Commercial Bulletin stated that in the year, the export in corn had been reduced from 2,107,694 bushels to 302,924 bushels, the actual decrease in cereals having been 1,750,000 bushels. The American shipments elsewhere were demoralized. The cattle shipments were reduced by about 4,000,000 head out of about 30,000,000, England being our chief customer. Our export breadstuffs, going all over the world, and carried mostly by British ships, shrank from $318,000,000.00 in 1898 to $270,000,000.00 in 1899 and $251,000,000.00 in 1900, in round figures. The freight rates, however, were increased by 30 per cent and the British shipowners lost nothing on the deal; but our farmers and merchants thereby contributed many millions of dollars to the subjugation of the Boer republic. And yet our farmers, and their representatives, in the West are opposed to ship subsidy, while they are said to have contributed enough in the Boer war to subsidize our own foreign shipping for twenty years! The total of our losses in that war cannot be fully estimated, but the effects were felt throughout the entire country, and that was in a war directed against a small country possessing not a single privateer or cruiser. What then if two large countries like Germany and England should go to war? We would be left high and dry upon the beach, without shipping to carry our commerce.
I have introduced the above facts into the final remarks under the paragraph devoted to the history of our merchant marine, since it appears fitting to have followed its transmigration from under the stars and stripes to the flags of other countries where it now is, and where we must leave it for the present.
PRESENT CONDITIONS.
Our foreign going merchant marine consists of ten (m) vessels, four of the American Line; one of the Great Northern Steamship Co., the Minnesota, plying between Seattle and the Orient; and five of the Pacific Mail Steamship Co., between San Francisco, Hawaii, Japan, China, and Hongkong. The last-mentioned company are expecting to withdraw the Korea, and later the rest of this line, and only a subsidy at this Congress can prevent this result. The same is true of the Minnesota. Only the American Line has any prospects of permanency due to the subsidies under the Ocean Mail law of 1891, passed during the administration of President Harrison. The Pacific Mail and Great Northern Companies are operated by the Harriman and James J. Hill Railroad interests as an adjunct to those lines, because of their value in making through freight rates to the Orient. The routing over all other railroads in this country of export goods is determined in great measure by the foreign steamship companies through their local agents. The railroads are placed into competition with each other, with the result that these agents are able to control the roads themselves sufficiently to kill all competition, and the roads thus favored with the handling of this freight are forced to comply or lose the traffic. This method of controlling the rates, and the roads themselves, in such a way as to freeze out the competition of independent home steamship lines, is exactly the same as practiced by the Standard Oil Co. prior to the establishment of the Interstate Commerce Commission; unfortunately this commission has no jurisdiction over through ocean shipping.
An agent of one of our railroads at New Orleans thus describes the method of operations: "The use of private terminal wharfage by favored steamship interests where their terminal expense is reduced to a minimum by railway absorption of charges, as quoted in their tariff, while these terminals are denied to the independent lines, has eliminated the American tramp ship and forced out of the trans-oceanic trade all ships of American register. These terminals are owned and operated by the railways, viz: Stuyvesant Docks, Westwego, Chalmette, Southport, Gretna Wharf, and Algiers Wharf." In fact, all the shipping terminals. The description further details the facilities afforded the favored lines and the obstacles placed in the way at the public wharves. Thus, the railroad keeps special handlers for the freight of the favored line, and the wharf is on the same level as the car doors, allowing a level truck from car to point of assemblage cargo; a switch engine in attendance prevents delays. The charges are very light, barely covering the labor used. When the order is given to unload a car, the failure to do it on that day places the demurrage charges upon the railway. The public wharves of these terminals are so arranged that the car door is 3 feet above the wharf, making the expense of handling double or treble that of the favored line, and demurrage begins after a stated time as provided for the general public under the regular railroad tariffs. Also, in the case of car shortage which is the usual thing, the cars containing goods for the public wharves must be unloaded upon open wharves, and tarpaulins rented at 25 cents each a day, 5 tarpaulins per car, and 5 watchmen per car at $2.00 per day each. Thus in the case of a ship of 4000 tons, or 200 cars of 20 tons each, the demurrage, after the free time allowed, would be $2oo.00 a day. The charges for tarpaulins, watchmen, and handling $71.33 a day; or a total of $271.33 a day or fraction thereof. The average ships take five days to load its total capacity if all were available, making a minimum of $1356.65 charges which the favored ship does not have to pay. It is manifest that the latter thus prevents its rival's prosperity and makes a good margin on its own cargo. The ability of the favored foreign steamship line to prevent competition is augmented by the fact that, in return for the privilege of handling the through freight of this steamship company, the latter are accorded the services of the regular soliciting freight force of the railway, who assemble cargo for these lines in hauling tonnage for their own lines. "The ruling of the Interstate Commerce Commission on making the initial line responsible for the delivery at destination is sufficient authority to allow such discrimination, and permit the making of through provisional bills of lading over these lines, while denied to independent vessels." This is the key to the whole situation, but many people who have observed the workings of these steamship lines in conjunction with the railroads have erroneously attributed the fault to the railroads. We are now in a position to understand why the late Mr. Harriman continued the operation of the Pacific Steamship Co. at a loss of $500,000.00 a year; it was undoubtedly to prevent the foreign steamship lines from taking over the profits of his railroad lines on through shipments. So likewise with Mr. James J. Hill's Minnesota.
