Calendar No. 363. Lr Coxon, ! SENATE. REerorT No. 854 OCEAN MAIL SERVICE. MARCH 7, 1910—Ordered to be printed. Mr, GaLLINGER, from the Committee on Commerce, submitted the following REPORT. "To accompany 8S. 6708.1 This bill is the identical measure which the Senate passed without 2 division on March 20, 1908, with one additional feature, to wit, Special provision for mail lines to the Isthmus of Panama, which will be considered later. The terms of the bill (S. 6708) are as follows: That the Postmaster-General is hereby authorized to pay for ocean mail service, ander the act of March third, eighteen hundred and ninety-one, in vessels of the second class on routes to South America, to the Philippines, to Japan, to China, and to Australasia, four thousand miles or more in length, outward voyage, or on routes to the Isthmus of Panama, at a rate per mile not exceeding the rate applicable to Vessels of the first class, as provided in said act, and in vessels of the third class on said routes, at a rate per mile not exceeding the rate applicable to vessels of the second class, as provided in said act: Provided, That if no contract is made under the pro-Visions of this act for a line of ships between a port on the Atlantic coast south of Cape Charles and South ‘American ports, the Postmaster-General shall, provided two Or more lines are established from North Atlantic ports, require that one of said lines shall, upon each outward and homeward voyage, touch at at least two ports on the Atlantic coast south of Cape Charles, regard being had in the selection of such ports of call to geographical location and to the volume of the export and import business of the ports so selected: Provided further, That the total expenditure for foreign mail Service in any one year shall not exceed the estimated revenue therefrom for that year. The President of the United States in his annual message of Detember 7, 1909, to this Congress earnestly recommends the passage of this legislation, as his predecessors, President McKinley and E resident Roosevelt, haverecommended similar legislation. President aft said: Following the course of my distinguished predecessor, I earnestly recommend to Congress the consideration and passage of a ship subsidy bill, looking to the establishment of lines between our Atlantic seaboard and the eastern coast of South America, 38 well as lines from the west coast of the United States to South America, China, Japan, and the Philippines.” The profits on foreign mails are perhaps a sufficient Measure of the expenditures which might first be tentatively applied to this method of inducing American capital to undertake the establishment of American lines of steamships in those directions in which we now feel it most immortant that we should OCEAN MAIL SERVICE. have means of transportation controlled in the interest of the expansion of our trade. A bill of this character has once passed the House and more than once passed the Senate, and I hope that at this session a bill framed on the same lines and with the same purposes may become a law. STRONGLY INDORSED. This bill has been strongly recommended for the past five years by Postmaster-General Cortelyou, Postmaster-General Meyer, and Postmaster-General Hitchcock, extracts from whose annual reports on the subject are printed in Appendix B, together with Postmaster-General Hitchcock's special report on this measure in Appendix A. The bill has been strongly recommended in the interests of American sommerce for the past seven years by Secretaries of Commerce and Labor Cortelyou, Metcalf, Straus, and Nagel, extracts from whose reports on the subject are printed in Appendix C. Admiral Dewey, president of the general board, Navy Department, in a report upon this subject has said: The general board considers that, from a military standpoint, a bill which would ancourage the building of large fast vessels suitable as auxiliary cruisers, scouts, and squadron colliers would be of great advantage as assuring to the Navy Department means of obtaining necessary auxiliaries in time of war important as affecting the yperations of the fighting fleet. The Army War College in a report upon mail steamships as transports in war has said: It appears that now, and for the immediate future, the force for which our military establishment is maintained can not be exerted over sea. The quick first blow, so very and increasingly important, can not be struck at all, nor can an expedition of any greater size be embarked without delay, except by the use of foreign vessels. This condition can not improve until the American steam seagoing merchant marine has increased in tonnage to approximately two and one-half times its present volume by the addition of ships adapted in size and design to quick conversion into suitable transports and built under conditions which make their voluntary surrender to the United States on demand ga foregone conclusion. OPPOSED BY EUROPEAN SHIP MONOPOLISTS. No valid reason against this legislation has ever been advanced from any quarter, but aggressive opposition has come from foreign steamship trusts and combinations.” On the other hand, the legislation has been earnestly asked for by American manufacturers and merchants interested in the export trade, who suffer from the arbitrary and oppressive methods of these European ship monopolists. The National Board of Trade, the National Association of Manufacturers, the American Bankers’ Association, the American Cotton Manufacturers’ Association, and the boards of trade and chambers of commerce of most of the chief cities of the United States by formal resolution have demanded the creation of regular American lines of mail steamers to South America and the countries beyond the Pacific cean. NOT NOVEL LEGISLATION. The bill is an amendment to the ocean mail act of 1891, which act s fad in Apnoadix E, and involves no new or strange legislative policy for the United States. The wisdom of the act of 1891 has never been seriously challenged in Congress. That act has established and maintained excellent lines of American mail steamships to Europe, the West Indies, Mexico, and the nearer ports of South America. But because of inadequate compensation, as clearly shown uw by the Postmaster-General in his report in Appendix A, the law of 1891 has failed to sustain American mail steamship service on the longer and more expensive routes to the farther countries of South America and across the Pacific Ocean, and it is confidently believed that the increased compensation allowed by this bill will give us direct communication with those countries, and thereby greatly increase the trade of the United States. AMOUNT TO BE EXPENDED. OCEAN MAIL SERVICE. g T E 3 7 - 7 Nn J 2 oO ~ 2 © o 7 4 © C m = 0 OQ 0 QO = ~~ m ~ OO _ The bill provides that the total expenditure for foreign-mail service In any one year shall not exceed the estimated revenue therefrom for that year. "The report of the Postmaster-General in Appendix A shows the total annual receipts and expenditures since 1900. For the past four years the apparent profit of the ocean mail service has been Upward of $3,000,000 annually. While exact figures can not, of course, be given, the statement may nevertheless be made unhesitatingly that the ocean mail service of no other considerable nation shows any such balance of profit. It is the uniform Jranjion of maritime nations, except the United States, to create and maintain ocean mail service under the national flag and to gan on that service all the receipts from ocean postage and more. Following is a statement from the annual report of the Postmaster-General of the expenditures of foreign governments and of the United States for carrying the mails on their national ships, exclusive of the postage paid to steamships of other flags, for the year 1908: Great Britain......... France...... Japan. . Ttaly........ Germany... Spain... ....... Austria-Hungary. United States. } P b $7, 016, 764 5, 217, 037 1, 379, 000 2, 328, 917 , 301, 029 1858, 186 1,729, 530 1. 467, 256 In addition, the United States paid, in 1908, to foreign steamship lines for transporting the ocean mails of our country $1,228.032. TYPE OF VESSELS TO BE CONSTRUCTED. ] -— le] oN oO ™® oo oy oo =~ 3 bn k pr © ~ Sr The mail steamships on our European and Caribbean routes did good work-as auxiliary cruisers and transports in our war with Spain. New steamships built under this bill—and practically all of the ships required would have to be built before routes could be established— must, as provided in the law of 1891, “be constructed with particular reference to prompt and economical conversion into auxiliary naval cruisers. ”’ They must undergo official tests by the Navy Department and must be turned over to the Government in war. All of the officers of these mail steamships and an increasing proportion of their crews must be American citizens, so that the hips would be completely readv in case of need. SOUTHERN PORTS CARED FOR. The bill further provides that if two or more lines are established from North Atlantic ports to South America, ‘one of said lines shall upon each outward and homeward vovage touch at at least two ports 0 [=] oN 0 < wn m N oN m oN 0 rol aL 7 — nn OCEAN MAIL SERVICE. sn the Atlantic coast south of Cape Charles, regard being had in the selection of such ports of call to geographical location and to the volume of the export and import business of the ports so selected.” This is a guaranty that the producing and exporting interests of our Southern States shall have direct communication of their own with the great markets of South America. They now have practically pone. - THE ISTHMUS OF PANAMA. The bill contains a new and special provision for mail lines to the [sthmus of Panama. The time for the completion of the Panama Canal approaches. Already the Spanish law of 1909 provides a compensation of $1.90 a mile for steamships of 13 knots from Barcelona to the west coast of South America and to San Francisco through the canal when completed. The bill pending in the Italian Parliment provides similar compensation for similar services in anticipation of the changes in trade routes to be effected by the opening of the canal. The committee believes that the United States should not be behind these nations in preparing for the effects upon navigasion which will ensue from the vast expenditures our own country is making on the Isthmus; indeed, there is every reason, both sentimental and patriotic, why we should be ahead of all the other nations in this respect. The bill accordingly proposes payment of not to exceed $2.30 for 14-knot American steamships and not to exceed $4.60 for 16-knot steamships. As the act of 1891 requires that mail routes shall be equitably distributed among Atlantic, Pacific, and Gulf orts, the committee assumes that a Ime to the Isthmus would soon be established from a Gulf port, and would thus prepare the way for the large increase in commerce of the Gulf ports to follow from the spening of the canal. In making special provision for a mail route to the Isthmus of Panama the committee has sought to provide in advance for changes in the world’s trade routes which will follow the opening of the Panama Canal. So far as international mails are concerned considerable change is already imminent. The Andes have been pierced and on the anniversary of Argentine independence, May 25, it is believed that trains will begin to cover the 950 miles across South America from Valparaiso on the Pacific to Buenos Aires on the Atlantic (River Plate) in thirty-six hours. The British Pacific Steam Navigation Company, which for sixty years has received a subsidy from England for carrying mails to Chile and the west coast through the Straits of Magellan, has already decided to spend $3,500,000 on fast steamers to carry the British mails to Buenos Aires, there to connect with the Trans-Andine Railway for Chile and Peru. Chile and Peru are preparing to subsidize faster mail steamers of their own to carry part of their mails to the Isthmus and part to Valparaiso to connect with the Trans-Andine Railroad. Spain's subsidy law of 1909 provides in advance for a Spanish steamship line through the canal nl finished to the west coast of South and North America. Similar provision is puiseapiued in the subsidy bill being prepared by the ltalian ministry. Japan has already secured Mexican cooperation for the Japanese subsidized line of 1910 to Mexico and South America. The committee has felt that the United States, which is building the canal, ought not to be the last nation to provide for its use by our own ships and for the benefit of our own trade. OCEAN MAIL SERVICE. The bill does not in terms provide that the proposed mail line for the Isthmus shall have a port on the Gulf of Mexico for its base of Operations, because conditions will compel the selection of that base. The distance from Colon to New Orleans is 1,380 nautical miles; to Mobile, 1,371 miles; so that other considerations, such as railroad connections, will control. That New Orleans, for example, is the natural sippy point of departure for American mails for Chile and Peru for all of the United States east of the Rocky Mountains is a manifest geographical fact. The opening of the Trans-Andine Railway a few months hence will make New Orleans the proper point of departure for such mails also for Argentina (though not for Brazil). The distance from New York to Buenos Aires by sea is 5,868 nautical miles, equivalent to 6,807 statute miles. The distance by rail from New York to New Orleans is 1,372 miles, from New Orleans to Colon 1,600 statute miles, from Panama to Valparaiso 3,025 statute miles, and from Valparaiso to Buenos Aires 950 miles, in all 6,947 statute miles, as compared with 6,807 statute miles by sea from New York to Buenos Aires. But the mail route via New Orleans will have the advantage of 2.322 miles by rail, where the speed will be double that by sea. With the steamship lines to be subsidized by Chile and Peru in operation, letters from New York will reach Buenos Aires three days sooner by the New Orleans route than by the all-sea route. From San Francisco by way of Panama to Valparaiso is 6,855 statute miles. From San Francisco by rail to New Orleans is 2,482 miles, and thence by sea to the Isthmus and on to Valparaiso is 4,625 statute miles more, or 7,107 statute miles in all. The mail route by way of New Orleans has the advantage of a railroad haul of 2,482 miles, where double the sea speed can easily be made, involving a saving of nearly three days even on mails from San Francisco to Valparaiso. w the New York mails for Buenos Aires and the San Francisco mails for Valparaiso can be carried more expeditiously by the New Orleans route than by direct sea routes, then obviously the South American mails from the great interior cities of the United States will make an even greater saving in time by the New Orleans route. Without elaborating this statement, a table of the official railroad mileage distances of the United States follows, from which can readily be computed the saving in mail time for a number of our larger cities: 0 ficial railroad mileages. New Orleans. . Mobile. .... 3t. Louis.... 3t. Paul.... Shicago. ... Savannah. ..... New York. ... 3an Francisco. - Seattle... New Yrleana " 399 275 912 “91 Mobile. 141 647 i,223 929 520 Bi, 323 079 st. St. | emg Louis. | Paul. : Chicago. 699 647 1,275 1,223 576 410 1,437 1,061 2,091 1. 820 912 929 284 410 -,027 912 2,279 9 239 284 905 867 199 2 339 Savannah. 520 905 1,437 L027 ™ LY New York. por 1,231 867 , 061 912 O44 +. vo) San Francisco. we 62 1199 4,001 2,279 3,104 2.930 057 Seattle. 2,931 2,979 9,332 1,82 2,239 3,237 3,151 957 In his annual report the Postmaster-General has proposed a mail route from New Orleans to Valparaiso, and the committee is convinced that no time should be lost in creating an American mail line ' J OCEAN MAIL SERVICE. of steamers of 16 knots or upward from a Gulf port to the Isthmus of Panama. The whole country would benefit from such ‘a line. New Orleans and Mobile stand in the same relation to the Panama Canal as does Brindisi to the Suez Canal. The Trans-Andine Railroad will change the mail relations of South America to North America and Europe as the Trans-Siberian Railroad is changing the mail relations of Asia to western Europe. A VALUABLE ADDITION TO THE NAVAL RESERVE. Except on the routes to the Isthmus of Panama, it is practically certain that the Post-Office Department will require the use of secondclass steamships which must be of from 16 to 20 knots speed, and of at least 5,000 tons gross register as stipulated in the law of 1891, As a matter of fact these mail steamships will range from 8,000 tons on the routes to South America to 15,000 tons on the routes to the Orient. This is about the smallest practicable size of ocean steamships now constructed for such ocean carrying. A mail steamship of 16 knots and of 8,000 tons gross register, equipped for passenger and cargo traffic, would cost about $1,400,000. A steamship of at least 16 knots and of 15,000 tons gross register would cost about $2,500,000. A full ocean-mail service, such as is contemplated in this bill, would call for the eventual construction of from 20 to 30 such steamships, a most valuable addition to the naval reserve of the United States. A PITIABLE CONDITION. Last year our exports and imports by sea, according to the report of the Secretary of Sommaerce and Labor, amounted in round gen bo $2,721,000,000, of which only $258,657,000, or 9.5 per cent, was carried in American ships. At the beginning of the current fiscal vear (July 1, 1909) we bed only 4 American steamships regularly engaged in the European trade, only 5.in trade with Asia, and none with South America hi the Caribbean, or with Australia or Africa. What a pitiable condition that is for a great country like ours to be in. DIRECT COMMUNICATION WITH SOUTH AMERICA. When American shipbuilders recently opened negotiations with the Argentine Government for the building of several battle ships and cruisers these Americans were met at once by a statement from the Argentine ministry that one very serious objection to the placing of such a contract in this country was that there were such slow, wretched, irregular mail and passenger communications between Argentina and the United States in contrast with the facilities offered by the national mail lines of Europe, and it was with ereat difficulty that this objection was overcome. If this bill becomes a law, it will no longer be necessary for American manufacturers and merchants to send their products to South America via Europe, necessitating transshipment, and covering a route twice the length of a direct line to those countries, and it will also give the United States a line of steamships to Australasia, where now the American flag is never seen and where a large commerce can be developed. It seems to your committee that an enlightened self-interest, as well as a patriotic purpose, may well be invoked in behalf of the proposed leeislation APPENDIX A. Post-OFFicE DEPARTMENT, OFFICE OF THE POSTMASTER-(GENERAL, Washington, D. C., February 12, 1910. My Dear Sir: I have the honor to acknowledge receipt of your communication referring to me bill S. 525, Sixty-first Congress, first session, to amend the act of March 3, 1891, entitled ‘“An act to provide for ocean mail service between the United States and foreign ports and to promote commerce’’ and requesting to be furnished with such suggestions as I may deem proper touching the merits of the bill and the propriety of its passage. The text of the bill is as follows: . Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Postmaster-General is hereby authorized to pay for dcean mail service under the act of March third, eighteen hundred and ninety-one, in vessels of the second class on routes to South America, to the Philippines, to Japan, to China, and to Australasia, four thousand miles or more in length, outward voyage, at a rate per mile not exceeding the rate applicable to vessels of the first class as provided in said act. The act of March 3, 1891 (26 Stat. Li, 830), which the bill proposes to amend, is the only existing provision of law authorizing formal contracts for ocean mail service by American vessels at rates exceeding the sea and inland postage, no further helpful legislation toward the promotion of our foreign mail service having been enacted since the passage of that law. Under the act referred to we now have, in addition to a weekly service to Europe and a service of ten times a year to Tahiti, a service to Cuba, Jamaica, Venezuela, and the Atlantic ports of Mexico in our own ships subject to our own control; but with these exceptions our mails to foreign countries are wholly dependent upon steamers over which the department has no control whatever—a condition of affairs not in keeping with the policy of other great commercial nations. Not only is our mail service to points covered by the bill performed by steamers not under our control, but, with few exceptions, it is performed by steamers which do not fly our flag. ot steamers conveying our mail to the Orient, more than 70 per cent fly foreign flags. Not a single steamer now carrying our mails to Australasia and to points in South America covered by the bill flies the American flag. The act of March 3, 1891, has enabled the department to secure service in accordance therewith on short routes, but it has not enabled us to secure service on the longer and more expensive ones. Service to Brazil, Argentina, Australasia, and the Orient, which was contracted for under its provisions, was discontinued for the reason that the contractors could not continue the service for the amount of compensation received. If we are to have service on the long routes in American steamers, more liberal compensation is necessary; and public policy forbids that the carrying of our mails to foreign countries and that the means of our merchants for reaching the markets of those countries should continue to be dependent upon the voluntary service of steamers flying foreign flags and operated by foreign OCEAN MAIL SERVICE. interests, and that we should continue to contribute to the maintenance of the vessels of other nations that which should go toward the development of the ocean mail service and the upbuilding of the mershant marine and auxiliary naval forces of our own nation. In order to show the inadequacy of the act of March 3, 1891, to provide for service to South America, the Philippines, Japan, China, and Australasia, I set forth here a statement of such service advertised for, indicating first those routes for service upon which the department received no proposals, and second, those routes for service upon which the department received proposals: 1. RouTes FOR SERVICE UPON WHICH THE DEPARTMENT RECEIVED No PROPOSALS. Term, ten years, except where otherwise specified. Schedules omitted.] Under advertisement of July 15, 1891.1 No. 11, “0. M. 8.” from New York to Buenos Aires, Argentine Republic, touching at Montevideo, Uruguay, once in three weeks, in vessels of the second class. No. 12, “0. M. 8.” from New York to Buenos Aires, Argentine Republic, touching at Montevideo, Uruguay, once in two weeks in vessels of the second class. No. 18, “0. M. 8.” from Newport News to Rio de Janeiro, Brazil, by St. Thomas, Martinique, Barbados, Para, Pernambuco, and Bahia, once in two weeks. in vessels of the third class. (Contract for five years.) No. 14, “0. M. 8.” from Norfolk to Rio de Janeiro, Brazil, by