Calendar 1 0. 9 26547. 5811 CONGRESS, | SENATE. 3d Session. ¢ J REPORT No. 2049 DEVELOPMENT OF THE AMERICAN MERCHANT MARINE AND AMERICAN COMMERCE. Jaxvary 12, 1905.—Ordered to be printed. Mr. | Garris, from the Committee on Commerce, submitted the “Mowing = 21 BY THE VIEW" CTNORITY. To acerrmany 8, 6201.) The Committee on Commerce, to whom was referred the bill (S. 5241) to promote the national defense, to create a foree of naval volunteers, to establish American ocean mail lines to foreign markets, to promote commerce, and to provide revenue from tonnage, having considered the same, beg leave to report the bill hack favorably with a recommendation that it pass. In support of the bili the committee adopt the report of the Merchant Marine Commission. made to the Senate on January -£, 1905, as follows: Deeply concerned at the decline of our ocean fleet, and the loss of skilled officers and seamen—pioneers of trade in peace, and defenders of the lag in war—the President of the United States, in his annual Message to Congress, December 7, 1903. said: J A majority of our people desire that steps be taken in the interest of American $ pping, so that We may once more resume our former position in the ocean carryng trade. But hitherto the difierences of opinion as to the proper method of reaching this end have been 80 wide that it has proved impossible to secure the adoption of any particular sffieme. Having in view these facts, I recommend that the Congress direct the Secretary of the Navy, the Postmuaster-( ieneral, and the Secretary of Lonmerce and Labor, associated with such a representation from the Senate and the House of Representatives as the Congress in its wisdom may designate, to serve as a commission for the purpose of investigating and reporting to the Congress at its next session what legislation ix desirable or necessary for the development of the American merchant marine and American commerce, and incidentally of a national ocean mail service of adequate auxiliary naval cruisers and naval reserves. While such a neasure Js desirable in any event, it is especially desirable at this time, in view of the fact that our present governmental contract for ocean mail with the American me will expire in 1903. Our ocean mail act was passed in 1891. In 1895 our 20-knot trans-Atlantic mail line was equal to any foreign line. Since then the Germans have put on 23-knot steamors, and the British have contracted for 24-knot steamers. Our service should equal the best. Tf it does not, the commercial public will abandon it. 1f we are to stay in he business it ought to be with the full understanding of the advantages to the country on the one hand, and on the other with exact knowledge of the cost and proper methods of carrying it on, Moreover, lines of cargo ships are of even more portance than fast mail lines, save so faras the latter can be depended upon to furnish swift auxiliary cruisers in time of war. The establishment of new lines of cargo ships to South America, to Asia, and elsewhere would be much in the interest of our commercial expansion. 2 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. In response to this earnest recommendation Congress passed the act of April 28, 1904, creating the Merchant Marine Commission, composed of five Senators and tive Representatives. The text of the act by which the Commission was authorized is as follows: Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That a commission is hereby created, to be called “The Merchant Marine Commission,” to be composed as follows: Five members of the Senate of the United States and five inembers of the House of Representatives of the United States, to be appointed by the presiding officer of each llouse of Congress, respectively: Provided, That at least two of the said members of the Senate and two of the said members of the House of Representatives shall be members of the minority party. Src. 2. That it shall be the duty of this commission to investigate and to report to the Congress on the tirst day of its next session what legislation, if any, is desirable for the development of the American merchant marine and American commerce, and also what change, or changes, if any, should be made in existing laws relating to the treatment, comfort, and safety of seamen, in order to make more attractive the seafaring calling in the American merchant service. Sec. 3. That the Commission shall give reasonable time for hearings, if deemed necessary, and if necessary it may appoint a subcommission or subcommissions of its own members to make investigation in any part of the United States, and it shall be allowed actual necessary expenses for the same. Tt shall have the authority to send for persons and papers and to administer oaths and affirmations. All necessary expenses, including clerks, stenographers, messengers, rent for place of meeting, and printing and stationery, shall be paid from any money in the Treasury not otherwise appropriated; however, not to exceed twenty thousand dollars for expenditure under this section, to be paid upon vouchers to be approved by the chairman of the Commission. Sec. 4. That any vacancies occurring in the Commission, by reason of death, disability, or from any other cause, shall be filled by appointment by the officer and in the same manner as was the member whose retirement from the Commission creates the vacancy. The Commission immediately met and organized in Washington, and began its formal inquiry on May 23, 1904, in New York City, where more witnesses appeared than could be examined in the three days set apart for the initial hearing. That the mercantile interests of the whole country welcomed the investigation and applauded its object soon became manifest in every section of the United States. Urgent invitations were received not only from the great ports of the north Atlantic coast, but from the lake cities, the Gulf of Mexico, and the distant Pacific seaboard. A full national itinerary was therefore arranved and hearings were held as follows: On the north Atlantic. New York, May 23-25. Philadelphia, May 26, 27. Baltimore, May 28. Boston. June 1-2. On the Great Lakes. Chicago, June 24. Detroit, June 27. Cleveland, June 28, 29. Milwaukee, July 21 On the Pucifie. Qeattle, July 26, 27. Tacoma, July 28, 29. Portland, August 1. San Francisco, August 4, 5. On the southern coast and Gulf of Mexico. Galveston, November 12. New Orleans, November 14. Pensacola, November 15. Brunswick, November 17. Newport News. November 19 In addition to the above, the Commission held daily sessions in the city of Washington from November 22 to December 12, hearing evidence, sifting the printed testimony, preparing a bill. and forecasting a report to Congress. REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 3 A FAIR CHANCE FOR ALL. In all of these cities, except Washington, the invitations were extended and the arrangements for the hearings were made by representative commercial organizations, for whose alertness, patriotic zeal, and cordial hospitality the Commission desires to return sincere acknowledgments. Without the frank cooperation of these energetic men of business in the chief commercial cities of the country, the inquiry of the Commission could not have been cartied so far between the adjournment and the reassembling of Congress. It was everywhere distinctly stated that the Commission did not, come on any political errand; that it was not committed in advance to any specific measure; that its members, one and all, were open minded as to the best policy of relief for our vanishing ships and seamen; and that any intelligent suggestion offered in good faith toward the apbuilding of our merchant fleet would be frankly welcomed and honestly considered. Indeed, the open-door rule that governed all the hearings was so very liberal that in one or two instances alien agents of foreign steamships appeared with the familiar sophistical plea that foreign shipowners had the field; that their service way “‘cheap,” and that therefore they ought to be allowed indefinitely to monopolize our ocean carryin regardless of the ultimate effect upon our power to extend our oan in peace or defend our coasts in war. Nn m o QO 0 J Hl » ; 2 - «© eq x 3 «© a b 0 OO J ld = mM ~~ QO ™ -l oN o 0 oO Nn | > or 2) UNITED DEMAND FOR AMERICAN SHIPS, Coincidently, this bland appeal of the foreign steamship agents has found expression in a few newspapers, but so far as is known it has not been advanced anywhere by so much as one witness qualified to speak us a disinterested American citizen. Public sentiment, as the Commission has sounded it throughout the United States, is practically Unanimous not in merely desiring, but in demanding an American ocean fleet, built, owned, officered, and so far as may be, manned by our own people. This sentiment, as the printed pages of the testimony prove, ls just as earnest on the Great Lakes as it Is on either ocean. ~ Men of business showed themselves conspicuously alert and well informed on this vital question ‘in the lake cities, and the interest and knowledge of shipbuilding Philadelphia were fairly matched at the great southern port of New Orleans. Differences of opinion there are, of course, as to methods and policies, though these are by no means irreconcilable. But nowhere is there any difference as to the main principle of national recognition and encouragement of our hard-pressed ocean carrying trade DISINTERESTED WITNESSES. A very large proportion—perhaps a majority—of the hundreds of Witnesses who have appeared before the Commission are men who have not a dollar’s worth of actual interest in ships or shipbuilding. Practically all of the present ocean shipowners and shipbuilders of America have been heard, but all together these men are by no meang lumerous., A great part of the testimony, and that not the least authoritative and impressive, has come from merchants in general trade, manufacturers of goods for export, editors, lawyers and like Professional men, and others whose interest in this question is, at the 1 Le 2 1s fo 0 “— 0 2D ~ Io} a LO mM ve N m N ) o£ = [28] 5 4 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. most, of those who have freight to ship, or, at the least, of sagacious and patriotic citizens. It the inquiry of the Commission has done nothing else, it has in any event proved beyond the shadow of a doubt that public opinion will loyally and even cagerly sustain Congress in any frank, equitable, and effective measure that may be adopted for the restoration of the carrying trade and the expansion of our ocean commerce. A QUESTION OF MORE TRADE. Thoughtful men throughout the entire country have now come to soe that the question is not merely one of building ships or manning ships, important though that may be fo large seaboard communities. Nor is the question, further, one solely of the national defense, though that of itself would abundantly justify Congressional action. A third imperative motive for the creation of an adequate merchant marine is the need of new and wider markets. Without these, there is such a thing as smothering at home in our own prosperity. There is one sure way in which these new and wider markets can be gained. Our own people—merchants, manufacturers, bankers. shipowners, working heartily together—must go and get them. We can not depend upon the foreigners for this—noton the foreign shipowner more than on the foreign manufacturer or merchant. When the mar-Ket is once opened, the foreign ship may take our goods for a consideration, which in the long run ix sure to be higher than the price granted to the foreign manufacturer. NO MERCHANT WOULD DO THIS. There is not a department stove in Omaha or Waco which would dream of intrusting to a rival department store across the street the delivery of its own coods to its own customers. Th - heads of the two establishments might be tolerably good friends, hut merchant No. 1 would instinctively assume that, human nature heing as it is, merchant No. 2 would keep his good horses and sound wagons for his own use, and quietly run in his spavined otoeds and worn-out vehicles to convey the goods of his competitor. And pretty soon merchant No. 1 would expect to have complaints of xhort weight or damaged articles, or perhaps that the purchases were missing altogether. And then he would hegin to sce those who were once his customers transferring their business to his rival—so that that © cheap” foreign service would have proved a dear service after all. This is precisely what is happening to-day in South America. The United States sends no marine delivery wagons of its own to Brazil or Argentina. Even the American mails must cross the Atlantic twice on the subsidized liners of England. The result is the inevitable one, testified to hefore the Commission by the manufacturers of Cleveland and Milwaukee, that they find it hard to get into the South American market and harder «till to stay there—that they can never depend upon the starting of English and German vessels from New York, and that there is much breakage as well as miscarriage of American goods, confusion. and disappointment. Nor need there be any surprise ahout this. The English and German shipowners naturally keep their best eraft for their own country’s trade and use their inferior ones for the American. And the result is just what was intended by REPORT OF AMERICAN MERCHANT MARINE COMMISSION. i our foreign competitors, that Brazil goes hy our door and buys of England and Germany. The United States sent $13,000,000 worth of merchandise to Brazil in 1394 and only $10,000,000 in 1903. Yet, having plenty of delivery wagons of its own by sen and rail to Canada and Mexico, our country has increased its exports to Canada from $31,000,000 in 1804 to $116,000,000 in 1903, and to Mexico from 812,000,000 in 1894 to $41,000,000 in 1903. The contrast is eloquent. There is no need to look further for an explanation why European shipowners, leagued with European manufacturers, are so insistent that the United States should not go to the expense and trouble of providing transportation facilities of its own in the trade to South America, Africa, and the Orient. OUR TRIBUTE TO FOREIGNERS. It is a fair, accepted estimate, based on Sir Robert Giffen’s figures for British ocean trade, that there is now being paid on the aver age the enormous sum of $150,000.000 a year to foreign shipping for the conveyance of our import and export freights, our mails, our passengers. Only 10 per cent of our vast sea-borne commerce is now carried by American ships. In 1810 the American proportion was 91 per cent; as late as 1861 it was 65 per cent. We ought again to be conveying at least two-thirds of our commerce beneath, our own flag; our right to this share is impregnable. An adequate American ocean fleet would mean the saving to this country of $100,000,000 a vear which now goes to build up the commercial power and naval strength of Europe and Asia. For a time it is true that the development of such a fleet would cost something, hut all our economic experience goes to show that this increased expense would be temporary, while the saving would be solid and permanent. American bridge makers and locomotive builders could not compete with Europe in price in the early days of their industry, hut now that they have developed standard types and attained a huge scale of constant production, American bridge makers and locomotive build ers, still paying good American wages, are able to meet their foreign competitors in costand beat them in the excellence and adaptability of their product. And what is a steamship but a locomotive and a stool bridge wrought together? A hundred million dollars a year, the amount that would eventually be saved to the American people if their ocean shipping were developed as their locomotive making and bridge making have been, is equivalent to the entire cost of oursplendid Navy, or of our reorganized and strengthened Army, including the coast defenses. It is equivalent to four times the annual interest on the National debt. It would furnish employent to tens of thousands of American workmen, and comfort to their families, in the processes of ship construction and maintenance, from the forest and mine to the rolling mill, forge, and shipyard. FOREIGN IN EVERYTHING. The foreign ships which now convey nine-tenths of our ocean commerce are invariably built abroad, oticered abroad, manned abroad, repaired abroad. If they can possibly help it, they never use a pound 6 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 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 their 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. Tt 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 faras possible not one penny of money earned by these foreign ships in American trade shall return to'the channels of American commerce. PARALYSIS OF OCEAN SHIPBUILDING. This policy of rigid, aggressive favoritism, practiced by foreign shipowners without resistance from the United States, has now wrought its desired and logical result. It has absolutely killed the ocean shipbuilding of America. The Commissioner of Navigation notes in his present annual report that last year for the first time in our history no square-rigged vessel for the deep-sea trade was launched on either the Atlantic or Pacific coastline, and that only one steamer for the foreign trade remained under construction in any American shipyard. Our shipyards, by the way, have not received an order for a steamship exclusively for foreign commerce since June, 1201. The condition of the remnant of the ocean fleet of the United States is, therefore, absolutely desperate. With no new ships whatever being built, and with existing vessels succumbing to age or casualties of the sea, a swift and appalling shrinkage in our skeleton fleet is inevitable next year and the years beyond unless some vigorous measure of relief is immediately adopted. The disappearance of our ships is reflected at once in the depression and disaster that crowd upon our shipyards. But for naval work and coastwise tonnage, always inadequate to fill the yards, there is not a steel shipyard in the United States that would now be earning enough money to pay its office force, and it has been testified before the Commission that nearly one-half of the skilled American shipyard workmen are now idle or engaged in the rouchest and cheapest of manual labor. OTR NATIONAL HUMILIATION. Here is a condition on which no American worthy of the name can look without a smarting sense of humiliation. We have deepened our harbors at an expense of millions upon millions of dollars, almost exclusively for the use of foreign steamships. We are building the Panama Canal through which very few American steamships will pass unless our merchant marine is rehabilitated. We have built a strong navy, in large part to protect our commerce. which is vanishing REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 7 from the ocean. Our war fleets in the Mediterranean and South American waters scarcely see a United States merchant flag from one year to another, and our battle ships, cruisers, and gunboats on the Asiatic station outnumber four-fold the merchant steamers that regularly ply from the United States to Eastern ports. Our sea power, in the important point of a merchant reserve of ships and sailors, is as empty as Russia’s naval might has proved to be in the war with vigilant and prepared Japan. Though proud of the greatest of naval historians, the United States has until now disregarded his admonitions. which for half a dozen years have been heeded in Tokyo while seemingly forgotten in Washington. Says Captain Mahan: When the day comes that shipping again pays, when the three sea frontiers find that they are not only militarily weak, but poorer for lack of national shipping, their united efforts may avail to lay again the foundations of our sea power.” Till then, those who follow the limitations which lack of sea power placed upon the career of France may mourn that their own country is being led, by a like redundancy of home wealth, into the same neglect of that greatinstrument. (The Influence of Sea Power upon History, Period 1660-1783, p. 39.) HANDICAPS ON OUR SHIPPING. Though the Commission in its inquiry throughout the country has asked for specific suggestions of remedial legislation for the future rather than explanations of the past, yet the causes that have brought the decline of our merchant shipping have not been neglected at the hearings throughout the United States. One, and a prime cause, is clearly stated by the President of the United States in his annual message to Congress in 1901: All our ships, sailing vessels and steamers alike, cargo carriers of slow speed and mail carriers of high speed, have to meet the fact that the original cost of building American ships is greater than is the case abroad; that the wages paid American officers and seamen are very much higher than those paid the officers and seamen of foreign competing countries; and that the standard of living on our ships is far superior to the standard of living on the ships of our commercial rivals. Our Government should take such action as will remedy these inequalities. The American merchant marine should be restored to the ocean. These superior wages and superior conditions are undeniably a great obstacle now to the growth.of our merchant fleet, just as at fiest they were an obstacle to the growth of our manufacturing. Yet American enterprise and determination, long encouraged by the National Government, have finally triumphed over these early disadvantages. Evidence before the Commission, notably in the important hearing of November 19, 1904, at Newport News, shows that wages in American shipyards are from 50 to 100 per cent above wages of similar labor in Europe. Yet the American-built ship does not always cost 50 or 100 per cent. more than the foreign ship. Indeed, such a wide difference as 60. per cent is temporary and exceptional. There seems to be no doubt that even in the present difficult stage of the industry both the labor and the administration in American shipyards are more efficient than in foreign shipyards, though this superiority is far from brideing the entire difference in cost. AN AVERAGE OF FORTY PER CENT. Mr. P. A. S. Franklin, of New York, vice-president of the International Mercantile Marine Company. which has had the largest 3 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. experience in ownership under both American and foreign flags, estimates that an American-built steamship, suitable for the North Atlantic trade, would cost about 40 per cent more than a Britishbuilt steamship. ‘This is a formidable difference in a 12,000-ton steamer costing upward of two million dollars. Indeed, it happens that just at present there prevails in England the period of dullness which alternates with activity in shipbuilding, as in every other industry the world over. To keep their machinery in use and their workmen together, British builders haye recently hid for new construction at unprecedently low rates, which mean, probably, a loss and certainly no profit. Some of these British “panic” bids have been but about one-half of what an American yard, figuring for a small profit, has asked for a similar vessel. If the normal range of ship cost between the U nited States and Great Britain were as wide as this, the problem of creating an American-built merchant fleet for ocean trade would manifestly be almost hopeless. But such a difference is not normal; it is temporary; indeed, it is even now passing away. Recent actual bids of American, British, and German yards for typical North Atlantic steamships, which have been communicated to the Commission, show an American excess of cost of about 47 and 37 per cent—the German figure being, significantly, the lowest. In the hearing at Baltimore, May 28, 1904, Mr. F. W. Wood, president of the Maryland Steel Company, testified that once, bidding against a north of England firm for some cargo steamships, he came within 15 per cent of the English figures—but this, as indeed Mr. Wood said, was also exceptional. He placed the average difference in cost between American and British ships under present conditions at from 30 to 50 per cent. AS TO COST OF MATERIAL. In this connection there arises a factor in the present cost of American ships which the Commission has no desire to overlook. It calls for some plain speaking. The tarift laws of the United States now, as for more than a decade past, allow the free importation of all materials to be used in building or repairing an American ship for the foreign trade or building for foreign ownership. This authority is found in sections 12 and 13 of the free list of the Dingley law, as follows: Spe. 12. That all materials of foreign production which may be necessary for the construction of vessels built in the United States for foreign account and ownership, or for the purpose of being employed in the foreign trade, including the trade between the Atlantic and Pacific ports of the United States, and all such materials necessary for the building of their machinery, and all articles necessary for their outfit and equipment, may be imported in bond under such regulations as the Secretary of the Treasury may prescribe; and upon proof that such materials have been used for such purposes no duties shall be paid thereon. But vessels receiving the benefit of this section shall not be allowed to engage in the coastwise trade of the United States more than two months in any one year except upon the payment to the United States of the duties of which a rebate is herein allowed: Provided, That vessels built in the United States for foreign account and ownership shall not be allowed to engage in the coastwise trade of the United States. Sic. 18. That all articles of foreign production needed for the repair of American vessels engaged in foreign trade, including the trade between the Atlantic and Pacific ports of the United States, may be withdrawn from bonded warehouses free of duty, ander such regulations as the Secretary of the Treasury may prescribe. REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 9 The scope of these provisions is very broad—all materials for the construction of the hull and machinery, and, besides, all necessary articles of equipment. Dut vessels thus constructed can not engage in the coastwise trade for more than two months in any one year, except the long-voyage trade between the Atlantic and Pacific seaboards. No American shipowner under present conditions builds a deep-sea ship, even though she be designed primarily for foreign commerce, without considering that he may be glad some day to fall back on the coastwise trade, now extended to Hawaii and Porto Rico and soon to include the Philippines. Therefore this apparently liberal privilege of free materials has not checked the decline of American ocean shipbuilding, and has been availed of for the complete construetion of only one large steel ship, the Jirigo, built by Arthur Sewall & Co., at Bath, Me. The Messrs. Sewall say that the peculiar status of the Dirigo is the cause of frequent anxiety to them, for if the vessel were to he for more than two months on the voyage from Puget Sound to Hawaii, the duties would have to be paid on the foreign plates, angles, and beams, of which she is constructed. Small amounts of foreign steel are occasionally imported for ship use, but the whole quantity is inconsiderable, and though the Sewall yard has built several steel ships since the [erigo. it has never again invoked the free-list privilege. AN INJUSTICE TO OUR BUILDERS. American ships continue to be constructed of domestic steel, even when designed for foreign service. This fact lends large importance to certain testimony which appeared most explicitly in the hearing of June 28, 1904, at Cleveland, though the fact had been alluded to elsewhere. Mr. James C. Wallace, then Fea ander, now president, of the American Shipbuilding Company, said: Recently one of our largest steel mills sold abroad 100,000 tons of steel plate. They delivered it, T understand, at Belfast, at $24 aton. That would practically mean, with ocean rates ag they are, $22 a ton at tide water. They are charging us to-day, at Pittsburg, $32 a ton. A differential of $10 in a ship carrying 5.000 tons is $50,000. That is the shipbuilder’s profit. And again in reply to questions: Representative Grosvenor. I want to know who bought the steel you speak of? Mr. Wartace. The Harland & Wolff Company, Belfast. Representative Grosvenor. From whom did they buy it? Mr. Warnace. The United States Steel Corporation. i Representative Grosvenor. Do you know where it was shipped from? Mr. Warnace. Ido not. I presume from the Carnegie Steel Company. I do not know that, though, for a fact, as they have go many mills. Representative Grosvenor. And their present price to you is $32? Mr. Warnrack. Thirty-two dollars a ton, Pittsburg. Representative Grosvenor. And that was laid down at Belfast at $227? Mr. Warrace. Twenty-four dollars. Whatever may be said for the occasional sale abroad of surplus manufactures below the domestic price, this, manifestly, is a case for which the familiar defense is quite impossible. American shipbuilding is terribly depressed; it is essentially an unprotected industry in the foreign trade, and when American steel mills, long and amply protected. sell material to foreign shipyards at eight or ten dollars 10 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. below the price asked from American yards, these steel mills simply heap an unjust and intolerable burden upon an interest now well-nigh prostrate. A sense of fair play, or even cool business prudence, should make it manifest to the steel companies that they ought to do their utmost to encourage the struggling American shipyards. For, after all, the best and permanent market for American ship steel must be in this country and not in Europe. AN EXTENSION OF THE LAW. In view of these circumstances, the Commission recommends that the law be so changed that the period during which ships built of free materials are allowed to run in the coast trade be extended from two months to six months; and also that the privilege of all-the-year-round service now granted in the Atlantic-Pacific trade be extended to the trade with the Philippines, which, on July 1, 1906, comes under the coastwise laws and regulations. This especial treatment of ship material can, we believe, be justified by the peculiar importance of ocean shipping in the promotion of our commerce and the national defense, and also by the fact that this ocean shipping has remained so long an almost forgotten and unprotected industry. But it must not be hastily assumed that even the absolutely free importation of materials will of itself immediately reduce the cost of American ships to the foreign figure. After all, the steel materials, while a large are not the dominant factor in the cost of ship construction. For example, an 8,000-ton ship would require about 3,500 tons of steel. Reducing the cost of all that material $8 a ton would reduce the cost of the completed ship $28,000. But an 8,000-ton ship which costs $450,000 in the United States can be built for from $100,000 to $150,000 less in England. The real dominant factor is thus not the price of materials, but the high wages of the skilled American workmen who fashion the plates and beams into the finished ship. A SPECIFIC EXAMPLE. Convincing proof on this point was offered in 1900, when steel plates and beams, because of labor troubles abroad, were selling at $40.86 in England, and $28 in the United States. Boston shipowners at that time invited bids from an American and a British builder for a cargo steamship of about 5,000 tons capacity. With both yards figuring for a small competitive profit, the American estimate was $275,000 and the English $214,000. The material of the American ship would have cost $63,000; of the English ship, $80,000. But this difference was more than offset by the higher wages paid to the American shipyard mechanics. However, the narrowing of the difference of shipyard labor cost that will come with increased experience, improved standardizing and constant production, as it has come already in the bridge and locomotive works, makes the reduced cost of materials a factor of undeniable importance. HIGHER SHIPBOARD WAGES. But higher cost of construction, chiefly because of the higher range of shipyard wages, is only one of the present handicaps on American shipping in over-seas trade. There is also the higher range of wages REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 11 of officers and crew, and the higher cost, because more liberal