Reverting to the port of New Orleans, which has been an easy prey of foreign steamship companies, an insight into the methods by which the profits have been squeezed out of that purely shipping city, is illustrated by a controversy occurring in the Board of Trade between the Cotton Exchange and the Maritime Exchange, the lamb and the wolf, respectively. The account appears in the Times-Democrat of November 18, 1906, and was reiterated in the issue of December 19, 1909. This controversy brought out the fact that the Maritime Exchange is composed of the foreign agents of foreign steamship lines, who were accused by the Cotton Exchange of throttling the commerce of the city, and of squeezing all the profit out of the cotton business. The method was through fixing the freight rates based upon the density with which the cotton was packed. The Cotton Exchange, made up partly of foreign steamship agents, but mostly of American citizens, made this pathetic appeal to the Board of Trade:
"The Maritime Exchange is a foreign corporation, formed by the foreign shipping interests, because its members formerly in the Cotton Exchange were not allowed to pass laws injurious to the trade of the port. No one objected to them protecting themselves, providing the requirements were the same as in other ports, but they first established rules detrimental to the port, and to avoid being brought into court and exposed, placed the following clauses in their contract," etc. Then after a pathetic plea asking the Board of Trade to force the Maritime Exchange to give New Orleans the same rules and rates as the other ports, ended by saying "Let the steamers that do not conform to these rules go elsewhere. Other lines will take their places." This protest was duly rejected, with force, by the Maritime Exchange, over the signatures of the agents of the foreign steamship companies, who accompanied the reaffirmation of the unfair charges by a threat of further discrimination, and this was duly approved by the president of the Board of Trade. At the same moment the British agent of the Leyland Line, whose signature appeared among the others of the Maritime Exchange, was president of the New Orleans Progressive Union, the most wide awake and influential commercial and political body in the South, and the influence of this body was in a position to be swayed against our merchant marine. The sentiment of New Orleans gives the cue to the other cities of the Mississippi Valley and greatly influences the entire South. Galveston, built up by these shipping interests, is full of foreign influence, and two papers of that city are violently opposed to American shipping. But New Orleans is awakening, a branch of the Merchant Marine League has just been formed, the citizens are beginning to realize their conditions and possibilities, and when the next subsidy bill goes to a vote, she will no doubt be heard from. There are 46 lines of steamships plying between New Orleans and foreign countries, all flying foreign flags. Of these the few that are participated in by American companies are operating chartered foreign vessels under foreign flags, manned by foreign crews.
Only last September, at the visit of President Taft to New Orleans, the following letter was addressed to the Collector of Customs at that port by the Assistant Secretary of Commerce and Labor, in reply to a query:
The Department has received your letter of the 9th inst., inquiring in behalf of the Entertainment Committee, whether there would be objection to the use of one or more foreign steamers to enable the President of the United States and his party, with delegates to the Waterways Convention, to spend three or four hours on October 30 in an inspection of the harbor of New Orleans and the lower Mississippi river.
The Department prefers not to answer the legal question until efforts have been made, for which there is ample time, to secure American vessels for the purpose. It is reluctant to believe that at our principal gulf port American shipping has so dwindled that to enable the President of the United States and a relatively small body of representative Americans to spend a few hours on the greatest American river, with a view to its .improvement, they must make the trip under a foreign flag.
This, at our principal gulf shipping port, in our greatest river, is a sufficient humiliation!
Only recently we celebrated the three hundredth anniversary of the discovery of the Hudson river at New York, and hundreds of ships of all nations took part; and among all that shipping there was only one solitary merchant over-sea ship flying the stars and stripes.
The Oceanic Steamship Co. of San Francisco, operating under the Ocean Mail law of 1891, after five years of trial found itself in competition with foreign lines under disadvantageous conditions. The route was from San Francisco to Australia, via Hawaii, Samoa, and New Zealand, a distance of about 8300 knots. The following shows the conditions of the competition:
Line. Nation. Speed (Knots). Subsidy.
Oceanic American 16 $16,600.00
North German-Lloyd German 15 41,600.00
French-Australian France 15 47,800.00
Yokohama-Australian Japan 14 21,900.00
Orient England 15 23,000.00
Immediately upon the defeat of the Merchant Marine Commission's subsidy bill of 1907, five days after the adjournment of Congress, the Oceanic Company's ships were taken off their course and dismantled, their officers and crews were discharged, and they are now lying idle in San Francisco Bay, an object lesson for the Congressional Committee which visited that city on September 23 of this year, and saw thousands of tons of shipping that had been put out of business in the same way. The end of the Oceanic Line left us with no communication with Samoa, and the people of Hawaii were obliged to ask Congress to permit foreign vessels to visit their ports! Meanwhile the business between San Francisco and Australia has had to take a roundabout course in British and Canadian steamers, involving loss of time and of millions of dollars worth of commerce.
The port of Boston is operated upon by 25 foreign steamship lines, all the Boston agents being foreigners excepting about four, who are American agents of foreign companies. These agents are members of the Boston Chamber of Commerce and have, in the past, exercised a controlling influence therein with respect to shipping matters. A reliable correspondent says with respect thereto, "A few years ago persons interested in the American merchant marine signified to officers of this Chamber of Commerce that they would like to have a declaration in favor of national aid to the merchant marine. These gentlemen were told that it would be unwise to bring forward such a proposition to the Chamber—that while unquestionably the American majority of the members favored it, the foreign interests would pack the meeting with their clerks and employees and defeat the resolution. Thereupon the effort to secure endorsement of the American flag was abandoned here, beneath the shadow of Bunker Hill." "Unquestionably the one greatest obstacle which we have to contend with is a tremendous political and commercial power exerted by the European steamship corporations in the United States." The above is quoted from one of the best informed men in this country on the subject.
There are six over-sea lines of steamers sailing from Baltimore, the agents of which represent foreign companies. My correspondent, in collecting information says," T he Maritime Exchange (supported largely by these people) was reluctant to assist me in this work . . . . they do not at all figure in the political activities of the city, but most of them are regarded here as public-spirited citizens." This is recognized as a sign that the usual thing has taken place in that city, as in other ports. Upon October 13 of this year the Shipping League of Baltimore was formed "for its special purpose of conducting an educational campaign in the South."
In Seattle there are 20 lines of steamers plying to foreign ports, and the agents of these foreign companies occupy the usual ratio of memberships in the Chamber of Commerce and the Merchants Exchange, as well as large commercial and political influences. My Seattle correspondent says: "It is a hopeful and encouraging sign to find a man in the navy who is anxious to help us. I have had rather disappointing experiences with our naval people heretofore, my encounters having been with officials of various rank, political and civil service; but have succeeded in accumulating but little assistance from those encountered. It seems to me there is a lack of sympathy in the navy with the work American business interests are endeavoring to promote for the betterment of our merchant marine. Moreover, I regret that I have frequently encountered officers who are inclined to belittle our efforts." I have quoted this so that naval officers may know what others are thinking, and may remedy this erroneous impression by showing at every opportunity that the opposite is true. Further he says that "all the lumber shipments from Puget Sound to Panama are 'made in foreign vessels, while at this time we have in excess of $3,000,000.00 invested in suitable tonnage idle and available for business."
