With a definite tonnage limitation established for all classes of naval ships by the terms of the London Naval Treaty of 1930, the national merchant marine assumes a still greater relative importance.
One of the three important elements that comprise sea power is:
A national merchant marine adequate in number and types of ships, and in national personnel, to carry on the nation’s trade and to supplement and to supply the Navy in time of war.
There is an unfortunate, widespread impression in the United States that we could carry on a successful war without sea-borne commerce. In fact, many men of prominence, very much in the public eye, have stated that we are the most self-contained nation that has ever existed, and that we need no importation of raw materials in case of war. How far this impression and this statement depart from the actual facts is shown by the accompanying list of raw materials, practically all of which are absolutely essential in time of war, and for which the United States depends largely or entirely on importation in merchant ships, and of which there are little or no reserve stocks carried in this country. The destruction of our sea-borne commerce would, therefore, deprive the manufacturing establishments in this country of the raw materials necessary to produce the finished products required for a successful naval and military campaign, and an enemy that had secured the command of the sea could destroy our sea-borne commerce without approaching nearer than several hundred miles to our coasts.
It is to be noted that the producing foreign country is not in all cases the country from which they are exported to the United States; thus a considerable portion of rubber, tea, wool, tin, and silk are shipped to the United States from England.
Partial List of Important Raw Materials Which Are not Produced in This Country, or are not Produced Here in Quantity Sufficient to Meet Domestic Requirements, with an Official Estimate of the Quantity Importation of Each that Would be Necessary During the First Year of a War.
Material | Principal use | Principal foreign source of supply | Domestic production | Estimated required importations first year of war. |
Manganese (high-grade) | Manufacture of steel. Very high- grade manganese ore required in manufacture of high-grade steels, for ordnance material, for aircraft material, etc. (Large deposits of low-grade manganese ore in U. S. but deposits of high-grade manganese ore very limited.) | Brazil, India | (1918)—305,000 tons (1923)—32,000 tons | 1,200,000 tons |
Tungsten | Manufacture of high-speed tool steel | China, India | (1923)—250 tons | 12,000 tons |
Tin | Food containers, bearing metal, solder, bronzes | Straits Settlements, Bolivia | None | 100,000 tons |
Nickel | Ordnance material, engine forgings, shafting, monel metal | Canada | Nominal | 25,000 tons |
Partial List of Important Raw Materials Which Are not Produced in This Country, or are not Produced Here in Quantity Sufficient to Meet Domestic Requirements, with an Official Estimate of the Quantity Importation of Each that Would be Necessary During the First Year of a War.
Material | Principal use | Principal foreign source of supply | Domestic production | Estimated required importation first year of war |
Graphite | Lubricants, crucibles | India, Mexico, Madagascar | 5,000 to 15,000 tons | 35,000 tons |
Sodium nitrate | Explosives, fertilizers | Chile, | Depends principally on possible production of fixation plants | 1,500,000 tons |
Rubber | Automobile tires, mechanical rubber goods, boots, shoes, insulating materials, gas masks, hospital supplies | Straits Settlements, British and Dutch East Indies, India, Burma, Brazil | None | 500,000 tons |
Cork | Life preservers, heat insulating materials | Portugal, Spain | None | 120,000 tons |
Iodine Manila, Sisal, Hemp, etc. | Medicinal use Cordage and twine | Chile, Philippines, Mexico | Practically none None | 700 tons 300,000 tons |
Jute | Burlap and gunny sacking | India | None | 500,000 tons |
Wool (raw) | Clothing, blankets, etc. | Australia, Argentina, China | 140,000 tons | 300,000 tons |
Silk | Clothing, powder bags, parachutes | Japan, China | None | 35,000 tons |
Shellac | Varnish, electrical apparatus | India | None | 20,000 tons |
Chinchona bark and Quinine | Medicinal use | East Indies | None | 7,000,000 oz. |
Cocoa | Food | British W. Africa, Brazil, Ecuador | None | 300,000 tons |
Tea | Food | China, Japan, Ceylon | Nominal | 80,000 tons |
Sugar | Food | Cuba, Hawaii, Philippines, Porto Rico | 1,000,000 tons | 6,000,000 tons |
Coffee | Food | Brazil, Columbia, Venezuela | None | 900,000 tons |
While a complete lack of knowledge relative to our foreign trade and the important relation of the merchant marine to that trade is not so widespread as it was a few years ago, still there are a great number of people in the United States who have no real conception of this vital subject.