St. Thoms, Martinique, Barbados, Para, Pernambuco, and Bahia, once in two weeks in vessels of the third class. (Contract for five years.) No. 15, “0. M. 8.” from Newport News to Rio de Janeiro, Brazil, once in two weeks in vessels of the third class. (Contract for five years.) ¥o. 16, “0. M. 8.” from Norfolk to Rio de Janeiro, Brazil, once in two weeks, in vessels of the.third class. (Contract for five years.) No. 17, “0. M, 8.” from Newport News to Rio de Janeiro, Brazil, by St. Thomas, Martinique, Barbados, Para, Pernambuco, and Bahia, once a week in vessels of the third class. (Contract for five years.) No. 18, “0. M. 8.” from Norfolk to Ric de Janeiro, Brazil, by St. Thomas, Martinique, Barbados, Para, Pernambuco, and Bahia, once a week in vessels of the third class. (Contract for five years.) No. 19, “0. M. 8.” from Newport News to Rio de Janeiro, Brazil, by St. Thomas, Martinique, Barbados, Para, Pernambuco, and Bahia, once in two weeks in vessels of the third class for three years, and once a week for the remaining seven years, additional vessels to be of the second class. No. 20, “0. M. 8.” from Norfolk to Rio de Janeiro, Brazil, by 8t. Thomas, Martinique, Barbados, Para, Pernambuco, and Bahia, once in two weeks in vessels of the third class for three years, and once a week for the remaining seven years, the additional vessels to be of the second class. No. 21, “O. M. 8.” from Philadelphia to Buenos Aires, Argentine Republic, touching at Montevideo, Uruguay, once in three weeks, in vessels of the third class. fe. 22, “0. M. 8.” from En Tampa to La Guaira, by Curagao and Puerto Cabello, three times a month, in vessels of the fourth class. . (Contract for five years.) No. 23, “0. M. 8.” from Port Tampa to Santos, Brazil, by Para, Pernambuco, Bahia, and Rio de Janeiro, once in two weeks in vessels of the third class. No. 24, “0. M. 8.” from New Orleans to Rio de Janeiro, by Para, Pernambuco, and Bahia, once in two weeks in vessels of the third class. No. 25, “0. M. 8.” from New Orleans to Rio de Janeiro, by Para, Pernambuco, and Bahia, once in two weeks in vessels of the third class for the first three years, and of the second class for the remaining seven years. No. 26, “0. M. 8.” from Baltimore to Para, once in two weeks in vessels of the third class. No. 27, “0. M. 8.” from Galveston to Santos, Brazil, by Para, Pernambuco, Bahia, and Rio de Janeiro, once in two weeks in vessels of the third class. No. 28, “0. M. 8.” from New Orleans to Colon, touching (going and returning) at Greytown and Bluefields, Nicaragua, Port Limon, Costa Rica, Carthagena, Savanilla, and Santa Marta in Colombia, once in two weeks in vessels of the third class. (Contract for five years.) No. 29, <0. M. 8.” from Galveston to Colon, touching (going and returning) at Greytown and Bluefields, Nicaragua, Port Limon, Costa Rica, Carthagena, Savanilla, OCEAN MAIL SERVICE. and Santa Marta, in Colombia, once in two weeks in vessels of the fourth class. (Contract for five years.) No. 37, “0. M.S.” from New York to La Guaira, by Curacao and Puerto Cabello, three times each month, in vessels of the third class for the first three years, and of the second class for the remaining seven years. No. 38, “0. M. 8.” from New York to Curacao (touching at La Guaira and Mara-2aibo in Venezuela on return trip) once a week in vessels of the third class. No. 43, <Q. M. 8.” from New York to Colon, once a week in vessels of the third >lass for the first three years, and of the second class for the remaining seven years. No. 45, “0. M. 8.” from San Francisco to Panama, three times per month in vessels of the third class for the first three years, and once a week for the remaining seven years, the additional service to be in vessels of the second class. No. 46, “0. M. 8.” from San Francisco to Valparaiso, Chile, by San Diego, Cal., and Panama, touching at Buena Ventura, United States of Colombia, Guayaquil, Ecuador, Callao, Peru, and Iquique, Chile, once in two weeks in vessels of the third class for the first three years and in vessels of the second class for the remaining seven years, No. 48, “0. M. 8.” from Seattle to Hongkong, by Yokohama, once every twentyeight days, in vessels of the second class. No. 49, “0. M. 8.” from Tacoma to Hongkong, by Yokohama, once every twentyeight days, in vessels of the second class. No. 50, “0. M. 8.” from San Francisco to Sydney, New South Wales, Australia, by Auckland, New Zealand, and Honolulu, once in two weeks in vessels of the second class. No. 51, “0. M. 8.” from San Francisco to Sydney, New South Wales, Australia, by Auckland, New Zealand, and Honolulu, once in two weeks, in vessels of the third class for the first three vears, and of the second class for the remaining seven years, No. 52, “0. M. S.” from San Francisco to Melbourne, Australia, by Honolulu and Wellington, New Zealand, once in two weeks in vessels of the second class. No. 53, 0. M. 8.” from San Francisco to Melbourne, Australia, by Honolulu and Wellington, New Zealand, once in two weeks in vessels of the third class for the first three vears. and of the second class for the remaining seven years. g {Under advertisement of May 25, 1892.] No. 65, “0. M. 8.”” from New York to Rio de Janeiro, fortnightly, calling at St. Thomas, Martinique, Barbados, Para, Maranhao, Pernambuco, and Bahia, in vessels of the fourth class. (Contract for five years.) No. 66, “O. M.. 8.” from New York to Rio de Janeiro, calling at Newport News, St. Thomas, Martinique, Barbados, Para, Maranhao, Pernambuco, and Bahia, fortnightly, in vessels of the fourth class. (Contract for five years.) No. 68, “0. M. 8." from Newport News to Rio de Janeiro, calling at St. Thomas. Para, Pernambuco and Bahia, monthly, in ships of the fourth class. No. 72, “0. M. 8.” from San Francisco to Hongkong, calling at Yokohama, once in twenty-eight days, in vessels of the third class for the first year and fortnightly for the remaining eight years of the contract in vessels of the first class. Proposals were also invited for one-fourth of said service during said eight years in vessels of the second class and for three-fourths of said service in vessels of the first class during said eight years of the term. (Contract for nine years.) No. 73, “0. M, 8.” from Mobile to Colon, calling at Port Tampa, Greytown, Bluefields and Port Limon on the outward voyage, and returning, calling at Carthagena, Savanilla, and St. Marta, once in two weeks in vessels of the fourth class for the first two years and once every ten davs in vessels of the third class for the remaining eight years. 2. RouTEs FOR SERVICE UPON WHICH THE DEPARTMENT RECEIVED ProrosaLs. Term, ten years, except where otherwise specitied. Schedules omitted.] [Under advertisement of July 15, 1891.] No. 30, “0. M..8.” from Galveston to La Guaira, thirty-six trips per year for five years, in vessels of the fourth class. No. 86, “0. M. 8.” from New York to La Guaira, calling at Curacao and Puerto Cabello, thirty-six trips per year in vessels of the third class. No. 42, “0. M. 8.7” from New York to Colon, thirty-six trips per year for the first two years and fifty-two trips per year for the next eight years, in vessels of the third class. No. 44. “0. M. 8.” from San Francisco to Panama, thirty-six trips per year for the first three years in vessels of the fourth class and fifty-two trips per year for the next even vears in vessels of the third class. 10 OCEAN MAIL SERVICE. No. 47. #0. M. 8.” from San Francisco to Hongkong via Yokohama, thirteen trips per year for the first two years in vessels of the third class and twenty-six trips per year for the next eight years in vessels of the second class. [Under advertisement of May 25, 1892.] No. 64. “0. M. 8.” from New York to Buenos Aires and intermediate ports once every forty-five days for five years in vessels of the fourth class. No. 67. “0. 8. M.” from New York to Rio de Janeiro and intermediate ports once every twenty-four days for five years in vessels of the fourth class. [Under advertisement of December 20, 1899.] No. 75. “OQ. M. 8.” from San Francisco to Sydney, touching at Honolulu, a port in the Samoan Islands. and Auckland, once every three weeks in vessels of the second. class. [Under advertisement of September 26, 1901.] No. 37. “0. M. 8.” from New York to Maracaibo, touching at La Guaira and Curacao, once every two weeks in vessels of the fourth class. [Under advertisement of February 14, 1905.] No. 76. “0. M. 8.” from San Francisco to Tahiti ten trips per year in vessels of the third class. The following service, advertised and contracted for, was abandoned by the contractors during the term of contract for the reasons herein stated: [Under the advertisement of July 15, 1891.] No. 44, “0. M. 8.” from San Francisco, California, to Panama and intermediate ports, average distance 4,134} statute miles, thirty-six trips per year for the first three years, at a compensation of 66% cents per mile (fourth class) and fifty-two trips per year for seven years, at a compensation of $1 per mile (third class). Service to commence February 1, 1892. Contractor, the Pacific Mail Steamship Company. Service on the route was discontinued from September 30, 1893, at the request of the contractors, for the reason that they stated that they were unable to comply with all the provisions of the contract. The contract, of course, required sailings on fixed dates, the maintaining of a regular schedule, and a certain proportion of the crew to be American citizens, all of which resulted in additional cost to the steamship company and perhaps was not as advantageous, so far as the carrying of freight was concerned, as if the sailing dates and schedules maintained were made dependent merely on the exigencies of commerce. Attention is also called to the fact that the contract on route No. 42,0. M. S.”” from New York to Colon, 2,283 miles, 36 trips per year, at $1 a mile, in vessels of the third class, which was in operation from February 1, 1892, to March 31, 1894, was discontinued for the reasons above zet forth. No. 47, “0. M. 8.” from San Francisco, California, to Hongkong, via Yokohama, a distance of 7,342 statute miles, thirteen trips a year for the first two years, at a compensation of $1 a mile (third class), and twenty-six trips a year for eight years, at a compensation of $2 a mile (second class), service to commence February 1. 1892. Contractor, the Pacific Mail Steamship Company. The service on this route was discontinued from March 31, 1894, at the request of the contractor, for like reasons to those above given. {Under advertisement of May 25, 1892.] No. 64, “0. M. 8.” from New York to Buenos Aires and intermediate ports, distance 7,151 statute miles, once every forty-five days for five years. Compensation $% a mile (fourth class) traveled on each outward voyage. Service to commence December 10, 1892. Contractors. the United States and Brazil Mail Steamship Company, of New York Citv. OCEAN MAIL SERVICE. 