The situation at Puget Sound in December, 1909, is fully covered by my correspondent in Seattle, which I have summed up in the following statements. A clipping from the Seattle Post- Intelligencer of December 8, 1909, states that 20p00p00 feet of Douglas fir have been shipped from Puget Sound to the Panama Canal during the past year and that much greater quantities will be shipped the coming year. The materials from the Pacific slope entering into the construction of the canal are confined almost exclusively to lumber. Almost every foot of it is handled by W. R. Grace & Co. (whose head firm is Grace Bros., London), who control also the lumber trade shipments to the west coast of South America, carried by many foreign tramp steamers under time charter. Be it known, then, that formerly the Panama trade was carried in American ships which are now lying idle. The rate then was $12.00 per thousand ft. B. M., disregarding lengths. Ultimately, the foreign vessels took up the trade and reduced the rates to $7.50 per M. The American vessels withdrew and took up the coastwise trade as far as the limited field permitted. After the American vessels were out of the way, two foreign competing lines gradually increased their rates until they have for some time back demanded $1I.00 on lengths up to 40 ft., and higher rates for greater lengths, increasing up to $25.00 per M. for 6o ft. lengths—much greater on the whole than the former American rates.
Now let us draw aside the curtain and note how this foreign control is perpetuated. From the same source, which is in reality the work of the leading spirits of the Seattle Merchant Marine League, the following information was derived. This League had recently appealed to the Navy Department for protection by giving certain preferences to American shipping which it claimed in the American coal-carrying business from the East to the West coast of the United States for the use of the navy. Immediately thereupon, the foreign ship agents began to manipulate the political wires to counteract this demand. A circular letter was sent out from Portland, Oregon, dated October 14, 1909, addressed "to farmers and grain growers," pointing out and denouncing the action of the Marine League, and representing "that the fifteen steamers bringing coal last fall really carried their wheat to Europe, except one or two carrying lumber" (the facts show that only one of these vessels cleared with wheat), "and that but for the presence of these coal vessels the freight to Europe would have been $1.00 per ton higher, or 3c. per bushel to each farmer for his wheat; that it was a case of Protection run riot, for the benefit of a few individuals of a ship trust, at the expense of the farmers."
These circular letters were sent out by Messrs. Balfour, Guthrie & Co. of Portland, without signature. This firm has its head office in London, and their local manager and all their employees hail from Scotland. They are the most extensive dealers in their line on the Coast, being grain buyers, brokers, and foreign ship operators; loading more than one hundred ships annually with grain for the United Kingdom.
This circular incited the farmers in Pendleton, Ore., to a meeting, and resolutions and protests, to the Navy Department and to members of Congress, urging a continuance of the employment of foreign vessels in this trade, and resolving that the Seattle Merchant Marine League was working in the interests of a "shipping trust." These resolutions were published in a number of the Sound papers and later an editorial appeared in the Oregonian, the most pronounced organ of the foreign shipping interests, haranguing the Congressman from that district by stating that he was present at the grangers meeting referred to, and that the writers of the editorial believed that he would be against the enactment of legislation favorable to an American merchant marine, or words to that effect.
In showing up the methods .by which the foreign shipping interests manage to manipulate us, through our ignorance and the other weaknesses inherent in our representative form of government, I only need to refer to what action might be expected of either the legislative or the executive branch of the government when beset by such conflicting clamors.
From every port the answers come in the same—sentiments controlled by agents and interests of foreign steamship companies. The strongest foreign control exists in New York, Boston, New Orleans, Galveston, and Portland (Ore.). The last two ports are the most bitterly resentful of any proposal to aid American shipping. New Orleans is almost now a convert, Boston will soon be likewise, but the big fight is on in New York and she will Ultimately vote for the stars and stripes, though maybe not right away. The foreign element is strong in the Chamber of Commerce, as is to be expected in our greatest shipping port, and the shipping interests will use all their commercial and political affiliations, and press bureaus in New York and Washington, and subsidized papers throughout the country, to fight the growth of American shipping unto the last ditch. Untold millions are at stake. New York is to-day the world's greatest shipping port.
Just at the time of this writing, at a meeting of the New York Chamber of Commerce, held upon December 16, 1909, resolutions favoring ship subsidies, discriminating duties, and free ships, were voted down. A special meeting had been called for the purpose of passing upon the favorable report which had been made by a committee of the Chamber, American friends of our merchant marine, the object being to formulate resolutions favoring the ship subsidy propaganda for the action of the present Congress. Of that meeting my Boston informant says: "New York merchants present at that meeting of the Chamber of Commerce, when the shipping resolutions were voted down, state that the meeting was crowded with foreign ship agents and ship brokers. The principal speaker against the resolution was Mr. E. H. Outerbridge, who is a Canadian, a brother of Mr. A. E. Outerbridge, the head of the Quebec Steamship Company, a British concern operating in the West Indies British ships which would be swept off the sea by high-class American steamers." A substitute resolution in favor of discriminating duties was first voted down; then the amendment for free ships adopted and the entire subsidy resolutions, including this amendment, were voted down. The New York Journal of Commerce in commenting, with evident satisfaction, upon these results, had the following to say: "The heartiness with which the original action on the amendment was taken leaves no doubt of its genuineness."
The foreign shipping organs in New York are said to be the New York Commercial Bulletin and the New York Journal of Commerce. It is alleged that marked copies of specially prepared anti-American-shipping editorials and articles are sent out from these papers and circulated in the West and South for prejudicing the press and public opinion in these districts, and are mailed to members of Congress and others in position to prevent legislation; and that the papers in the other ports most notably under the influence of this control are the New Orleans States, the Galveston News, the Galveston Post, and the Portland Oregonian, the latter being represented as the most bitter. The American Flag also asserts that the "agents of the foreign steamship companies fairly swarm in Washington," and "have been able to influence a few Washington correspondents." The New York agents are headed by Mr. Gustav H. Schwab, resident-director of the North German- Lloyd Steamship Co., and Mr. Emil Boas, resident-director of the Hamburg-American Line. Whenever we have had a convention to advocate American shipping, such gentlemen have been on hand, as delegates, as big as life, to advocate the contrary, 'and control the sentiment against ship subsidy.