It, therefore, becomes the duty of naval officers to make themselves thoroughly familiar with this subject, to grasp every opportunity to inform their acquaintances in civil life with the facts relating thereto and to impress upon them the vital necessity of an adequate American merchant marine.
For the years 1927, 1928, and 1929, the tonnage and value of our foreign world trade were as shown in the table on the next page.
1927 | 1928 | 1929 | |
Imports, tons | 42,183,000 | 47,395,000 | 50,985,000 |
Imports, value | $3,661,394,000 | $3,550,231,000 | $3,807,025,000 |
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Exports, tons | 56,935,000 | 58,829,000 | 57,475,000 |
Exports, value | $4,049,882,000 | $4,230,211,000 | $4,284,218,000 |
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Total, tons | 99,118,000 | 106,224,000 | 108,460,000 |
Total, value | $7,711,276,000 | $7,780,442,000 | $8,091,243,000 |
approximately 55 per cent of which was export of manufactured articles, raw materials, and foodstuffs.
This stupendous volume of trade was carried as follows:
American vessels, tonnage | 42 per cent | 42 per cent | 40 per cent |
Foreign vessels, tonnage | 58 per cent | 58 per cent | 60 per cent |
American vessels, value | $2,634,794,000 | $2,592,511,000 | 2,680,979,000 |
Foreign vessels, value | $5,076,482,000 | $5,187,931,000 | $5,410,264,000 |
The Department of Commerce, after a careful survey, has estimated that one out of every six of our citizens who are gainfully employed, depends for his living on our foreign export trade, so that the complete loss of our foreign markets would directly create an unemployed list of about 2,900,000 citizens and the ramifications and the loss of business which would result from the loss of income of these nearly three million people would be widespread. This is an average of 60,000 for each state and, of course, there is a greater number of citizens employed in foreign export trade in a manufacturing state such as New York or Pennsylvania than there is in a state in which manufacturing is not such a primary interest.
To successfully compete with other nations in the markets of the world, we need a merchant marine owned and operated by Americans. If anyone believes that we can depend upon a foreign merchant marine to serve our maritime and commercial interests properly, he is believing in an utter fallacy. In such case, the merchants and manufacturers of the United States with their carriers owned and operated by their foreign competitors, would be in precisely the same status as the Standard Oil Company of New York would be if it depended upon the shipment of its products on ships and railways owned and operated by the Royal Dutch-Shell Oil Company, or would be in the same status as Wanamaker’s of New York if it depended upon the receipt of its shipments and the delivery of its merchandise to its customers in New York and vicinity on delivery trucks owned and operated by Macy and Company, or by Bloomingdale Brothers.
The merchant marine of the United States engaged in foreign trade in competition with foreign merchant marines is seriously handicapped in many ways. First by the fact that, with the exception of merchant ships captured in time of war, it is not possible to obtain American registry for a merchant ship unless that ship was built in an American shipyard, and it is quite right and proper that such should be the case. But, owing to the higher cost of materials and the higher wages paid American shipyard mechanics, it costs more to build a ship in an American shipyard than it would cost to build that same ship in a foreign shipyard. Added to this higher initial cost, and as a direct resultant therefrom, there is the increased depreciation figure and increased interest on the investment, both of which must be charged as part of the operating cost. Then, too, there is the question of repairs. Foreign ships generally have their repairs made in the cheapest market. For instance, the ships owned by the Canadian Pacific Railroad and British ships sailing to far eastern waters have their repairs made in Chinese shipyards where the cost of labor is very small compared to the cost of labor in British shipyards, Canadian shipyards, or shipyards in the United States. If an American ship has its repairs made or its equipment replaced in a foreign shipyard, unless those repairs or equipment are necessary for the safety of the ship, its crew or passengers, our government charges the American shipowner or operator a tax of 50 per cent of the repairs made or the equipment replaced in the foreign shipyard. There is the further handicap due to such legislation as the LaFollette Act, which requires American ship operators to employ larger crews, to pay them higher wages, and to provide more expensive accommodations and better food than is the case with foreign ships. Consequently, to enable American ships engaged in foreign trade to compete on an even basis with foreign ships, some sort of government aid seems to be necessary. Such aid is usually referred to as a “ship subsidy.”