variety and quantity, of food on shipboard. The laws of the United States require a scale of provisions the most generous in the world, and if the Government scale is waived, as it may be by mutual agreement of master and men, equally good food must be substituted. This, of course, is all as it should be, and ‘must be in America, but wages and maintenance are unquestionably a present factor to prevent American ships from launching out into general and successful competition with foreign flags. The difference in wages and in style of living is not greater between an American and a foreign ship than between un American and a foreign factory. But the higher wages of the American factory, and the superior comforts required by its work people are, and long have been, protected by tariff laws against the cheaper wages and the lower standards of foreign lands. Here is the real heart of this whole question of the American merchant marine. THE ONE UNPROTECTED INDUSTRY. American shipping in the foreign trade has been for forty or fifty years the only American industry exposed directly to foreign competition that has not been protected by the Government. There is no need to look beyond this one sentence for an explanation of the hard fact that this is the one American industry that has halted and shrunk while all others have made prodigious increase. And yet this industry was once almost the mightiest in America. The American merchant fleet from 1800 to 1860 was the second in size and the most enterprising, efficient, and profitable in existence. But throughout most of that time 1t was a protected industry—protected at first by discriminating duties and tonnage taxes, which were not com letely removed against our most formidable rival until 1849; ho. later by the California gold discovery and the Crimean war. When these factors lost their power, as they did in 1855-56, there came the sharpest and most significant decline that American shipbuilding has ever suffered in the half decade from 1855 to 1860. When new and vigorous protection was applied by the National legislation of 1861 and the subsequent years to American manufactur-Ing and land industries in general, the toilers of the sea. the enterprise of our ocean merchants, were unconscionably forgotten by the National Government. HEAVILY BURDENED. Not only were the shipowners and seamen forgotten in their bold and hazardous industry, but heavy burdens were heaped upon them in the war taxes, for which manufacturers gained compensation in the protective tariff. The heavy blow struck by the war itself at our merchant shipping is, of course, historic, but there were economic disadvantages scarcely less severe and more protracted. The American shipowner who built a ship in the United States between 1865 and 1870 was in a position analagous to that of a manufacturer compelled to pay heavy duties on his machinery and his materials, and yet absolutely denied protection on the finished product of his industry. This finished product of the shipowner was his service, his transportation. It is a vivid proof of the incomparable American genius for the sea 12 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. and its affairs that several hundred thousand tons of American shipping have survived until to-day an economic blunder that would have long since driven a manufacturing industry to utter bankruptey and dissolution. A FLOATING FACTORY. The American merchant ship is essentially a floating factory. It is built and maintained at the American wage rate; but there is this vital difference, that, while land factories are covered by national protection averaging almost 50 per cent, these floating factories, the few that are left, work up and down the ocean without any protection whatever, save that granted to a few steam lines by the postal subventions of the law of 1891. These American ships, it is true, can secure their labor where they will. Our navigation laws, almost the laxest in the world in this respect, merely require that, except on mail ships only, the captain and the officers of deck and engine room need be American citizens. But because an American ship fits out and begins her voyage in the United States she naturally secures her crew there, and pays the high wages of her flag and port. Her foreign competitors, on the other hand, fit out and secure their crews at their home ports, where wages are adjusted to local conditions, and supply here only the waste of casualty or desertion. The handicap of wages against the American ship, as the testimony before the commission demonstrates, ranges from 30 to 60 per cent, except on the Pacific, where rates for white crews in the coast trade are almost the highest in the world, and regular American liners to the Orient employ Asiatic seamen and firemen. The American sailor, native or naturalized, an able-bodied, hardy, courageous man of peculiar value in the stress of war, would seem to be at least equally as deserving of the consideration of his Government as the worker in a cotton factory, and it is not apparent why a tin-plate rolling or dipping mill- should be more important to the United States than a great shipyard equipped to build not only merchantmen, but battle ships and eruisers. THE CASE OF THE SEAMEN. One essential clause of the bill creating the Merchant Marine Commission directed it to ascertain *“what change or changes, if any, should be made in existing laws relating to the treatment, comfort, and safety of seamen, in order to make more attractive the seafaring calling in the American merchant service.” Without this a merchantmarine inquiry would, of course, be incomplete, for, as a sailor-author has well said, there can be no upbuilding of American shipping which neglects the personal equation. After all, it is the officers, the men, and the boys that make up the soul of the ship, which is so much inanimate wood or steel without them. Authorized representatives of the seamen have been heard by the Commission on the Atlantic, the Pacific, and the Gulf of Mexico. They have had a conspicuous part in almost every meeting, and their evidence is fully set forth in the published volumes. Asa rule, this testimony is to the effect that general conditions of life in the Ameri- REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 13 can merchant marine—wages, food, quarters, etc.——are superior to those in foreign services, but that the discipline is often more exacting and the work more arduous. These seamen witnesses frankly acknowledge the beneficial effect of legislation enacted in recent years by Congress, but they ask for further measures of relief. The Commission would, therefore, commend to the friendly attention of the proper committees of the Senate and the House of Representatives requests offered by the sailors as to the load-line law, the adequate manning of seagoing ships, imprisonment for desertion in foreign ports, and certain standard qualifications of scamen. It will readily be recognized by Congress and the country that it is not enough that American seamen should be merely on a parity in wages, treatment, and comfort with foreign seamen. That will not suifice to draw American boys in any considerable numbers into our merchant fleet. The conditions of life in American shipping ought to be not only as good as, but distinctly better than, in foreign shipping. They are better already in most respects; that is unquestioned. But they ought to he made better in all respects. And above all, there must be a constantly increasing number and tonnage of American ships, for American boys of the right kind will not go to sea or into any other calling that is lagging and unprosperous. They will enter no profession that does not offer an opportunity to get ahead. There was a time, not so very remote, when American boys by the hundreds, from high schools and sometimes from colleges, were every year entering cheerfully on the hardships and perils of a sea life, hecause it was, as it still is, a brave and adventurous life, irresistibly appealing to their manhood, and because beyond the forecastle they saw prospects of profit and command. When America again has her ships on every sea the boys will be forthcoming. All they ask is a square deal and a fair chance of advancement. FOREIGN SUBSIDIES AND BOUNTIES. y ‘on ships and the lower cost of vy er first cost of foreign ships m eo Tower Hey tel he es i ships—due in both cases pri; imine or ie i ig a third serious handicap upon Ang 0 DD wages —there is 1 ounties bestowed upon a part or all 0 he NA ihe Salil - vents. These subsidies and bounties, 3% le 90 of uncle BO rhe Commissioner ot Navigation for 1901, are piled from the report of the LU as follows: Austria-Hungary... Denmark....... France ...... Germany .......... Great Britain. .....-Italy ....... Japan (oo... Netherlands. .... Norway _... Portugal... . Russin..cooununn Jpain.... Swoden. Country ail. #1, 288, 201 %2, 470 3,019, 700 1,825, 657 Pq R74, 240 1.757. 81 2, KG, R37 367, 468 48,338 63 300 1,629,927 81.849 19,904, 778 Jeneral. Total. TaR6 270 3698, 720 62, 360° 1,061, 639 76, 465 TTTg9, 218 TUTROA 01 e1,944,471 S2, 455 §, 643, 423 1, 425, 651 5, 536. G12 2,819,451 2,942, 296 367, 458 137. 456 6:3, 500 1.595. 701 1,629, 927 a1’ 840 7 oem 582 | 27,670, 160 Total .. 1 New Cunard subsidy of $1,100. 000 not included. 14 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. The maritime policies of the foreign nations may be thus summarized: Great Britain pays generous mail subsidies to her chief steamship lines, admiralty subsidies to her fastest vessels, and retainer bounties to many thousands of her seamen. Germany bestows liberal mail subsidies upon several steamship lines, especially those of recent development, and encourages her shipyards by hauling material at nominal cost on the State railways—in effect a bounty to shipbuilding. German shipyards are further aided by the requirement that mail steamers of the Imperial lines shall be constructed in Germany by German workmen. Moreover, the State railways grant preferential rates to goods intended for export by the Imperial lines—in effect a bounty on navigation. It is stated by British steamship managers that the passage through Germany of emigrants from other countries bound overseas is obstructed in every possible way unless they hold tickets by German steamers. Finally, the German Government, or individuals composing it, are understood to be interested in the great German shipyards and steamship companies, so that there is virtually a close partnership between these enterprises and the Empire, and the German people regard their merchant marine with the same intense patriotic devotion as their navy. France gives mail subventions to her great steamship lines, construction bounties to her shipyards, and navigation bounties to all French shipping, steam or sail, engaged in overseas commerce. Italy grants mail subventions, construction bounties, and navigation bounties to all her ocean vessels, steam or sail. . Austria-Hungary gives construction bounties, and mail and navigation subsidies to her ocean fleet. Holland grants subventions to her colonial mail service. Spain grants subventions and other privileges to her ocean mail lines. Russia bestows encouragement through subsidy on a part of her merchant shipping, this going chiefly to one concern, the so-called “volunteer fleet,” really controlled by the government. Denmark gives modest mail subsidies to her few lines, including a West India service. Sweden grants mail subsidies, and in addition lends government money to shipowners to aid them to buy new vessels and enter ocean trade. Norway gives direct bounties to encourage native shipbuilding and also grants mail subsidies, which have checked the growth of British shipping in certain trades of north Europe. Japan has a most comprehensive system of national aid to shipping—bounties to shipyards, subsidies to mail lines, bounties upon navigation. Japan’s ocean fleet has increased more rapidly of late years than any other shipping in the world. China, at present, gives very little help to her maritime interests, to the encouragement of her shipyards and steam lines, or to the development of seamen. Her policy of laissez faire in overseas navigation bears the closest resemblance to that of the U nited States, and is naturally attended with the same consequences. Chinese ocean tonnage is inconsiderable. According to the Bureau Veritas, it is less than 60.000 tons. steam and sail both included. REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 15 A WORLD-WIDE PRACTICE. To sum up, therefore, it may be said that every nation possessing a deep-sea merchant fleet of any real importance encourages and supports this interest to the degree and in the way which its judgment, approves or its national resources make possible. The most frequent form of this national assistance is the mail subvention to regular lines. Great Britain is the pioneer and chief exemplar in the policy of mail subventions. She began this practice on a large scale with the Cunard Line in 1839-40, and since then has expended between two hundred and fifty and three hundred million dollars in creating and sustaining her mail lines to every great port and market on this planet. ’ It is sometimes urged by those who desire to believe that a consistent free-trade policy has been maintained by the British (Government that these enormous British subventions were bestowed merely to carry the colonial mails, with no purpose whatever to encourage British ocean trade or navigation. But that this academic view is wholly superficial and untenable is demonstrated by the British Government itself. A report of the Parliamentary committee on contract packets in 1853 on the Cunard and other subsidies thus speaks with authority as to the actual purpose of these generous subventions: . . The objects which appear to have led to the formation of these contracts, and to the larger expenditures involved, were to afford us rapid, frequent, and punctual Communications with distant ports which feed the main arteries of British conmerce, and with the most important of our foreign possessions, to foster maritime enterprise and to encourage the production of a superior class of vessels, which would Promote the convenience and wealth of the country in time of peace and assist in defending its shores against hostile aggression. TO NON-BRITISH PORTS, Indeed, some of the heaviest British expenditures were not in the colonial service at all, but for lines not only to the United States, but to Colon, Brazil, and Argentina—in other words, to absolutely foreign lands, At least one of the British subsidized companies—the Pacific Steam Navigation—touched at no British port, but traversed the west coast of South America. Lindsay, the historian of British shipping, says of this enterprise, that was established by an American merchant who first sought aid unsuccessfully at Washington: . The extension of British influence and British commerce was doubtless the chief inducement for supporting this communication between the Republics of New Granada, Bolivia, Peru, and Chile, the nature and extent of that traffic rendering it necessary for the English to maintain mercantile establishments in the chief ports and towns of the western coast of the Pacific, and thus justifying the Government in gL this expense. (W. S. Lindsay, History of Merchant Shipping, Vol. IV, RECENT BRITISH SUBVYENTIONS. This fixed British practice of creating, by generous subvention, steamship lines “for the extension of British influence and British commerce” continues to the present time. The new Cunard contract, involving the virtual gift of two great steamers with a subvention of $1,100,000 a year, is a recent case in point. Another is the grant of a $200,000 subvention for a new 14-knot steam line to the West Indies. And still another—a little earlier—is the subvention of $291,000 to a British line of three ships for a service from Vancouver, British 16 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. Columbia, across the North Pacific to Japan and China—*a notable llustration of the generosity and courage with which England pushes her shipping interest,” wrote the late Ion. William C. Whitney in his annual report as Secretary of the Navy. ‘Under such competition,” Mr. Whitney added, "it is quite easy to conjecture what will become of the American flag and our resources in the way of a naval reserve in the North Pacific.” A HOPELESS COMPETITION. Close alongside these heavily subsidized British steamers, out of the American ports of Tacoma and Seattle, a few miles southward, now run two large and three smaller American steamships, competing with the British line for freight and passenger traffic to and from the Orient. These American steamers received lass year for carrying the United States mails ‘the muniticent sum of $£935. Close alongside the American steamers, right out of Puget Sound, runs a Japanese line, the Nippon Yusen Kaisha, which receives an annual subsidy of 330,000 from the Japanese Government, and was given last year $4,857 for carrying the United States mails. Again to quote Mr. Whitney, “Under such competition it is quite sasy to conjecture what will become of the American flag and our resources in the way of a naval reserve in the North Pacific.” Mr. Alfred Winsor, president of the Boston Steamship Company, operating these American steamers, has given frank notice to a committee of Congress that unless some national aid equivalent to that of his foreion competitors is speedily bestowed he must haul down his flag: and quit the route—and in that case the farmers and millers and lumbermen of the Northwest will lose the service of the largest and most efficient cargo carriers now running out of Puget Sound to the markets of the Orient. STATE AID EVERYWHERE. There is not an important commercial route anywhere on which the remnant of our American ocean fleet does not meet the keen edge of subsidized and bountied foreign competition. The five Pacific Mail steamers from San Francisco to Asia, which received $63,002 last year for carrying a great amount of United States mail, run directly side by side, to and from the Orient, with a Japanese line of three steamers that receive 600,000 a year from the Japanese Government. Germany pays $1,340,000 a year to the North German Lloyd for a steamship service to the Kast Indies and Australia, and Great Britain pays $1,660,000 to the Peninsular and Oriental. Not only does this competition strike heavily at our unsubsidized srans- Pacific lines, but it absolutely prevents the establishment of an American East India service direct from the Atlantic coast via the Suez Canal or the Cape of (Good Hope. Oriental goods brought by the subsidized British or German liners from the East are transferred in England or Germany to ships of the same flags or lines for transportation over the Atlantic. Thus the foreign subsidies that fifty years ago drove our clippers from the seas now stand a barrier across the course of American steamers. REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 17 EVEN ‘““ TRAMPS” INCLUDED. [t may be said that British ¢ tramps” and German “tramps” receive no subsidy, and that they are numerous. That is true, but indirectly even the “tramps” are and have been sharers in the general policy of national encouragement. The first British “tramps” years ago were built in yards and engined by machine shops that had been created and developed by the Parliamentary grant of subsidies to the Cunard Line, the Peninsular and Oriental, and the Royal Mail. These subsidies had an immediate and widespread effect upon the entire art of steamship construction in Great Britain, and gave that country at a critical stage an overwhelming advantage as against America. ’ The same process is now under way in Germany. Yards which build the subsidized liners and have their materials delivered at nominal rates by Government railways are thereby powerfully encouraged to build “tramps” or cargo boats in the intervals when no liners are required. Moreover, the great foreign subsidized mail companies own, besides the ships that earn their subsidy, a very large amount of ordinary commercial tonnage which indirectly shares the benefit of the subventions. Thus, when the $1,100,000 subvention was recently awarded to the Cunard Line, that company was encouraged to construct not only the two great 24-knot ships, but several auxiliary vessels of moderate speed and heavy tonnage. IN SHEER SELF-PROTECTION. As to the French, the Italian, the Austrian, the Spanish, and the Japanese vessels competing with our American ships, they are virtually all aided directly by their Governments, i Canada, with a sharp eye to American trade, has lately subsidized steam lines of her own to France, Africa, the West Indies, and, on both the Atlantic and Pacific, to Mexico. Even were there no wage difference against us, this now universal practice of State aid to shipping, in some form or another, on the part of our competitors, would eventually drive the American flag from the great trade routes of the ocean. To a very large part of the foreign merchant navies the eloquent words of Senator James Ashton Bayard, of Delaware, uttered in 1852, apply as truly ow as they then did to the subsidized liners of England: I am willing to trust American skill and industry in competition with any people on the globe when they stand nation to nation without Government interference. But if the treasury of a foreign nation is poured. into the lap of individuals for the purpose of destroying the interests of my country, or for building up a commercial marine at the expense of the commerce and prosperity of the United States, I, for ine, will count no cost in counteracting such Government action on the part of Great Britain or anv foreign power. 3. Rep. 2949, 58-3——.9 NEW LEGISLATION PROPOSED. This consideration of the serious threefold disadvantages, which American shipowners and seamen must now meet, brings us to the definite, imperative question, What remedy does the Merchant Marine Commission propose to Congress? Our answer is embodied, as the result of eight months of inquiry and reflection, in the accompanying bill “To promote the national defense, to create a force of naval volunteers, to establish American ocean-mail lines to foreign markets, to promote commerce. and to provide revenue from tonnage.” For several years the Navy Department has been urging Congress to authorize a naval reserve of professional officers and seamen of the merchant service, who shall be in effect a militia of the sea, holding the same relation to the Regular Navy that is held to the Regular Army by the organized State militia and National Guard. OUR NEED OF A REAL NAVAL RESERVE. The United States is the only maritime power, except Russia, which has not made provision for this essential factor of national defense. There is, it is true, a naval militia now existing in a few States, but as a rule it is composed of landsmen and is valuable in war only as an auxiliary in coast and harbor protection, where its advantage is unquestioned. = Buta naval reserve in the true sense, composed of men habituated to the sea, trained in its difficult work and hardened to its perils, has now virtually no existence in the United States, and nobody understands this better than the good and loyal officers of the State forces, especially those who, because of our sheer lack of such a reserve, were hastily drawn into the naval service on converted yachts or tughoats, or deep-sea cruisers, in the war with Spain. Not a few militia officers and men had at that time their first experience out of sight of land, and for the first time saw the sun go down behind an ocean horizon. “off soundings.” A DANGEROUS NEGLECT. There is, as has been said, one other maritime power besides the United States that is destitute of a trained seafaring reserve, and is in the same plight of fatuous unpreparedness. Asa neutral observer, quoted by Rear-Admiral Luce to the Commission, page 1741. said of the Russian Baltic squadron before it sailed away: The units of the ships’ companies are brave, but as a rule are wanting in the high-sea experience and the elasticity that enable the seamen of the American and Brtich navies to adapt themselves to new and difficult responsibilities as they arise. REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 19 Nor do the temperaments and traditions of the composite races that man the ships serve to correct these deficiencies. The service is compulsory, not voluntary, and a 200d portion of the crews is drawn from the interior. The merchant marine is relatively too unimportant to provide a proper nucleus of seamen, and the consequence is that many of the men serving on board ship have no sea aptitude, and are found afloat only because they have drawn an unlucky number in the conscription. Russia exhausted her best officers and trained men in the first squadron whose ships now lie sunk at Port Arthur or hide dismantled in the neutral harbors of the Yellow Sea. It isnot comfortable to think that but for our unbroken victories in the hundred days’ war with Spain Russia’s experience with the Baltic squadron might have been our own. It is the evidence of the admiral commanding on the coast of Cuba in that war that the United States had set afloat all its educated officers and skilled seamen in its first battle line, and that if a reverse had come there would have been no crews to man another fleet, even had the new ships been available. At the present time it is well known that new ships and good ships are being laid up at the navy-yards because there are no officers for them, and because the regular navy quota of enlisted men is insufficient for the demands of routine peace service. Representative Richard Wayne Parker, of New Jersey, who has given much thought to this question of a naval reserve, made an able presentation of the case at one of the Washington hearings in November, and for his zeal and information the Commission offers sincere acknowledgment. THE NAVAL VOLUNTEERS. The bill as drafted by the Commission proposes, as the first essential step in the rehabilitation of our merchant shipping, to create a force of naval volunteers composed of the best officers and men of our merchant ships and deep-sea fishing vessels, and, having created this force, which must necessarily be small at first, to provide means for its healthy and sure expansion. As an inducement to enroll, and in frank recognition of the peculiar national value of a thorough-going seaman, a substantial retainer is offered ranging from $100 a year for the master or chief engineer of a large steamship to $25 for a sailor or fireman and $15 for a boy. It is understood, of course, that officers and men shall receive regular pay, beside this retainer, during their period of actual naval instruction, and the terms and conditions of this period, which at first can not be long, and the regulations and qualifications of the service are left, as they ought to be, to he prescribed by the Secretary of the Navy. Enrollment in the naval volunteers is open to officers and men now in the coastwise service, but it is stipulated that bo receive the retainer they must have spent at least six months of the year in the foreign trade or deep-sea fisheries. A SMALL FORCE TO START WITH. It is estimated by the Commissioner of Navigation, in his annual report for 1903, that “all American vessels on salt water which go out of sight of land for any time during the year would be fully manned by 50,000 men, including masters.” Somewhat less than one-half, or perhaps 20,000, of these officers and seamen are native or naturalized American citizens. Out of these 20,000 officers and men probably not more than one-half would be eligible for naval volunteer service. and 20 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. it would require considerable time to enroll and instruct them. Dut the Navy has asked for a reserve of 20,000 in the bills which it has presented to Congress. It is therefore manifest that shipowners must not only be encouraged to employ these naval volunteers, but encouraged to build more ships to develop an increased naval reserve, as well as to advance the interests of commerce. Thus section 2 of the bill authorizes the payment of an annual subvention of $5 per gross registered ton for every vessel, steam or sail, engaged for twelve months in the foreign trade or deep-sea fisheries, $4 for nine months, and $2.50 for six months, provided that the vessel carries among her crew a certain proportion of naval volunteers, and provided further, that the vessel is held at the disposal of the Government in war, carries the United States mails, if so required, free of charge, maintains an efficient rating. and makes all ordinary repairs in the United States. AN EXACT PRECEDENT. An exact and authoritative precedent for the principle of this proposed legislation is to be found in the example of the fathers of the Republic. More than a century ago, on February 16, 1792, the Congress of the United States, acting on information contained in a report of Thomas Jefferson, Secretary of State, granted bounties from the Treasury to the men employed in the deep-sea fisheries and to the vessels themselves. (Jefferson's exhaustive memorandum will be found in Volume VII of “The writings of Thomas Jefferson,” edited by H. A. Washington.) These bounties at first took the place of an allowance that had been made upon the exportation of dried fish, and were nominally at first in lien of a drawback of the import duties paid on salt, but as a matter of fact were very much more than an equivalent. The original bounties offered were at the rate of $1.60 a ton to vessels below 20 tons, $2.40 a ton to vessels of 20 and not more than 30 tons, and $4 a ton to vessels of above 30 tons—the manifest purpose heing to encourage longer trips and the use of larger and superior seagoing vessels. These payments were divided in a fixed ratio between the vessel and her crew. Only three or four months of actual sea service were required each year. This policy was interrupted during the period of the embargo, but it was resumed at the end of the second war with England, and, with some modifications and increases, it remained in force under all changes of parties and administrations until 1866. During a part of this period a separate bounty was allowed on the exportation of dried fish, but this was withdrawn in 1848 in favor of a drawback of the duty on the salt used in curing fish for exportation. A POLICY OF THE FATHERS. Under this policy of the fathers more than $10,000,000 were expended between 1793 and 1851, and the tonnage of the cod and mackerel fisheries increased from 80,959 in 1793 to a maximum of 204,197 in 1862. Men of the fishing crews under this historic system received on the average a retainer of about $2 a month for three or four months’ service, or alinost an equivalent to the $25 per year offered to seamen by the terms of the present bill. REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 21 The chief motive of this time-honored policy of the founders of the nation, as the references to it in Congress abundantly prove, was the exact purpose of the present proposition—to create a sea militia, a force of naval volunteers, brave and hardy men, inured to the ocean, who should be prepared to defend the flag in war. History records how gallantly these naval volunteers responded. The Constitution in her later and most glorious cruises was manned largely by deep-sea fishermen, who were found in the crew of every frigate and sloop of war of 1812, and swarmed into the daring and effective privateers of that ocean conflict. When the N avy was again recruited for the war with Mexico, the deep-sea fisheries were again a ready source of the best enlistments, and so many thousand fishermen joined the Federal fleet in the civil war that the industry was well nigh abandoned— shrinking from a tonnage of 204.197 in 1862 to 76.065 in 1867. A NATIONAL INTEREST NOW. At that time, and for many years before, the deep-sea fisheries were not the genuinely national industry they have now become, when their adventurous sails flash in the Gulf of Mexico and the far North Pacific. Seybert in his ¢ Annals” (1818) declares: ‘Our fishermen have heen almost exclusively confined to the New England States; of these Massachusetts had the greatest share. * * * Ip the cod fishing, no vessel (except 4844 tons returned for New Jersey in 1803 and 6638 tons for Virginia in 1796) was owned south of New York.” Yet until the unhappy quarrel that preceded the civil war, this national encouragement from the Treasury of a naval reserve aroused no party or sectional opposition. The policy, founded under Washington. through the counsel of Jefferson, stood under Madison and Jackson as well as the younger Adams. That identical principle—indeed, that identical method—with the sanction of three-quarters of a century upon it, is now again evoked in the present bill for the creation of another force of naval volunteers, applied anew to the deep-sea fisheries, and extended to the kindred service of the mercantile marine for the fisheries are Now t00 scant to provide alone the naval volunteers for a nation of 30.000,000 people. FOR CARGO CARRIERS ESPECIALLY. To the inevitable question, Will this naval subvention of $5 per gross ton per annum, payable to a given vessel for no more than fen years, suffice to solve the whole problem of our ocean shipping, creat-Ing not only a fleet of capacious and useful cargo ships, but a fleet of fast and luxurious passenger ships?