Such was noted at the National Convention for the Extension of Foreign Commerce which 'met in Washington, January 14, 1907—gotten up by the New York Board of Trade and Transportation— where the foreign steamship interests were led by Mr. Gustav H. Schwab. There was present a certain ex-naval officer, who spoke in advocacy of "free ships." This same gentleman has very recently been before the Waterways Convention at Norfolk and the Society of Naval Architects in New York, and the New York Chamber of Commerce, preaching the doctrine that ship subsidies are unconstitutional and advocating "discriminating duties." Clause 3, Sec. 8 of Art. I of the Constitution gives power in perpetuity to Congress "to regulate commerce with foreign nations, and among the several States, and with the Indian tribes." Subsidies were voted and paid under the laws of 1845 and 1847, and the Senate has repeatedly voted for a subsidy bill and the Senate lawyers have never seriously raised the point that subsidies are unconstitutional. The Supreme Court has held that, wherein the Constitution does not expressly prohibit, Congress has inherent power to legislate. Why then these preachments to raise a doubt about a thing about which there is no room for doubt? Why also the urgency of a practical man to persuade public opinion to undertake legislation by impracticable and ineffective discriminating duties? Why should a reputed shipbuilder advocate a scheme which, in effect, protects every American industry excepting his own?
But, reverting to these foreign agents, the report of the Roosevelt Merchant Marine Commission said: "The foreign ships which now convey nine-tenths of our ocean commerce are invariably built abroad, officered abroad, manned abroad, repaired abroad. If they can possibly help it, they never use a pound of American material, except coal, or yield so much as a dime to American labor, beyond the stevedores. The managers of these foreign steamship companies are, as a rule, aliens, sent over to the United States. The very clerks in the offices are, as far as can be, brought from Europe. These foreign steamship agencies are virtually little European colonies on American soil; their fixed determination seems to be to exclude Americans by birth from all share or knowledge of the ocean shipping business.
"It has been testified before the Commission that not only do foreign ships, sent over here to engage exclusively in American commerce, bring officers and crews under long contract from home, and return home for all important repairs, but that many actually refuse to purchase food and other supplies here in the best and cheapest market. These vessels arrive loaded with home provisions and other material that are placed in bonded stores here and withdrawn from time to time as they are needed, so that so far as possible not one penny of money earned by these foreign ships in American trade shall return to the channels of American commerce."
Before quitting this section it will suffice to relate briefly the conditions of our trade with South Africa and South America. There are no American steamers to South Africa, but all our trade is carried in foreign subsidized lines. The Canadian government subsidized a line in 1901 and has built up a large trade with South Africa, and the shipping rates quoted in 1905 were $4.26 a ton from Montreal to Cape Town, whereas the rates our merchants paid from New York to Cape Town were $6.70 a ton; the Canadian rates being $2.00 or $3.00 a ton cheaper. Evidently, under these conditions, we can only get that portion of the export trade which Canada cannot supply.
Our trade between the Atlantic Coast and South America now equals about $250,000,000.00 a year, notwithstanding the very limited facilities for direct shipment and the large amount shipped via Europe, all in foreign bottoms. The total trade of South America with other nations is very much greater than this and is increasing at the rate of $100,000,000.00 a year. We are only getting the left-over portion of that trade which Europe cannot supply. Twenty years ago New York merchants built and operated a Brazil line to get some of this trade, but found they could not compete with the foreign subsidized lines; they appealed to Congress for a subsidy which was refused, and the line shortly went out of business. Thereafter, whenever our business men wished to visit South America to build up their trade, they found that to make connection with reasonable comfort and dispatch they were forced to go via Europe, thereby twice crossing the ocean, and returning the same way. Likewise their shipments had to be sent by the same circuitous route. Only one American line, the Red D Line, goes as far south as Venezuela, that line profiting from the mail subvention of 1891. Not one American ship goes to Brazil, Uruguay, Argentine, Chili, Peru, or Ecuador. Of the steamer lines and tramps under foreign flags that ply direct from the United States to South America, they are slow, uncertain and inefficient; they are taken unceremoniously away if needed for the European trade and are not to be depended upon; some of them are as slow as 8 or 9 knots, yet the rates are nearly double those of the fast and elegant steamers between Europe and South America. The Brazilian shipping combination, comprising the united foreign steamship companies that control the shipping trade between the United States and Brazil have formed a shipping ring, and squeeze out all competitors by Standard Oil methods. They have charged 40 cents a bag and 5 per cent primage for coffee to this country, and when a tramp comes by and offers to take it for 20 cents, they cut to 10 cents to get the shipment, and afterwards boycott the merchant into submission next time, refusing him reduced rates which are, at the right time, offered to other shippers.
At the first Pan-American Conference held in Washington many years ago, Mr. James G. Blaine presiding, Argentine agreed, at the suggestion of the United States delegates, to assist the United States to subsidize a mail line between New York and Buenos Ayres; that country afterwards passed the law, but ours failed to do so, and the scheme fell through. Argentine has now a trade of over $800,000,000.00 a year with other countries and we only get about $100,000,000.00 of it.
Every one of our European rivals in trade have fast fine subsidized steamer lines to South America; Great Britain had subsidized heavily in the past; also France; and Italy has five new 10,000-ton ships sailing from Genoa; Germany has forty-three large steamers, and more building, mostly to Brazil; even Portugal and Sweden have subsidized lines; and Japan has subsidized lines in the Pacific. Only the United States stands aloof, and yet we are the altruistic goose of the Monroe Doctrine. European countries might as well own South America for all our Monroe Doctrine, since such ownership could have no other ultimate aim than to secure for the owners the advantages and profits of trade to the exclusion of ourselves. We dominate this hemisphere of influence with our Monroe Doctrine to the same extent as the control of the Pacific and the Open-Door of China, and contribute the whole to the trade of other nations, with the Panama Canal thrown in for good measure; or, in other terms, we dominate nothing, but only the "big talk," while European nations are busy collecting up the golden eggs we are producing for their benefit.