Every maritime nation, except the United States, has subsidized its privately owned ocean shipping. But it is a remarkable fact that the term “ship subsidy” in connection with our ships operating in foreign trade, seems to have the same effect as waving a red flag in the face of a bull. A number of important and influential newspapers in the United States have repeatedly stated, and their statements are apparently believed by a large number of American citizens, that the purpose of a subsidy for our ships operating in foreign trade, is merely to take money out of the pockets of the farmer and the pockets of the working man and put it into the pockets of the Wall Street gang.
There has never been built up in the United States any great industry without the aid of a subsidy in one form or another. Our transcontinental railway companies were subsidized in the building of the transcontinental railroads, by which the United States was opened up to development, by the granting of scores of thousands, if not hundreds of thousands, of acres of the public lands. Every manufacturing industry in the United States has been built up and is being maintained under the protection of a subsidy in the form of a protective tariff— that is the case with steel, automobiles, machine tools, woolen and cotton goods and very many other items.
Our coastwise shipping is absolutely protected against foreign competition by navigation laws which forbid foreign-owned ships from carrying passengers or merchandise from one United States port to another United States port. If a foreign-owned ship operating between San Francisco and the Asiatic ports, carries American passengers from San Francisco to Honolulu, the foreign shipowners are fined $1,000 for each passenger so carried.
As pointed out above, the shipbuilder himself is protected against foreign competition by the practical impossibility of a foreign-built ship being entered in the American registry. But, American citizens who desire to operate American-built ships in foreign trade are apparently the only citizens who have not heretofore received government aid for the business in which they desire to engage.
We are further handicapped in engaging in foreign trade in our own ships by the fact that a very large part of our merchant tonnage was built during the war when the only thought was to transport food and supplies for the American Expeditionary Force and for our allies. Many of these ships are not fitted to carry freight of a specific character such as frozen beef from the Argentine, are expensive to operate, and are slow in speed. Slowness in speed not only detracts from the usefulness of these ships as naval auxiliaries in time of war but also greatly reduces their earning power, as many passengers will not travel on a slow ship if a faster ship is available and valuable cargoes, of which silk is a marked example, on account of the great amount of money tied up in the shipment, which is not released until the merchandise is placed on the market and sold, will not be shipped on anything but the fastest ships available. Of our total seagoing merchant tonnage of 11,164,000 only 2,024,000 tons have a speed greater than twelve knots, while of Britain’s total merchant tonnage of 20,000,000, 8,716,000 tons have a speed greater than twelve knots.
Considering the nations which can be classed as the leading maritime nations, that is, the United States, Britain, Japan, France, Italy, and Germany, the number of ships in operation having a speed greater than twelve knots is as follows:
The number of ships in operation having a speed greater than eighteen knots is as follows:
For the six years, 1922 to 1927, the building of ocean-going merchant ships of 2,000 gross tons and over had practically ceased in the United States, while all other nations have built and are building a large number of these ships to capture and hold the world’s trade; the figures are as follows:
United States | 18 | 199,884 |
British Isles | 741 | 4,558,847 |
Japan | 71 | 350,556 |
France | 80 | 507,329 |
Italy | 91 | 805,945 |
Germany | 221 | 1,348,533 |
During the years 1928 and 1929, merchant ships of 2,000 gross tons and over where launched as follows
| 1928 | 1929 |
United States | 6 | 14 |
British Isles | 238 | 241 |
Japan | 17 | 22 |
France | 11 | 8 |
Italy | 15 | 16 |
Germany | 40 | 40 |
At that rate it will not take very many years to place all of the world’s carrying trade in the hands of foreigners, and if that happens, our prosperity will begin to decline. As already pointed out, of our yearly foreign-world trade of $8,000,000,000, approximately 55 per cent of it is export. With foreign carriers, much of that export trade would be taken from us by foreign manufacturers through the simple expedients of increasing the freight rates for American shipments and either reducing or discontinuing entirely the number of sailings from American ports to foreign ports where our goods have found a market. To illustrate how our export trade fluctuates with the availability of our own shipping, the figures relative to our South American trade will be of interest.