—to this question the Commission will frankly reply that no such complete result is to be expected. Regular mail liners of adequate speed on certain important routes are Provided for in another way in another section. But this naval subvention of $5 per gross ton does effectually bridge the difference of cost of construction and cost of maintenance, based on wages here and abroad, so far as concerns the average freighting vessel, steam or sail. To this extent it does equalize conditions, and thereby does give our merchant ships a fair fighting chance again upon, the ocean. . Take, for example, the actual case of a new steam freighter, a typcal cargo vessel, of 8.750 gross tons. Her fixed charges. based on 22 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. crew wages and maintenance and higher cost of construction, would be, approximately, $13,000 a year greater than those of a British vessel of the same class, with a British crew—it a Chinese or Lascar crew, the difference would be four or five thousand dollars greater. Such a typical American ship would earn a subvention for a year’s service, at ¥5 per gross ton, of $18,750, evening conditions, and perhaps a little more, by way of encouragement to the owners to build new vessels, employ more naval volunteers. and help to make new markets for American commerce. ONLY EQUALIZES CONDITIONS. It should be emphasized that this subvention only equalizes conditions, or, at the best, a little more. In no instance, with no kind of ship, is the subvention large enough to justify the owner in sailing without cargo. He must have a freight, and a good one, if he is to make both ends meet. To run without it means to pay &3 or $4 in wages, supplies, interest, taxes, depreciation, and insurance in order to earn $1 of subvention. Therefore, no arbitrary requirement of a certain proportion of cargo is necessary; and it must he remembered that such a requirement would bear hardest on adventurous vessels seeking to create new, trades, where at first a ship that fills one-third of her space is fortunate. It is just this seeking for new markets that the American people are most eager to encourage for the sake of farmers. manufacturers, and other producers at home. ONE EVEN RATE. Tt is to be noted that one even rate of subvention of $5 per gross ton is provided for all vessels, sail craft included. This is the fairest plan that possibly can be framed. It is simple and intelligible. It is proof against all charges of favoritism and discrimination. Moreover, there is more than one urgent reason why sail vessels should have the same rate as steamers. Our present fleet includes many sail ships of high commercial efficiency. They are often still the pioneers of commerce, visiting new ports where trade is too small or channels too shallow for the steamers. They are the cheapest carriers of certain important cargoes, and their presence is evervwhere a check upon exorbitant steam rates. VATE OF NATL SHIPS. But beyond all this, sail vessels of square rig or fore and aft rig are indispensable as schools of seamanship. Ilere their value is incomparable. Indeed the greatest steamship companies of Kurope now maintain sail ships for the express purpose of training their young officers, and the United States Navy does the same. Within a few months the Navy has launched three vessels—sail ships, pure and simple—modeled” closely after the merchant type, and to be used exclusively for training” purposes. Both the cadets at Annapolis and the lads who are to be enlisted men receive their practical sea education to-day on sailing ships or steam vessels with the largest possible sail power. Ac Roar Admiral Luce. one of the ablest of the veteran sea officers REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 23 of the United States, testified recently before this Commission in Washington: “I am a strong advocate for keeping up, if possible, the sailing vessel as distinct from the steamer. * * * It is desirable, from the naval point of view, that this species of industry should be encouraged by our navigation laws, for it is unquestionably true that it is that class of vessel that we must look to for sailors.” Steamers produce seamen, it is true—men who acquire the sea habit—hut not sailors in the strict sense of the word, men who do not only have the sea habit’ but the well-known characteristics of the sailor, his skill in meeting all the vicissitudes of life at sea, his contempt for danger, his self-reliance under difficulties, his adaptability to all sorts and conditions of circumstances. Men seasoned in that school soon adapt themselves to man-of-war life NOT ENOUGH FOR FAST, HIGH-COST VESSELS. This proposed rate of $5 per gross ton is unquestionably sufficient to equalize conditions for American sail vessels ag against foreign sail vessels, save in the case of the excessively subsidized fleet of France. This same rate, as has also been said, is sufficient to equalize conditions for American cargo steamers, save in exceptional instances. The Commission is prepared to anticipate the criticism that this naval sub. vention will not of itself encourage the building of swift and expensive steamships. Indeed, we are ready to adit this without controversy. We are frank to say, moreover, that it is our deliberate judgment that in the restoration of the American merchant marine it is the useful, hardworking cargo ship of steam and sail which should have the first and friendliest consideration. For the American people, though they are now sending many compact manufactured goods abroad, are still in the main producers of bulky commodities, so far as concerns their export commerce. Grain, provisions, cotton, lumber, cattle— things like these still make up the greater part of the value, as they do of the volume. of American shipments to foreign countries. CARGO SHIPS THE NATION'S FIRST NEED. The Commission believes that it interprets rightly the desire of the American people, as everywhere expressed at the hearings throughout the United States, when it provides first and foremost for the encouragement of the kind of ships best adapted to convey American export merchandise. We are glad to make this explanation promptly and fully at this time, hut we do not feel that anything like an apology is Decessary for so shaping the proposed bill that it will especially aid, and insure the construction of, commercial vessels that can most easily be built, owned, and managed by men of moderate means—vossels adapted to the present requirements of American ocean commerce. Indeed, if we mistake not, this feature, frankly embodied in the bill, will he recognized as a distinet and important merit of the proposition, not only on the seaboard, but in the States of the South and West. whose fields supply the chief part of our outward cargoes. NO MERE COMMERCIAL SUBSIDIES. It can not be too plpsagly emphasized that the naval subventions offered in sections 2. 3. and 4 of the proposed bill are not bounties 24. REPORT OF AMERICAN MERCHANT MARINE COMMISSION. outright or mere commercial subsidies, such as many of our competitors give, but are distinctly based on important public services rendered and to be rendered by the ships and shipowners that receive them. As to the constitutionality and expediency of such guarded subventions as these there can be no question whatever, in the light of the example of the fishery subventions given to both vessels and men for prospective naval service by the fathers of the Republic. and continued by their immediate successors. It was not expected that these fishing craft themselves would fight; they never did so. But their gallant men did fight in every ocean war we ever had, and the Government from 1792 onward frankly recogpized that in order to secure this indispensable naval reserve it must help to make and keep the entire industry prosperous. Those of our deep-sea fishermen who still remain possess the same peculiar value to the nation. No community of like size in the country contributed one-tenth so many first-class recruits to the Regular Navy of the United States in the war with Spain as did the famous town of Gloucester. Though the call did not come until the fishing fleets had sailed, Gloucester mustered several hundred fine, able-bodied seamen, and it is especially significant that 764 per cent of the men offéred at Gloucester were acceptable in intelligence and physique, while of the general applicants at Boston only 144 per cent and of those at New York only 8 per cent were found qualified for the severe requirements of the naval service. POLICY OF OTHER NATIONS. France and Japan both pay what is in effect a naval bounty to their deep-sea fishermen. Canada gives to her vessels and men annually $160,000 American money, the proceeds of the Halifax award. Great Britain includes the hardy fishermen of Newfoundland in her naval reserve, paying vetainers and furnishing instruction. The British reserve altogether, merchant seamen and fishermen, consists, exclusive of officers, of upwards of 30,000 men, who each receive annual retainers of from $15 to $50. The method adopted in the proposed bill is therefore not only in harmony with Anerican traditions, and indeed founded on authoritative precedent, but is in accord with the practice of the chief maritime powers of the world. THE VIEWS OF THFFRERYON. Mr. Jefferson had both merchant marine and fisheries in mind when in December, 1793, he wrote these memorable words to the House of Representatives: Our navigation involves still higher considerations. As a branch of industry it is valuable, but as a resouce of defense essential. Its value, as a branch of industry, is enhanced by the dependence of so many other branches on it. In times of general peace it multiplies competitors for employment in transportation, and so keeps that at its proper level; andr in times of war—that is to say, when those nations, who may be our principal carriers, shall be at war with each other, if we have not within ourselves the means of transportation, our produce must be exported in belligerent vessels, at the increased expense of war freight and insurance, and the articles which will not bear that must perish on our hands. But it is as a resource of defense that our navigation will admit neither neglect nor forbearance. The position and circumstances of the United States leave them nothing to fear on their land board, and nothing to desire beyond their present rights. But on their seaboard thev are open to injurv. and thev have there, too, a commerce REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 25 which must be protected. This can only be done by possessing a of citizen seamen, and of artisans and establishments in readiness (Report of Thomas Jefferson, Secretary of State, to the House of December 16, 1793. “The Writings of Thomas Jefferson,’ edited ington, Volume VII, p. 647.) The wisdom and force of this historic statement will he as gratefully recognized now, as they were then, by Mr. Jefferson’s fellow countrymen. NEW OCEAN MAIL ROUTES. Wherever throughout the country the Commission has held its hearings the evidence has been unanimous in favor of the principle of the Prep ocean-mail act, approved March 3, 1891, and a very earnest esire has heen expressed for its extension. When this law was passed the rates of compensation originally proposed were cut down about one-third by Congress. Experience has amply proved that this reduction was an error, for, though the older American mail lines have been sustained and developed by the law of 1891 and a few new lines have been created, yet the law has not sufficed to give the United States a complete system of mail communication with the great ports of the world and the chief markets for American merchandise, The American ocean mail lines now operating under contracts provided by the law of 1891, and the compensation received in the fiscal year 1904, are stated by the Superintendent of Foreign Mails as follows: American Line, New York to Southampton . Oceanic Line, San Francisco to Australasia. _.__.. ee New York and Cuba Mail, New York to Cuba and Mexico... __. Red I Line, New York to Venezuela ahd Dutch West Indies _._. American Mail. Boston and Philadelphia to Jamaica $690, 488. 20 283, 203. 00 206, 082. 00 103, 325. 00 a2’ 748 00 Tota. ... 1,375,841. 20 NO OHANGE IN EXISTING LINES. In the proposed bill not one dollar is added to the expenditure for any one of these five established contract lines, They are left exactly as they are at present, fulfilling, under the law of 1891. their acreements with the Government. Moreover, this law of 1891 is not repealed, and it is not amended GXcept as to certain specific new routes to be established and the new requirement of naval volunteers. Contracts authorized on these new toutes are to be made in general in the manner provided for under the existing law, which has stood the test of almost fourteen vears of actual experience. But in one important particular the law of 1891 has undeniably failed. Its reduced compensation has not sufliced to establish contract mail lines to the greater countries of South America, to Central America, to Africa, or to the Orient. Therefore the Comniission recommends in the proposed hill a substantial increase of compensation on certain specified routes where American steam service will be most likely to" increase the foreicn markets for American merchandise, These new rontes are: THE NEW SERVICES. First. From a port of the Atlantic coast of the United States to Brazil, on steamships of the United States of not less than 14 knots speed, for a monthly service at a Maximum compensation not exceeding $150,000 a year, or for a fortnightly service at a maximum compensation not exceedine $300.000 a vear 26 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. Second. From a port of the Atlantic coast of the United States to Uruguay and Argentina, on steamships of the United States of not less than 14 knots speed, for a monthly service at a maximum compensation not exceeding $187,500 a year, or for a fortnightly service at a maximum compensation not exceeding $375,000 a year. Third. From a port of the Atlantic coast of the United States to South Africa, on steamships of the United States of not less than 12 knots speed, for a monthly service at a maximum compensation not exceeding $187,500 a year, or for a fortnightly service at a maximum compensation not exceeding $375,000 a year. Fourth. From a port of the United States on the Gulf of Mexico to Brazil, on steamships of the United States of not less than 12 knots speed, for a monthly service at a maximum compensation not exceeding $137,500 a year, or for a fortnightly service at a maximum compensation not exceeding $275,000 a year. Fifth. From a port of the United States on the Gulf of Mexico to Cuba, on steamships of the United States of not less than 14 knots speed, for a semiweekly service at a maximum compensation not exceding $75,000 a year. Sixth. From a portof the United States on the Gulf of Mexico to Central America, on steamships of the United States of not less than 12 knots speed, for a weekly service at a maximum compensation 'not exceeding $75,000 a year. Seventh. From a port of the United States on the Gulf of Mexico to Mexico, on steamships of the United States of not less than 12 knots speed, for a weekly service at a maximum compensation not exceeding $50,000 a year. Eighth. From a port of the Pacifie coast of the United States, via Hawaii, to Japan, China, and the Philippines, on steamships of the United States of not less than 16 knots speed, for a monthly service at a maximum compensation not exceeding $300,000 a year, or for a fortnightly service at a maximum compensation not exceeding $600,000 a year. Ninth. From a port of the Pacific coast of the United States to Japan, China, and the Philippines, on steamships of the United States of not less than 13 knots speed, for a monthly service at a maximum compensation not exceeding $210,000 a year; or for a fortnightly service, at a maximum compensation not exceeding $420,000 a year. Tenth. From a port on the Pacific coast of the United States to Mexico, Central America, and the Isthmus of Panama, on steamships of the United States of not less than 12 knots speed, for a fortnightly service at a maximum compensation not exceeding $120,000 a year. Provided, That the requirements of this section as to the rates of speed shall be deemed to be complied with if said rates are developed during a trial of four hours’ continuous steaming at sea in ordinary weather in water of sufficient depth to make the test a fair and just one, and if the vessels are maintained in a condition to develop such speed at any time while at sea in ordinary weather. 'I'his trial shall be made under the direction and supervision of a board of naval officers which the Secretary of the Navy shall appoint upon the application of the owner or owners of the ves<el to be tested. FOLLOWING TRADE ROUTES. It will be recognized that in every instance these proposed lines follow natural and important trade routes, and that several of them are valuable, not only for the commercial, but for the political relations which a regular American steamship service will assuredly promote. The United States is Brazil’s best customer. Nearly all of our imports from that country are on the tariff free list. We have also a considerable commerce with the countries farther south. Qur interest in the welfare of these great American Republies is such that it is manifestly unjust and intolerable that not only must American traflic with Brazil and Argentina come and go in inferior and uncertain foreign ships, but that American merchants, and even the officers of our diplomatic, consular, and naval service must be forced to cross to England in order to secure first-class passage to Rio Janeiro and Buenos Ayres. So eager are Brazil and Argentina to gain regular and adequate steam communication with the United States that they have even intimated that they would defray part of the cost of the undertaking. REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 27 Our exports to South Africa are now upward of $30,000,000 a year— almost entirely conveyed by foreign shipping. An American mail line to Cape Town and other ports, composed of capacious steamers of moderate speed, has been requested by American merchants interested in the trade, and is justified by every consideration of commercial prudence. FOUR NEW GULF ROUTES. Three of the ten new mail-steamship lines proposed are to have their origin on the Atlantic coast; four of the ten on the Gulf of Mexico. The Commission thoroughly believes that this liberal recognition of the Gulf ports is demanded by their present, and still more by their future, commercial importance. Galveston, New Orleans, Pensacola, Mobile, and the other commercial cities of that great coast line have excellent harbors, steadily improving rail connections, and behind them the productive wealth of the Mississippi Valley and the mighty Southwest. These Gulf ports ought, in all national equity, to have an American steamship line of their own to South America. They ought to have their own connections under the United States flag with Mexico and the West Indian archipelago. They are assured of these new steamship services through the specified mail routes of the proposed bill, and they will be enabled to create other commercial lines and to launch and run individual ships under the broader terms of the naval subventions. THE GULF'S GREAT OPPORTUNITY. In spite of climatic advantages, and the nearness of timber, iron, and coal, there is not to-day one large modern shi vard on the whole range of the Gulf of Mexico. The foreign ‘y that now convey the commerce of Galveston. New Orleans, Pensacola, and Mobile are built abroad, repaired abroad, manned ahroad, supplied abroad. Even the few of these foreign vessels which American capital owns employ almost no American labor. This proposed legislation, in its mail and naval subvention sections, gives the Gulf States assurance of a new and important industry, absolutely essentiat to them if they are to realize to the full the magnificent advantages opened by the great Isthmian Canal. Under this Proposed legislation, the Gulf cities can build their own ships, officer and largely man them—thus giving their boys a new field of employment—repair their own ships and supply them with their own materials, and thus keep at home all the profits of their ocean trade that now go over the sea to Liverpool, London, Hamburg, Bremen. Havre, Marseilles, Trieste, and Genoa. The Isthmian Canal, built. by American money, will bring not pride, but humiliation, to the American people if it floats, in foreign commerce, only foreign and no American ships. THREE PACIFIC LINES. Three of the ten contract mail lines of the proposed bill are on the Pacific Ocean. Like the Atlantic and Gulf services, they follow natural trade routes of large present and larger future importance. As the President of the United States said in the annual message to Coneress. 28 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. in which he recommended the creation of this Commission, “The establishment of new lines of cargo ships to South America, to Asia, and elsewhere, would be much in the interest of our commercial expansion.” Two new contract lines of mail and cargo steamers are therefore proposed in the accompanying bill, not only to Japan and China, but to the Philippines. These are very long routes, and in the Pacific coal is costly. It has thus been necessary to set the trans-Pacific subventions at a figure that may seem high, but that is not high considering the expense and the importance of the service. Indeed, the Commission must say that it has not yet received any intimations that the offered subventions would secure a trans-Pacific service on either route, although there is satisfactory proof that the Albi and Gulf subventions will attract proposals from responsible bidders. The need of regular mail and commercial service on the third Pacific route, from the western coast to Mexico, Central America, and the Isthmus of Panama, is unmistakable. No like subvention is offered on the Atlantic side, because the Panama Railroad Company already operates an American steam line under domestic postal contract from New York to Colon, and this has passed with the canal property into the possession of the United States (Government. NEARLY ALL NEW ROUTES. As a rule, the ten new ocean mail routes specified in the proposed bill must be created from the beginning—not only the lines, but the ships themselves. There is not one American steamer now running to Brazil, not one to Argentina, not one td South Africa. On the four Gulf routes but one American steamer is now found—on the short line to Guba. In the Pacific Ocean the situation is somewhat different. A service from San Francisco to China, Japan, and the Philippines is now maintained by five American steamers of the Pacific Mail and three British steamers of the Occidental and Oriental Company. If the Pacific Mail were to seek the proposed contract, the three British vessels would have to be displaced by new ships of American construction. There is not now, therefore, an ‘‘ existing line” on this San Francisco route, as the proposed bill contemplates such a service. Oust of the ports of Puget Sound only two American steamers of the liner type now run to the Orient and the Philippines. Four other ships of at least equal size and speed would have to be secured to provide a contract service. On this northern route also there is no ““ existing line,” such as would be required by the proposed subvention. A COMPARISON OF RATES. As to the maximum compensation offered, of $420,000 per annum, for six American steamers on this northern route, it must be compared with the $291,000 given to three steamers of the Competing British line out of Vancouver—smaller ships, though fast. and of less commercial value than the large Americans. This subvention of $420,000 for six American steamers is to be compared also with the $330,000 given to three steamers of the exactly parallel Japanese line from Puget Sound to the Orient. As to the other trans-Pacific subvention of $600,000 for seven or eicht American steamers. it is comparable with $600,000 received by REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 29 three Japanese steamers of a smaller type in direct competition out of San Francisco. _ Whatever criticism may be made of the two trans-Pacific subveritions of the proposed bill, it can scarcely be urged that, judged by foreign standards, thev are unreasonable and excessive. THE ATLANTIC SUBVENTIONS. On the Atlantic the maximum subvention of $300,000 offered for the first Brazil line is about twice the amount granted under the present law, which has absolutely proved to he inadequate. The British Royal Mail service to the West Indies and South America received at first $1,200,000 and then $1,350,000 a year, but on the final successful establishment of the line the amount was gradually reduced. It is now about $400,000 for a double service to the West Indies, Brazil, and Argentina, but a new West India line has lately been started with a subvention of $200,000. The proposed subvention to the new American line to Argentina is set at $375,000 a year—the distance being greater than to Brazil. It has not seemed feasible to unite these South American services, for such mail as is now carried to Brazil or to Argentina by slower foreign steamers goes to one country or the other direct. The distance to South Africa is greater than to Argentina, but the required speed is less, so that a subvention of $375,000 is not inequitable. On the Gulf-Brazil route the subvention is set at $275,000, or $25,000 less than on the North Atlantic route, but the stipulated speed is ¢ knots lower, which is not an unfair balance. The subventions of $75,000 for the Gult-Cuba line and the same amount for the Gulf-Central American line and of $50,000 for the Gulf-Mexico line are relatively small amounts, but the distances are short, the ships tequired are not large, and good steam coal is available. The exact tonnage of the steamships on these new mail routes is not specified in the proposed bill. That is a detail which can best be left to the shipowner and merchant. who know best what a given trade demands and justifies. NO “OCEAN GREYHOUNDS.” Frankly, these proposed new mail subventions do not look to the Creation of an ‘ocean greyhound?” class. Almost the only “ greyhounds ” in the world are to be found on a few North Atlantic lines to Europe. It has seemed to the Commission that the most useful mail steamships for distant commerce and the mail steamships which the American people most desired at the present time were modern, etficlient vessels, combining moderate speed with large cargo capacity. Such ave the steamships called for by the mail subventions of the proposed bill. Their speed, it is believed, is adequate but not excessive. Commercial value is nowhere sacrificed to mere record breaking. At the same time, the stipulated speed is believed to be always at least equal, and in most instances superior, to the average rates of foreign steamers now running in the same or similar services. For example, only two of all the foreign vessels that last year received United States mails at New York for South America possess even a nominal speed of 14 knots. the rate required from all the new 30 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. ships of our proposed lines to Brazil and Argentina. Foreign steamsrs from New York to South Africa are now of from 8 to 11 knots, and 10 knots is above the average speed of the foreign craft now trading within the Gulf of Mexico. On the trans-Pacific routes, the fastest ships now afloat are Amerisan built, and belong to the Pacific Mail Company. The required speed for steamers on the North Pacific line (13 knots) is three knots loss than via the Hawaiian line, but the northern route is the shorter to the Orient, and the winter voyages are often too rough and stormy for high speeding. The three British North Pacific liners are nominally of 16 knots, but it is understood that they are never driven to their maximum. A NAVAL RESERVE FLEET. Just as is required by existing law, whose safeguards are in no way relaxed, the contracts for the new ocean mail routes of the proposed hill must be awarded, after public advertisement, in free and fair competition, to the lowest responsible bidder offering terms satisfactory to the Post-Office Department, and the ships offered can receive no sther subvention or bounty from the United States. As required by existing law, the new mail steamships must be built under naval inspection, and the faster of them must be strengthened to mount powerful puns asarmed auxiliary cruisers, while theslower vessels serveasequally indispensable transports or supply ships. The speed of all must be tested on an official trial and certified by the Navy Department, and all these mail ships, of any speed, must be held at the disposal of the (Government in war. Moreover, they must all carry a quota of men and boys of the naval volunteers. Thus there is guaranteed a new naval reserve of both ships and seamen, and an important reinforcement not only of the commercial power but of the defensive power of the United States. NO NEW DEPARTURE. The general method of the proposed bill in its mail subventions nvolves no new departure from the established practice of the Govsrnment. These mail subventions are not in any opprobrious sense a subsidy or bounty. They are granted frankly in compensation for public services rendered and to be rendered. = As far back as 1841, the gear after the Cunard Line appeared with its British mail contract, Senator Thomas Butler King, of Georgia, began his memorable and successful advocacy of national encouragement to American mail lines on the North Atlantic. Mr. King was ably supported by Senator Thomas J. Rusk, of Texas, and in an annual message to Congress President Polk urged: The enlightened policy by which a rapid communication with the various distant parts of the world is established, by means of American-built steamers, would find an ample reward in the increase of our commerce and in making our country and ts resources more favorably known abroad; but the national advantage is still syreater—of having our naval officers made familiar with steam navigation, and of having the privilege of taking the ships already equipped for immediate service at a moment’s notice, and will be cheaply purchased by the compensation to be paid for the transportation of the mail, over and above the postage received. A just national pride, no less than our commercial interests, would seem to favor the policy of augmentine the number of this descriotion of vessels. REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 31 OUR EARLIER LEGISLATION. In 1845 and 1847, Congress passed acts offering a subvention for an American ocean mail service from New York to Havre and Bremen. A new line of Awerican-built steamships was immediately established. A second subvention created the celebrated Collins Line from New York to Liverpool, and other subventions created an American steam service to the West Indies, to the Isthmus of Panama. and from the [sthmus northward in the Pacific Ocean. As a result of this enlightened statesmanship, the United States from 1850 onward for several years built more ocean steamships than Great Britain did, and better steamships, superior in size, speed, power, and commercial value. There were some lamentable disasters at sea in this period, to remind the world that even steam had not conquered the perils of the ocean, but on the whole the advantage in safety and efficiency as well as in mercantile success remained with the ambitious and progressive builders and seamen of America. This national policy, thus approved, would doubtless have continued unbroken to the present day but for the fierce and deplorable sectional quarrel in Congress that immediately preceded the civil war, This ended the rebuilding of our steam lines for the same reasons and in the same way that it abruptly checked the upbuilding of the Navy. In the white heat of this quarrel the mail subventions were withdrawn, and the north Atlantic steamships, struggling hard with subsidized British rivals, were abandoned. It is sometimes said that this national effort to create a steam fleet by mail subventions failed of its purpose. But it failed only because the effort was given up in the very crisis of the contest. A few years more would probably have made our steamships as securely masters of the north Atlantic as our packet ships and clipper ships had been before them. Even as it was, the ending of the subventions did not break our grip upon the West Indies, the Isthmus, and the Pacific. We had gained there a foothold which our steamships have retained to the present time. GENERAL PRINCIPLES THE SAME. The general printiples of the ocean mail legislation of 1845-1858 were renewed in the ocean mail law of 1891, which for nearly fourteen years has stood unchallenged. It is worth recalling that the performance of the most important contract ever concluded under this act was begun during the second Administration of President Cleveland. The ocean mail sections of the proposed bill simply strengthen the existing act on lines where it has happened to prove inadequate. There is no departure from the method, and none from the purpose, of American ocean mail legislation of sixty years. But there is a distinct increase in the amount of public service required from the shipowners, and the safeguards surrounding the contracts are greater than ever before. THE TONNAGE-TAX PROPOSITION. There now remains to be considered the fourth and last feature of the proposed bill. That is a plan, outlined in section 8, to Increase the tonnage taxes on all vessels, American and foreign. now entering our ports bv sea in the foreign trade. 