I might retail further the multitudinous ills to which our shipping is subject, and the devious ways in which the foreign control is extended and perpetuated, but may sum up the situation with more brevity by the reminder that such depredations are to be expected as a natural result of the laws and forces acting against any homeless enterprise which is unprotected. In our tariff laws, we have protected all other enterprises in this country; our shipping we have refused to protect. The policy of a protective tariff, erstwhile partisan, is now national, and may be considered as a permanent institution. How foolish it is, then, for any American not speaking for the foreign shipping trust, to advocate withdrawing protection from our other enterprises as a means of protecting the only one left unprotected; in other words, that because of the higher cost of labor and materials in this country to build and operate ships under the American flag, due to the tariff, therefore reduce the tariff so that no business will be protected! That line of foreign-inspired talk is now well nigh out of date in this country. The only way to protect our shipping is to do it. The Trans-Mississippi Congress of merchants and farmers in 1903 struck the keynote when they resolved that "it is as absurd for the United States to depend upon foreign ships to distribute its products as it would be for a department store to depend upon the wagons of a competing house to deliver its goods."
A report of Senator Gallinger, chairman of the Senate Committee on Commerce, says: "The decline of our ocean shipping, our one unprotected industry, has ruined shipowners and shipbuilders alongshore from Eastport to Galveston and from San Diego to Puget Sound. It has impoverished and scattered our shipyard mechanics, the most skilled in the world. It has robbed the country of the hardy officers and seamen who should constitute our naval reserve; but it has done more than this—it has choked the normal growth of the export trade of the United States to four of the five other great continents. Therefore, there is not a wheat farm in the Dakotas, a cattle ranch in Texas, or a cotton plantation in Mississippi, Georgia, or the Carolinas, where the loss of American shipping has not made itself felt in shrunken sales and opportunities for profit."
EFFECT OF THE TARIFF.
The relative cost of wages to operate ships may be indicated by comparing the American St. Louis, a smaller ship, with the larger British Oceanic and the German Kaiser Wilhelm der Grosse:
German. British. American
Number of officers and crew 500 427 380
Wages, cost per month to operate $7,700 $9,900 $11,3oo
The available statistics show 50 to 100 per cent greater cost to operate American ships, man for man; the cost of food on American ships is 25 to 50 per cent greater. To build the ships the cost of shipyard labor is 50 to 100 per cent higher, and of materials 20 to 25 per cent higher; that of repairs is upon the same scale. In order, therefore, to protect our shipping it is necessary to offset this difference in cost by means of a subsidy sufficiently increased to permit our ships to operate in competition with foreign ships at as cheap or cheaper rates with faster and better ships. To do this will necessitate also that the grant should include a sufficient subsidy per se to offset the subsidy enjoyed by the foreign ship. Furthermore, the foreign lines, being already established in trade, may be able to operate upon reduced subsidies, whereas to build up our trade and until we should get a good start will require increased subsidies, for such is the rule of trade as found by the results of all experience. At first the subsidies must be in greater proportion, later they may be reduced as determined by the earnings, the measure of reduction being determinable from the volume of the trade and the excess of profits, which should for that purpose be accessible to the government. It will cost money to do this, and there isn't any slick trick of legislation which will bring it about without paying the price. Various people, foreign inspired and otherwise, advocate various remedies, such as free ships, free trade, and discriminating duties; but all of these propositions are quack remedies, and cannot effect a cure, as shown in the following.
QUACK REMEDIES.
Free Ships.—A definition of the "free ship policy is, that the country adopting it passes laws permitting its government or its citizens to purchase ships, either merchant or naval, from other countries and enter them into the home service, or home registry, without any charges for the privilege. In reality, it is a trick invented by England as a means of fostering her ship-building industries in building the ships of all countries. In the years between 1840 and 1860, during the transition from wooden sailing to iron steamships, England heavily subsidized her steamship lines, which gave iron ship-building and steam-engine building such an impetus in British yards that other nations could not compete with them. Shrewdly foreseeing this result, England adopted .the free ship policy, and then encouraged other nations to do likewise, with the results that all important maritime nations did so, except the United States; and since that time English shipyards have flourished not only upon the subsidized British ship-building, but also upon the building of both merchant and war vessels for most of the other countries. England, however, never intended to buy ships built elsewhere and never did so, her free ship policy being a free ship myth except as a trap to catch the shipbuilding of other countries; and in her recent subsidy to the Cunard Line it was expressly stipulated that the ships thus affected should be "built in the United Kingdom," even though the free ship policy still remains upon the statute books.
France followed England's lead with the free ship policy and had her ships built in British yards; that had the effect of placing the French shipyards into discouragement which had its inevitable effect upon the shipping output, and France, in 1881, found her merchant marine decreasing and her shipyards in such poor shape that she found it difficult to get new battleships without going to England for them also. This weakening of the other countries was, no doubt, among the results hoped for by Great Britain. France, realizing that England had tricked her, then began to retrieve herself by subsidizing and building her own ships, which she has since done. Germany had the same experience, and bought both her merchant and war ships in England, and found that to build up her own shipyards she must subsidize her shipping and carry along her shipbuilding industry as a necessary adjunct thereto, if she wished to become independent of England, which she has done since 1881. So likewise with Norway, Italy, and Japan. It is thus proved by experience that the free ship policy is valuable only for us to find out all about, in order to avoid having anything to do with it.
If this country should adopt the free ship policy, and we should have our merchant ships built abroad and entered under American registry, that would have the effect of leaving our shipyards unprotected against foreign competition, and the ships themselves would still have to be subsidized to offset the additional cost to operate under the American flag as well as to offset the foreign subsidy; hence free ships would only complicate our ills. In 1904, the Roosevelt Merchant Marine Commission visited twenty-one of our principal sea ports, and took the testimony of over three hundred shipping experts, and out of all these only one or two were found who asserted that American registry would be sought even if the ships could be built abroad. Besides, any scheme to upbuild our merchant shipping by leaving our shipbuilding industries unprotected, can only cripple one of the essential elements, and must necessarily tend to defeat the objective sought, as in the case of France and Germany described above. The recent financial difficulties of our own shipyards are cases in point. Free ships are out of the question.