11 No. 67, “0. M. 8.” from New York to Rio de Janeiro and intermediate ports, distance 6,127 statute miles, once every twenty-four days for five years. Compensation 3% a mile (fourth class) traveled on each outward voyage. Service to commence December 1, 1892. Contractor, the United States and Brazil Mail Steamship Company. The ‘service on these two routes, viz, Nos. 64 and 67, ceased in January, 1893, by reason of the failure of the contractors, and the contracts were annulled. [Under advertisement of December 20, 1899.] No. 75 “0. M.S.,” from San Francisco to Sydney, touching at Honolulu, a port in the Samoan Islands, and Auckland, once everv three weeks in vessels of the second rlass at two dollars a mile This contract was with the Oceanic Steamship Company, of San Francisco, Cal. The service was performed Sa 6, 1907, on which date it was suspended, and oe has been no service under the contract since. It has been reported to the department that the contracting company withdrew its vessels on account of financial conditions, the route having been operated at a heavy loss. It has been represented that the compensation allowed under the act of March 3, 1891, is inadequate as compared with the expense of operating the service. The company has stated that it — expect to resume service between the points covered by the contract in the event that adequate increase in compensation were provided for by legislation. Tt will be noted from the above that the contract ocean mail service from the United States to the countries named in the bill which the department has been enabled to contract for under the law of March 3, 1891, is very limited, and that most of such service contracted for has been discontinued on account of the inadequacy of the compensation provided by the law. Between the United States and South America we have but two such routes in operation, one from New York to La Guaira, and the other from New York to Maracaibo. Neither of these routes is 4,000 miles in length, and oy supply mail to practically only one South American country, and that situated in the northern part. There is no contract service now in operation under this law between the United States and any port in the Philippines, Japan, China, or Australasia. The importance of adequate mail service on lines of steamers carrying ie American flag to these parts of the world is evident. The following extract from the report of the United States consul at Santos, State of So Paulo, found in Daily Consular and Trade Reports of March 26, 1909, comments upon the importance of such a line to South America: A line of steamers flying the American flag, with first-class accommodations for passengers, making the trip from New York to the River Plata, stopping at the most important ports of Brazil, would not only be of great convenience but the greatest advertisement the United States could have. Such a line would improve the mail and passenger service between the two countries, would give an opportunity to the people of the United States to visit South America with ease and comfort without the necessity of traveling via Rurope, and would turn the tide of travel from this country to New York instead of to Europe, and, most of all, such a line would inspire confidence. There has been but one American merchant ship in this port in a vear—a sailing vessel in distress. The consul-general at Buenos Aires in his statemeut, found in the Daily Consular and Trade Reports of April 12, 1909. says: The average number of ships under the British flag entering and clearing from Buenos Aires for the past three years was 1,118, belonging to 32 companies. Of these lines onlv the Roval Mail carries mail regularly. for which it is subsidized 12 OCEAN MAIL SERVICE. . As an illustration of the importance of improving our mail and steamship service to the Orient in order that our mails and exports may reach the markets in that part of the world as quickly as those of European countries via a recently opened Trans-Siberian Railway, attention is invited to the following report from our consul-general at Hongkong dated March 3, 1909: ~T have the honor to report that the plan in vogue here with regard to handling mail from Hongkong to England via Shanghai and the Trans-Siberian Railway has so far been working out most successfully and bids fair to give English and German houses a decided advantage over American concerns. The ordinary mail time from here to England via Suez is about thirty days, whereas mails sent by the Siberian route have been making the transit in twenty-three to twenty-five days. As compared to this it should be noted that the average time of mail from here to San Francisco is twenty-seven or twenty-eight days. The Canadian Pacific Railway maintains a service of mail steamers once a month which makes the voyage to Vancouver in twenty-one or twenty-two days. To arrive at a true basis of comparison one should add to these periods of time for the American mails the time consumed in crossing the continent by rail. This would make the usual time thirtythree to thirty-five days to the points east of the Alleghenies in the case of mail sent via San Francisco, —_ twenty-six to thirty days for mail sent via Vancouver. Correspondence for Europe via Siberia is forwarded from Hongkong by all vessels sailing for Shanghai. The mails via Dalny and the Trans-Siberian Railway are dispatched at Shanghai about once a week by the British post-office. The steamers of the Oceanic Steamship Company, which were employed under a contract entered into in accordance with the act of March 3, 1891, from November 1, 1900, to March, 1907, between San Francisco, Honolulu, Samoa, New Zealand, and Australia, not only furnished needed mail facilities for transportation to those parts of the world, but were important factors in American commercial relations with Australia and the South Pacific. The amount paid by the department during the fiscal year ended June 30, 1909, for the transportation of the trans-Pacific mails and the mails to South American ports whose distance from New York or New Orleans is 4,000 miles or more is as follows: Trans-Pacific: To vessels of foreign register (857,221 pounds).... To vessels of United States register (612,523 pounds)... To ports in South America whose distance from New York or New Orleans is 4,000 miles or more: To vessels of foreign registry (761,262 pounds). 43,142. 99 To vessels of United States register........ SHEE FEENEY With the exception above noted in the statement, this service is what is called noncontract service, being paid for on the basis of weights carried at not exceeding the sea postage to foreign vessels and the sea and inland postage to American vessels. The trans-Pacific mails are dispatched with ordinary frequency and regularity and mails for the above-mentioned ports of South America are dispatched with ordinary frequency, but not with regularity, the steamers seldom sailing on the dates originally announced. If Senate bill 525 should become a law, the department would be enabled to advertise for service with a probability of receiving proposals therefor for the establishment of the following routes, service upon which would be of great advantage to this country: From New York to Rio de Janeiro, calling at Pernambuco, about 6,000 statute miles, once every twenty-eight days, 13 trips per year, cost $312,000 a year. a Includes $42,180 for the contract service between San I*rancisco and Tahiti under the act of March 3. 1891. OCEAN MAIL SERVICE. 13 From New York to Buenos Aires (Argentine Republic), calling at Montevideo (Uruguay), about 8,000 statute miles, once every twenty-eight, days, 13 trips a year, cost $416,000 a year. From New Orleans to Valparaiso (Chile) via Colon and Panama, calling at Guayaquil (Ecuador), Trujillo, Callao, and Mollendo (Peru), and Iquique and Antofagasta (Chile), about 4,000 statute miles, every twenty-eight days, 13 trips a year, cost $208,000 a year. From San Francisco or Seattle to Hongkong, China, calling at Honolulu, Yokohama (Japan), and Manila (Philippine Islands), about 8,000 statute miles, once every fourteen days, 26 trips a year, cost $832,000 a year. From San Francisco to Sydney (Australia), calling at Honolulu, Pago Pago (Samoan Islands), and Auckland (New Zealand), 8,330 statute miles, once every twenty-eight days, 13 trips a year, cost $433,160 a year. The contract for service on this route should provide for a sailing once every twenty-eight days to alternate with the sailings from Vancouver for Australia of the steamers of the Canadian-Australian line, which eur oe in every twenty-eight days. thereby giving us a fortnightly fast service to ustralia. In my judgment the routes above suggested are the most important possible under the proposed legislation. The total cost, provided service is secured on all the routes indicated, would be $2,201,160 a year, which, in my opinion, is not out of proportion to the advantages to the nation which would result from such service. It should be borne in mine that the action authorized by the bill under consideration would not add to the cost of any service now being performed under the provisions of the act of March 3, 1891. In considering the possible expenditures under the provisions of this bill, the amount of postal revenue collected by the United States on articles contained in the mails exchanged with foreign countries other than Canada and Mexico, the net cost of foreign mail service, and the surplus of revenue over such cost as estimated for a period of ten years ended June 30, 1909, should be given consideration. The following table shows these amounts: 1900. . _. 1901 _, 1902, | 1903. 1904 . Year. Receipts. h3, 467,139. 2¢ 3,005, 323. 6 3,737, 318.57 1,991,074. 5/ 5,005, 389. 1¢ 4711, 215.0 6,008, 807. 5° 6.579, 043. 48 6. 602, 648. 2 a 290 751. 0° Cost.a 2,014,537. 9¢ 1062, 537. 1¢ } 245, 625. 55 » 383, 588. 80 2,516, 053. 06 2,670, 798. 42 2,965, 624, 27 2,041,816. & 2,875,911. 7. 92 724 665.7 Surplus. $1,452, 601. 3C 042, 786. 4 1,491, 693. 0% 2, 608, 385. 74 2,579,336. 1! 2,040, 416. 60 3,043, 183. 32 3,637, 226. 81 3.816, 736. 48 2 486’ OR. 2F a The cost mentioned does not include any apportionment to the mails exchanged with foreign coun tries of any part of the general cost of transporting and handling mails within the United States. Tt will be seen that for each of the fiscal years ended June 30, 1906, 1907, 1908, and 1909, the surplus was $3,000,000 or more. Concerning this matter, the Hon. Elihu Root, then Secretary of State, at the Trans-Mississippi Commercial Congress, November 20, 1906, said: Every dollar of that $3,000,000 is made at the expense of the commerce of the United States.” What can be plainer than that the Government ought to expend at least the iiss that it gets from the ocean mail service in making the ocean mail service efficient Your attention is further invited to the language of President Roosevelt in his message to the Sixtieth Congress, first session, as follows: The time has come, in my judgment, to set to work seriously to make our ocean mail service correspond more closely with our recent commercial and political development. A beginning was made by the ocean mail act of March 8, 1891. but even at 14 OCEAN MAIL SERVICE. that time the act was known to be inadequate in various particulars. Since that time events have moved rapidly in our history. We have acquired Hawaii, the Philippines, and lesser islands of the Pacific. We are steadily prosecuting the great work of uniting at the Isthmus the waters of the Atlantic and the Pacific. To a greater extent than seemed probable even a dozen years ago, we may look to an American future on the sea worthy of the traditions of our past. As the first step in that direction, and the step most feasible at the present time, I recommend the extension of the ocean mail act of 1891. That act has stood for some years free from successful criticism of its principle and purpose. It was based on theories of the obligations of a great maritime nation, undisputed in our own land and followed by other nations since the beginning of steam navigation. Briefly those theories are, that it is the duty of a tn power so far as practicable to carry its ocean mail under its own flag; that the fast ocean steamships and their crews, required for such mail service, are valuable auxiliaries to the sea power of a nation. Furthermore, the construction of such steamships insures the maintenance in an efficient condition of the shipyards in which our battle ships must be built. The expenditures of public money for the performance of such necessary