32 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. Tonnage taxes are practically the only Federal charges levied on shipping in American ports, for entry and clearance fees, ete., are too small to be considered. The present rates of tonnage taxes in the United States are lower than those of the principal maritime nations, and very much lower than the rates of some of those nations. Such charges are sometimes called *‘light dues,” and their original purpose here as abroad was to provide from shipping a fund for lighting the coast for the benefit of shipping. Thus, during the year 1903, the light dues collected in the United Kingdom amounted to £548,196, while the expenses of the British light-house establishment were £499.404. From light dues, accordingly, the British Government met all cost of lighting the coasts of the United Kingdom, and had a surplus of nearly $250,000 a year to add to an accumulated surplus for other years of nearly $2,000,000. The Commission believes that, with entire propriety, a similar general principle may he adopted in the United States. Our receipts from tonnage taxes in 1903 were $885,841, while the expenses of our light-house establishment were $538,105. The Commission does not propose to raise from tonnage taxes an amount sufficient to meet the entire cost of the light-house establishment for several reasons: First. A relatively small part of our light-house establishment expenditures is for the rivers and the Great Lakes. Shipping is here in competition with the railroads, and a Federal charge ought not to be imposed on vessels from which railroad traffic is necessarily exempt. Second. To an extent the same ts true of the coasting trade. We have reserved our coasting trade to vessels of the United States, and for more than twenty years it has been the policy of the Government to pay out of the public funds many of the charges to which American vessels are subject. Accordingly for many years our coasting trade has been exempt from tonnage taxes. The coasting trade of Great Britain, on the other hand, and of some other foreign nations, is not a reserved trade, being open freely or conditionally to the vessels of all nations. Such countries accordingly with propriety levy tonnage or light dues on vessels in the coasting trade. NOT AN UNFAIR CONTRIBUTION. The Commission believes that the sum of $3,000,000 is not an unreasonable contribution on the part of vessels in the foreign trade toward the maintenance of our national light-house, buoy, and beacon system, which this year will doubtless cost about $5,000,000, and the rates proposed in section 8 of the bill have been adinsted so as to produce as nearly as may be that sum. To raise this amount of revenue the maximum charge proposed on any entry is 16 cents, an amount lower than the corresponding rates charged by France or Italy, though nominally double the rates charged by trate and Bremen. At these two principal seaports of the German Empire, however, the rate of practically 8 cents is imposed at every entry (with a slight diminution at Hamburg), while this bill provides that the tonnage taxes shall be imposed on only ten entries during a year. The bill preserves the distinction in the present law by which vessels entering from ports belonging geographically to the North American system pay one-half the rates of vessels entering from the more REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 33 remote parts of the world. A geographical distinction similar in principle is observed by most maritime nations either directly or indirectly in the. imposition of light dues or tonnage duties. The proposition of the Commission further repeals the inexplicable misapplication of the principle of reciprocity to tonnage taxes found in sections 11 and 12 of the act of June 19, 1886. In brief, these sections provide that vessels shall be exempt from tonnage taxes in the tony States on condition that in the ports from which they come no tonnage taxes or light dues or equivalent taxes are imposed on American vessels. If American vessels had a reasonable share in the trade of the world this system might be justified in theory, though in practice the revenue requirements of most nations would not permit of its application. With the ocean carrying trade of the United States, however, almost entirely in the hands of foreign shipowners, this so-called reciprocity system is indefensible. In 1903, for example, American vessels paid in the United States in round numbers $72,000 in tonnage duties, while foreign vessels paid $810,000. Complete reciprocity, therefore, under this law would have given foreign vessels the benefit of $12 exemption for each $1 exemption secured to American vessels. The exemption in foreign ports would be in the same proportion, but the amounts would be considerably larger. THE MARINE-HOSPITAL SERVICE. The bill also repeals section 15 of the act of June 26, 1884, by which the proceeds from duties on tonnage heretofore have been devoted to the Marine-Hospital Service. The Commission realizes the excellent work, the progressive spirit, and the scientific methods of the Public Health and Marine-Hospital Service. It is to be observed, however, that the character of this Service has been materially changed by the legislation of recent years. Its functions have been extended from those of a purely maritime service to a national public-health service, and it seems proper, therefore, that its expenses should hereafter be met hy direct appropriations in the same manner as that by which the (tovernment provides for other general services. Furthermore, the marine hospitals are maintained for the benefit of seamen on American yessels, and seamen on foreign vessels treated at these institutions are charged a moderate sum. As over 90 per cent of our tonnage taxes are paid by foreign vessels it does not seem just that this fund should be set apart as at present for the exclusive benefit of our own crews. A REMISSION IN BEHALF OF BOYS. It has been explained that the increase in tonnage taxes made in section 8 of the proposed bill falls alike on an American or a foreign ship that enters a port of the United States in foreign commerce. The chief maritime power in the world, the one that has been most successful in developing a strong naval reserve of merchant officers and seamen, and the one great power, moreover, that resembles the United States in dependence for naval strength on voluntary enlistments, has for several years followed a practiee of remitting a part of its tonnage taxes to those of its own vessels that train boys for the merchant service and the Navy. 8 Ren. 2049. 58-3——3 34 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. The Commission would invite especial attention to section 6 of the British merchant shipping act of 1898: On proof to the satisfaction of the board of trade that a British ship has during any fiscal year carried, in accordance with the scale and regulations to be made by the board of trade, with the concurrence of the treasury, boys between the ages of fifteen and nineteen, there shall be paid to the owner of the ship, out of moneys provided by Parliament, an allowance not exceeding one-fifth of the light dues paid during that year in respect to that ship: Provided, That no such payment shall be made in respect of any boy unless he has enrolled himself in the royal naval reserve and entered into an obligation to present himself for service when called upon, in accordance with rules to be issued by the Admiralty. The scale and regulations aforesaid may be modified from time to time by the board of trade, with the concurrence of the treasury. This section shall continue in force until the thirty-first day of May, one thousand nine hundred and five, and no longer, unless Parliament otherwise enact. AN EXCELLENT PRECEDENT. Noprotest against this remission of British tonnage taxes exclusively in favor of British ships has ever been made by the United States, because it is manifest that these ships have earned a fair title to especial national consideration through the rendering of an especial service to the Government. The education of these young seamen is rightly regarded as an important contribution to the national defense. The Commission, therefore, has provided, in section 9 of the proposed bill, for a remission of a part of the tonnage taxes—amounting to 80 per cent of the increased rate-—to American ships that carry a certain number of boys who are suitably trained in seamanship or engineering, and are either enrolled as naval volunteers or indentured 4s apprentices. The report of the Commission has already emphasized the great importance of the personal equation in this urgent problem of the merchant marine. Fhe thorough seaman must begin his calling as a lad, when his elasticity and adaptability are greatest. Few men remain at sea who first go when they are over 25 years of age. - The encouragement offered to the training of American boys is purposely made a conspicuous part of this proposed legislation. For if a larger American merchant marine is to be created it will have imperative need of the pluck, energy, and determination of boys like those who crowded our new regiments in the war with Spain, but quit when the fighting was over, to go into machine shops, or to try railroading in the West, or prospecting in Alaska or South Africa or the Philippines, or any other adventurous outdoor life, with plenty of hardship and danger and some chance of profit. ’ AN UNEXAMPLED LIBERALITY. No nation in the world has drawn on its treasury so freely as the United States for the improvement of rivers and harbors and the maintenance of an unequaled light-house, buoy and beacon, and life-saving service. The national expenditures on rivers and harbors from 1888 to 1904 reached the enormous sum of $261,082,852; for light-houses, for buoys, etc., $23,320,086, and for the life-saving service, $11,657,-952—a total for these maritime purposes of $296,060,890—while in all this time the foreign shipping interests, for whose benefit, largely, these heavy expenditures were made, returned only $10.458.996 in tonnage taxes. REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 35 Some of our expenditures for rivers and harbors, light-houses, etc., have of course been on the Great Lakes or rivers of the interior, where foreign vessels seldom or never go, but by far the largest part of these disbursements has been made in navigable waters on or adjacent to the ocean. The costly deepening of harbors has especially inured to the benefit of foreign ships, for coastwise commerce, as a rule, has not required it, and the number of heavy-draft American vessels in the foreign trade is trivial. Only six American steamships of 10,000 tons gross register or upward now run in the trade of the Atlantic seaboard. and they all go out of the port of New York. Our liberal river and harbor appropriations have always, as one sure result, enabled great foreign steamship companies to build immense craft and thereby increase their dividend rate per ton with the cordial assistance of the United States Treasury. No other government in the world has displayed such eager altruism in opening channels for the almost exclusive use of foreign flags. Meanwhile, the few American ships that visit foreign waters have been met there by tonnage, light-house, dock, and other charges, almost invariably higher than— indeed, often several times as high as—the charges on foreign ships in deep and secure American seaports. This anomalous condition of affairs points straight to the necessity of an immediate revision of our tonnage-tax system. The Commission believes that in the proposed bill it has offered a method of providing increased revenue from tonnage, that, while just to the United States, 18 not unfair to the ships of foreign governments, long the chief beneficiaries of our generous policy of maritime expenditure. RSTIMATED COST OF THE PROPOSED LEGISLATION. As to the important practical question of the cost of the proposed legislation, the average of the annual retainers provided in section 1 of the bill for officers and seamen of the naval volunteers would be close to $50 each. It is probable that in the first year no more than 3,000 naval volunteers could be enrolled and qualified—for this process, at. first unfamiliar, wiil necessarily be slow. These naval volunteer retainers, therefore, for the fiscal year ending June 80. 1906, would call for a maximum expenditure of $150,000. As to the subvention for the ships themselves, the total registered gross tonnage of the United States, steam and sail, on June 30, 1904, was 888,628 tons. But it is well known that all this tonnage was not actually engaged in foreign commerce. Many steamships, whose employment is really coastwise, sail under register because they happen to touch at one foreign port. For instance, eight ships of a total of 52,857 tons of the American-Hawaiian fleet are registered, though engaged regularly in trade between New York, San Francisco, and Hawaii. Other vessels sail under register for similar purposes of convenience, including many small steam craft running to Alaska and on the Yukon River. The actual foreign-going steam tonnage of the United States is easily ascertainable. It can be selected, ship by ship, from the short list of registered steel and iron steam vessels of above 1,000 tons. Smaller craft than these, or wooden craft of any size, are not likely to make a serious effort in foreign commerce. But from this list of registered steam vessels must be excluded— 36 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. (1) Twenty steamships of 107,385 tons now employed on mail lines ander the law of March 8, 1891, which forbids them, under the terms of the proposed bill, to receive any other bounty or subvention. (2) Steamships of a speed and character available for the new ocean mail routes proposed in the present bill—these numbering 19 of 151,442 tons. This process of elimination leaves 44 steamships of 203,871 gross tons now registered in the United States and qualified to receive the subvention of $5 a ton provided for in section 2 for ships engaged in foreign trade by.sea for twelve months in a year. This steam fleet, therefore, would require in subventions the sum of $1,019,355. Besides this registered steam tonnage there are 150 registered American square-rigged sailing vessels of 200,000 gross tons. These vessels are now employed partly in long coastwise, and partly in foreign, voyages. It may safely be assumed that one-half of this square-rigged tonnage, under the encouragement of this bill, will engage for six months and one-half for nine months in foreign commerce, requiring, therefore, subventions at the six months’ rate of 250,000, and at the nine months’ rate of $400,000, or $650,000 in all. The schooners registered on June 30, 1904, for foreign commerce were 700, of 150,000 gross tons. But it is well known alongshore that few schooners engage exclusively in the foreign trade—for they go intermittently from coastwise to foreign carrying. Assuming that the subventions offered by this bill to the vessels themselves and to their officers and seamen will move the schooners to much larger participation in foreign trade—to the extent for the whole fore-and-aft Beet of six months in a year—the 150,000 tons of fore-and-aft shipping will require total subventions of $375,000. There were on June 30, 1904, 567 enrolled vessels of 48,982 tons engaged in the deep-sea fisheries—small licensed craft below 20 tons not being included. This total deep-sea fishery tonnage of, in round numbers, 50,000 tons would on the average call for subventions at the nine months’ rate of $4 per ton, which would amount for the year to $200,000. The approximate cost of the. proposed legislation in sections 1 and 2 for the first fiscal year, from July 1, 1905, to June 30. 1906, may therefore be summarized as follows: Annual retainers to naval volunteers (3,000) . an Subventions to 44 registered steamships of 203.871 tons at twelve months’ rate of $5 per ton....... ene Subventions to 100,000 tons of - uare-rigged sailing vessels at nine months’ rate of $4 per ton... ..... . ; . Subventions to 100,000 tons of square-rigged sailing vessels at six months’ rate of $2.50 per ton ........... oo. wnrene Subventions to 150,000 gross tons of reguwtered schooners at sx months’ rate of $2.50 POT COM «ove icine cain aieaeee eh ceases os Yubventions to 50.000 tons of deep-sea fishing vessels at nine months’ rate of 84 ner ton Total $150, 000 1,019, 355 400, 000 250, 000 375, 000 200, 000 9 304 355 For the first year the increased tonnage taxes provided for in section 8 of the proposed bill would furnish a total revenue of $3,025,529, out of which there would be remitted to American vessels carrying the required quota of boys—naval volunteers and apprentices—the amount of $210.320. REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 37 THE COST OF NEW OCEAN MAIL ROUTES. The maximum subventions required for the complete service on the ten new ocean mail routes authorized by the proposed bill amount to $2,665,000. This is the expenditure which must not be exceeded, but as the contracts are to be let to the lowest responsible bidders it is possible that the actual final cost may be considerably less than this. However, assuming that $2,665,000 is the maximum, it may be said in the beginning that this full expenditure can not be reached for at least three years, for the majority of the ten new mail routes provided are absolutely new. There are, for example, no American ships whatever DOW running on the routes to Brazil or Argentina or South Africa, or In the Gulf of Mexico to Mexico and Central America. Moreover, there are few steamships now in existence in the United States qualified for this service, especially for the long lines southward beyond the equator, Nearly all of the tonnage required for these mail routes tn the Atlantic, and a large part of that required in the Pacific, will have to be designed, launched, and completed, and fully three years will be necessary for this undertaking. Even assuming that the few steamships that could be adapted to this mail service will be diverted from their present use, no more than onefourth of the maximum of $2,665,000, or $666,250, could in all probability be expended on the new mail routes within the first fiscal year. The United States is now paying a considerable sum of money for the carrying of ocean mails, on the weight basis, to American and foreign steamers on the new proposed mail routes. This sum amounted to $158,401.46 in the fiscal year ending June 30, 1904. At least twothirds of this, or about $100,000, will be saved when the new mail routes are established, and should therefore be deducted from the maximum estimate of $2,665,000, leaving a net maximum cost of $2,565,000. Moreover, the important fact should be emphasized right here that the United States is the only mercantile nation in the world that makes any profit out of its ocean mail service. Great Britain, for example, a kes the entire income from its ocean mails and devotes it, with sevtral million dollars more, to the encouragement of its chief lines of steamships, The United States, on the other hand, according to the report of the Superintendent of Foreign Mails for the fiscal year ending June 30, 1904, actually made in that year $2,579,336 beyond the net cost of the service, exclusive of the cost of transferring the articles between the United States exchange post-offices and the United States postoffices at which they were mailed or delivered. There will be general agreement that at least this apparent profit on the ocean mail service of the United States ought to be turned back to the encouragement of our ocean mail lines, and that is exactly what is contemplated in the mail subvention clause of the proposed legislation. In effect, the annual— not the accumulated—profit from our ocean mail service is hereafter to be devoted to the upbuilding of American steamship communication with distant markets. Great Britain goes beyond this, and applies to this purpose two or three millions more annually. The United States can at least afford to utilize in this way the full’amount of its ocean-mail net income. The maximum expenditure for the mail service, it should be remembored, can not be reached before the fiscal year beginning July 1, 9K 38 REPORT ‘OF AMERICAN MERCHANT MARINE COMMISSION. The total expenditures for the first year, from July 1, 1903, to June 30, 1906, under the proposed bill, for naval retainers, subventions, and mail subventions, all included, would therefore be: Naval retainers and subventions........ Mail subventions (one-fourth of maximum). Ceeoo. $2,394,355 © 866,250 . 3,060,605 As to the probable rate of increase in the expenditures for the naval retainers and subventions to general shipping, it may be said that the proposed legislation would .prove satisfactory it it added the second year 3,000 naval volunteers, at a cost of $150,000, and 100,000 tons of new merchant and fishing tonnage of an effective type, in the ratio of 75,000 tons of steam to 25,000 tons of sail, the cost being $375,000 and $100,000, respectively, or a total increase for men and ships of $635,000—malking an aggregate expenditure for the fiscal year ending June 30, 1907, of $3,029,355. A JUST MEASURE OF RETALIATION. An important memorial in regard to discriminating duties, which has been submitted to the Commission by commercial organizations of the central Northwest, states: We believe that a great injury would result if the United States took the initiative in discriminating against the ships or goods of other nations. But if other nations liscriminate against our products there should be a swift and severe retaliation. We should not commence commercial warfare, but if others inflict injuries upon us we must not shrink from vigorously protecting our own interests. If Great Britain takes the initiative and discriminates unjustly and injuriously against our agriculaural export trade, then there should be invoked the old rule of conduct laid down ov our fathers nearly a century ago to meet similar cases of injustice. This memorial calls attention to the fact that there is nothing in our commercial agreement with Great Britain which could prevent Congress from meeting such a discrimination against our agricultural exports as involved in the proposed policy of Mr. Chamberlain by invoking against British vessels in the indirect carrying trade the retaliation authorized by section 23 of the Dingley law, as follows: That no goods, wares, or merchandise, unless in cases provided for by treaty, shall be imported into the United States from any foreign port or place, except in vessels of the United States, or such foreign vessels as truly and wholly belong to the citizens or subjects of that country of which the goods are the growth, production, or manufacture, or from which such goods, wares, or merchandise can only be, or most usually are, first shipped for transportation. All goods, wares, or merchandise imported contrary to this section, and the goods wherein the same shall be imported, together with her cargo, tackel, apparel, and furniture, shall be forfeited to the United States; and such goods, wares, or merchandise, ships or vessel, and her cargo shall be liable to be seized, prosecuted, and condemned in like manner, and under the same regulations and provisions as have been heretofore established for the recovery, collection, distribution, and remission of forfeitures to the United States by several revenue aw. Total _ As the Dingley law now stands, section 24 provides: That the preceding section shall not apply to vessels or goods, wares, or merchanjise imported in vessels of a foreign nation which does not maintain a similar regnlation against vessels of the United States. The Northwest memorial suggests that there be provided an amendment to section 24 of the Dingley law so that it shall at once be made ready to give full effect to section 23— to protect any of our national interests against the aggression of maritime nations doing a profifable freighting business with our people by our sufferance. By that REPORT OF AMERICAN MERCBANT MARINE COMMISSION. 39 means the maritime interests of Great Britain will understand that any injurious discrimination on the part of that Government against our people and goods will result in their exclusion from our indirect foreign freightage. ~ This may or may not check hostile discrimination against us, but it will compel the consideration that there is more than one side to the proposition and that the injuries which we can and will inflict would counterbalance any possible benefits which that nation might receive by any preferential action against us. The Commission heartily approves this plan for self protection as outlined by the commercial organizations of the Northwest, and recommends oA action to Congress not only in defense of our agricultural Interests against a hostile policy, but as a possible and effective method, if we are driven to it, of regaining for our ships an important commerce now all but nny by the fleets of our aggressive rompetitors. THE TRANSPORT SERVICE. . In the hearings of last summer at Puget Sound and San Francisco it was discovered that mercantile sentiment on the Pacific coast very earnestly demanded the abandonment of the transport service to and from the Philippines, on which the Government had entered from necessity in the Spanish war. This transport service has been practically suspended on the Atlantic Ocean; it is only on the Pacific that it has been retained, and there it has been partly discontinued. But several large transports, foreign-built vessels, are still in operation between the Philippines and the Pacific seaboard, conveying not only soldiers, but all manner of Government freight and supplies. and even a considerable number of civilian passengers. In other words, the Commission, instructed by Congress, on the recommendation of the President, to investigate the feeble and even desperate condition of the American merchant marine, found that the Government itself was directly and powerfully contributing to the decline of American merchant shipping on the Pacific Ocean by operating rival lines of tforeign-built craft, and depriving American vessels, in a time of profound peace, of a business to which they were legitimately entitled. Not only this, but it was insisted that the Government was actually conducting this business at a very much higher price than that for which American shipowners were willing to perform the service. "A MATTER OF BOOKKEEPING. To all of the members of the Commission who visited the Pacific coast, this procedure of the War Department appeared to be absolutely indefensible. It is true that in his recent annual report, the Quartermaster-General of the Army figures out a profit of $398,236 for the transport service as compared with the rates which commercial steamers would have charged, but this profit, as a matter of fact, is altogether due to a radical difference in bookkeeping methods between commercial steamship companies and the Quartermaster’s Department. Steamship companies, like all other private business enterprises, are compelled to pay taxes, to pay insurance rates—and marine insurance is high—and to make large annual allowances for interest and depreciation. One of the witnesses before the Commission at San Francisco was the major and quartermaster in charge of the army transport service there. He was questioned as follows: _ Representative Mivor, Major have vou in your calculation made any allowance ‘or deterioration? Maior DevoL. No. sir. 10 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. Representative. Minor. Ordinarily, I believe, that is 5 per cent, is it not? Major Drvor. We do not carry that, neither do we carry interest on investment. Representative Minor. Then you do not pay any taxes, of course, as shipowners vould have to pay? Major DevoL. No, sir. The CrairMAN. Do you insure the Government property? Major Devor. We never insure. The CralrMaN. So you take that risk? Major Devol further stated that the original cost of the four transports now performing the Manila service ‘could probably be reckoned at $4,000,000”—others were being held in reserve. The usual allowance of a steamship company for taxes, interest, insurance, and depreciation would not be far from 15 per cent per annum, or about £600,000 on these four transports, to say nothing of the fixed charges on the others—charges which the Quartermaster’s Department may ignore, but which can not be so lightly treated in the economics of an ordinary business corporation. Of course these charges would convert the profit of the transport service into an undeniable deficit. * ¥* COSTLY AS WELL AS UNWISE. And though these charges may be overlooked, they can not be ignored. Deterioration proceeds as inevitably in the transport as in the liner. Most of these foreign-built transports on the Pacific were by no means new vessels when they were acquired. In general efficiency and economy of operation they are not to be compared with the new American-built commercial steamships which American enterprise has put into service on the Pacific Ocean since the war with Spain. A steamship manager at Seattle testified that his company could have saved the Government $150,000 in two years if the supplies carried by an old foreign-built transport had been conveyed by his new commercial steamers. Said this witness, Mr. Frank Waterhouse, managing agent of the Boston Steamship Company: I think I can show you that we can carry cargo cheaper than the Diz, for this reason if no other. On the Dix there is no return cargo from the Philippine Islands. All her cargo is one way. We could not begin to operate our line under any circumstances if we took eargo but one way. Now, we carry cargo both ways. Our average earnings eastbound are fully as much as our average earnings westbound. Of course, that is bound to tell in the cost. Representative Spit. In that way you are able to carry cheaper than the (overnment? Mr. Warernouse. Certainly; we carry cargoes both ways. If the same bookkeeping methods by which such factors as taxes, interest, insurance, and depreciation are entirely ignored, were applied to other transactions, it could doubtless be proved beyond dispute that the United States Government could not only conduct a steainship business more cheaply than private shipowners, but that it could make steel rails and woolen cloth and boots and