78 REPORT OF AMERICAN MERCHANT MARINE COMMISSION.

(Government will have paid these ships the subventions, and yet will
have no claim on them if the shipowners for anv reason do not see fit
to renew from vear to vear.

*“ DISTINCTION BETWEEN SUBSIDY AND SUBVENTION.”

In the published reports of discussions relative to the question of
ship subsidy reference is frequently made to what is called a ‘‘subsidy
 ” paid by the British Government, the reason for the reference
generally being to claim that since England pays a **subsidy” it is
necessary that we should follow her example if our vessels are to compete
 with British vessels. There is a radical mistake of fact involved
in such statements, and such mistake grows out of want of information
as to the distinction between a subsidy and the subvention paid by the
British Admiralty. That distinction 1s practically as broad as a difference
 between a gift and a purchase. A subvention is an annual payment
 made by the navy authorities, which from the standpoint of the
Government represents the advantage to the Government of having
ready for its use, when required, a certain number of steamers whic
have been expressly constructed so as to be available as armed cruisers
or transports. From the standpoint of the shipowner this payment is
compensation for the increase of cost and diminished usefulness involved
in having the vessel so constructed under the Admiralty regulations
a8 to be available for use by the navy.
Vessels on which this subvention is paid are required to be constructed
according to plans approved by the Admiralty. These plans require
that the structure of the ship should be heavier and stronger than
would be the case in a passenger ship; gun platforms are constructed
on the decks, and the decks are built and supported so as to be ready
for the immediate mounting of heavy guns. This accomodation of the
structure of the ship to the needs of the Navy is computed by experts
to involve an increase of from 20 to 25 per cent in the cost of construction,
 and as this additional cost must be paid by the shipowner he is
called upon in building his vessel to sink from 20 to 25 per cent of the
cost in special structural work, which not only does not improve the
ship for commercial purposes but makes her heavier and diminishes
the space available for cargo and passengers. The increase of weight
caused by this special naval construction is computed to amount to
between 1,000 and 1,200 tons on such vessels as those which now carry
the mails between New York and England.
This means that at least 1,000 tons of cargo space which would
otherwise be available is permanently made unavailable by special
construction, and on every voyage the shipowner loses the freight
which he could otherwise earn on this 1,000 tons of added weight in
every voyage. Allowingafreightrate of $2.50 per tonacrossthe Atlantic
 and allowing twelve voyages to the year (which is about the average
of mail-carrying vessels) this item of dead freight alone means a loss
of $60,000 a year on each ship, aside from the original loss of from 20
to 25 per cent in increased cost of construction, and this increased cost
of construction, of course, involves a subsequent loss of interest on
the excess of cost, and a proportionate increase to the insurance and
depreciation account against the ship.
This heavy burden, which is thrown upon the shipowner when he
builds and runs such a vessel in ordinary business, is properly borne