functions of Government is certainly warranted, nor is it necessary to dwell upon the incidental benefits to our foreign commerce, to the shipbuilding industry, and to ship owning and navigation which will accompany the discharge of these urgent public duties. though they, too, should have weight. * We riow pay under the act of 1891 $4 a statute mile outward to 20-knot American mail steamships, built according to naval plans, available as cruisers, and manned by Americans. Steamships of that speed are confined exclusively to trans-Atlantic trade with New York. To steamships of 16 knots or over only $2 a mile can be paid, and it is steamships of this speed and the type which are needed to meet the requirements of mail service to South America, Asia (including the Philippines), and to Australasia. I strongly recommend, therefore, a simple amendment to the oceanmail act of 1891 which shall authorize the Postmaster-General in his discretion to enter into contracts for the transportation of mails to the republics of South America, to Asia, the Philippines, and Australia at a rate not to exceed $4 a mile for steamships of 16 knots speed or upward, subject to the restrictions and obligations of the act of 1R01 And, finally, to the following statement from the inaugural address of President Taft: I sincerely hope that the incoming Congress will be alive, as it should be, to the importance of our foreign trade and of encouraging it in every way feasible. The possibility of increasing this trade in the Orient, in the Philippines, and in South America is known to everyone who has given the matter attention. The direct effect of free trade between this country and the Philippines will be marked upon our sale of cottons, agricultural machinery, and other manufactures. The necessity of the establishment of direct lines of steamers between North and South America has been brought to the attention of Congress by my predecessor and by Mr. Root before and after his noteworthy visit to that continent, and I sincerely hope that Congress may be induced to see the wisdom of a tentative effort to establish such lines bv the use of mail subsidies. Yours, very truly, Frank H. Hircucooxk, Postmaster-General. Hon. WiLLiam P. FrYE, Chairman Committee on Commerce, Tlnated States Senate. APPENDIX BR. STRONGLY INDORSED BY THE POST-OFFICE DEPARTMENT. Postmaster-General Cortelyou, in his report for 1905, said: Congress has authorized the Postmaster-General, by the act of 1891, to contract with the owners of American steamships for ocean mail service and has realized the mpracticability of commanding suitable steamships in the interest of the postal service OCEAN MAIL SERVICE. 15 alone by requiring that such steamers shall be of a size, class, and equipment which will promote commerce and become available as auxiliary cruisers of the navy in case of need. The compensation allowed to such steamers is found to be wholly inadequate to secure the proposals contemplated; hence advertisements from time to time have failed to develop any bids for this much-needed service. This is especially true'in regard to several of the countries of South America with which we have cordial relatione and which, for manifest reasons. should have direct mail connections with us. Irefer to Brazil and countries south of it. Complaints of serious delay to mails for these countries have become frequent and emphatic, leading to the Suggestion on the part of certain officials of the Government that for the present and until more satisiactory direct communication can be established important mails should be dispatched to South America by way of European ports and on European steamers, which would not only involve the United Statesin the payment of double transit rates to a foreign country for the'dispatch of its mails to countries of our own hemisphere, but might seriously embarrass the Government in the exchange of important official and diplomatic correspondence. The fact that the Government claims exclusive control of the transmission of letter mail throughout its own territory would seem to imply that it should secure and maintain the exclusive jurisdiction, when necessary, of its mails on the high seas. The unprecedented expansion of trade and foreign commerce justifies prompt considera tion of an adequate foreign mail service. Postmaster-General Meyer, in his report for 1908, said: With the exception of our service to Europe, the American ocean mail facilities do not compare favorably with those of the other great nations. In no other branch of our postal service has so little been done in the way of helpful legislation, no provision having been made for improving the conditions since the act of March 3, 1891. Under that act we now have a good service to J amaica, Cuba, and the Atlantic ports of Mexico in our own ships, subject to our own control; but the longer and more expensive routes are not a provided for, and with the exceptions above noted our mails to Central and South America, the West Indies, Australasia, and the Orient are almost wholly dependent on foreign steamers over which we have no jurisdiction. Last year the department recommended, and the Senate by a practically unanimous vote passed, a bill (S. 28) providing for more liberal treatment of American steamers carry-Ing the mails. That bill, which is awaiting the action of the House, provides in substance that the compensation of $4 a mile now allowable to 20-knot trans-Atlantic American mail steamers shall also be allowable to American steamers of not less than 16 knots on routes of 4,000 miles or more to South America, the Philippines, Japan, China, and Australasia. I earnestly recommend its early enactment into law. Manifest considerations of public policy forbid that we should continue to depend on the irregular service of steamers built abroad, owned abroad, and operated primarily by and for foreign interests. Now, even more than last year, we are dependent on the auxiliary cruisers and merchant vessels of other nations for the means of reaching the Philippines and the markets of Australasia and the Orient. Within two years the number of American steamers crossing the Pacific and available for carrying the mails has been reduced more than one-half. More liberal compensation to such steamers would appear to be imperative if they are to remain on the seas at all. In considering the question of additional cost, it should be borne in mind that while the expenses of the department as a whole have exceeded the revenues, our inter national mail service for many years has produced a large surplus. It would require several years to establish the new mail route contemplated in the bill (8. 28), for most of the fot steamers required would have to be built. The enactment of the bill would, therefore, involve no large expenditure in the immediate future. Incidentally the creation and development of new ocean mail lines would promote our export trade and our shipbuilding industry, and materially strengthen the auxiliary naval forces of our Government. 1 believe the American people expect and desire that their ocean mail service shall be equal to that of other nations, and I urgently recommend that Congress aid the department in making it so. , Postmaster-General Hitchcock, in his report for 1909, said: OCEAN MAIL SERVICE. The act of March 3, 1891, authorized the Postmaster-General to enter into contracts with American citizens for carrying the mails on American steamships between ports of the United States and such ports in foreign countries, Canada excepted, as in hie iudement would best subserve and promote the postal and rammercial interests of 16 OCEAN MAIL SERVICE. the United States. Under this statute the department has eight contracts, as follows: From New York to Puerto Cabello, Venezuela, calling at San Juan, Curacao, and La Guaira; from New York to Maracaibo, Venezuela, calling at La Guaira and Curagao; from New York to Southampton, England, calling at Plymouth and Cherbourg; from New York to Tuxpam, Mexico, calling at Habana, Progreso, and Tampico; from New York to Habana, Cuba; from Boston and Philadelphia to Port Antonio, Jamaica; from San Francisco to Tahiti; and from San Francisco to Sydney, New South Wales, calling at Honolulu, Pago Pago, and Auckland. Service is being performed under all these contracts except the last mentioned. All other mail service between the United States and foreign countries is wholly dependent upon steamships over whose sailings the department has no control. Of the Vessels conveying the United States mails to the Orient more than 70 per cent fly foreign flags, while not a single steamship now carrying our mails to Australasia and to South America, except the north coast, flies the American flag. This condition is not in keeping with the policy of other great commercial nations. The maintenance of frequent, fast, and regular mail service must be the first step in establishing closer trade relations between this country and foreign markets. The efforts of the department to secure and maintain a contract service under the provisions of the act of March 3, 1801, to ports of the Orient, of Australasia, and of South America, except the north coast, have been unsuccessful. Advertisements for service on 35 routes have been issued without results. Proposals were received and service was inaugurated on 6 routes, each more than 4,000 miles in length, but in avy case the service has been discontinued because the provisions of the law are not sulficiently liberal to insure its maintenance. On none of the long routes has a single contract been made for the carriage of the mail by a 20-knot or first-class ship. . The foreign trade of South America is $1,500,000,000 and is increasing at the rate of $100,000,000 a year, yet this country has only two contract routes to that continent, both of them to Venezuela. The Orient offers vast opportunities for trade, yet there is no contract service between the United States and the ports of the Philippines, Japan, China, or Australasia. The building and operation of fast modern steamships for service between European countries and Brazil and Argentina under the stimulus of government aid have placed the shipping interests of the United States at a marked disadvantage. The trip from Rio de Janeiro to Genoa in Italian ships is made in twelve days. English, French, and German ships. reach their respective ports in from fourteen to fifteen days. The time of the trip from New York to Rio de Janeiro in the fastest vessels carrying our trade is eighteen and one-half days, while others require as much as twenty-eight days. The voyage could be made in less than fourteen days in vessels of the type plying between Europe and Rio de Janeiro. The United States has service to Rio de Janeiro and southern Atlantic ports of South America about six times a month and to the northern ports of Brazil about three times a month, but the department has no voice in fixing the dates of sailing or the ports of call. From Europe to Brazil there are on the average four mail trips a week during the year, and from Brazil to Europe an average of five mail trips a week. Japan is establishing lines to Mexico and South America, and Chile to the western entrance of the Panama Canal. The report of the Bureau of Navigation of the Department of Commerce and Labor for the fiscal year 1909 shows a total of $46,900,000 as the amount now paid annually by foreign governments for mail subsidies, admiralty subventions, and. shipbuildin, and navigation bounties. Of this amount $28,254,537 is paid for mail subsidies and subsidies in connection with mails, distributed as follows: Great Britain and colonies France..... Japan. . Italy....... Germany. Spain. ........ Austria-Hunearv. Brozil. oceans Netherlands. Norway. . Sweden. Chile..... ri gypt.... Portucal a New law, 1910. b An additional sum of $30,000 is to be paid to the Japanese line. OCEAN MAIL SERVICE. 1% The amount paid during the last fiscal year for carrying the mail in American steamships under the provisions of the act of March 3, 1891, was $1,127,245.72. The difficulty in securing contract ocean mail gervice under the provisions of that act is experienced in connection with the longer and more expensive routes. If such service is to be secured, more liberal remuneration must be provided. It is highly desirable that our mail should be carried in American vessels and that the money paid by the Government for its transportation should go to American citizens, thus assisting in the development of a national merchant marine that can serve the double purpose of fostering the foreign trade of the country and providing an auxiliary naval orce. The passage of an act to authorize the Postmaster-General to pay for ocean mail service in vessels of the second class on routes to South America, the Philippines, Japan, China, and Australasia, 4,000 miles or more in length, outward voyage, at a rate per mile not exceeding the rate applicable to vessels of the first class as provided in the act of March 3, 1891, should enable the department to secure contract service to the ports of these countries. Advertisements could be issued as follows with reasonable prospects of securing proposals: (1) New York to Rio de Janeiro, about 6,000 miles, once in twenty-eight days, 13 times a year. (2) New York to Buenos Aires, calling at Montevideo, about 8,000 miles, once in twenty-eight days, 13 times a year, (3) New Orleans to Valparaiso via Colon, Panama, and ports of Ecuador, Peru, and Chile, about 4,000 miles, once in twenty-eight days, 13 times a year. (4) San Francisco or Seattle to Hongkong, calling at Honolulu, Yokohama, and Manila, about 8,000 miles, once in fourteen Si 26 times a year. (5) San Francisco to Sydney, calling at Honolulu, Pago Pago, and Auckland, 8,330 miles, once in twenty-eight days, 13 times a year; trips on this route to alternate with sailings from Vancouver for Australia, thus giving fortnightly fast service to Australia. The total cost, provided service were secured on all these routes, would be about $2,201,000 a year, which is not out of proportion to the resulting advantages to the nation, especially when it is considered that the estimated profit from the foreign mail service (not including the cost of handling between the United States exchange offices and offices of mailing and delivery in this country) is in excess of the combined cost of the suggested service and the service now in effect under the provisions of the act of March 3, 1891. Itshould be borne in mind that such a provision would not authorize additional cost for any service now performed under existing contracts. It is strongly recommended that favorable consideration be given legislation for adequate mail pay to American steamships on routes of this character. APPENDIX C. OPINIONS OF SECRETARIES OF COMMERCE AND LABOR. Secretary Cortelyou, in his report for 1903, said: For years the condition of our shipping in foreign trade has been a matter of concern to public-spirited Americans. It is virtually the only form of commercial and industrial activity in which the country has not recently shown creditable growth. Asan industry it holds exceptional relations to Government. From the nature of things, it has been exposed in an unusual degree to foreign competition, These and other considerations make it a fitting subject for our highest statesmanship. Strong appeals in its behalf by our Presidents from the time of General Grant and earnest efforts more recently in Congress have so far brought meager results. Congress has made it the duty of the Department of Commerce and Labor to foster, promote, and develop our shipping interests. Commerce and labor, howevey are not the only interests concerned in the improvement of our merchant shipping. Recent legislation and administration have aimed to render more effective the militia of the States as an important factor in the national defense. In our past wars the men and ships of the merchant marine were the reserves that put our navy on a war footing, and under like circumstances they must perform the same service. Government aid to the merchant marine, in its naval features, should conform closely to our general naval policy. The position among nations now occupied by the United S. Ren. 354, 61-2—2 18 OCEAN MAIL SERVICE. States warrants the maintenance of an ocean mail service equal to that of the United Kingdom or of Germany, in order that, like those countries, we may possess the best possible facilities of communication in our dealings with distant quarters of the world. By the establishment of such service other nations have helped to build up their shipbuilding industries and to strengthen their position on the sea. Expenditures for ocean mails, however, concern most directly the Post-Office Department, and must be adjusted according to the means Congress has placed at its disposal. Secretary Metcalf, in his report for 1906, said: I wish to lay stress upon the desirability of more intimate trade relations with the great republics of South America. In my opinion the most effective means of promoting such relations is the establishment of improved steamship communication between the continents. Fast and regular mails are a necessity of modern commerce, yet it is a matter of record that at times we must send our mails for Brazil, Argentina, and Uruguay by way of the ports of Burope and its superior subsidized mail steamships. The transmission of the mails, however, is within the province of another department and is mentioned here only as an incident. It is equally necessary to commerce that there shall be comfortable, regular, and quick passenger transit for the citizens of countries which desire to trade with one another. * * * A line of such vessels is somewhat in advance of our current trade requirements, and is quite beyond the powers of private enterprise unsupported. We shall look in vain for European steamship companies to establish such lines. Geographically the route is not unlike the British mail route from England to Cape Colony, which for some years has received a liberal subsidy, now amounting annually to $650,000. The subject is of more than sentimental interest to the South American Republics. Indeed, in adopting practical measures some of them are in advance of our own country. This autumn the Lloyd Brazilerio Steamship Company inaugurated, under the Brazilian flag, an experimental monthly line of steamers between Rio de Janeiro and New York. On the Pacific coast Peru voted this year an annual subsidy of $150,000 for fifteen years for the purpose of improving its steamship communication with the Isthmus of Panama and in order to be brought closer to our Atlantic and to European ports. The Chilean budget contains this year an appropriation of $95,000 for substantially the same purpose. The Argentine Government is considering a monthly subsidy of $25,000 a round trip for a fast mail line to Europe. Sixteen years ago at the Pan-American Congress held in Washington the representatives of the Republics of South America and the United States, ay themselves to the desirability of better steamship communication and to joint action in aid of establishing American lines. The Third International American Conference at Rio de Janeiro last August favored the elaboration of definite contracts with navigation lines to connect the principal ports of American countries. The United States has undertaken at great expense to construct the Panama Canal, thereby bringing Chile and Peru nearer to the United States than to Europe by the width of the Atlantic. The Republics of the eastern coast of South America can be brought nearer only by the establishment of superior steamship connections, and this, in my judgment, should receive the immediate attention of Congress. Secretary Straus, in his report for 1908, said: The Department of Commerce and Labor has a threefold interest in the improvement of our ocean-mail service. It is concerned in the development of American ocean-mail steamship lines, especially to South America and on the Pacific, because such steamships afford the opportunities for buyers and sellers to travel to and from this country, for the speedy and regular transmission of mail orders, and for the transportation of classes of manufactured goods for which especially we seek markets. nder modern conditions of international competition such opportunities must be made satisfactory, if our producers, both capitalists and laboring men, are to have a fair chance with those of other nations in Te relatively new markets of the world. That such opportunities are not now satisfactory is shown bv an unbroken line of undisputed testimony of competent witnesses. It is not now possible to travel with satisfactory speed and comfort from the United States to many South American countries or to Australasia unless the voyage is made by way of European or Canadian ports. Perhaps in time foreign steamship lines may find it to their profit to improve present conditions, but our reliance upon such foreign lines is already so great as to impair that independence on the sea which ought to be the aim of a country holding the present rank of the United States among nations. OCEAN MAIL SERVICE. 19 Since the adjournment of Congress the American battleship fleet has sailed nearly around the world on a mission of peace. The attending fleet of foreign colliers has been evidence to all the world that this voyage would have been well-nigh impossible in time of war, and that during hostilities the radius of action of our battle ships will be practically restricted to their limited coal-carrying capacity so long as our merchant marine on the sea remains dwarfed. An ocean-mail act will not, of course, lead directly to the construction of colliers. In the development of modern shipping corporations, however, the cargo steamer has usually Followed the faster ocean-mail steamer. Such has been our own experience under the ocean-mail act of 1891, in so far as its rates of compensation have sufficed to produce results, and such doubtless will be the effect of a satisfactory amendment to that act. The construction of such cargo steamers will still further increase our ocean transportation facilities for the benefit of the interior productive fields of the United States. _ Again, the cost of construction of ships is the initial, though not the sole, obstacle in the way of the development of the American merchant marine in over-sea trade. Our extensive programme of naval construction and our coastwise-trade law have Created our on shipyards on the seaboard, but it is not to be expected that they will always suffice to maintain them. The transportation of ocean mails is as legitlmate a function of government as the transportation of domestic mails. As such the ocean-mail service seems to me to be entitled to the support of the entire Congress, regardless of the general economic theories which may be held by individual members. If such support shall involve indirectly the increase of our fleet of cargocarrying ocean steamers and the upbuilding of domestic shipyards, then the gain to the whole country is the greater. . Congress in 1891 appreciated the importance of an American ocean-mail service. The act of that year has since stood free from successful criticism of its principle and purpose. It has produced results in certain directions and it has failed in other directions, where failure was foreseen by its advocates. We stopped with that act, while other nations have advanced. We should bring that