shoes at a lower price, that it could mine coal more cheaply, do the country’s banking and operate its railroads. But if the United States Government is to attack any industry as a competitor, it ought in all fairness to select one that is prosperous and robust, and not set up asa rival to an interest that, because of long continued neglect, is now fichting a veritable battle for existence. The two American steamship companies which regularly ply across the Pacific to Asia and the Philippines are face to face with over- REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 4] whelming odds in the large subsidies enjoyed by the parallel lines of Japanese and British steamers. The least that our Government could do to aid these American lines would be to give them the carrying of 1ts own soldiers and their supplies. Neither Great Britain nor Germany maintains a transport service. Both nations find it more satisfactory and economical to make use of their regular commercial Steamers, and both nations thereby foster and encourage in a perfectly legitimate way the enterprise of their shipowners and merchants. The United States stands alone in denying this assistance to its maritime interests. SECRETARY ROOTS VIEW. For some inexplicable reason, the gradual discontinuance of the transport service of the United States, which Hon. Elihu Root noted and commended in his annual report as Secretary of War in 1902, Seems now to have been arrested. Mr. Root spoke of the sale of some transports and the laying up of others, and added: In October bids were invited from commercial lines for transportation of passengers and freight for the Army between San Francisco, Portland, Seattle, and Tacoma and Manila until June 30, 1903. A number of bids have been received, but the combarative advantage of operating under them has not yet been worked out, and no contract has been awarded. As rapidly as it becomes. apparent that the Government business can be done more economically in any part or as a whole by this method it is the purpose of the Department to follow the same course which hag been followed upon the Atlantic in discontinuing the use of Government transports and to put the business in the hands of commercial lines on the basis of open competition. Lam satisfied that it is practicable for private shippers to do ordinary business much cheaper than it is possible for the Government to do it under the limitations which rest upon Government action, and that they can afford to do the business for less than it costs the Government and still make a profit. At the same time, by follow-Ing this method, the Government will be aiding to build up regular commercial lines between the Pacific coast and Manila, which is much to be desired. . The Commission earnestly indorses this authoritative recommendation, and ag Congress to complete as soon as possible the discon. tinuance of the transport service, as a measure of economy, and a sure and acceptable encouragement to American trade and navigation on the Pacitic Ocean. The military power of the United States will be not the loser, but tite gainer, by an enlightened policy tending to Increase the number of modern American steamships available for use, and to strengthen our commerce with the Orient. AMERICAN SHIPS FOR THE CANAL TRADE. A law of the United States requires that only American vessels shall be used for the shipment by sea of all supplies and materials for the Army and Navy, unless the President shall find that the rates of freight are excessive and unreasonable. This is in accord with the regulation or practice of all maritime powers, who never, save in exceptional cases, intrust their public service of this kind to foreign shipowners. Remonstrances have been sent to the Commission hy American shipowners on both the Atlantic and Pacific oceans, that foreign vessels were being used to the exclusion of American vessels for the trans portation of materials and supplies from the United States to the Isthmian Canal Zone. One case In particular is cited, where a considerable amount of lumber was given to the Kosmos Line of German steamers 12 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. from Puget Sound, though American shipowners offered substantially the same freight EV difference being that the German bid was on the basis of the delivery of partial lots, the American of entire cargoes. Shipment in this case was arranged for by the contractors, the Isthmian Canal Commission purchasing the lumber delivered on the Canal Zone. At the time this lumber was given to the German shipowners a large number of steamers and sail craft were lying idle awaiting charters in Puget Sound. If the lumber in question had been purchased across the frontier in Canada while American mills stood idle in consequence, there undoubtedly would have been sharp complaint from American lumbermen. Rear-Admiral John G. Walker, U. S. Navy (retired), chairman of the Isthmian Canal Commission, has stated that hereafter contractors for materials will be requested to include in their bids the estimated cost of transportation by both American and foreign vessels. CARRYING OUR OWN MATERIALS. The Commission believes that the American people, who are building this canal with American money, prefer to have their materials carried in American and not foreign ships, particularly as there is always likely to be plenty of American tonnage available. This delivery of canal supplies, machinery, etc., is a traffic adapted not only to American vessels registered for foreign commerce, but to a Jarge part of the very much greater coastwise fleet on both the Atlantie and Pacific oceans. There are, all told, 3,244,000 tons of shipping on the Atlantic and 775,000 tons on the Pacific seaboard, and of this a considerable part is composed of capacious seagoing vessels, Steam and sail, including scores of general cargo steamships and hundreds of efficient schooners, especially equipped for coal and lumber carrying. Not a few of these vessels are now engaged frequently in trade to the Isthmus and beyond, and with these great fleets available, with hundreds of individual owners, there need be no fear of lack of suitable tonnage, or excessive rates, or combinations to take advantage of the Government. PROPERLY RESERVED TO OUR SHIPS. Therefore, the Commission has prepared and caused to be introduced in the Senate and House of Representatives a bill requiring the use of vessels of the United States, or belonging to the United States, for the transportation of all supplies or materials for the Panama Railroad and the Isthmian Canal, and also of all supplies or materials for the naval station at Guantanamo. This bill does not extend our coastwise laws to either Panama or Cuba: it raises no delicate questions of jwrisdiction. It simply directs the use of American vessels for the performance of certain public services. It is a simple, profitable, and effective method of encouraging the American merchant marine, while at the same time protecting certain important public interests. The Commission urges the immediate enactment of this measure not only for what it will accomplish, but as a declaration of purpose that the isthmian waterway is to be American in something more than name. REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 43 THE RECIPROCITY TRADE WITH CUBA. In the important reciprocity agreement between the United States and Cuba, not only are valuable exclusive advantages given to Cuban productsin the American market through areduction of customsduties, but similar advantages are secured in the Cuban market to American manufacturers, farmers, and merchants. Only American shipowners, builders, and seamen are forgotten. The Cuban reciprocity treaty contains no recognition whatever of the maritime interests of the United States. F ortunately it is not even now too late to remedy this oversight. Another treaty governing our general commercial relations with the Cuban Republic remains to be negotiated, and the Commission recommends that, asa delayed but none the less merited act of justice to the shipping industry, this commercial treaty should be made to provide for reserving the transportation of this reciprocal commerce to vessels already registered or hereafter built in the United States or Cuba. It 18 not suggested that the coastwise principle be sweepingly applied, and foreign vessels be excluded altogether from trade between American and Cuban seaports, but rather that the benefits of the reciprocal reduction of duties in either country be granted only to merchandise conveyed in vessels of the contracting governments. The United States and Cuba have just as good a right to make a reciprocity agreeent with regard to their shipping as they have with regard to their manufactures or their agriculture, and broad considerations of equity as well as of prudence demand that such a shipping agreement be concluded as soon as possible. FOREIGN FLAGS NOW DOMINANT. At present foreign flags cover the larger part of the transportation between Cuba and the United States. Of total imports from the island, valued at $62,813,362 in the fiscal year 1903, $22,490,644, or only 85.80 per cent, were conveyed in American, and $40,322,718, or 64.20 per cent, in foreign shipping. In the export. trade to Cuba American vessels significantly make a better showing. Of total exports to the island; valued at $21,760,842, $11,792,402, or 54.19 per cent, were conveyed in American, and $9,968,440, or 45.81 per cent, were conveyed in foreign shipping. Of the entire commerce between the United States and Cuba, both imports and exports included, valued at $84,574,204, only $34,283,046, or 40.54 per cent, were carried in American, and $50,291,158, or 59.46 per cent, were carried in foreign shipping. If all of this reciprocal commerce were secured for American and Cuban vessels, in the manner indicated, an important advantage would be gained for the American merchant marine, and not only for the American fleet but also for the native shipping of Cuba. It is desirable for purposes of defense, as well as for the promotion of commerce, that there should be adequate building and repair yards, proper docks, and a capable and experienced naval reserve of officers and seamen established on the coast of Cuba, as well as on the neighboring Gulf and South Atlantic coast of the United States. These indispensable advantages can never be secured for either the United States or 44 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. Cuba so long as ships built in Europe, owned there, officered and manned there, and repaired there, dominate the growing trade between the island and the mainland. The peculiar closeness of the relations between the new Republic and the United States imperatively forbids a longer continuance of European control over the larger part of their means of communication. THE NORTH ATLANTIC MAIL SERVICE. None of the new mail routes proposed by the bill runs to a European port. There is nothing in this measure, as has frankly been acknowledged, to encourage the building of expensive *‘ greyhounds” for the mail, passenger, and express cargo service to Great Britain and the Continent. The Commission has not been forgetful of this important part of our commerce, nor is there any disposition to ignore it, especially as the President of the United States, in his message to Congress recommending the creation of this Commission, made significant reference to this very service, saying: While such a measure is desirable in any event, it is especially desirable at this time, in view of the fact that our present governmental contract for ocean mail with the American Line will expire in 1905. Our ocean-mail act was passed in 1891. In 1895 our 20-knot trans-Atlantic mail line was equal to any foreign line. . Since then the Germans have put on 23-knot steamers and the British have contracted for 24-knot steamers. Our service should equal the best. If it does not, the commercial public will abandon it. If we are to stay in the business, it ought to be with the full understanding of the advantages to the country on the one hand, and on the other with exact knowledge of the cost and proper methods of carrying it on. During the past few weeks the Commission has given particular attention to this important phase of the inquiry in its sessions in Washington, and expert engineers, ship builders, and steamship managers have been invited to present their views as to the difficult prob lem of the North Atlantic fast mail and passenger service. But the Commission regrets to say that information that would be adequate to guide the action of our Government has not yet been secured. A COMPLICATED PROBLEM. The problem, a formidable one at best, is further seriously complicated at the present time by the partial development of the turbine principle in marine propulsion. The two new giant Cunard steamers will be of this type, yet untried on a large scale in transoceanic navigation, though perhaps destined to work almost another revolution In marine architecture. Besides the Cunard ships, two Allan Line steamers of large size, but moderate speed, are being completed in Great Britain for the Canadian mail service, and conflicting reports as to the trial performances of the first of these vessels make a positive recommendation seem all the more premature and ill advised. Meanwhile, though American builders have thus far produced no large ocean-going turbine steamer, some creditable experimental work has been done in the United States, and some of our own engineers are advancing on original lines toward results that promise to be of the very first importance. These considerations naturally make the Commission all the more reluctant to form conclusions that must be based on European practice, though that practice confessedly has not vet passed beyond the experi- REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 45 mental stage. When it is remembered that steam was first pracilely applied to the driving of both war ships and merchant s ips in the United States, that the first steamer that crossed the Atlantic was American, that the first satisfactory use of the screw propeller on a large scale was made here, and that as late as 1860 American-built steamships held on the North Atlantic the same relative postion toward other ships as the huge twin Cunarders will hold if hey are Successful —when all this is recalled, it is not unreasonable to expect that the best marine turbine may yet prove to be wrought out by American technical skill and boldness of invention. Moreover, the enormous new Cunard subvention of $1,100,000 for twenty years, combined with the extraordinary liberality of the British Government in loaning to the company at a nominal rate the $13,000,000 required to build the new ships, introduces another factor that forbids an immediate recommendation to Congress. It is estimated that with the other generous terms of the contract this subvention is worth to the Cunard Line the equivalent of $2,000,000 or $2,500,000 a year, which would have to be more than offset in amount to produce a corresponding American ocean mail service—covering the higher range of American ship wages and cost of construction, Manifest]y the American people, whatever their final decision may be, would hesitate to embark on such a scale of expenditure as this while the imperative technical question of whether the turbine is to supplant reciprocating engines as the screw propeller supplanted the side wheel is still undetermined. Therefore the Commission, though fully realizing the commercial and political importance of the fast North Atlantic mail service and the value of these great ‘“merchant cruisers” to the national defense, is unwilling at this time to recommend any specific legislation to Congress. But the Commission does insist with the utmost earnestness that the United States can not afford to disregard the mighty transition that Seems to be impending in the North Atlantic; a change which, if 1gnored by our rE may result in the complete loss of even our present inadequate share of the noblest field of ocean navigation. Congress owes it to the commercial welfare and the naval security of the country to make provision at once for an especial, vigilant study of the North Atlantic steamship service as affected not only by the extraordinary new British subventions, but by the approaching 1ntroduction of the turbine high-speed engines on the all-important mail and passenger routes between America and Europe. URGENT NEED OF IMMEDIATE RELIEF. In the midst of a general condition of buoyant prosperity the American merchant marine in over-seas trade alone of our great National industries is, and long has been, depressed and declining. The slight temporary increase of registered tonnage, due in large part to ‘auses growing out of the Spanish war, has now come to an end, and the absolute cessation of shipbuilding for ocean commerce shows that the country is on the verge of a swift and heavy shrinkage in the small registered fleet still left to it—a fleet actually smaller by 100,000 tons than that of 1810. If there is to be remedial legislation it must he 16 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. prompt and energetic. Delay only increases the cost and intensifies the difficulty of Be undertaking. It may be said without exaggeration that there is not a large ocean shipyard in America, and not an ocean steamship company, except the Few mail lines operating under the act of 1891, that is not looking to instant and vigorous remedial legislation by Congress as the one hope of its continued existence. Within a few weeks an important shipyard, on the Delaware River, after a long and brave fight against adversity, has succumbed and gone into the hands of receivers. This yard has a splendid modern plant, zealous and capable managers, and the prestige of an active career of half a century. The American Government and people may well ask themselves this grave question: Where in a few years can they find solvent shipyards to contract with to build their battle ships and cruisers unless the complete paralysis fog threatening this great industry is speedilv arrested by national aws? If the passage of the legislation proposed by the Commission is postponed to the next session of Congress a condition already desperate will have become still more desperate. The time to act is now. The Commission has prepared a conservative measure, aiming to achieve its purpose at a minimum cost, fair to all sections and interests, and directed especially to the strengthening of the national defense and the extension of American commerce to new and distant markets. The Commission can see no reason why a cautious measure of this kind, making no large immediate draft upon the national revenues. ~an not be passed at the present session of Congress. With all possible emphasis, therefore, the Commission recommends that the following bills which will be reported from the Commission and introduced into the two Houses of Congress, be taken up promptly, and after reasonable debate advanced to enactment. A BILL To promote the national defense, to create a force of naval volunteers, to establish American ocean mail lines to foreign markets. to promote commerce, and to provide revenue from tonnage. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Navy and the Secretary of Commerce and Labor shall cause to be made an enrollment of officers and men now and hereafter employed in the merchant marine and deep-sea fisheries of the United States who may be capable of rendering service as naval volunteers in time of war. No man shall be thus enrolled who is not a citizen of the United States or who has not declared his intention to become a citizen. Any naval volunteer who, having declared his intention to become a citizen, fails to complete his naturalization according to the provisions of title thirty of the Revised Statutes, shall be stricken from the rolls. These naval volunteers shall be enrolled for a period of three years, during which period they shall be subject to render service on call of the President in time of war. They shall also possess such qualifications, receive such instruction, and be subject to such regulations as the Secretary of the Navy may prescribe. The Secretary of the Treasury is hereby authorized and directed, upon proper audit, to pay, out of any money in the Treasury not otherwise REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 47 SDpesprivied, to each officer or seaman thus enrolled and employed in the foreign trade or deep-sea fisheries, as hereinafter provided, an annual retainer as follows: For each master or chief engineer of a vessel of the United States of five thousand gross tons or over, one hundred dollars; for each master or chief engineer of a vessel of the United States of one thousand gross tons or over but of less than five thousand gross tons, efghty-five dollars; for each master or chief engineer of a vessel of the United States under one thousand gross tons, seventy dollars; for each mate or assistant engineer of a vbssel of the United States of five thousand gross tons or over, seventy dollars; for each mate or assistant engineer of a vessel of the United States of one thousand gross tons or over but of less than five thousand 2108s tons, fifty-five dollars; for each mate or assistant engineer of a vessel of the United States under one thousand hs tons, forty dollars; for 2ach seaman, twenty-five dollars; for each boy, fifteen dollars. Such retainer shall be paid at the end of each year of service on certificate by an officer, to be designated by the Secretary of the Navy, that the aval volunteer has satisfactorily complied with the regulations, and On certificate by the Commissioner of Navigation that such volunteer hag served satisfactorily for at least six months of the preceding twelve Months on vessels of the United States in the foreign trade or in the deep-sea fisheries. SEC. 2. That in the interest of the national defense and for the performance of ‘the public services hereinafter specified, after July first, tneteen hundred and six, the Secretary of the Treasury is hereby authorized and directed to pay, subject to the provisions of this act, out of any money in the Treasury not otherwise appropriated, to the owner or owners of any vessel hereafter built and registered in the United States or now duly registered by a citizen or citizens of the United States (including as such citizens any corporation created under the laws of the United States or any of the States thereof), subventions as hereinafter provided; that is to say, (a) the sum of five dollars Der gross registered ton for each vessel which has heen engaged in the foreign trade by sea or the deep-sea fisheries for a period of twelve Months, including time necessarily consumed in muking annual or ®Xtraordinary repairs; (b) the sum of four dollars per gross registered ton for each vessel which has been engaged in the foreign trade by sea or the deep-sea fisheries for a period of nine months or over, but less than twelve months, including time necessarily consumed in making extraordinary repairs; (c) the sum of two dollars and fifty cents per gross registered ton for each vessel which has been engaged in the foreign trade by sea or the deep-sea fisheries for a period of six months OT over, but less than nine months, including time necessarily consumed in making extraordinary repairs: Provided, That if, for reasons satisfactory to oe Secretary of Commerce and Labor, a vessel is idle for more than one month when not undergoing repairs or receiving or discharging cargo the subvention shall be reduced pro rata. SEc. 8. That before receiving any subvention under the provisions of this act the owner or owners of any vessel shall contract, in writing, with sufficient sureties, with the Secretary of Commerce and Labor to fulfill each and all of the following obligations: First. That said vessel may be taken and used by the United States, for the national defense or for any public purpose, at any time, upon Payment to the owner or owners of the fair actual value of the same 48 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. at the time of the taking, or a fair rate of hire to be agreed upon. And if there shall be a disagreement as to such fair actual value or fair rate of hire between the United States and the owner or owners of such vessel, then the same shall be determined by two impartial appraisers, one to be appointed by each of said parties, they to select a third, who shall act in such appraisement in case the two shall fail to agree. Second. That said vessel shall carry, free of charge, the mails of the United States, if the Postmaster-General shall so require, for the whole or any part of a voyage for which subvention shall be claimed. Third. That upon each departure of said vessel from the United States at least one-sixth of the crew shall be citizens of the United States, or men who have declared their intention to become citizens. Fourth. That a vessel employed in the foreign trade shall maintain during the period so employed at least class Al if a steam vessel and ab least class Al} if a sail vessel, as such classes are now established by either the Record of American and Foreign Shipping or the United States Standard Owners, Builders, and Underwriters’ Association, or equivalent classification in any other register of shipping of at least aqual merit. Fifth. That all ordinary repair or overhauling of said vessel shall be made in the United States, except in cases where drydocking is necessary and no dry dock of sufficient capacity shall be within a distance of five hundred miles of the location of the ship when the repairs shall be desired. Sixth. A vessel shall not be entitled to the subvention above provided for unless during the period of employment in the foreign trade or deep-sea fisheries the following proportions of the crew of the vessel after the dates specified shall have been enrolled in the naval volanteers: After July first, nineteen hundred and seven, one-eighth; after July first, nineteen hundred and eleven, one-sixth; after July first, nineteen hundred and sixteen, one-fourth: Provided, That if the foregoing stated proportions of naval volunteers can not he obtained at a foreign port with reasonable effort, as certified by the consul, other persons may be substituted until the first return of said vessel to the United States without forfeiture of the subvention, Sec. 4. That the contracts provided for in section three shall be for a period of one vear, and shall be renewed from time to time; but no vessel shall receive a subvention under the provisions of this act for a longer period than ten years. At the expiration of each annual contract the owner of the vessel shall be required to prove to the satisfaction of the Secretary of Commerce and Labor, in such manner as the said Secretary shall prescribe, that it obligations each and all have been satisfactorily complied with. The Secretary of Commerce and Labor shall thereupon certify to the Secretary of the Treasury the amount of subvention to which said owner shall be entitled in fulfillment of said contract and of the provisions of this act, and the Secretary of the Treasury upon proper audit shall thereupon pay the subvention due. Sec. 5. That the Postmaster-General is hereby authorized and directed to enter into contracts, for a term not less than five nor more than ten years in duration, with citizens of the United States for the carrying of mails on steamships hereafter built and registered in the Unite REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 49 States, or now duly registered by a citizen or citizens of the United States (including as | citizens any corporation created under the laws of the United States or any of the States thereof), between ports of the United States and foreign ports on the routes, at the rates of speed and for the amounts prescribed in section six of thisact. All the provisions of the act of March third, eighteen hundred and ninety-one, entitled “An act to provide for ocean mail service between the United States and foreign ports, and to promote commerce,” are hereby made applicable in all respects to the services provided for in section six of this act: Provided, That the specific rates of compensation provided for in section five of said act of March third, eighteen hundred and ninetyone, shall not apply to the services provided for in section six of this act. SEC. 6. That as soon as may be practicable, the Postmaster-General shall establish in the manner prescribed in section five the following ocean mail services: First. From a port of the Atlantic coast of the United States to Brazil, on steamships of the United States of not less than fourteen knots speed, for a monthly service at a maximum compensation not exceeding one hundred and fifty thousand dollars a year, or for a fortnightly service at a maximum compensation not exceeding three hunred thousand dollars a year. Second. From a port of the Atlantic coast of the United States to Uruguay and Argentina, on steamships of the United States of not less ‘than fourteen knots speed, for a monthly service at a maximum Boe pensation not exceeding one hundred and eighty-seven thousand live hundred dollars a year, or for a Sonja gly service at a maximum Conpensation not exceeding three hundred and seventy-five thousand dollars a year. . Third. "From a port of the Atlantic coast of the United States to South Africa, on steamships of the United States of not less than twelve knots speed, for a monthly service at a maximum compensation not €Xceeding one hundred and eighty-seven thousand five hundred dollars { year, or for a fortnightly service at a maximum compensation not ®xceeding three hundred and seventy-five thousand dollars a year. Fourth. From a port of the United States on the Gulf of Mexico to Brazil, on steamships of the United States of notless than twelve knots peed, for a monthly service at a maximum compensation not exceedng one hundred and thirty-seven thousand five hundred dollars a year, or for a fortnightly service at a maximum compensation not exceeding two hundred and seventy-five thousand dollars a year. Fifth. From a port of the United States on the Gulf of Mexico to Cuba, on steamships of the United States of not less than fourteen knots speed, for a semiweekly service at a maximum compensation not exceeding seventy-five thousand dollars a year. Sixth. From a port of the United States on the Gulf of Mexico to Central America, on steamships of the United States of not less than twelve knots speed, for a weekly service at a maximum compensation not exceeding seventy-five thousand dollars a year. Seventh. From a port of the United States on the Gulf of Mexico to Mexico, on steamships of the United States of not less than twelve knots speed, for a weekly service at a maximum compensation not eXeeeding fifty thousand dollars a vear. S. Rep. 2949. 