Free Trade.—Free trade, like free ships, is another British invented myth to catch other nations' trade with. It means, in reality, that its advertisement shall serve England to make free with the trade of other nations. Of course England may not have sufficient reason to protect the industries of her small island by a tariff wall as we do, but instead she protects her main industry, the shipping business, to the limit; and from the control of the trade thus obtained she extracts far more profit than a tariff could possibly supply. Both the shipping and the shipbuilding of England are more highly protected, and this protection is more rigid, than in any other country in the world. The British government does not permit of the use of a single article of foreign manufacture in the construction of its naval vessels or its merchant vessels that have mail contracts. Yet that country advertises itself as being an adherent of free trade. Even in this country of high protection, though the materials of our naval vessels must be of domestic production, yet all other ships may be made of foreign materials by payment of the duty on them. England, therefore, is more rigid than we are, and if we take into account the fact that the greatest part of the British population is engaged either in shipping or shipbuilding or in furnishing materials for shipbuilding, the great extent of British activity covered by this protection is all the more apparent. In fact, the whole of Great Britain is more or less an immense shipyard and shipping point, loaded to the gunwales with protection and subsidies. The tariff, therefore, on imported shipbuilding materials is absolutely prohibitive; and if there is no tariff upon the balance of her imports it is because she chisels the profits off said imports while en route to England, instead of at the point of landing. To say that England practices either free ships or free trade is mythical, and no one in this country now believes in free trade.
Discriminating Duties.—From the fact that our early successes in the shipping industries were due to the practice of discriminating duties together with bounties upon export dried and pickled fish, and upon the fishing vessels and fishermen engaged therein (acts of 1792 and 1813), some people profess to believe we should return to the same expedients as the proper solution of our difficulties. Times have changed, however, and discriminating duties are as out of date as piracy. Aside from the forty reciprocity treaties, containing the "most favored nation agreements," we have made with various countries since those times, and aside from the fact that all nations that have experimented upon those lines have been forced to abandon, and have actually abandoned, the practice, I need only recall that we ourselves were forced to abandon discriminating duties on British ships as a result of the War of 1812. It would seem useless, therefore, to hunt for other reasons against an obsolete and impracticable procedure. There are many people, however, who profess to believe that what we did successfully once we can do again; that the reciprocity treaties can be dissolved after a year's notice; and that the probabilities of retaliation have no fears for them. To all such let it be known that this "policy of the fathers," even if reverted to, cannot cope successfully with present-day conditions. This practice consisted in remitting to per cent of the tariff duties upon goods imported in American bottoms. Evidently, then, the inducement led only to ships on the homeward trip; that is, one way. Subsidy works both ways, both going and coming. A 10 per cent reduction on the duties can be met by a foreign subsidy sufficient to permit the foreign vessel to reduce its rate to more than offset the amount of the discrimination, and still get the shipment; subsidy, once the practice is established, is more flexible in controlling the trade than is a readjustment of tariff rates with all the intricacies involved. Besides, the routes of shipment, and the class and sources of imports are very different nowadays from the days of discriminating duties, and the tariffs are not equalized or adjusted so that the benefits of discriminating duties could be distributed in the proper proportions to encourage all lines of trade alike. In the old days practically all our imports were dutiable, so a remission of duties was distributed. Nowadays, the free list of non-dutiable imports is very large, and to meet success in this application the free list would have to be abolished. About 35 per cent in value and 65 per cent in bulk of our imports are on the free list. Of this, nearly all our imports of raw materials, 82 per cent from South America, and 94 per cent from Central America, are on the free list. These countries we are the most anxious to build up a shipping trade with, and discrimination duties could be of no avail there. On the other hand, our imports from Europe are all dutiable except 28 per cent, and from the West Indies all but 17 per cent. A remission of io per cent of the tariff, therefore, would have the effect of rewarding 83 per cent of the import trade from the West Indies, 72 per cent from Europe, 18 per cent from South America, 6 per cent from Central America, 5o per cent from China, 36 per cent from Japan, and 31 per cent from India. Undoubtedly, to distribute the rewards by this method so as to actually build up and maintain steamship lines in competition with foreign subsidized lines, not only would the free list have to be abolished, but the whole scheme of tariff rates would have to be readjusted with that end in view. A remission of tariff duties to the shipper is the equivalent of giving him that much money out of the treasury, and is in reality a subsidy; for whether a subsidy be given in the form of a remission of tariff dues before the money equivalent goes into the treasury, or whether given as a subsidy direct with the money after it has reached the treasury, it is all government money nevertheless, and will require the same amount whether applied the one way or the other, to do the work. Why, therefore, should we quarrel with terms, or meddle with impracticabilities, or trifle with obsolete and unpopular discriminating duties when we can, for the same money in the form of subsidies, get the results we want without taking any chances. If this great country can't go straight down into its pocket and pay cash for the thing that will have to be bought with money anyhow, it would better go out of business.
CHEAP AT THE PRICE.
At the present time the sum total of our exports amounts to about $1,750,000,000.00 in value, and our imports $1,250,000,000.00, the difference in our favor being $500,000,000.00 which insures our prosperity. This balance, however, is diminishing rapidly, but out of it we are paying $300,000,000.00 a year to foreign steamship companies to carry these imports and exports for us. The annual profits from our foreign mails amount to from $6,000,000.00 to $8,000,000.00 a year; the amount we now pay to American steamers is about $1,500,000.00, and to foreign steamers is about $1,225,000.00, to carry these mails. In order to capture all this business for American vessels the Roosevelt Merchant Marine Commission's subsidy bill offered to subsidize twelve lines of steamers at a cost to the treasury increasing by about one-and-one-half million dollars a year for ten years, the total cost at the end of ten years being only about seven-and-one-half million dollars. The ships were to be suitable for naval purposes, and the crews available for the naval militia. That bill and the subsequent modified bills of more modest proportions, have gone down to defeat before the avalanche of criticism engineered by the subsidized agents of the foreign steamship interests. We are truly a nation without foresight, as weak in defending ourselves against the trade depredations of outside nations as is China to defend herself against the onslaught of military powers, doubly weak, because our wealth is greater than that of all other nations combined.
WHAT OTHER NATIONS ARE DOING.