Our average trade with South America for the five years before the war was $330,000,000 annually, in 1915, $360,000,000, in 1916, $572,000,000, with a further consistent and steady increase year by year until in 1920 it reached $1,384,000,000. In that year the foreign commercial interests were again in a position to cater to the South American trade and consequently the foreign steamship lines were more interested in carrying the products of their own nationals than they were in carrying the products of Americans and our trade fell off, dropping in 1921 to $569,000,000, a loss of $815,000,000 in one year.
The American flag lines to South America were then inaugurated by the U. S. Shipping Board and our trade to South America again began to increase until it reached, in 1926, $1,011,000,000, in 1927, $956,000,000, so that in six years’ time we still averaged $400,000,000 per annum behind the trade which we had reached in 1920 and which we could not hold because of the lack of our own carriers.
Of our foreign trade in 1927, 1928, and 1929, amounting to $23,582,961,000, only 34 per cent was carried in American ships and 66 per cent was carried in foreign ships. For carrying that value of foreign trade there were paid in round numbers $2,280,000,000 in transportation charges, of which $1,504,800,000 went to foreigners, and only $775,200,000 went to Americans.
The total transportation charges (both passenger and cargoes) in the water-borne foreign trade of the United States for the year 1928 amounted to $1,000,000,000, for the year 1929, to $1,100,000,000.
The more and better merchant ships we have operating, the more of these huge sums will go into the pockets of American citizens and the less will go into the pockets of foreigners.
The Merchant Marine Act of 1928, for the first time in over fifty years, provides protection and inducements to American ocean shipping which counteracts the advantages heretofore possessed, through subsidies, etc., by foreign ocean shipping. It places American shipping in a position to meet foreign competition. It is constructive instead of being obstructive, and it provides for the proper development of the American owned and operated merchant marine engaged in ocean trade. The most important features of this act are authorization for:
- United States mail franchise contracts for ten-year periods, the payments for services under such contracts being based upon the distance traveled and the speed performance of each vessel.
- Vessel insurance by the United States government for American ships at more equitable rates than have heretofore been available.
- Loans for new construction of American ships up to 75 per cent of the cost thereof at or about three per cent interest per annum, with payment spread over twenty years.
Another item of interest in connection with ocean shipping is marine insurance. Our exports for the year 1927, as previously stated, amounted to $4,050,000,000, our coast and lake commerce for the same year amounted to $7,780,000,000, our ocean shipping of 11,164,000 tons, valued at from $35 to $120 per ton, amounted to an additional $781,148,000, which gives us a total of $12,611,148,000 for ships and cargoes that must be insured. Assuming a premium rate of 3J4 per cent, which is the average figure charged for marine insurance on hulls and a premium rate of $0.10 per $100 which is the rate on general merchandise cargoes from U. S. Atlantic ports to England and France gives a total approximate annual premium of $37,264,310. The ratio of losses to premiums averages 80 per cent so that the gross profit on insurance of American ships and cargoes approximates $7,452,862 yearly and the greater part of this large sum paid by American shipowners and American merchants and manufacturers is paid to foreign marine underwriters.
So far, this question of foreign trade and the American merchant marine has been discussed solely on a peace-time basis. There is another feature which should always be considered in this connection and that is the effect of a war on our foreign trade if we are depending upon a foreign merchant marine to carry our goods.
At the outbreak of the Boer War in 1899, a great number of the ships carrying our foreign trade at that time were British and a very large number of these ships were withdrawn from the American carrying trade to serve as troop transports and as supply ships to carry the British forces and British supplies to South Africa. While our foreign trade at that time was inconsiderable in comparison with our trade today, the losses incurred by American shippers were tremendous due to the congestion in warehouses and railroad yards and to the spoiling of shipments that were perishable in their nature.
At the outbreak of the World War in 1914, the British and French withdrew a great number of their merchant ships for war service and all German ships remained in port to avoid capture by the British and French cruisers. In a very short time the piers and warehouses were full to overflowing, shipments could not be unloaded from railroad cars, the railroad terminals and the railroad lines leading out of those terminals for miles, were filled with cars which could not be unloaded and the loss to American shippers ran into hundreds of millions of dollars. A great part, if not all, of which loss would have been avoided had American ships been available for carrying American goods.
It is evident from the foregoing that it is the duty of every loyal American citizen to use his utmost endeavors in every way to build up and maintain an adequate American owned and American operated merchant marine and to see that it carries much the greater part of our foreign trade.