583 50 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. Eighth. From a port of the Pacific coast of the United States, via Hawaii, to Japan, China, and the Philippines, on steamships of the United States of not less than sixteen knots speed, for a monthl y service at a maximum compensation not exceeding three hundred thousand dollars a year, or for a fortnightly service at a maximum compensation not exceeding six hundred thousand dollars a year. Ninth. From a port of the Pacific coast of the United States to Japan, China, and the Philippines, on steamships of the United States of not less than thirteen knots speed, for a monthly service at a maximum compensation not exceeding two hundred and ten thousand dollars a year; or for a fortnightly service, at a maximum compensation not exceeding four hundred and twenty thousand dollars a vear. Tenth. From a port on the Pacific coast of the United States to Mexico, Central America, and the Isthmus of Panama. on steamships of the United States of not less than twelve knots speed, for a fortnightly service at a maximum compensation not exceeding one hundred and twenty thousand dollars a year: /%ovided, That the requirements of this section as to the rates of speed shall be deemed to be complied with if said rates are developed during a trial of four hours’ continuous steaming at sea in ordinary weather in water of sufficient depth to make the test a fair and just one, and if the vessels are maintained in a condition to develop such speed at any time while at sea in ordinary weather. This trial shall be made under the direction and supervision of a hoard of naval officers which the Secretary of the Navy shall appoint upon the application of the owner or owners of the vessel to be tested. SEC. 7. That all contracts hereafter made pursuant to the act of March third, eighteen hundred and ninety-one, before mentioned, or pursuant to sections five and six of this act, shall provide that on each voyage the following proportion of the crew shall be enrolled naval volunteers: After July first, nineteen hundred and seven, oneeighth; after July first, nineteen hundred and eleven, one-sixth; and after July first, nineteen hundred and sixteen, one-fourth: /ovided, That if the foregoing stated proportions of naval volunteers can not he obtained at a foreign port with reasonable etfort, as certified by the consul, other persons may be substituted until the first return of said vessel to the United States, without forfeiture of the compensation. Sec. 8. That a duty of eight cents per net ton, not to exceed in the aggregate eighty cents per net ton in any one year, is hereby imposed at each entry by sea on all vessels which shall be entered in any port of the United States from any foreign port or place in North America, Central America, the West India Islands, the Bahama Islands, the Bermuda Islands, the coast of South America bordering on the Caribbean Sea, or Newfoundland; and a duty of sixteen cents per net ton, not to exceed in the aggregate one dollar and sixty cents per net ton in any one year, is hereby imposed at each entry by sea on all vessels which shall be entered in any port of the United States from any other foreign port or place, not. however, to include vessels in distress or not engaged in trade. Src. 9. That on proof to the satisfaction of the Commissioner of Navigation that a vessel of the LTnited States has on any foreign voyage carried a boy or boys, a citizen or citizens of the United States, under twenty-one years of age, suitably trained during that voyage in seamanship or engineering, in the proportion of one for such vossol. REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 5] and in addition one for each one thousand tons of her net registered tonnage, there shall be paid to the owner or owners of the vessel, out of any money in the Treasury not otherwise appropriated, an allowance equivalent to eighty per centum of the tonnage duties paid in respect of the entry in the United States of that vessel from that voyage; Provided, That such payment shall not be made after July first, nineteen hundred and seven, except in respect of any hoy who is enrolled in the naval volunteers, or is an apprentice indentured in accordance with law, Sue. 10. That sections fourteen and fifteen of the act approved June twenty-sixth, eighteen hundred and eighty-four, entitled “Ap act to remove certain burdens on the American merchant marine and to tncourage the American foreign-carrying trade, and for other pur-Poses” sections eleven and twelve of the act approved June nineteenth, eighteen hundred and eighty-six, entitled ‘An act to abolish certain fees for official services to American vessels, and to amend the laws relating to shipping commissioners, seamen, and owners of ves. sels, and for other purposes;” section one of the act approved April fourth, eighteen hundred and eighty-eight. entitled ““An act to amend the laws relating to navigation, and for other purposes;” so much of Section forty-two hundred and nineteen of the Revised Statutes as conflicts with this act, and section forty-two hundred and thirty-two of the Revised Statutes are hereby repealed. SEC. 11. That this act shall take effect on July first, nineteen hundred and five. A BILL To provide for the use of vessels of the United States for public purposes. Beit enacted by the Senate and House of Representatives of the United Stetes of America in Congress assembled, That vessels of the United States or vessels belonging to the United States, and no others, shall he employed in the transportation by sea from the United States of all Materials, supplies, machinery, and equipment employed on or used for the Panama Railroad or for the construction and operation of the canal across the Isthmus gf Panama, and such vessels, and no others, shall be employed in the return by sea to the United States of such matetials, supplies, machinery, and equipment. Src. 2. That all naval supplies, materials, machinery, and equipent sent to or returned by sea from the naval station at Guantanamo, Cuba, shall be transported in vessels of the United States or vessels belonging to the United States, and no others, Src. 8. That any contractor for supplies or materials for use at Guantanamo, or in the Canal Zone, shall comply with the provisions of this statute under penalty of the forfeiture of said materials and supplies brought to or taken from the Canal Zone, or Guantanamo, in vessels other than those of the United States. Sec. 4. That this act shall take effect thirty days after its passace. APPENDIXES. APPENDIX A. TONNAGE OF THE UNITED STATES MERCHANT INE EMPLOYED IN THE 8 RC MARIN FOREIGN TRADE, THE COASTING TRADE, AND THE FISHERIES, FROM 1789 ’ TO 1904, Foreign trade. Coasting | Whale trade. fisheries. Jeep-sea fisheries. Year ending— Registered veosaela inrolled and licensed vessels. Registered and enrolled vessels. Enrolled and licensed vessels. Total merchant marine. Tons. 201, 562 478,377 502, 146 564, 457 520, 764 628, 618 747,965 331, 900 876,912 898, 328 939,408 972, 492 947,576 892,106 949,172 +, 042,404 1140, 367 208,737 268, 548 £242,595 +, 350, 282 , 424,783 1232, 502 269, 997 166, 628 159, 209 +, 368, 128 1,372,219 ., 399,012 1,225,185 1,260,752 ', 280, 167 , 298, 958 , 524, 699 336, 566 389,163 423,111 534,191 620, 607 . 741,392 260, 798 L191, 776 ,267, 846 ., 439, 450 1, 606,161 1,758. 907 a Joseph Nourse, Register of the Treasury, under date of February 1. 1812, stated: ‘As there were not Any accounts kept at the Treasury of the district tonnage of the United States prior to the operation of the acts of 31st December, 1792, and 18th February, 1793, the statement in which is exhibited the ‘onnage for the years 1789, 1790, 1791, and 1792 has been formed from the accounts of tonnage on which luties were collected for those years.” B . 4 The decrease of tounage in this vear arises principally from the registered tonnage having been corrected by striking off vessels the registers of which were granted prior to 1815, which were supposed by the collectors to have been lost at sca, captured, ete.—Joseph Nourse, Register of the Treas-Ary (American State Papers. Vol. II. p. 648) december 31— 1789... 79a. la.. xo. Tons. 123,893 346, 254 363.110 111,438 367,734 138, 863 329, 471 376, 733 397,777 303, 376 357,142 367,107 330, 558 357, 760 385, 910 560, 514 744, 224 798, 507 340, 163 765, 262 06, 855 381,019 763, 607 58, 636 372, 700 374, 633 354, 295 300, 760 804, 851 589, 944 581,230 583, 657 393, 825 582,701 300, 003 336, 807 365, 409 396, 221 01,517 57,998 92, 859 337, 563 529, 136 514, 121 548, 869 749.378 Tons. 88, 607 103. 775 106, 194 120, 957 122,071 162,578 3,126 [84 308 8/163 07,811 2) 364 337,403 1,104 B51 443 763 116, 640 5,647 772,492 3, 466 774, 551 2085 189. 623 3201 299, 060 12390 317. 537 (2 339 342, 663 5,015 340, 540 0) 507 319, 028 9 051 120, 819 4,596 105, 163 3777 105, 347 3580 120, 362 5.299 77.972 230 171,100 2/942 166.159 362 175, 666 1,230 322,165 L168 325, 030 51294 340, 374 6,750 571, 058 32. 886 588,095 3, 445 614, 845 7 905 624,189 7583 517,805 10] 503 641563 33, 346 40’ 861 31379 2330 984 30, 150 J 992 UZ, 906 301 08, 838 7.284 $16, 979 wg 539) 724 82,7 640, 627 73, 246 744/199 | 101,636 “a3 610 | 108 4nd Tons. Tons. 9, 062 25,348 32,542 32, 062 30, 959 23,048 30,933 24,962 0,628 2,746 29,979 19,427 ™, 582 522 1,812 2,014 /, 466 3,183 0,306 1,998 4,487 34,828 13,234 30,459 19,877 17,855 36,937 48, T2¢ 64, 807 59,107 16,078 2, 040 , 202 , 226 °, 257 44 31, 46° 656 939 587 "wy - b4 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. Tonnage of the United States merchant marine employed in the foreign trade, etc.—Cont’d. Year ending. september 30— 1835 (9 months)........ : I ne Jo “43 (9 months) A. Loo Dore “Five L 57... 58. osg)L 60.0... 6. 5. Z Phan Tl erg] a: we 1875... 180. 81 ot 2 ane LO 2% ig Fagg 0 a. 1&1... 1809... | i _— eo, 8% er one 9 1 O04 Foreign trade. Registered vegspls, Tons. 788,173 753, 094 683, 205 702, 962 702, 400 762, 838 784, 398 R22 746 856, 930 900, 471 904, 476 943, 307 1, 047, 454 , 168, 707 258, 766 439, 694 544, 663 L705, 650 £910, 471 ..151, 918 4, 348, 358 302,190 268, 196 301,148 321, 674 379, 396 496, 894 173, 537 926, 886 486,749 518, 350 387,756 515, 648 487,246 496, 220 438) 846 L363, 662 1359, 040 ) 378, 533 1389, 815 B15, 598 553, 705 570, 660 589, 348 451, 506 314, 402 297, 036 259, 492 260, 631 276,972 , 262, 814 088, 041 989, 412 919, 302 499, 619 928, 062 G8, 719 977, 624 $83,199 899, 69¢ 592, 347 309, 837 92, 87( 726, 218 337, 996 316, 79% 379, BY: #73, 235 79, 264 RRR. 6 Coasting trade. Enrolled and licensed vessels. Tons. 797,838 873,023 956, 981 1,041,105 1,153, 552 1,176, 694 {, 107,068 I 045. 753 1,076,156 1,109, 615 223, 218 1315, 577 488, 601 659,317 770, 376 797,825 899, 976 055, 87% 134,958 322,114 543, 255 247, 663 1336, 604 1401, 220 480,929 "644, 867 1704, 544 4,616,716 2,960, 633 3,245, 265 381) 522 2,719, 621 Y, 660, 390 1702, 140 515,515 2,638, 247 2,764, 600 2,929, 552 3,163,220 3,293, 439 2.219, 608 1508, 835 Y, 540, 322 2447, 170 » 508, 182 *. 637, 686 1646, 011 1795, 776 838, 354 , 884, 068 895, 371 1939, 252 1010, 735 2172120 211,416 1409, 435 609, 876 700, 773 854, 692 $96, 276 728, 714 7€0, 296 896, 826 959, 702 965, 313 1, 286, 516 1,582, 645 1858, 714 5,141,037 5 22’ 164 Whale fisheries. Registered and enrolled vessels. Tons. 97, 649 146, 254 129, 137 124, 860 132,285 186,927 157, 405 151. 990 152, 617 LG8, 614 190, 903 187, 420 193, 859 192, 613 180, 186 146, 017 181,644 193,798 193, 203 181, 901 186, 848 189,461 195,842 198,594 185, 728 166, 841 145,734 117,714 99, 22¢ 95, 145 54,233 ns, 170 52,384 78, 486 70, 202 7,954 61,490 <1, 608 ‘4,755 39,108 38,229 39,116 10, 593 39, 700 10, 028 38,403 28, 551 "2, 802 “2,414 7,249 5, 184 £3,138 26,151 4,482 ‘1,976 i, 633 7,231 ., 052 6, 604 6,482 5,839 5,121 », 714 496 1, 017 9, 899 9,534 9,320 9,512 10. 140 Deep-seq fisheries, Enrolled and licensed vessels. Tons. 141,781 109, 731 127,363 126,713 108, 242 104, 805 77,783 70. 90° 73, 000 101, 396 98, 405 115, 781 109, 13 133, 40% 124, 69% 151,918 146, 156 183,119 169, 078 "46, 969 33, 540 132, 339 40,196 48, 846 76. 707 162,764 192, 64° 204, 197 168, 309 159, 241 112,677 98, 231 76, 065 83, 887 62,704 91, 460 92, 865 97, 547 109,519 78, 290 80, 207 87, 802 91, 086 86, 547 79, 885 77,538 76, 137 77,863 95, 038 29, 940 32, 565 80, 705 79,547 76,012 74, 464 68, 367 68, 93° 69,477 70, 57% 71,572 39, 066 58, 630 66, 610 39, 897 50, 674 51,629 52, 444 56, 632 57,532 57 602 Total merchant marine. Tons. [,824,941 L, 882,102 i, 896, 686 1,995, 640 2, 096, 479 2,180, 764 2,130,744 2 042. 391 2,158, 603 2, 280, 096 2,417, 002 7, 562, 085 1839, 046 1154, 042 2334, 018 ~ 535, 454 3,772, 439 4,135, 440 1,407, 010 1,802, 902 3,212, 001 4,871, 653 1940, 843 3,049, 808 5,145, 038 5, 353, 868 3,539, 813 5,112,164 3,155, 056 17.986, 400 096, 782 1,310,778 1,304, 487 1,351, 759 1,144, 641 © 946, 507 1,282, 607 1 437, 747 © 696, 027 800, 652 1,853, 732 4,279. 458 “2942, 600 912.765 L169, 601 068, 034 1 057, 734 1,165,933 1,235, 487 1,971,229 1,265, 934 4,131,136 4,105, 845 4,191,916 1,307,475 4424, 497 1) 684, 709 1.764, 921 1,825, 071 4, 684, 029 635, 960 © 703, 830 1769, 020 1,749,738 1, 864, 238 5,164, 839 5, 524, 218 5.797, 902 6,087, 345 6 201 H3K REPORT OF AMERICAN MERCHANT MARINE COMMISSION. bb ArpreEnDIX B. TONNAGE OF THE WORLD AND OF IMPORTANT MARITIME POWERS, STEAM VEssers over 100 Toxs AND SAIL VESSELS over 50 Toxs. [Recorded by Bureau Veritas] THEE WORLD. 1890... i898. LLL "894... 893. ROG. "897... . 189° 1 G00 Yaar Steam (over 100 tons). Nuwitior. | cvs me. 9,638 10, 629 10, 744 7, 896 1155 L271 , 576 456 1289 >, 702 2,106 3,381 17 539 12, 825, 70¢ 15, 134, 43¢ 1, 657, 12¢ 3, 338, 517 1089, 596 L889, 00¢ 886, 042 9,711, 387 “1, 787, 60C 23,379, 79 24, 967, 63' 26, 15%, 35. 5%’ 900. 457 Sail (over 50 tons). Number,’ Net tons 33,879 29, 756 9, 332 9. 570 “348 RE > 885 7, 867 7,982 7,854 27, 976 27, 705 0g 873 10, 540, 051 9,629, 063 9,547, 747 3,893, 995 }, 135, 560 > 894, 732 3,603, 769 3,347, 596 3, 206, 889 & 119,121 8,078, 897 8, 066, 305 =’ 210’ 957 Potential tonnage. 43, 687, 039 18,528, 319 19, 526, 847 30, 764, 795 31,179, 660 34, 605, 664 565,442, 853 57,008, 600 52, 068, 253 66, 771, 601 69, 806, 793 73, 334, 581 76. 567. 601 BRITISH. 1890... _. 1893. . 1894 _, “95, ane 8o” aa TTT a a o 5,302 %, 694 735 | Til 690 661 707 ,453 649 621 5, 839 5, 929 ]’ 106 8,043, 872 9,383, 361 9, 706, 976 9, 984, 250 10, 245, 557 10, 552, 495 0,993.11] 1,093, 807 11,859, 581 12,457, 111 13,305, 915 13. 966, 977 14. $89 17% 10, 569 a 277 892 793 L726 596 , 125 7,706 7,826 7,134 7,029 6, 839 8.773 3, 693, 650 * 574, 847 485, 590 ,833, 607 L267, 625 1098, 618 910, 555 "662, 168 2,513,307 2) 352, 378 2,233, 684 2,196, 443 2’ 080 242 24,119, 974 7,121,331 7, 885, 806 18, 258, 883 28,920, 729 30, 064, 198 29, 868, 083 29, 696, 992 32, 096, 443 32, 821, 878 34, 652, G44 36, 907, 579 98. 521. 155 GERMAN. 1890... los... £894... L895....... ‘806. 1897. S98. 899. M9 2 "93... 0d 639 779 810 &20 831 24¢ S7¢ 900 t,031 1,115 1,167 1,193 1. 479 930, 754 1,144,190 11216, 097 1306, 771 360, 475 162, 530 625, 521 873, 338 ,169, 029 2. 430, 206 2, 622, 308 2,767, 493 0’ ge7 120 398 , 386 1105 ,09¢ 067 00 981 95: 966 957 914 45 706,475 667,219 624, 92 597, 862 B66, 973 344, 420 535, 937 548, 053 551, 025 536, 744 527, 543 528, 267 506. 010 3,331, 203 3,875, 151 1, 065, 289 4843. 760 1152, 357 1,681, 812 1,605, 413 5,215, 765 1, 9062, 785 6,782, 728 7,062, 727 7.345, 747 7! 635. 349 FRENCH. (890... 893°... S94. 10 95. or 97. 98. 5 .. )1.. 02. 02, G4 471 500 503 501 32 30 44 52 347 560 556 556 25 8(5, 987 856, 37° 872, 10% 964, 598 933, 244 979. 074 952, 682 985, 968 060, 238 079, 682 ., 096, 120 1,139. 575 1. 266. 486 1,627 49 49( 48¢ 42¢ 3461 33¢ 37 39¢ ,40¢ 429 449 . 440 208, 787 957, 444 156, 266 255, 095 252, 940 269, 667 979, 412 309, 881 341, 037 401, 353 467, 026 535, 703 494. 123 2,238, 747 "181,198 '121) 560 100, 683 207, 644 > 969,147 », 986, 580 2, 067, 704 2,594, 103 2.542, 785 2,721, 806 2, 907, 083 3’ 040 147 56 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. Tonnage of the world and of important maritime powers—Contiuued. NORWEGIAN. 1890. . 893...... SOL, suman S065.. ae WM... oe wa we acy Year. Steam (over 100 tons). Number.! Gross tons. 371 490 210 2 30. 63 6557 71¢ 58 804 844 1.037 245, 052 367, 652 406,119 156, 317 194, 617 576, 598 528,493 672, 549 769, 242 779, 398 $63, 146 995, 683 1.030 637 Sail (over 50 tons). Number. Net tons 3,567 > 278 111 959 2,801 ~' 594 582 208 1,405, 934 375,138 297, 801. , 240, 159 2 176,174 1, 103, 284 2144, 482 996, 678 898, 761 833, 934 $07,125 767, 981 10’ 354 7 40 al Potential tonnage. 2,111, 610 2,416,359 9,343,173 +385, 531 2,433,390 9, 54d, 630 1720, 482 666, 230 ~ 815, 977 , 883, 742 2, 960, 489 3,069, 533 2’ 209’ £78 TJAPANFSE. 1890. 1891. ... POY aun ma Bune 894... 1895... (896. ... 1897. . (898. __ ‘809. .... anny —-— J02.. 1903. QnA Van Number. Gross tons. . | is - 2 Lv gross) Number. Net tons. Bod aatl (net). 147 146 43 Fi of 123,279 120, 882 121, 697 142,095 171,901 14) 659 313, 563 108, 503 139, 50% 477,511 518, 493 530, 067 551, 036 615. OTR 104 9 100 260 256 248 23 4 310 053 502 +, 497 1,521 1’ 5a 27,721 25, 602 26,505 37.615 36, 867 37, 655 33, 880 31, 750 30, 515 10, 966 17, 364 170, 790 172, 480 174, 624 184. 990 151,000 146, 484 148, 202 179, 710 J0R. 768 312, 814 346, 443 440, 953 £70, 024 196, 501. 504, 67R 659, 683 702, 537 730, 660) 22) 19% GY 51¢ 33: 28 38 “GE 36F 372 eg ArreNDIX C. ’ THE NEW CUNARD SUBSIDY From Report of the Commissioner of Navigation for 1902 pages 18-521 On the part of the British Government the Cunard contract is made jointly by the Adniralty, representing the Navy Department, by the Board of Trade, corresponding to our Department of Commerce and Labor, and by the Posjmaster-General. The public purposes of the contract, recited in the preambles, are the maintenance and improvement of British steamship lines to the United States, the control by the Admiralty, when desired. of the Clunard fleet. and the transportation of the British mails. The basic articles of the new Cunard contract are the following: “3. (1) The company shall forthwith cause to be built for it in the United Kingdom, with all due dispatch, two steamships of large size capable of maintaining a minimum average ocean speed of from 24 to 25 knots an hour in moderate weather, suitable in all respects to maintain and develop the company’s line between Liverpool and New York, or other ports in Great Britain and the United States of America. “10. His Majesty's Government shall advance to the company a sumn equal to the cost to the company of the two steamships referred to in clause 3 hereof, but not exceeding in any event £2,600,000, upon the terms and conditions following:’’ The estimate of the first cost of these steamers, £1,300,000 each, was based on the investications of a special commission of the Admiralty. That commission reported REPORT OF AMERICAN MERCHANT MARINE COMMISSION, 5% the first cost, indicated horsepower, and annual subsidy required to maintain commercially fast British ocean steamers as follows: Average speed. Tm First cost. £350, 000 400,000 470, 000 575, 000 850, 000 , 000, 000 1. 250. 000 Engine DOWET. Fd. P. 19,000 22,000 25, 500 30, 000 40, 000 52,000 (HR O00 ' Annual qubsidv. £8, 000 19, 500 40, 500 67,500 110, 500 149, 000 204 (100 The speed basis is not for a measured ile, or a short distance but for the vovage of 3,000 miles across the Atlantic. The annual subsidy to make good commercial losses is based on a ten-year contract. By the article just quoted the British Government agrees to advance the first cost, £1,300,000, of each of the two fastest steamers which can be built. This amount is to be repaid by the company in twenty annual installments of £65,000 each, begin-Ning with the end of the first year after the second of the two steamers has made her first voyage. Beginning with the first voyage of each steamer .the British Government is to pay the company an annual admiralty subvention of £75,000 for each of the two steamers, or £150,000 a year when both are in full operation. This £150,000, however, includes the present admiralty subvention for Cuwmpania, Lucania, and other existing steamers of the feet under the agreement of October, 1902 (see article 9), amounting to about £20,000. The new admiralty subvention for the two new steamers is thus virtually £130,000, or £65,000 apiece—a sun just sufficient to equal the annual installment of the company’s repayment of the Government's advance. By paragraph 9 (e) of the contract, interest shall be at the rate of 24 per cent per annum.- At this rate the average annual interest on the principal of £1,300,000 payable in twenty years will be £17,875. Besides the Admiralty subvention of £150,000 already mentioned, the Cunard Company is also to receive £68,000 (see contract, Pare 17, paragraphs 13, 14, and 26) for carrying the mails once a week from Queenstown to New York. This service will require four steamers, and the postal subsidy 1s accordingly at the rate of £17,000 a steamer. As the two. new steamers will presumably carry more than the average amount of mail, in effect the mail subsidy is calculated to pay interest on first cost, as the Admiralty subvention was calculated to repay the principal of first cost advanced by the Government. By this agreement in effect the British Governinent agrees to build and give to the Cunard Company the two best steamships Great Britain can produce, and the company agrees to operate them at its own cost. The Government supplies the capital, the company meets operating expenses. The company’s chance for profits depends on passenger receipts exceeding operating expenses {excluding first cost of the steamers). The (Government's return for its investment is: “1. British transportation of British mails. “2, The employment of naval reserves on the Cunard steamers. “3. The possession of & fleet of auxiliary cruisers and transports without the cost of maintenance, including insurance, wages, repairs, ete. “4, The reassertion of British preeminence on the North Atlantic. threatened by the rapid development of the two great German lines.” By the third schedule of the contract the British Government has the right to purchage outright any Cunarder for a sum equal to the value of the vessel at the time of her purchase, plus 10 per cent as a bonus to the company. The present value of each steamer of the fleet, it will be noted, has been fixed in the contract. the Tacania and Cumpania, built in 1893, for example, each being valued in September, 1902, at £356,839. Depreciation is to be allowed at the rate of 8 per cent annually, but the value of a steamer may be appreciated by the installation of new boilers and engines. Although the British Government, as shown, pays the first cost of the new steamers, it can purchase them from the company only by a payment of 10 per cent bonus above their value, as an insurance to the company aeainst Insa consequent unon interrninted traffic. 58 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. By the same schedule the British Government may temporarily charter any vessel 7 the Cunard fleet at the following rates: Rate per ton gross register per month. In the event of the company not having to provide and pay the officers and CTEew In the event of the company having to provide and pay the officers and crew. speed of vessel per hour, Above 22 knots ............... Of irom 20 to 22 knots, inclusive. Of from 17 up to 20 knots .......... Mnder 17 knots and nbhove 14d note For first four months of each period of hire sd. 25 0 20 0 20 0 17 6 For subse quent period of hire 8d. 25 0 20 0 17 3 15 For first four rnonths of cach period of Hire 5. dd. 30 © 24 0 24 0 a9 0 For subsequent period of hire. sd. 30 0 24 0 21 6 17 6 The rates are equivalent to $87.48 a year per ton (including crew) for the steamers over 22 knots and to $51.45 a year per ton (including crew) for steamers between 14 and 17 knots. The average earnings of the Cunard fleet in 1902 were $57.83 per gross registered ton, so that the Government charter rate is somewhat in excess of the ordinary commercial earnings of the company. The total annual subsidy to the Cunard Line specifically provided for in the contract consists of £150,000 ($729,000) for admiralty services and £68,000 ($330,480) for the mails, in all $1,059,480. Paragraph 20 of the second part of the contract contains, however, the following provisions looking toward the maintenance of a complete Cunard semiweekly trans-Atlantic service: ‘If, in consequence of additions to its fleet, the company shall at any time establish a new fast weekly midweek service between Great Britain and the United States of America (that is to say, a service performed by vessels of a speed of 18 knots and upward per hour), and the postmaster-general shall, under the powers conferred by this clause, send by means of such new service a regular mail to the United States of America which shall be equal in weight, on an average of twelve months, to not less than 10 per cent of the average weight of the mail sent each week by a mail ship under this agreement, then the postmaster-general shall make such additional payment to the company for the advantage thus obtained as (regard being had to the other payments to the company under this agreement) may be agreed upon, or failing agreement, settled by arbitration under clause 35 hereof.” The amount of the subsidy or “mail pay” under this paragraph is not fixed, but the paragraph is a pointed illustration of British policy to dispatch British mails entirely by British steamers, even if British steamers are slower than competing American and German mail steamers. With the semiweekly mail line in operation, the Cunard Company will doubtless receive about $1,100,000 from the British Government annually. The United States pays substantially the same sum for our eastbound trans-Atlantic mails, the Cunard Company receiving of late years over $200,000 annually from the American post-office. The proposed concentration of British westbound mails upon the Cunard Line, with an annual payment of about $1,100,000, may be contrasted with the American policy of distributing our east-bound trans-Atlantic mails, ag Shwn by the following tahle of mail pavments for a series of vears to the nea named « REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 59 Ameriean trans-Atlantic mail payments. Voagr 1889...... 1890... ROL... 892... | B05 cain LL 896... 1897... 1808... 1899... _. 1900...... 1901... VO us 1908. .._.. Total International Navigation American) North German Lloyd (German). $8,642.93 41, 631. 84 25,961. 00 43,965. 85 103, 029. 31 192, 405.75 223’ 900. 48 395, 043. 38 766, 507. 66 580, 809. 09 85, 673. 60 347,278. 40 529,101. 29 562, 184. 00 560. 872. 00 }188, 633.19 171, 546. 81 78,108. 86 172,165. 69 152,418.55 157, 764. 90 15, 599. 56 120161. 74 07,522. 30 88, 029. 67 95.153. 19 00, 823, 54 80,141. 8” 83,572. 1¢ 111.732. 00 567 706.58 | 1.915. 000.09 Hamburg American ‘Clorman Cunard ‘British? 114, 868. ¢” 20,424. 1 29,120. 4 10,679. 5. 38,361. 37 15,311. 82 11,119. 24 0, 030. TE 2%, 296, 87 7,431.0 3861. 0° 3,137. 11 32, 750. 6 55, 092. 4¢ 10° 905. 21 $101, 818. 32 88, 673.52 77, 349.50 92; 919. 80 105, 019. G6 131, 062. 12 145, 859. 07 42, 008. 27 44,140.26 72, 91%. 34 183, 846.20 185,417.73 213, 772. 80 221,224, 07 241 $24 10 511. 440.53 | 2.247.663. 86 White Star Rriticl) §12, 875. 97 27.106. 00 52,471. 04 59, 090. 06 2 918.40 7176.13 1,879. 99 7,824. 51 5,974.21 3, 535. 64 31, 873.74 187820. 7 “1,591.2 51,010. 9 Al Quq oF 785 652. bh Cie. Géndé-“ale Trans Yip { Freneh) "14, 959, 20 5, 442.9: 24,749. 1C 8, pd. 0F 4,933, 8 2,959.7" 29, 229. 5 2) 506. 8 5, 856. 2 31, 679. 88 37,202. 22 27,987. 67 24, 842. 91 20,184, 82 3) Oxp a 441. 624. 79 Total. $351, 298. 30 374,825.23 397,759. 97 447, 375. 01. 525, 976. 09 606, 60. 50 607, 587. 86 940,775. 53 106, 097. 53 954,403.76 877, 639. 98 1,045, 515, 18 992,199. 96 , 093, 077. 52 11117 75 ag 11. 469, 038. 40 The only American trans-Atlantic mail contract now in force was made with the American Line for ten years, under the act of 1891. Under that contract the maximum annual subsidy is $757,000 for four steamers, or on the average $189,000 a steamer. As already shown, the Cunard contract is so arranged that the company is assured that the Government will meet the entire first cost, including interest, of the two new steamers. Two new steamers were built in the United States under the American contract in 1893-1895, at a cost each of $2,500,000 in round numbers. During the ten years of the American contract each of these steamers, if in full operation, might thus draw $1,890,000. If the company undertook, as does the Cunard company, to repay the first cost in 20 annual installments, during the ten years of the contract $1,250,000 must be set aside for the purpose. The British Government requires only 2§ per cent interest from the Cunard company; the American company pays b per cent interest on its mortgage bonds. At this rate (assuming it were proposed to retire the bonds in twenty years) the interest charges for the ten years of the contract will amount to $937,500. This sum, added to $1,250,000 set apart for amortization, amounts to $2,187.500 paid out. compared with $1.890.000 subsidy received. At the end of the ten-year American contract the company’s payments for first cost and interest are thus nearly $300,000 more than the maximum subsidy receivable, while the company has still to meet half of the first cost and interest thereon of a steamer adapted virtually to one line of trade. The disparity between the twentyyear Cunard contract and the ten-year American contract is lessened by the fact that Congress admitted two British-bullt steamers to American registry in order to give life at all to an American trans-Atlantic mail system. It is increased, on the other hand, by the higher wages paid on the American than on the British lines. The four steamers of the American Line in 1895 were unequaled by the four steamers of any foreign steamship company. Since that time the German trans-Atlantic mail fleet has considerably surpassed it. In October, 1905, the American contract will expire. Soon after that time the new Cunard contract will go into operation. In the reports of the Bureau for several years past a revision of the ocean mail act of 1891 has been suggested in the interest of the American merchant marine and of American shipbuilding. Such a revision obviously concerns the Post-Office Department and the Navy Department, as well as the Department of Commerce and Labor. The new Cunard contract suggests the desirability of action upon this subject in such a manner as shall meet the requirements of the three Departments concerned and the reasonable ambitions of the American people. The act of 1891 has failed to establish an American mail line to South America below the Caribbean. 30 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. AppENDIX D. INQUIRIES AS TO THE FREE-SHIP QUESTION. Desirous of learning how far a simple free-ship policy would be effectivein increasing the American merchant marine in foreign trade, the Merchant Marine Commission caused inquiries to be sent to the chief American owners of foreign-built steamships now being operated under foreign flags. These inquiries and the replies received from the steamship managers were as follows: Tae MERCHANT MARINE COMMISSION, Washington, D. C. Dear Sirs: It is stated in the report of the Cominissioner of Navigation for 1902 that you are the owners in whole or in part of several steamships foreign built and row flying foreign colors. The Merchant Marine Commission is charged by Congress to ascertain, if possible, the best method of increasing American tonnage in the over-seas trade. Will you kindly state for the information of the Commission: 1. Whether you would, if so authorized by Congress, transfer your foreign-built ships to American registry to engage exclusively in the foreign trade, but to remain without subsidy, differential duty, or any other Government encouragement? 2. Whether you would transfer your foreign-built steamships to American registry if they were admitted to all or part of any subsidy or differential duty granted by our Government, but were still confined to the foreign trade? 3. Whether you would transfer your foreign-built steamships to American regisfry if no subsidy or differential duty were granted, but if the ships were allowed to enter the coastwise trade on the same terms as other American vessels? 4, Whether you would transfer your foreign-built ships to the American flag for foreign trade alone if vou were required to build an equivalent tonnage in this rountry ? 5. Whether, if your foreign-built ships were admitted to American registry, you would also wish to have the privilege of employing alien officers and be exempted from the food scale required hy United States law? Verv truly, vours, WinTHROP L. MARVIN. Secretary. t New Yorrg. November 2, 1904. Tae MercHANT MARINE COMMISSION, Washington, D. C. GenTLEMEN: We ackuowledge yours of the 24th ultimo and herewith answer questions proposed in the light of existing circumstances and conditions, which may change materially by the time legislation is enacted. In reply to question 1 we reply in the negative. To question 2 we reply that we would probably if entitled to full subsidy. No. 3 we answer affirmatively. No. 4 we answer in the negative. No. 5. We would prefer to have the privilege of employing aliens for positions below captain and chief engineers, but would not object to compliance with United States law respecting food scale. Yours, truly, W. R. Grace & Co., Per A. D. Snow. [TERNATIONAL MERCANTILE MARINE COMPANY, OFFICE OF THE VICE PRESIDENT, 9 Broadway. New York. November 8, 1904. Wivraror L. Marvin, Fsq., Secretary the Merchant Marine Commission, Washington, D. .C. Dear Sir: In reply to your communication of the 29th ultimo asking certain questions for the information of the Merchant Marine Commission. we beg to make reply as follows: 1. If Congress should authorize the issuing of American register to foreign-built ships to engage exclusively in the foreign trade, hut.provide for no governmental REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 61 assistance to such ships, we could not afford to transfer any of our foreign-built ships to American register, as the increased cost of operating steamers under the American flag, compared with the steamers under foreign flags in the same trade, would be too great to warrant the transfer. . . 