legislation abreast of the day. In my report last year I stated: . “For many years it was entirely true that the energies of the country were so absorbed in its internal development that there was no surplus to devote to expansion of national trade and influence outside our coast lines. It is equally true that such la no longer the fact. The acquisition of insular territory, the construction of a powerful navy, and the investment of American capital abroad are all tokens of a tendency in national growth which will compel our country to become again a sea power, as it was when the Republic was only a fringe of States along the Atlantic seaboard.” Even under favorable conditions at least two years and possibly three years must elapse before American ocean-mail lines to South America south of the Caribbean can be established and a line to Australasia reestablished. Accordingly, I earnestly recommend the passage by the House of Representatives of the ocean-mail bill which has already passed the Senate. Secretary Nagel, in his report for 1909, said: _ With good reason we are building a powerful navy, and Congress has been generous in its appropriations for the purpose. The argument for an adequate merchant marine is fully as strong and should appeal with equal force to men of all parties. By the common consent of civilized nations the policy of discriminating duties was maid long ago. The conditions of our foreign commerce render it particularly inapplicable to our own situation. At the present time foreign governments are spending annually about $45,000,000 upon certain types of merchant steamships. The form of expenditure varies, of course, and the objects differ. In some instances the prime object ie to promote regular transportation facilities, in others to provide reserve cruisers or army transports, while the creation of a body of naval reserve seamen, the encouragement of shipbuilding, and regular and swilt carrying of ocean mails are reasons for other appropriations. Whatever the purpose, the result in each case is the same— the increase of the nation’s merchant marine and merchant seamen. It is not material that in some instances the amounts are described as subsidies and in others as pay: ments for services rendered. Nor do I deem the amounts and conditions of appro: priations essential. The fact, common to all these expenditures, suffices—that each nation desires certain types of ocean steamships under its own flag on certain routes, and where they do not exist it 1s willing to pay enough to get them, 20 OCEAN MAIIL, SERVICE. The creation of a merchant marine in foreign trade Jopinionats in any degree to our rank among nations must be a slow undertaking. The approaching completion of the Panama Canal, as already indicated, will create some favorable conditions, but it also imposes the obligation of early action. Several measures to this end are now pending in Congress. While differing in important respects, they all provide for an extension of the ocean mail act of 1891. The special reasons for American ocean mail steamship lines to South America, and by way of Hawaii to Australia and to Asia, including the Philippines, have been repeatedly set forth, as have been the reasons for increasing the per mile compensation of American ocean mail steamships, under a prescribed by the act of 1891, on routes to South America, Asia, and ustralia. APPENDIX D. E acts concerning foreign subsidies, subventions, and mail pay from Report of the Commissioner of Navigation for 1909.1 OCEAN-MAIL SYSTEMS. The weight of the ocean mails of the British Empire greatly exceeds the weight of the ocean mails of any other nation, the weight of the ocean mails of the United States ranking easily second. If the length of ocean-mail routes be considered, however, the difference between the British and American mails considerably lessens. The great volume of British international mails is carried across the Channel, a distance of only 20 miles, and then distributed throughout Europe. British mails even for Asia and Australia are taken across the Channel, thence by rail to the end of Italy, and begin their actual sea transportation 3,000 miles from England. The bulk of the mail exchanges of other European nations, of course, is carried by rail. All the mails of the United States for Europe must travel 3,000 miles across the Atlantic. Within a few years the United States has acquired territory more or less remote from the mainland, and has brought under the American flag a larger number of distant people than under similar conditions are under any flag except the British, French, or Dutch. In opulation and trade importance the colonies of the German Empire, %, example, may not be compared with Porto Rico, Hawali, the Philippines, Alaska, and the Nl Zone. A glance at any globe made In the last few years will show that for political reasons the United States has more need of a complete ocean-mail service under its own flag than any other nation except Great Britain. The same glance will show that geographically the United States, with its Atlantic and Pacific coasts, is better placed to use such an ocean-mail system of its own to push its foreign trade than are any of the nations using ocean-mail systems for that purpose, except Great Britain. Yet Germany, France, Italy, Austria-Hungary, Spain, the Netherlands, and of late years Japan have established ocean-mail systems of their own, more or less complete, at the cost needed to effect the result, while the United States, in spite of obvious political considerations and geographical advantages, having begun such a system in 1891, has halted for a dozen years to debate whether it is worth while to carry it out. If this were a country where the economic doctrine of laissez faire was generally accepted, there would be a possible explanation, OCEAN MATL SERVICE. 21 although the most consistent, continuous, and comprehensive application of ocean-mail subsidies has always been and is now by the British Empire, distinctively the leader among nations in free-trade policies. The United States, whatever the relative advantages to it: of high or low tariff may be, for many years has been the leader among nations in the application of protectionist doctrine. The essence of that doctrine 1s that legislation shall undertake to create industrial enterprises which would not otherwise exist. Outside of its purely commercial phases the doctrine aims to secure more or less complete industrial independence through diversification of national products. Such considerations, as hinted, have carried little or no weight in the British Empire, whose subsidy policy is based on the higher considerations of imperial defense and independence; for whatever the purpose, among the results of ocean-mail subsidies are seamen and ships adaptable to military purposes, if necessary, and shipyards capable of building a navy. These considerations at least are entitled to some weight with Americans who do not accept the economic doctrine of international trade prevalent with us. They are entitled to even greater weight with those who are disposed to dwell on the distinction between federal and state powers, for while the States have their militia to which as auxiliaries to the army Congress makes annually a contribution of about a million dollars, the States under the Constitution can do practically nothing to promote merchant shipping in foreign trade, whence must come our auxiliary maritime line. Historically, from the time of Thomas Jefferson up to the preparation for our war between the North and South, the most earnest advocates of pecuniary national aid to Anmerican merchant shipping and the fisheries were those identified politically with free trade and states rights. Up to 1890 our helplessness as a naval power was a possible explanation of our failure to provide an adequate American ocean mail system, but that reason no longer holds. By the harmonious action of men of all political beliefs in Congress we now rank as a naval power of the first class, and there is nowhere evident the disposition through niggardliness to lose that rank. The very fact, however, that that rank has been attained must raise questions in the minds of thoughtful men as to the future of our sea power. The most eminent naval writer of the generation has said: Can this navy be had without restoring the merchant shipping? It {s doubtful. History has proved that such a purely military sea power can be built up by a despot, as was done by Louis XIV; but though so fair seeming, experience showed that his navy was like a growth which, having no root, soon withers away. Butin a representative government any military expenditure must have a strongly represented interest behind it, convinced of its necessity. How such BR merchant shipping should be built up, whether by subsidies or free trade, by constant administration of tonics or by free movement in the open air, is not a military but an economical question. (Influence of Sea Power upon History, Capt. A. T, Mahan. U. 8. N,, p. 87.) American Oczan-Main Pay. Under existing law and conditions our expenditures for ocean mails are about equally divided between American steamships and steamships of the great maritime powers—England, France, Ger- 29 OCEAN MAIL SERVICE. many, and Japan—which in most cases by the very terms of their mail contracts are constituted parts of their respective navies in the event of war. Under present conditions it is morally certain that this measure of dependence will increase. The following statements, compiled from the reports of the Post-Office Department, show the changes in our ocean-mail pay made between 1905 and 1908 (figures for 1909 being not yet available) : PAYMENTS TO AMERICAN AND TFORFIGN STEAMSHIP TINES FOR TRANSPORTING QCEAN Marrs oF THE UNITED STATES, 1905 AND 1908. Mail pay. Company. Nationality, Route. 1905. 1908. American ships: American Linea..........c..cuene American ...... New York and Cuba Maile. ......".....do.. en Panama Railroad Companyd..... coco. alaiian.-. American Maila..........0... 0] ll meme Red ‘“‘D”ea...... ceenten a saa Pacific Mail. x whims Oceanica..... mm Miscellaneous... a Trans-Atlantic ..... Gulf of Mexico ..... Caribbean .......... OI. SO 3 od vem oscars Trans-Pacifle....... Miscellaneous ...... $662, 867 203, 260 112,064 116, 986 107, 458 88,411 341, 982 83. O88 $737, 352 203,115 191, 969 105, 667 105,128 65, 657 87,962 20, 425 Total. 1,666,116 1,467,255 Foreign ships: ORNATE cuvmnssivmumniesivasinsmns White Star... ....... North German Lloya . --. Hamburg-American .............. Compagnie Générale Transatlan- - tique. Toyo Kisen Kaisha .....ocauanao. Nippon Yusen Kaisha ... ., .._, Miscellaneous ..... rae! British ........ Aol. Ferman ........ vueilD wewsnn any French .........! Japanese ....... sirellB eis Miscellaneous. . Trans-Atlantic <n] eeelO iia wnn 0 mr smnnnnnesne] eenl0 iene Caribbean ........... Trans-Atlantie ..... Tete) Miscellaneous...... 153,115 264, 921 204,110 78,756 50, 868 189, 362 827,275 331, 562 90, 920 8,705 23,986 16, 002 170, 220 2,797 8, 881 135.716 Total. . 200 164 L,228 032 Grand total .. 2,565,280 «2,695, 287 8 Contracts under act of 1891 SUBSIDIES UNDER THE ACT OF 1891. ' Government llne, The expenditure of $1,467,255 in 1908 represents the entire amount paid by the Federal Government to American merchant ships, either in the form of subsidies under the act of 1891 or for ocean-mail pay. Of this amount $191,969 was paid to the steamship line to the Isthmus of Panama and the railroad, owned by the Government. Our Government, unlike any other government at the present time, maintains its own army transports and either builds its own colliers for the Navy or charters foreign colliers. Under the ocean-mail act of 1891 American vessels, under contracts prescribing rigid requirements, are paid at fixed rates per statute mile outward bound. The American Line for 20-knot steamships to Southampton is paid $4 a mile, and in 1895 its fleet of four steamships surpassed all others in trans-Atlantic trade. The New York and Cuba Mail is paid $1 a mile for its steamships, 16 to 18 knots, to Cuba and Mexico, although the law permits $2 a mile; the American Mail and Red D are paid $1 a mile for the mails to Jamaica and Venezuela, OOEAN MAIL SERVICE. 