England.—Great Britain began paying subsidies about the year 1840, and has since that time paid out upwards of $300,000,000.00, which is far more than any other nation. It coincides with the amount now being paid by this country to foreign steamship lines to carry our ocean commerce each year. England subsidizes thirty steamship lines, belting the entire world. The subsidy payments amount to about $6,000,000.00 a year, not including the recent $1,100,000.00 grant to the Cunard Line. Besides the above mail subsidies there are admiralty subsidies to fast steamers and retainer bounties to 33,500 merchant seamen and fishermen of the royal naval reserve. The great number of tramp steamers, while not directly subsidized, are indirectly the product of the subsidy system; since, on the one hand, they represent the economical resultant of the shipyard surplus of labor and materials, while, on the other hand, they are owned in great part by subsidized lines and are operated to supplement the regular service in carrying the trade built up by the subsidized lines. England recently subsidized the Cunard Steamship Co. by making it a gift of the two magnificent transatlantic liners Mauretania and Litsitania, and of an additional sum of money under the following conditions: these vessels were to be built in England of British labor and materials at a cost of $6,500,000.00 each. For this purpose the government loaned the company the necessary $13,000,000.0o at 2 3/4 per cent interest for a period of twenty years; that is, a return payment of $357,500.00 per annum, or a total of $7,150,000.00. To offset this, the government first gave this company a subsidy of $750,000.00 a year, afterwards increasing it to $1,100,000.00, the amount at present allowed.
France.—The mail subsidies are about $5,000,000.00, and the navigation and construction bounties about $3,500,000.00 additional, per annum. France abolished discriminating duties and adopted the "free ship" policy in 1866, with the result that her ships were built in England, which proved ruinous to the French shipyards. In 1872 discriminating duties were re-established, but other nations, including the United States, retaliated, so she returned to the "free ship" policy, and in addition gave subsidies to mail lines, and bounties to shipyards and seamen. Her tonnage has been greatly increased, great shipyards have been developed, and a naval reserve of officers and seamen created.
Germany.—Germany first tried the "free ship" policy which killed her shipyards while her ships both merchant and naval were built by England. In 1881, at the instance of Bismarck, subsidies were begun and now amount to about $3,000,000.00 for mail service; in addition, the shipyards are subsidized by the aid of the State railways which haul shipbuilding materials at cost, and which give preferential rates to goods for export by German steamers.
Evidently, from the experience of France and Germany with "free ships," and the present resultant bounties on construction obtaining in both countries, it is certain that any system of protection to shipping which excludes the shipyards is bound to be disastrous not only to shipbuilding, but also ultimately to the shipping itself.
Italy.—First tried "free ships," but like France and Germany had to turn to subsidies to prevent a total depletion of her shipyards. The total subsidies now amount to about $3,000,000.00 a year.
Japan.—Tried "free ships," but now subsidizes to the extent of $6,200,000.00 a year, builds her own ships in her own shipyards, and gives bounties to her naval reserve and fishermen.
Russia.—Russia is in the same class with the United States; she adopted the "free ship" policy, and her native shipbuilding has been smothered. Recently she has subsidized to the extent of $2,000,000.00 a year, more than the United States pays for mail subsidies.
Several of the smaller nations subsidize, where they have any shipping worth mentioning.
THE NEEDS OF THE NAVY.
Our own merchant shipping has been so sadly neglected that when our fleet recently made the tour around the world it was attended by twenty-seven colliers flying the flags of foreign nations. In case of war, that number would be only a fraction of what we might need throughout a conflict, and unless we have subsidized merchant ships and crews convertible into war purposes, the left arm of the navy, which I shall term the merchant marine, will be crippled, and consequently the force of the navy much modified and diminished.
As indicating the needs of the navy in merchant shipping, the following is quoted from a report of the General Board of the Navy Department, dated November 23, 1905:
Sir: In compliance with the Department's endorsement dated October 20, 1905, referring to the general board for report and recommendation a letter from Senator Gallinger, chairman of the Merchant Marine Commission, to the Secretary of the Navy, in relation to the extent and character of the merchant marine that this nation should possess to supply its possible needs in time of war, as viewed from a military standpoint alone, the general board has the honor to submit the following:
The need of auxiliary vessels in time of war for military service is felt both by the army and the navy…Vessels other than the fighting fleet which would be needed by the Navy Department in time of war, and which would largely be drawn from the merchant marine, may be classed as follows: Scouts, colliers, ammunition ships, supply and refrigerating ships, distilling ships or tank steamers, hospital ships, repair and torpedo depot Ships, transports, dispatch vessels, tugs…It is, of course, impossible to foretell the extent of the needs of the navy in any future war, they being dependent altogether on the size of the United States Navy at that time and the nature of the campaign to be carried out; but summarizing the above, the number of auxiliary vessels necessary for naval purposes would be, roughly, as follows, basing the number upon a squadron of eight battleships with attendant cruisers, torpedo-boat destroyers, etc.:
20-knot scouts, 8 for each squadron.
15-knot squadron colliers, 5 for each squadron.
Slower colliers, dependent upon circumstances. Say, roughly, 5 for each squadron.
13-knot ammunition ships, 1 for each squadron.
12-knot supply and refrigerating ships, 1 for each squadron.
12-knot tank and distilling ships, 1 for each squadron.
12-knot hospital ships, 1 for each squadron.
12-knot repair and torpedo depot ships, 1 for each squadron.
18-knot dispatch boats, district scouts, etc., 2 for each squadron; 5 for each naval district (10 naval districts).
12-knot transports, 6.
Tugs and steam lighters, 2 for each squadron.
Tugs, 100 for navy yards and naval districts.
If the United States should go to war when the vessels now authorized by Congress are completed the navy would then possess 27 battleships in addition to cruisers, coast-defense vessels, torpedo-boats, etc., and with the following auxiliaries now built or building: 3 scout cruisers, 2 squadron colliers, 16 slow colliers, 3 supply ships, 1 tank ship, 2 hospital ships, 1 repair and distilling ship, 6 transports, 23 dispatch boats and yachts, and 43 tugs.
It is thus seen that the Navy Department would be compelled to secure from the merchant marine, following the proportion of auxiliaries given above: 24 scouts, 16 squadron colliers, 2 slow colliers, 5 ammunition ships, 2 supply and refrigerating ships, 4 tank and distilling ships, 2 hospital ships, 4 repair and torpedo depot ships, 34 dispatch boats, district scouts, etc., and 78 tugs.
In order to be sure that this number of vessels would be available for immediate purchase of charter by the Navy Department at the outbreak of War, the number of American-owned merchant vessels of each type should be largely in excess of the number here given, as some vessels would be abroad when needed, some under repairs, and some should be left for carrying on their regular commercial runs and as a reserve from which to draw in case of necessity.