2. If foreign-built steamers were admitted to American register and were granted sufficient governmental assistance (either by subsidy or otherwise) to offset the Increased cost of operating under the American flag as compared with the cost under 3 foreign flag, we would doubtless take advantage of this act and transfer some of Jur steamers now under foreign register to American register. . 3. If no subsidy or other assistance were granted by Congress to foreign-built ships ‘ransferred to American register, but such steamers were permitted to enter the coastwise trade on the same terms as other American vessels, there would be no inducement to make the transfer, as steamers constructed for the foreign trade are not generally suitable for coastwise trade. Co . . 4. If Congress should pass an act providing for the admission to American register of foreign-built ships under an agreement on the part of the shipowner to build an equal amount of tonnage in this country, we could not take advantage of this act unless, in addition, governmental assistance was provided sufficient to offset the Increased cost of building and operating steamers under American register. 5. If foreign-built ships were admitted to American register we would not care for the privilege of employing alien officers and to be exempted from the food schedule required by United States laws, provided the assistance offered by the Government 18 an offset to increased expenses were sufficient to cover the increased cost of wages and provigions of the American crew. } } . We have endeavored to answer your questions, but if there is any further informa-‘lon that you require, we will be pleased to have you communicate with us. Yours, truly, P. A. S. FRANKLIN. Vice-President. Dowarp SteamsaIP CoMPANY (INCORPORATED), 18 Broadway, New York, October 29, 1904. WintkRoP L. Marvin, Esq., - Secretary Merchant Marine Commission, Washington, D. C. Drar Sir: I beg to acknowledge receipt of your letter of October 25, and beg to em for the delay in not answering same sooner. In reply to your letter, I have tonsidered the five quéstions which you ask, and in answer would say— L. I beg to state on my own behalf as official president of this company, without onsulting my directors, that I would not feel inclined to transfer our foreign-built ships to American registry without some inducement for doing so. 2. 1 think, on the conditions indicated in your question, that we would be willing i Santer our foreign-built ships to American registry. to be confined to the foreign rade, 3. I believe we would not be willing to transfer our foreign-built ships to Amerian registry in order to participate in the benefits of the coasting trade, as we believe that if a general transfer of other firms’ property was put in that trade it would be as much depressed as the foreign trade for American ships. 4. I am not prepared to state that we would transfer our foreign-built ships to the American flag for foreign trade alone if we were required to build an equivalent tonnage in this country. 5. I am not prepared to state that we would desire to have the privilege of employing alien officers for our foreign-built ships if they areadmitted to American registry. I should like to be permitted to further add, however, that I am in favor of having foreign-built ships bought and purchased by American citizens without seeking any Government assistance whatever, as I am convinced that the nucleus for the shipowning business could be started in this country in this manner alone, and that by reason of ultimate repairs and renewals American shipowners will be able to build ships as cheaply as they could be built in foreign countries, and 1 would be further in favor of citizens of foreign countries being licensed to navigate those ships under the laws of this country. I should be very pleased indeed to appear before the Commission and explain my views on thismatter. I am in favor of protecting the coasting trade just as it remains at present on behalf of American shipping industry. So far as I can see at present the permission for American citizens to own foreign-built tonnage would not affect 62 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. one iota the interest of the American shipbuilders, as I have not been able to discover in the records of the last two or three years that any appreciable amount of tonnage has been built in this country for the ofishore trade. At vonur service, I am, yours, truly, Joax A. DoNALD. 21 Stare StreET, NEW YORK, October 27, 1904. Mr. Wixtaror L. Marvy, Secretary Merchant Marine Commission, Washington, D. C. Dear Sir: We are in receipt of your letter of October 25, and you doubtless will appreciate how impossible it is for us to state definitely to-day what our action would be on certain possible future contingencies, without knowing the conditions that the future may reveal. On general principles, however, we might state for the information of the Commission, and waiving for the time all other considerations except those of a purely commercial advantage, in reply to question— 1. That there would be no incentive, from a business point of view, to transfer foreign-built ships to American registry, if they were to he confined exclusively to the foreign trade, but to remain without subsidy, differential duty, or any other Government encouragement, on account of the greater cost of onerating vessels under the American flag than under some foreign flag. 2. The advisability of transferring foreign-huilt ships to American registry, if they were to be adinitted to all or part of any subsidy or differential duty granted by our Government yet confined to foreign trade, would depend entirely upon the amount of such remuneration that the steamers would receive under such subsidy or differential duty. If it did not fully compensate for the extra cost of operation there would be no advantage to be gained by making the change. 3. We could not say at the present time whether we would want to transfer our foreign-built ships to American registry without subsidy, but with the privilege of entering the coastwise trade. 4. The answer to No. 1 practically covers this question also. There would be nothing gained by transferring foreign-built ships to American registry and building an equivalent tonnage in this country unless both classes of vessels participate in the subsidy or differential duty. 5. In view of the possibility that there might not be a sufficient number of experienced officers and engineers to man all American and foreign-built ships operating under American registry, we would deem it advisable that the privilege should be granted of employing alien officers and engineers, at least for a term of years after the passage of any legislation granting American registry to foreign-huilt vessels. We trust that the above fully answers your desires, and remain. Yours, truly, T. Hoan & Song. Mr. WintHROP L. MARVIN, Secretary Merchant Marine Commission, Washington, I. C. My Dear Mr. Marvin: [am in receipt of your letter of the Ist instant, and note your request for a formal reply from me to the various questions vou have submitted, also to others, for the information of the Commission. You will find below the ques. tions and my answers to each. 1. Whether you would, if so authorized by Congress, transfer your foreign-built ships to American registry to engage exclusively in the foreign trade, but to remain without subsidy, differential duty, or any other Government encouragement? Anwser. No. 2. Whether you would transfer your foreign-huilt steamships to American registry, if they were admitted to all or part of any subsidy or differential duty granted ly onr Government, but were still confined to the foreien trade? Answer. Yes. 3. Whether you would transfer your foreign-huilt steamships to American registry if no subsidy ar differential duty were granted, but if the ships were allowed to enter the coastwise trade on the same terms as other American vessels? Answer Nao Barrisorg, Mb., November 4. 1904. REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 63 4. Whether you would transfer your foreign-built ships to the American flag for foreign trade alone if vou were required to build an equivalent tonnage in this country? Answer, Yes, if subsidy or differential duty sufficient were given. 5. Whether, if you foreign-built ships were admitted to American registry, you would wish also to have the privilege of employing alien officers, and be exented from the fond scale required by United States law? Answer. Yes, would wish privilege to employ alien officers. No, would not wish exemption from food seale required by United States law. Yours. very truly. B. N. Barrer Furnnss, Witny & Co. (Limrren), Rooms 360-362 Produce Exchange, New York, Jawvary 3, 1505, The Merchant Marine Commission, Washington, I). C. Dear Ses: Referring to your communication of the 25th October, addressed to the Chesapeake and .Ohio Steamship Company (Limited), Newport News, Va., after having submitted vour questions to the head office of the company in London, we are in receipt of their communication under date of the 23d ultimo. as follows: L. No. 2. We would be willing to consider a proposal of this kind, but would have te have further particulars before giving a definite reply. 3. No. 14. No. 5. Yes. Yours, very truly, GEORGE T. WoorLLes Mr. Winranop I. MARVIN, | Secretary, Merchant Marine Commission, Washington, D. C. Drag Sir: Owing to the writer’s-absence in Europe vour favor of October 25 has not heen attended to before. The questions nropounded by vou we would answer as follow: No. 1. No. No. 2. We would be in favor of transferring to American registry if the subsidy Rranted was sufficient to offset the higher cost of running the vessels. No. 3 and No. 4. We would answer no. No. 5. We would wish to have the privilege of emploving foreign officers, hut we Would not object to the American food scale. Respectfully. vours. ANGLO-AMERICAN Orr, COMPANY (Liyren), ’ 26 Broadway. New York, Decomior 13. 1904. Pamre Ruprecur, Agent, Anaro-AmEerIcaN Orr Co. (LIMITED) Arrennpix E. SUMMARY OF AMERICAN LAWS FOR BOUNTIES TO FISHING VESSFT.Q [February 16. 1792.1 AN ACT Concerning certain fisheries of the United States, and for the regulation and government of the fishermen emploved therein. Srerion 1. Be it enacted by the Senate and House of Representatives of the United States of Ainerica in Congress assembled, That the allowance now made upon the exportation of dried fish of the fisheries of the United States, in lieu of a drawback of the duties paid on the salt used in preserving the same, shall cease on all dried fish exported aiter the tenth day of June next, and asa commutation and equivalent therefor, there shall be afterwards paid on the last day of December annually, to the owner of Every vessel or his agent, by the collector of the district where such vessel may belong, that shall be qualitied agreeably to law, for carrying on the bank and other cod fisheries. and that shall actually have been emploved therein at sea for the 64 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. term of four months, at the least, of the fishing season, next preceding, which season is accounted to be from the last day of February to the last day in November in every year, for each and every ton of such vessel’s burthen according to her admeasurement as licensed or enrolled, if of twenty tons and not exceeding thirty tons, one and one-half dollars, and if above thirty tons two and an half dollars, of which allowance aforesaid three-eighths parts shall accrue and belong to the owner of such fishing vessel, and the other five-eighths thereof shall be divided by him, his agent or lawful representative, to and among the several fishermen who shall have been employed in such vessel during the season aforesaid, or a part thereof, as the case may be, in such proportions as the fish they shall respectively have taken may bear to the whole juantity of fish taken on board such vessel during such season: Provided, That the allowance aforesaid on any one vessel, for one season. shall not exceed one hundred and seventy dollars. (By the act of July 8, 1797, the bounties to fishing vessels were increased 33% per sent, to take effect on Januarv 1, 1798.) {July 29, 1813, Thirteenth Congress, first session, chapter 35.] AN ACT Laying a duty on imported salt; granting a bounty on pickled fish exported, and allow. ances to certain vessels emploved in the fisheries. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That from and after the first day of January next a duty of twenty cents per bushel shall be laid, imposed, and collected upon all:salt imported from any foreign port or place into the United States. In calculating the said duty every fifty-six pounds of salt shall be computed as equal to one bushel. And the said duty shall be collected in the same manner, and under the same regulations, as other duties laid on the importation of foreign goods, wares, and merchandise into the United States: Provided, That drawback shall in no case be allowed, and the ‘erm of credit for the payment of duties shall be-nine months. Sec. 2. And be it further enacted, That on all pickled fish of the fisheries of the United States, exported therefrom subsequent to the last day of December, eighteen aundred and fourteen, there shall be allowed and paid a bounty of twenty cents per oarrel, to be paid by the collector of the district from which the same shall be so sxported, without any deduction or abatement: Provided always, That in order to entitle the exporter or exporters of such pickled fish to the benefit of such bounty or allowance, the said exporter or exporters shall make entry with the collector and naval officer of the district from whence the said pickled fish are intended to be exported; and shall specify in such entry the names of the master and vessel in which and the place where such fish are intended to be exported, together with the particular quantity; and proof shall be made to the satisfaction of the collector of the district from which such pickled fish are intended to be exported, and of the naval officer thereof, if any, that the same are of the fisheries of the United States; and no entry shall be received as aforesaid of any pickled fish which have not been inspected and marked pursuant to the inspection laws of the respective States where inspection laws are in force in regard to any pickled fish, and the casks containing such fish shall be branded with the words ‘for bounty,” with the name of the inspector or packer, the species and quality of the fish contained therein, and the name of the port of exportation; and the collector of such district shall, together with the naval officer, where there is one, grant an order or permit for the inspector to examine the pickled fish as expressed in such entry, and if they correspond therewith, and the said officer is fully satisfied that they are of the fisheries of the United States, to lade the same, agreeably to such entry, on board the ship or vessel therein expressed; which lading shall be performed under the superintendence of the officer examining the same, who shall make returns of the quantity and quality of pickled fish so laden on board, in virtue of such order or permit, to the officer or officers granting the same. And the said exporter or exporters, when the lading is completed, and after returns thereof have been made as above directed, shall make oath or affirmation that the pickled fish expressed in such entry, and then actually laden on board the ship or vessel as therein expressed, are truly and bona fide of the fisheries of the United States, shat they are truly intended to be exported as therein spegified, and are not intended to be relanded within the limits of the United States; and shall also give bond in double the amount of the bounty or allowance to be received, with one or more sureties to the satisfaction of the collector of the port or place from which the said pickled fish are REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 65 intended to be exported, conditioned that the same shall be landed and left at some foreign port or place without the limits aforesaid; which bonds shall be cancelled at the same periods and in like manner as is provided in respect to bonds given on the exportation of goods, wares, and merchandise entitled to drawback of duties: Provided always, That the said bounty or allowance shall not be paid until at least six months after the exportation of such pickled fish, to be computed from the date of bond, and until the exporter or exporters thereof shall produce to the collector with whom such outward entry is made such certificates or other satisfactory proof of the landing of the same as aforesaid as is made necessary for cancelling the bonds given on the exportation of goods entitled to drawback: And provided also, That the bounty or allowance as aforesaid shall not be paid unless the same shall amount to ten dollars at least upon each entry. Sec. 8. And be it further enacted, That no bounty, drawback, or allowance shall be made under the authority of this act unless it shall be proved to the satisfaction of the collector that the pickled fish for which the bounty, drawback, or allowance shall be claimed was wholly cured with foreign salt, and on which a duty shall have been secured or paid. . Sec. 4. And be it further enacted, That if any pickled fish shall be falsely or fraudulently entered, with intent to obtain the bounty or allowance on their exportation a8 here provided, when the said fish are not entitled to the same, the said fish or the value thereof, to be recovered of the person making such false entry, shall be forfeited. SEC. 5. And be it further enacted, That from and after the last day of December, 1814, there shall be paid on the last day of December, annually, to the owner of every vessel or his agent, by the collector of the district where such vessel may belong, that shall be qualified agreeably to law for carrying on the bank and other cod fisheries, and that shall actually have been employed therein at sea for the term of four months, at the least, of the fishing season next preceding, which season is accounted to be from the last day of February to the last day of November in every year, for each and every ton of such vessel’s burthen according to her admeasurement as licensed or enrolled, if of 20 tons and not exceeding 30 tons, $2.40, and if above 3Q tons, $4, of which allowance aforesaid three-eighths part shall accrue and belong to the owner of such fishing vessel and the other five-eighths thereof shall be divided by him, his agent or lawful representative, to and among the several fishermen who shall have been employed in such vessel during the season aforesaid, or a part thereof, as the case nay be, in such proportion as the fish they shall respectively have taken may bear t0 the whole quantity of fish taken on board such vessel during such season: Provided, That the allowance aforesaid on any one vessel for one season shall not exceed $272. SEC. 6. And be it further enacted, That from and after the last day of December, 1814, there shall also be paid, on the last day of December, annually to the owner of every fishing boat or vessel of more than 5 tons and less than 20 tons, or to his agent or lawful representative, by the collector of the district where such boat or vessel may belong, the sum of $1.60 upon every ton admeasurement of such boat or vessel, and shall accordingly be so divided among all persons interested therein: Provided, however, That this allowance shall be made only to such boats or vessels as shall have been actually employed at sea in the cod fishery for the term of four months at least of the preceding season: And provided also, That such boat or vessel shall have landed In the course of said preceding season a quantity of fish not less than 12 quintals for every ton of her admeasurement; the said quantity of fish to be ascertained when dried and cured fit for exportation, and according to the weight thereof as the same shall weigh at the time of delivery when actually sold, which account of the weight with the original adjustment and settlement of the fare or fares among the owners and fishermen, together with a written account of the length, breadth, and depth of said boat or vessel, and the time she has actually been employed in the fishery in the preceding season, shall in all cases be produced and sworn or affirmed to before the said collector of the district, in order to entitle the owner, his agent, or lawful representative to receive the allowances aforesaid. And if at any time within one year after payment of such allowance it shall appear that any fraud or deceit has been practiced in obtaining the same, the boat or vessel upon which such allowance shall have been paid, if found within the district aforesaid, shall be forfeited; otherwise the owner or owners having practiced such fraud or deceit shall forfeit and pay B100, to be sued for, recovered, and distributed in the same manner as forfeitures and penalties are to be sued for, recovered, and distributed for any breach of the act entitled “An act to regulate the collection of duties on imports and tonnage.” Ske. 7. And be it further enacted, That the owner or owners of every fishing vessel of 20 tong and upward, his or their agent or lawful representative, shall, previous to receiving the allowance made by this act, produce to the collector who is authorized S. Rep. 2949. 58~-3——K 66 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. to pay the same the original agreement or agreements which may have been made with the fishermen employed on board such vessel as is hereinbefore required, and also a certificate, to be by him or them subscribed, therein mentioning the particular days on which such vessel sailed and returned on the several voyages or fares she may have made in the preceding fishing season, to the truth of which he or they shall swear or affirm before the collector aforesaid. SEC. 8. And be it further enacted, That no ship or vessel of 20 tons or upward, employed as aforesaid, shall be entitled to the allowance granted by this act unless the skipper or master thereof shall, before he proceeds on any fishing voyage, make an agreement, in writing or in print, with every fisherman employed therein, according to the provisions of the act entitled ““An’act for the government of persons in certain fisheries.” Src. 9. And be it further enacted, That any person who shall make any false declaration in any oath or affirmation required by this act, being duly convicted thereof in any court of the United States having jurisdiction of such offense, shall be deemed guilty of willful and corrupt perjury, and shall be punished accordingly. Sec. 10. And be it further enacted, That this act shall continue in force until the termination of the war in which the United States are now engaged with the United Kingdom of Great Britain and Ireland and the dependencies thereof and for one year thereafter, and no longer. Approved, July 29, 1813. The above act was continued by act of February 9, 1816. Amended, March 3. 1819. AN ACT in addition to and alteration of an act entitled “An act laying a duty on imported salt, Tipine a bounty on pickled fish exported, and allowances to certain vessels employed in the fisheries.” [Fifteenth Congress. second session, chapter 88.1 Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That from and after the passing of this act there shall be paid, on the last day of December, annually, to the owner of every fishing boat or vessel, or his agent, by the collector of the district where such boat or vessel may belong, that shall be qualified agreeably to law for carrying on the bank and other cod fisheries, and that shall actually have been employed therein at sea for the term of four months at least of the fishing season next preceding, which season is accounted to be from the last day of February to the last day of November in every year, for each and every ton of such boat’s or vessel’s burden, according to her admeasurement as licensed or enrolled, if of more than 5 tons and not exceeding 30 tons, $3.50; if above 30 tons, $4, and if above 30 tons and having had a crew of not less than ten persons, and having been actually employed in the cod fishery at sea for the term of three and one-half months at the least, but less than four months, of the season aforesaid, $3.50: Provided, That the allowance aforesaid on any one vessel for one season shall not exceed $360. . Sec. 2. And be it further enacted, That such parts of the fifth and sixth sections of the act hereby amended as are contrary to the provisions of this act be, and the same are hereby, repealed. Anproved March 23 1R10. SEC. 6 of an act reducing the duty on imports, and for other purposes. (Chapter 74, Twenty-ninth Congress. firat sesgion Julv 30 1R46 Y Sec. 5. And be it further enacted, That from and after the first day of December next, in lieu of the bounty heretofore authorized by law to be paid on the exportation of pickled fish of the fisheries of the United States, there shall be allowed on the exportation thereof, if cured with foreign salt, a drawback equal in amount to the duty paid on the salt, and no more, to be ascertained under such regulations as may be prescribed by the Secretary of the Treasury. Approved, July 30, 1846. SEC. 4, chapter 298, Laws of 1866, Thirty-ninth Congress. first session. Sec. 4. And be it further enacted, That all laws and parts of laws allowing fishing bounties to vessels hereafter licensed to engage in the fisheries be. and the same are REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 67 hereby, repealed: Provided, That from and after the date of the passage of this act, vessels licensed to engage in the fisheries may take on board imported salt in bond to be used in curing fish, under such regulations as the Secretary of the Treasury shall prescribe, and upon proof that said salt has been used in curing fish the duties on the same shall be remitted. [March 1, 1817.] AN ACT concerning the navigation of the United States. Sec. 8. And be it further enacted, That after the thirtieth day of September next the bounties and allowances now granted by law to the owners of boats or vessels engaged in the fisheries shall be paid only on boats or vessels the officers and at least threefourths of the crews of which shall be proved. to the satisfaction of the collector of the district where such boat or vessel shall belong, to be citizens of the United States Or persons not the subjects of any foreign prince or state. [June 28, 1864.1 AN ACT repealing certain provisions of law concerning seamen on board public and private vessels of the TInited States. . Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That so much of an act entitled ‘An act for the regulation of Seamen on board the public and private vessels of the United States,”” approved the third of March, one thousand eight hundred and thirteen, as makes it not lawful to employ on hoard any of the public or private vessels of the United States any per-80m or persons except citizens of the United States or person[s] of color, natives of the United States; and so much of the third, fifth, sixth, and seventh sections of An act concerning the navigation of the United States,’” approved the first of March, one thousand eight hundred and seventeen, as concerns the crews of vessels therein named; and so much of the first section of an act entitled “An act to repeal the tonnage duties upon ships and vessels of the United States and upon certain foreign vessels,”” approved the thirty-first of May, one thousand eight hundred and thirty, a8 makes discrimination in favor of vessels certain proportions of whose crews shall be citizens of the United States, shall be, and the same are hereby, repealed: Provided, however, That officers of vessels of the United States shall in all cases be citizens of the United States. ArpenpDIX F. JAPAN'S MERCHANT MARINE, From the Nautical Gazette. March 8, 1904.) Mr. K. Uchida, director of the marine bureau, Empire of Japan, prepared and read a most interesting paper at the last meeting of the Japanese Society of Naval Architects, which was held in Osaka. This paper was entitled ‘‘On shipbuildin bounties, as applied in Japan and abroad,” and is a complete history of the vapid rise of the nation among the maritime powers of the world. When she fought with China, Japan had few merchant vessels and fewer war vessels. At the close of this war the Government resolved to encourage not only shipbuilding, but the establishment of steamship lines to various parts of the world as well. To stimulate her citizens and shipowners to activity in these lines liberal inducements were offered. The Government passed an act in 1896, to remain in force eighteen years, which especially encouraged not only the building of ships but of running them. The following bounties were provided for: All vessels of over 700 tons to 1,000 tons, if built in Japan, were to receive 12 yen (about $6) per ton, and those over 1,000 tons were to receive 20 yen (about $10) per ton upon the vessel itself. For the machinery a uniform rate of 5 yen per indicated horsepower (determined on trial) was to be paid on all native-built steamers over 700 tons. Up to the end of 1903 31 steamers 68 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. bad been built in Japan, and 10 more were being built, all of which came under the head of this act. The total tonnage of these steamers was something over 86,000 gross tong, and the total indicated horsepower over 71,000. Aside from the stimulating influence of an act that makes it obligatory on the Government to assume a portion of the original cost of a vessel, it, also provides for the regular payment of subsidies or bounties to those vessels when placed in the foreign trade. The amounts of subsidy paid each year by Japan to such vessels for the first six years succeeding the passage of the act were as follows: $360, 000 i,315, 2.020. © . $605, 000 450, 000 160, 000 The reason for the rapid decline in the amounts paid after the year 1899 is explained in the following manner: Under the act of 1896 all Japanese steamers of more than 1,000 tons and of a speed exceeding 10 knots receive subsidy just as long 18 they are engaged in the foreign trade, the minimum subsidy amounting to 25 sen (about 12% cents) per ton per 1,000 miles traveled. With the increase and size of the ship, as well as of speed, the subsidy increases up to 60 sen (30 cents), the tonnage required to insure this highest rate being 6,000 and speed 17 knots. From the date of the launch of the steamer up to and including her fifth year, the subsidy is paid in full. After the fifth year it is reduced 5 per cent every year, and when ‘he steamer is 15 years old it is withdrawn altogether. -It is stated that the encouragement thus given was found to be insufficient to induce Japanese owners to enter into serious competition with well-established foreign steamship companies. This fact known, in 1899 a new departure was made, and the Government entered into special contracts with steamship owners to give regular service on certain definite routes. As these lines receive the special subsidy only, the steamers that benefit under the old arrangement are fewer than was previously the case. Thus the special subsidies now being paid and assured steamship lines predominate largely over those paid out on account of the old act of 1896. At the present time the definite contracts with the Government are those in force with the Nippon Yusen Kaisha, the Toyo Kisen Kaisha, the Osaka Shosen Kaisha, the Daito Kisen Kaisha, H. Oie & Co., and the Hunan Steamship Company. The Nippon Yusen Kaisha ig, of course, the leading line, and naturally controls the largest number of steamers and the principal routes. These routes, and the subsidies paid, are as follows: Yokohama to Melbourne, employing 3 steamers of 3,500 tons and above; speed, 16 knots and above. A monthly service. Subsidy, $268,000. Contract runs from April, 1901, to March, 1906. Yokohama to Bombay, employing 3 steamers of 3,000 tons and above; 10 knots and above. A monthly service. Subsidy, $91,000. Contract runs from April, 1901, to March, 19086. European line, employing 12 steamers of 6,000 tons and above; 14 knots and above. A fortnightly service. "Subsidy, $1,364,000. Contract runs from January, 1900, to December, 1909. Hongkong to Seattle, employing 8 steamers of 6,000 tons and above; 15 knots and above. A four weeks’ service. Subsidy, $333.500. Contract runs from November, 1901, to December, 1909. Also mail routes: 1. Yokohama to Shanghai, employing 3 steamers of 2,250 tons and above; 14 knots and above. A weekly service. 