Summarizing, the general board considers that, from a military standpoint, a bill which would encourage the building of large fast vessels suitable as auxiliary cruisers, scouts, and squadron colliers would be of great advantage as assuring to the Navy Department means of obtaining necessary auxiliaries in time of war important as affecting the operations of the fighting fleet…Another benefit which would accrue to the navy from a large fleet of American-owned merchant vessels would lie in the large number of experienced seagoing men, engineers, and firemen accustomed to marine engines and boilers, who would form a valuable reserve from which to draw the men for manning the auxiliaries.
The report of the Army. War College, upon the same subject, dated December 22, 19o5, contained the following statements:
Sir: The special committee appointed to prepare a report on the letter of Senator Gallinger to the Secretary of War, on the subject of the merchant marine in its relation to military transport, has the honor to submit the following report:
In any military enterprise involving the movement of troops over sea, the matter of first and paramount importance is the transport. The primary requisites of sea transports are sufficiency, suitability, and readiness. The secondary consideration is cost—secondary not alone because war is ill adapted to economical prosecution, but also because in preparing for war it is generally true that the worst way is the dearest and the best is the cheapest; the worst being a procrastinating, unready policy of penury during peace and prodigality during impending or actual hostilities, the net result of which is equal or greater ultimate expenditure and much less value received…With the regular army at its present authorized strength, it is an outside assumption that two divisions could be made ready to embark in fifteen days. Hence, 20 of the larger and 18 of the smaller ships available in fifteen days would meet the probable needs under this category.
As an expedition may be necessary from either the Atlantic or Pacific coast, and as ships in either ocean cannot possibly be made available in fifteen days for an expedition from the other coast, there should be on each side a number of suitable ships afloat, such that the numbers specified above can be obtained within the time stated. Supposing these ships to be engaged in foreign trade, it is not probable that more than one-third of those in either ocean could be obtained and made ready in fifteen days. Assuming this ratio, it follows that to provide suitable ships for a rapid movement of two divisions from either coast, there should not be less than 60 of the larger and 54 of the smaller size afloat in Atlantic and the same in Pacific waters, or 520 of the larger and 108 of the smaller size in all, an aggregate of 228 vessels.
Larger expeditions will require a longer time to prepare and will give a longer time to collect ships, causing a larger proportion of those afloat to be available. The total capacity of 228 ships would be about 225,000 men of all arms, completely equipped. The number of ships above indicated and of the kind described will permit an expedition of 225,000 men, or any less number, to sail as soon as it can be made ready to embark, without delay on account of sea transport.
The aggregate gross measurement of 228 ships of the size indicated above is 1,368,000 gross tons. The official list of merchant steam vessels for 1904 shows 57 seagoing ships of 4000 gross tons and upward, with an aggregate tonnage of 400,000. This includes the very fast American liners, which would doubtless be required by the navy for scouts, and also some very large ships which would not be generally serviceable. Of these ships 8 are substantially of the smaller and 9 of the larger sizes described. The others vary in size and proportions to such an extent as to make it unsafe to adopt factors smaller than 4 gross tons per man and so per animal in gauging their capacity. With these factors a division would require 116,000 gross tons of transport, and two divisions—the force previously discussed as a first expedition to be dispatched at once—will require 232,000 gross tons, selected from this list of ships. In short, to strike the quick force of a blow corresponding to our permanent military establishment would require practically all the American shipping of suitable character in Atlantic waters and more than the entire tonnage in Pacific waters.
There needs no argument to show that this transport tonnage could not be procured in fifteen days. It is doubtful whether it can be procured at all, except by impressment and in a period of six months or more. For the transportation of the Santiago expedition in 5898 the Quartermaster's Department chartered every American vessels that could be obtained in the Atlantic ports during the twenty days following the declaration of war and succeeded in obtaining a fleet of 36 vessels, averaging 2500 gross tons. But two of these were over 4000 tons. The ships had an aggregate capacity of 90,000 gross tons, or less than one-half the quantity required to embark a force of two divisions. The expedition was fitted out for a definite voyage of thirty hours from Tampa to Habana. Circumstances finally determined that the voyage should be one of eight days to Santiago. The official records afford ample evidence that the safe arrival was due to the good fortune of continued fine weather. A severe storm encountered would have scattered the fleet, probably with great loss of life, and would have defeated the object of the expedition. There is nothing except its successful arrival to justify its departure…This condition cannot improve until the American steam seagoing merchant marine has increased in tonnage to approximately two and one-half times its present volume by the addition of ships adapted in size and design to quick conversion into suitable transports and built under conditions which make their voluntary surrender to the United States on demand a foregone conclusion.
So far as concerns the interests of military transports, any subvention, subsidy, or other assistance rendered by the United States to the American merchant marine will produce the greatest return for the money expended if the legislation is so framed as to require or strongly encourage the construction of ships of the two sizes and with the proportions and arrangements described in this report.
THE NAVY LEAGUE.
I have endeavored to portray, in the foregoing, the many ills with which our merchant marine is afflicted and the consequent weakening effect upon the navy; and it ought to be evident to anyone that the navy and the merchant marine are essentially dependent upon each other, each being the necessary supplement of the other, without either of which this country can ill afford to be found. The interests, therefore, of the Navy League and of the Merchant Marine League lie along the same directions, and they interlock and overlap at vague and indistinct lines of separation; so that, in reality, they should be found marching hand in hand both working for the upbuilding of the merchant marine and the upbuilding of the navy. The Navy League has had an easy task in behalf of the navy, the popularity of which has probably needed no seconding. On the other hand, the Merchant Marine League of the United States sorely needs the practical assistance of the navy and of the Navy League in its uphill fight for a decent merchant marine. This Merchant Marine League was established at Cleveland, Ohio, in 1904, in continuation of the work of the late Senator Marcus A. Hanna, and has ever since been engaged in a campaign of education for the purpose of restoring the American flag to the high seas. At the present session of Congress the Humphrey subsidy bill I will either pass, or subsidy legislation will again meet a material setback; if it passes it will be the entering wedge and should be followed up by additional legislation. A magnificent opportunity is thus opened for the friends of the navy to strengthen the navy's left arm, and uplift the merchant marine—a work more promising than any other line of effort now within reach. What has the Navy League done, and what will it do? What can the navy do to lift up the stars and stripes now drooping over the last remnants of our merchant shipping?