2. Kobe to North China, employing 3 steamers of 1,400 tons and above; 12 knots and above. A weekly service, except in winter. 3. Kobe, Korea, and North China, employing 1 steamer of over 1,400 tons; speed, over 12 knots. A four weeks’ service. 4. Kobe to Vladivostock, employing 1 steamer of over 1,400 tons and 12 knots. A four weeks’ service. 5. Kobe to Otaru, employing 12 steamers of 1,400 tons and above; 14 knots and above; two routes: eastern, 10 times a month; western, weekly, 6. Aomori to Mororan, employing 3 steamers of 700 tons and above; 10 knots and above. A'daily service. The joint subsidy for the foregoing six mail routes is $280,500. Contract runs from October, 1900, to September, 1905. The Toyo Kisen Kaisha rung its steamers between Hongkong and San Francisco. [t employs 3 vessels of 6,000 tons and above, and 17 knots and above. It gives a four weeks’ service. The subsidy is $517,000 per annum. The contract runs from January, 1900, to December. 1909. TIYMMNY REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 69 The following routes are covered by the Osaka Shosen Kaisha: Shanghai to Han. kow, employing 3 steamers of 2,000 tons and above; 11 knots and above. A bi-weekly service; in winter, three times a fortnight. Subsidy, $125,000. Contract runs from J anuary, 1898, to December, 1907. Hankow to Ichang, employing 2 vessels of 1,50 tons and above; 10 knots and above. Service, six times a month; in winter four times. Subsidy, $56,000. Contract runs from January, 1899, to December, 1907. Kobe to Korea, employing 2 steamers of 700 tons and above; 10 knots and above. A three weeks’ service. Subsidy, $15,500. Contract runs from October, 1900, to September, 1905. . The Daito Kisen Kaisha have vessels on Chinese rivers and receive $29,500 subsidy, and H. Oie & Co. operate steamers on the Japanese Sea, and enjoy a yearly bounty of $70,000. The special service above enumerated costs the Japanese Government $3,150,000 5 year, in addition to the amounts given on account of new hulls and machinery and the ordinary subsidv to vessels encacing in the foreign trade not on regular lines. ArpenDix C. HOW SWEDEN ENCOURAGES DEEP-SEA TRADE. A (From the Nautical Gazette, November 10, 1904.) As an evidence of the manner in which the comparatively insignificant maritime country of Sweden aids and encourages its shipowners, the following facts regarding loans made by the Governmeht to a number of lines, taken from a Swedish trade journal called ‘¢ Affarsvarlden.’’ which, broadly translated, means ‘The Business World,” is cited: “Some time ago we enumerated the Swedish shipping firms which have been granted considerable 1dans in order more effectively to develop the Swedish shipping trade abroad. Itis evident that this step will also be of great advantage to our export trade, in both direct and indirect ways. The Tirfing Steamship Company, which obtained a grant of $80,400, commenced its activity with three small ships, plying on the Baltic and the North Sea. Since 1897 the steamers have become largerand more numerous, and they now number sixteen, keeping up different trades both on the above-named seas and on the Atlantic. The capital of the company, which has toe to $846,880, will now be further increased by $194.300 for buying two new Steamerg. The company has gone in chiefly for the foreign shipping to and from Sweden. Thus it has run 1 steamer with freights between ports in North America and Tampico In Mexico; 5 steamers with ore freight from Narvik and Lulea to the Netherlands, England, and Belgium; 5 steamers with coal and timber freights on the Baltic and North seas; 2 steamers with ore freights from Oxelosund to Stettin, and finally 3 steamers on the south coast Baltic route. The Motala Shipping Company, having been granted $26,800, has since 1899 chiefly carried on navigation on the Baltic and the North seas, in some cases extended to the Mediterranean and the White seas. The Disa Shipping Company has run its ships between Sweden and England, or France, and also between these last countries and Portugal. Lately the company bought a new, large steamer, built in Sweden, which is intended for carrying freight between North America, the West Indies, and South America. The same company even contemplates establishing a coast route in China. Mr. Marcus Wallenberg, who obtained a loan of $53,332, states that the South African Trading Company has sold its steamer to him. This will be sent on with freights to distant waters. The company has just bought another steamer, which will pass into the hands of Mr. Wallenberg to be ased for distant navigation. _ “The Nike Shipping Company also has lines to South Africa. Itisindeed of great importance that we should get direct trade with those ports, since our exporters have bad to send their goods via Hamburg, Antwerp, or London, which of course made the expenses very heavy. The company will run 4 steamers, sending 1 every month from Sweden. Mr. C.J. Sandell has sent his ships to Brazil, the West Indies, North America, South Africa, and Australia. The Heimdal Steamship Company was granted a loan of $47,168. It has carried on freight traffic with 3 steamers without any regular routes, chiefly between ports in Russia, Germany, England, and France” In a smaller degree it has carried coal, stone, timber, and wood pulp. One steamer has also been plying between ports on the Mediterranean and England.” 70 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. The total amount loaned by the Government, as outlined above, is over $400,000, and this has all been given in recent years. It is a notable fact that all countries that have a realizing sense of the importance of a merchant marine to do its transporting consider the maritime situation most carefully and consistently, and when sovernment aid will accomplish anything they are not slow to cooperate and assist in the placing of lines of trade on a firm and enduring basis. They appreciate fully and vividly the necessity of such maritime strength. The following views of the minority of the Merchant Marine. Com-Mission are adopted as the views of those members of the minority of the committee whose names are appended thereto: : Mr. Marrory, from the Merchant Marine Commission, submitted the following VIEWS OF THE MINORITY. [To accompany S. 6291.] It is agreed by every observant man who has given thought to the subject that our shipping interests in the foreign trade are in a deplorable condition. That something ought to be done to restore to American bottoms a reasonable percentage of our export and import carrying trade is conceded by all; the only difference of opinion is as to what the remedy should be. A return to the discriminating-duty policy appears to be generally favored, as shown by the hearings of the Merchant Marine Commission at the most important ports on the Atlantic, Pacific, and Gulf coasts and on the Great Lakes. This was the policy of the fathers of the Republic, under which our shipping interests were so marvelously developed in our early history. Under this policy merchant ships flying the American flag were ‘seen in every important port of the civilized world, and under its fostering care our Hine carried more than three-fourths of our exports and imports. Although our business has increased so wonderfully that we are now the largest exporting nation in the world, with corresponding imports, only 8 or 10 per cent of our foreign carrying trade is done in American bottoms. The objections urged to a return to this system are based upon the hecessity of abrogating treaties with nearly all the maritime countries and the fear of retaliation. That those treaties all operate to the great disadvantage of the United States under present conditions is not seriously denied in any quarter. They all provide, too, for abrogation at the instance of either party to the convention upon the prescribed notice, so that no element of bad faith could be charged if steps should be taken to abrogate. In the light of our earlier experiences and in view of the peculiar existing conditions, we think the fear of retaliation is not well founded. In our infancy as a nation we not only faced this danger courageously, but successfully, and our shipping industry prospered far beyond anything we have witnessed since we bound ourselves {2 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. by treaties to virtually surrender our business on the high seas. At present the larger part of oar exports are food and clothing products, either in the raw or finished state, and the countries which are our best customers can not afford to discriminate against our goods, because this would only tend to increase the cost of necessaries to their own people. The strongest argument presented against this policy is the fact that about 40 per cent of our imports are of goods EY are now on the “free list,” and that the only way to enforce discrimination in respect to such imports would be to increase the *“dutiable list.” Of course, we do not advocate an increased cost of imported goods to the American consumer, but with the treaties out of the way we might meet this difficulty by imposing a low rate of duty on many of the imports when brought in foreign bottoms, but still to be free from tariff when brought in our own ships, and thus enable American vessels to compete successfully with foreign ships in freight charges and at the same time minimize the danger of increased cost to the consumer. What we want to do is to give some assurance to our foreign-going ships that they will have return cargoes, which would go far toward settling the question of the carrying of our exports in our own bottoms. But we are not willing, nor do we think it necessary, to commit ourselves to the proposition that anything now upon the *‘free list” should be made *‘dutiable.” We prefer to take the chances of aiding our merchant marine by discriminating duties upon the 60 per cent of :mports now on the ‘*dutiable list.” This, we believe, would result in permanentassistance to our languishing shipping interests without imposing any additional burdens upon the public. We wish to aid our merchant marine by reducing burdens, not increasing them. It is also shown by the hearings before the Commission that there is a material difference between the cost of construction in American shipyards and in foreign. A part of this difference is due to the greater cost of labor, but this is largely overcome by the greater efficiency of the American artisan and the use of improved tools; but it appears to us that the unnecessary and exorbitant tariff imposed upon steel and iron products is one of the greatest Impediments to cheaper ships in American yards. The steel manufacturers in this country are the richest and best equipped in the world, and have long since outgrown the necessity, if any ever existed, for the protection accorded to ‘infant industries.” It 1s a shame and an outrage upon the American people that manutacturers in this country should be able to sell in foreign countries any products of their factories at lower prices than are charged their own countrymen at home. This condition applies with especial force to the subject now under consideration. It has been conclusively shown by testimony before this Commission that materials which enter into the construction of ships are sold by our factories and laid down in foreign shipyards for a price far below that charged at the mills to our own people—a condition which could not exist but for the unjust provisions of our tariff laws. Mr. Edward S. Cramp, of the Cramp Shipbuilding Company, in May, 1904, stated to the Commission that foreign shipbuilders were then paying only about $25 per ton for materials that cost the American shipbuilder $40 per ton, *“a handicap against him of $15 per ton.” Mr. James C. Wallace, of the American Shipbuilding Company, REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 73 told the Commission at Cleveland, Ohio, June 28, 1904, that the United States Steel Corporation was selling great quantities of steel to foreign shipbuilders, delivered at Belfast, at $24 a ton, while the price charged at its Pittsburg mills was $32 a ton. Deducting $2 a ton for ocean transportation and $1.40 for freight from Pittsburg to tidewater, the steel trust is selling steel to foreigners at $20.60 per ton that it sells to Americans at $32. As Mr. Wallace said, * "That would make $11.40 difference between the Pittsburg price to you and the price abroad.” Mr. Wallace estimated that an 8,000-ton ship would require about 3,500 tons of steel materials, and that the discrimination of $8 per ton would make a difference of $28,000 in the cost of constructing this ship here or abroad. He said that about four years ago his company built two ships for the American Navigation Company at A price about equal to the price for which they could be built in England at that time. ‘Steel was then,” he said, ‘very much lower than it is to-day. The steel pools had not then been formed.” Mr. George W. Dickie, superintendent of the Union Iron Works, the largest shipbuilding plant on the Pacific coast, stated to the Commission at San Francisco, that he was in a Scottish shipyard in 1900 when they were building a vessel almost exactly like one he was building in his yards and he saw there materials unloaded from a ship trom Now York furnished by Carnegie & Co. at about $13 a ton less than he was paying for the sane material from the same mills. A large number of others testified to the same effect. It can be seen at once what an immense profit is gl to the steel trust by the operation of law alone. A tariff which enables manufacturers to reap a bonus of from $10 to $15 a ton in addition to the legitimate profits is indefensible from any standpoint of honesty and fair dealing, and one of the first steps in the interest of shipbuilding in the United States ought to be to put at least all materials which enter into the construction of ships on the free list no matter whether intended for the foreign or domestic trade. ~The recent testimony, as well as the testimony given in former hearings, and the statements of experts made in newspapers and magazines during the last ten years indicate that the cost of constructing ships in American yards had, before the advent of Dingleyism and its brood of cormorant trusts, gotten down to about the cost of constructing ships in foreign yards. In the North American Review of January, 1892, Mr. Charles H. Cramp said that first-class ships could be huilt in American yards at about the cost of building them in foreign yards. His words were, * within as small a margin as would be likely to prevail in a similar case between any two British shipyards.” In his testimony before the Merchant Marine Commission at Philadelphia on May 27, 1904, Mr. Edwin 8. Cramp said: For these reasons, enumerated above, the cost of ships in America, which at the time of the beginning of the McKinley Administration had approximated the cost of the ships of a similar type by first-class builders in England within 10 or 15 ver cent. to-day can not be produced within 40 ver cent. _ In an article on the invasion of American goods in foreign market in the Grande Review, quoted in Consular Reports. March 3, 1900. Mr. George Wenlersse said: To-day ships may be built at Bath, San Francisco, Philadelphia, Wilmington, Dhester. and Newport News as cheaply as anywhere in the world. 74 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. Many other similar statements might be quoted. As far back as 1896 Mr. John Roach, the great shipbuilder. said: The high cost of iron produced by the tariff upon it is one of the principal difficulties our. commerce has to contend with. I did not come here to ask a bounty. I came here to tell you that, while all other articles of American produce are protected to a great extent, there is no protection for American ships. If Congress will sake off all the duties from American iron, then we are prepared to compete with foreign shipbuilders. The labor question is misstated. We are prepared to meet that difficulty and to ask no further legislation on the subject. Since then materials and supplies for our ships in foreign trade have been put upon the free list. The testimony before the Merchant Marine Commission shows that, for numerous reasons, this discrimination in favor of our foreign ship builders and owners has been of no practical benefit to them. One of the reasons, if not the prime one, is that ships built from foreign materials, in whole or in part, can not be used in oar coastwise trade. To give our shipbuilders any bevefit from free materials the tariff must be removed from materials from all ships. Probably also it will be necessary to remove the duties not only for materials but from all materials sold cheaper abroad than-at home. In this way, and in this way only, will our shipbuilders be enabled to obtain our materials at the prices at which they are sold to foreign shipbuilders. There was some startling testimony as to the difference of prices of materials to American and to foreign shipbuilders. Thus, Mr. Edwin S. Cramp told the Commission that steel plates, shapes, angles, channel and bulb angles were, on May 27, 1904, selling ‘at 1.75 cents per pound while the prices ruling in England would permit these same materials to be delivered, clear of insurance and freight, but no duty paid, at Philadelphia for 1.40 cents per pound. He said that foreign shipbuilders were then paying about $25 per ton for materials that post American builders about &10. Thus far we have outlined briefly some measures for the relief of our shipping interest which if enacted into law would, in our judgment, accomplish substantial and permanent good without injustice to any other American interest and without doing violence to any fundamental principle of right or of organic law. We regret that we can not agree with the majority of the Commission in the legislation proposed. It would have been very gratifying to us if a unanimous report could have been made, and we _ been willing to make concessions in order to accomplish this result. While there are objections to the entire bill as reccommended by the majority, we are disposed to withhold any opposition except to sections 2, 8, and 4. These sections provide for direct subsidies, and are so obnoxious to Democratic principles and to the economic sense of the country that we are compelled to enter our earnest protest against their enactment, into law. Its chief difference from former direct subsidy bills is that it is not as honest as these bills were. It displaces the word * subsidy” with the word ‘‘ subvention” and through the explanation with which it is launched seeks to create the impression that it only gives back to the shipping industry what is taken from it, or rather that it gives back to American ships what is taken in increased tonnage taxes from ships of all nations. But, on the contrary, it places in the Treasury the amounts to be received under it through tonnage taxes and takes out of the REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 75 Treasury the appropriations provided for without any reference whataver to the relative amounts taken out and put in—without any limitation of the subsidy to the amount of the tonnage taxes—without any sort of limitation of the total to be paid out of the Treasury now or hereafter for the benefit of the merchant marine. Tt will be remembered that the ship-subsidy bills first proposed during the last decade carried unlimited appropriations for the benefit of the shipping industry. The public sentiment against such bills was so strong that a limitation to nine millions a year was made. The bills were so drawn that a few companies would have gotten the greater part of the benefit, and, because of public sentiment against the principle of subsidies and the unfairness of the distribution proposed, these bills were abandoned. We had thought, that by legislative concessions both to public sentiment and wise economics we were through with subsidy bills and were to make an effort to devise other means to build up the merchant marine. But we have come back very nearly to the point from which we started, with the only difference consisting in subterfuges and disguises. We can not but see in the proposed hill the ¢ trail of the serpent ” that has been over all other bills on this subject. We mean no reflection of duplicity against our colleagues on the Commission; but the situation seems to be such that they can not get away from the idea of direct governmental aid. In this connection it is pertinent to note that our friends of the majority have refused to consider the theory of discriminating duties; have refused, with impatience, any consideration of the theory of free ships; have refused to make concessions of any sort through the protective-tariff system, that has helped to stifle shipping along with many lines of individual industry, and have come back to the most obnoxious plan of all—the taxation of all the people for the benefit of the one industry which they desire to help. Every argument that has been made against the subsidy bills of former Congresses applies against the direct subsidy features of this bill. Section 2 ingeniously introduces the subject by the “sugar coated” expression *‘in the interest of the national defense and for the performance of public services.” Will the Congress of the United States and the American people suffer themselves to be deceived by this transparent disguise? + Public sentiment and the sober judgment of the people’s representatives have united to condemn every previous sffort to enact such legislation, and surely this effort must meet the fate of its predecessors despite the canting phrase, in the interest of the national defense and for the performance of public services” and the substitution of the more euphonious title *¢ subvention” for “subsidy.” Whatever objections to previous subsidy bills have been valid are of equal weight to-day against this section. It was urged against the previous bills that the cargo steamers received no consideration. A comparison or two will show how little this section differs in that respect from the previous bill. The Mineola, a steamship engaged in foreign trade on {he Pacific coast, with a gross tonnage of 2,438, would receive, ander this section, $12,190; under $. 727, H. R. 64, Fifty-sixth Congress, first session, and S. 5590, Fifty-fifth Congress, third session, $11 885. The Takoma. 2.811 tons. under this bill would receive $14.055; 76 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. under S. 727, $14,505; H. R. 64, $19,115, and under S. 5590, $14,505. In 1899 the frrawaddy, of less than 12 knots speed, with a gross tonnage of 2,553, made 10 round trips between New York and Grenada. This ship does not appear in the list of those registered for foreign trade in the year 1904, but for all this can well be used for comparison. Under this section she would receive $12,785; under S. 727, $13,020; under H. R. 64, $13,020 also. The Umatilla, a 13-knot vessel of 3,069 tons, under this section would receive $15,345; under S. 727, $13,749; and under H. R. 64, $15,261. (These estimates of subsidies under S. 727 and H. R. 64 are copied from the report of the Commissioner of Navigation for 1900.) It appears, then, that under a different guise the subsidy to cargo vessels under the bills of the Fifty-sixth Congress and the subvention under this section are almost identically the same thing. There are, however, one or two differences between the subsidy bills and this subvention section. 8. 727 and H. R. 64, section 1 (a), both provide: That no vessel shall be entited to the full compensation under this clause unless she shall have cleared from a port of the United States with cargo to the amount of fifty per centum of her gross tonnage. This section of the bill as proposed contains no such provision nor any provision of any sort other than the agreement to turn the ships over to the United States Government at any time for a fixed rate of hire, to carry mails free of charge if asked to do so when on a subvention voyage, and to have a certain small proportion of its crew American citizens. Section 9 of S. 727 and H. R. 64 prohibit the paying of a subsidy to a vessel on a voyage extending to a foreign port less than 150 nautical miles from her last point of departure in the United States. 8. 5590, section 6 {#), also contain the same exclusion. The reason for this exclusion is given on page 62 of the report of the Commissioner of Navigation for 1899. A fair summary of the Commissioner’s reason is: Americans already control the trade. The vessels thus excluded have a varying tonnage from 400 up to 3,000 and more—all told, about 25,000 or 30,000 tons. It may be said that this is a mere bagatelle of only $125,000 or $150,000, and perhaps it does make materially little difference to the actnal drain upon the treasury of the people. But the items show clearly that this section proposed to give without restriction $100,000 and more to steamship companies which are already in control of the trade almost as exclusively as if it was the coasting trade. We have already made a comparison between this second section of the proposed bill and S. 5590, showing that for all vessels under 10 knots the subsidy or the subvention or the compensation or the bounty is practically the same. The only apparent exception to this is in the case of a vessel of a low rate of speed of a tonnage of approximately 8,000 making foreign vovages of a less distance than 1,000 miles each way. In short, so far as the subvention under this section goes, this bill is one of a double set of twins, the others being S. 5590. S. 727, and H. R. 64. Section 8: The different obligations incurred under this section by the owners of the ships, so far as the percentage of Americans employed is concerned, are not at all likely to make any change in the crew. The percentage, with possibly here and there an exception on the REPORT OF AMERICAN MERCHANT MARINE COMMISSION. 74 Pacific coast, is doubtless as large now as is required by this section. The total number of men required to man fully all the American seagoing vessels which go out of sight of land is estimated by the Commissioner of Navigation, on page 26 of his report for 1903, to be not more than 50,000. This includes sail and steam, deep-sea fisheries, foreign and coast trade ships. Of the half million gross tons of steainships registered for foreign trade in 1904, the 4 large ships of the International Mercantile Marine Company, the 3 largest ships of the Oceanic Company, 6 at least of the ships of the New York and Cuba Mail Steamship Company, 3 of the Red D Line, and the 4 of the Admiral Line are under contracts to carry mails under the postal acts oo and are in no way affected by this or any other section of this ill. Further, under section 6 of this proposed bill there will be a considerable tonnage to enter upon the mail contracts proposed under that section. The remaining registered steam tonnage, after these contracts have been made of steamships engaged in foreign trade, six months or more each year is less than 800,000. For the fiscal year ending June 30, 1904, on both steamers and square-rigged sailing vessels there were shipped only 42,000 Americans (native and naturalized). This includes all the men shipped before United States commissioners, and by no means. was this namber of men, or anything like it, employed at any one time. Since there are, all told, engaged in trade out of sight of land, steam and sail, less than 50,000 men; since from 160,000 to 200,000 tons of the total of 500,000 registered tons do not come under this section at all; since officers are counted as a part of the crew; since several of the steamships registered are under 1,000 tons, it necessarily follows that the increase in the number of American citizens to be employed will be best represented by Zero. In other words, this part of this section effects nothing, does nothing. It is verbiage put in to fill our eyes and blind us to the real purpose of the bill. ~ The other items of this section are of equal value. The enrollment of one-fourth of the crew in the naval volunteers after 1916 is either more dust thrown in our eyes or else the number of ships drawing subventions will be so large and the subventions amount to so enormous a sum that we shrink from even an attempt to estimate. * Section 4. This section provides that the contracts shall be for a period of one year, and may be renewed from time to time. The rebuted purpose of this bill, so far as subventions go, is, as we have already said, “To promote the national defence and create a force of naval volunteers,” but according to this section the contract is to be for a period of but one year, leaving the shipowner at pertect liberty to decline to renew the contract for a second year if he sees signs of war. _ The Government, then, will be in no better condition so far as secaring vessels for transport service or for naval volunteers than if this act were not in existence. Of course, if the shipowners think that it will be more profitable to them to turn their vessels over to the Government than to continue in trade, they will renew the contract and receive pay for the use of their ships by the United States. But this they would do in any event, subvention or no subvention. It is clear, then. that with this limit of one year attached to the contract the 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 REPORT OF AMERICAN MERCHANT MARINE COMMISSION. | 79 in part by the Government by means of an annual payment called a “‘subvention.” This payment is for value received by the Government and value lost by the shipowuner. It is a purchase by the Government of a preemptive right in vessels which are especially constructed and kept under Admiralty rules. On the other hand, a subsidy is a gift for which the Government receives no direct equivalent and which is intended to assist a new enterprise. These British subventions differ in principle and in effect from subsidies. If the British Government, for naval purposes, chooses to compensate shipowners for building and running auxiliary cruisers, that is no reason why we, for commercial purposes, should make gifts to our shipowners to increase their profits and so attract capital in the ocean carrying trade. Subventions are based on military congsiderations, while subsidies are an extension of the principle of Government aid to certain industries, and a confusion of the two is a disregard both of facts and of principles. The foregoing are a few reasons why we can not support the bill as favored by the majority of the Commission. We believe that the subsidy features are wrong in principle and that it would result in an enormous expenditure from the Treasury of the United States. We believe that the argument that the money to be thus expended would be in any appreciable degree derived from the increase of tonnage taxes is utterly fallacious. If anything is accomplished toward the building up of our own over-sea carrying trade a large and steady decrease in the income from tonnage taxes is inevitable. It is equally true that under the same conditions there would be a rapidly growing increase in the amount paid in the way of subsidies. It will be observed also that, unlike other subsidy bills which have been offered from time to time, there is absolutely no limit to the amount which may be expended under this bill. It may be true, and we hope it is, that for a short time the payments to naval volunteers and the increased expenditures for ocean mail service can be met by tonnage taxes and the profits from foreign mails; but it must be borne in mind that the expenses of the Marine-Hospital Service which have heretofore been paid from the fund arising from tonnage taxes must, Inder the proposed bill, be met by a direct appropriation from the reasury. LA Tn dollars annually will be required for this purpose alone. S0 it will be seen that with an accelerated decrease of the fund arising from tonnage taxes and the lowering of the rate of profit from the Ocean mail service it would not be long until there would be an Increased drain from the National Treasury, leaving entirely out of view the subsidies provided for in sections 2, 3, and 4 of this bill. What this increase would amount to can hardly be conjectured. What we do know is that the only limit is the number of vessels that would apply for the subsidy. James H. BErrY. ALEXANDER S. CLAY. STEPHEN R. MALLORY. MN)