29 14-knot steamers (66% cents for two 12-knot steamers), and the Oceanic (Spreckels) Line formerly was paid $2 a mile for 16-knot steamships carrying mails from San Francisco to Australia via Honolulu and Samoa. The line was abandoned in 1907, but one 14-knot steamship to Tahiti is still paid $1 a mile. All other payments are according to the weight of mails carried. American steamers are paid sea and inland postage amounting to 80 cents a pound for letters and post cards and 8 cents a pound for other articles. Foreign steamers are paid 85 cents a pound (4 francs a kilogram) for letters and 44 cents a pound (50 centimes a kilogram) for other articles. ForereN SussIDIES AND MAIL Pay. The aggregate amount paid by foreign nations in the form of subsidies, ocean-mail pay, navigation, and construction bounties, admiralty subventions, naval-reserve appropriations, fisheries bounties, refund of Suez Canal tolls, and other forms of contribution, which directly or indirectly add to the volume of business under their respective national flags, is upward of $46,000,000 a year. RECENT CHANGES IN LAWS AND CONTRACTS. In the short time since the bill generally known as the “ Frye-Hanna-Payne bill” failed to pass the House of Representatives there has been a general revision of the subsidies of nations. During the interval of our halt Great Britain has executed the new Cunard contract and put an « all-British ” clause into her other principal mail contracts, Germany has increased the North German Lloyd subsidy, Japan has passed the law of April, 1909, Spain the law of June, 1909, Austria the law of February, 1907, and Italy is now revising her laws and mail-subsidy contracts. Holland, in 1907, subsidized for fifteen years a line to South America, and Norway is contemplating a subsidized line to the United States. In France revision of subsidies, bounties, laws, and contracts is almost incessant. The following table and pages of explanation, with the statements in Appendix N, are a short review of recent subsidy legislation abroad. The laws, regulations, contracts, and reports on which they are based were obtained by our embassies and legations abroad and are on file in the Bureau. They comprise over 1,000 pages in various languages, and only the briefest summary is possible within the limits of this report. Generally speaking, the nations of continental Europe own their railway systems, and governments, which fix freights and fares ashore, also fix maximum rates on their subsidized steamship lines. Military features, of course, are contained in nearly all the great foreign ocean-mail contracts, as in our law of 1891. Comparison of aggregate payments by nations and aggregate tonnage Is not useful, for in the last analysis, natural conditions are, of course, more effective in securing results than is legislation. Large expenditures under unfavorable conditions produce less results than less expenditure applied to natural advantages. The essential fact remains that every nation actually expends sums in proportion to its resources much in excess of the expenditures of the United States, in order to secure under its own flag efficient 21 OCEAN MAIL SERVICE, means of communication by sea with other countries. Following is the summary: TABLE OF FOREIGN SUBSIDIES, MAIL Pay, Bounties, Ero. Great Britain and colonies: Subsidies and mail pay (British Postmaster-General, 1908) ____ Cunard Admiralty subvention (1909) ___________________ Royal Naval Reserves (1909-10) ._____________________ Canadian subsidies and mail pay (1910) _________ I Canadian fisheries bounties (1909) _______________ mem Australian and New Zealand subsidies and mails (1909) _______ Cape Colony subsidy (1909)________ iim Jamaica subsidy (1909) _.__________. §3, 820, 454 729, 000 1,783, 620 1, 581, 800 160, 000 1, 263, 600 656, 910 194, 000 Total 9, 689, 384 France: Mail subsidies (1908)*___________ FE Navigation and armament (shipowners’) bounties (1808)*_____ Shipbuilding bounties (1908)____________________ Fisheries bounties ____ 5, 217, 037 6, 079, 500 2, 007, 200 120, 000 13, 423, 737 Total —________ Japan : Mail subsidies (new law, 1910) eo ___________________________ Shipbuilding bounties (1908) ________________ ti Fisheries bounties ____ 4, 379, 000 997, 700 37, 000 Total oo __ ~-.. 5,413,700 Italy: Mail subsidies (1908) ________________ [PE Navigation bounties (1909) _________________________________~ Shipbuilding bounties (1009)__________. J 2, 328, 917 677, 734 866, 266 Total oo 3, 872, 917 Spain : Mail subsidies (new law, 1910) ______________________ ________ 1, 858, 186 Navigation bounties (new law, 1910). ______________._______ 1, 291, 826 Shipbuilding bounties _______ --- Not ascertained. Total .—....__. meee 3,150, 012 Austria-Hungary : Austrian-Lloyd subsidy (1908) ____________ JE Suez Canal refunds (1008) .._________________________________ Navigation and shipbuilding bounties (1008) _____________ ____ Hungarian mail contracts (1908) ..____ oo 1, 450, 400 375, 000 880, 000 279,130 Total —_____ ____ _ ——— 2,984,530 Germany : Mail subsidies (1908) _______________ Mail pay (1907y____ ____ 1, 706, 460 594. 509 Total ._______ imme 2,301, 029 Russia : Subsidies (1908) Suez Canal refunds (1908). ____________________________ 1, 543, 578 3834. 750 Total _ 1. 878. 328 * Including $153.665 bounties to Messageries Maritimes. OCEAN MAIL SERVICE. Norway : Mail subsidies (1908-9)______________ Trade subsidies (1908-9' ___________ Tariff refunds (1908-9) Total Netherlands : Mail subsidies (1908) ____________ Naval reserves (1908) oo Total __ $561, 788 513, 555 26, S00 -- 1,102,143 841, 827 88, 184 880, 011 25 Sweden : South American and Asiatic subsidies (1909) cco 140, 000 Mail pay (1908) oo ____. eee 137, 752 State loans.._. ———. Not ascertained. Total om. Denmark: Trade subsidies and harbor dues exemption (1902) ___________ i 277, 752 145, 000 Belgium : Trade bounties (1908) _____ Pilotage refunds (1008) __ om ___. 23,160 32, 810 Total __ _ 55, 970 50, 000 Grand total ___ __ 45,224,513 Outside of Europe and Japan subsidies and mail payments have been reported for 1908 to the Bureau as follows: Chile, $253,195; Mexico, $75,000; Egypt, $54,512; Brazil, $1,300,000; in all, $1,682,707, making with the above a total of $46,907,220. In 1908 the United States spent $43,588.012 for transporting mails on railroads and $34.355.209 for rural delivery. Portugal: Mail subsidy (1908-9) __. GREAT BRITAIN. The total expenditure last year for the British navy, including £7,545202 for new construction, was estimated in this year’s Admiralty statement at £32,819,500 ($157,072,770), including $1,783,620 voted for the training and maintenance of seamen on merchant steamships as naval reserves. The total expenditure by the British Em-Dire, so far as ascertained, for subsidies, ocean-mail contracts, and Admiralty subventions (not including payments for merchant seamen as naval reserves just referred to) was L705 64. The item for merchant seamen may be viewed from two points, but for the present pur-Pose it is retained in place as a naval appropriation. The Empire aceordingly devotes in fact a sum for its merchant marine equal to about 5 per cent of its naval appropriations. Here it may be noted that Japan’s naval appropriations for the current year are $35,870,061, While her subsidies to the merchant marine are $4,416,000, not includ-Ing shipbuilding bounties, and Italy’s naval appropriations for the current year are $30,229,754 and her ocean-mail contracts, navigation and shipbuilding bounties amount to $3,872,917, or in each case equal 26 OCEAN MAIL SERVICE. to over 10 per cent of naval appropriations. The sums comprising the British totals above are: 1. For foreign and colonial mail service to British ships, $3,320,454, reported by the British postmaster-general, excluding £4,293 paid to the American Line. (Report of British Postmaster-General, 1908.) 9. Subsidies and mail payments of the Dominion of Canada, aggregating $1,581,800. . 3. Subsidies and mail payments of the Commonwealth of Australia and New Zealand, $1,263,600. 4. Mail subsidy of Cape Colony, $656,910. 5. Trade subsidy of Jamaica, $194,400. 6. Cunard admiralty subvention, $729,000. 7. Canadian fisheries bounties, $160,000. Other small mail and trade subsidies are paid by British colonies, such as the annual payment of £5,000 ($24,300) for steam communication between Australia and the Fiji Islands, but in the aggregate doubtless such items would not add more than $150,000 or $175,000 to the total. Included in mail payments stated by the British postmaster-general are certain contributions by the colonies, such as $292,183 by British India for the Bombay mails. (For 1909 report just received see Appendix I.) Whether Great Britain and other foreign nations pay subsidies has been a subject of debate in this country which has turned more on the definition of the word than on the essential political and commercial facts involved. Undoubtedly our very large appropriations for battle ships have stimulated American shipbuilding and have in fact created and maintained some of our principal seaboard shipyards. Such appropriations are for the national defense, yet in effect they operate as directly to encourage a domestic industry as do many paragraphs of our tariff law. If forced to it, we doubtless could buy war ships abroad, as do some nations, but it has seemed best to build them at home without regard to comparative cost. In the same manner it is doubtless true that the British ocean contract mail system, in operation in some of its features for seventy years, is primarily a political and military system, but it has none the less developed British shipbuilding and navigation and extended British commerce. Fair definitions of the word “subsidy ” were given in the report of the House of Commons committee on steamship subsidies in 1902: The word “subsidy” in itself requires some elucidation. Bounty, subsidy, gubvention, are all words denoting pecuniary aid. These terms are substantially interchangeable, but bounty is sometimes more expressly used for a payment made to encourage some branch of industry, trade, or agriculture, and is looked upon by many with greater suspicion, because the word also bears a meaning of generosity and liberality. Subsidy may have the same meaning, but it is sometimes employed to describe a payment made for value alleged to be fully received, as in a postal subsidy. Subvention has really the same meaning as subsidy, but it is apparently thought to be more euphemistie and to create less prejudice, and the payments made by the Admiralty to secure the right to obtain mercantile ships for use in time of war are often characterized as admiralty subventions. But in point of fact bounties, subsidies, or subventions are all terms used for payments made for some kind of value received, irrespective of the policy which may be involved; in one case the carriage of mails or provision of cable communication, in another the maintenance of national defense, or it may be the encouragement of a trade; and it sometimes occurs that where a given sum is granted as a subsidy it is very difficult indeed to analyze it into its component parts and lay down that so much of it is paid as a postal subsidy, so much for admiralty purposes, or so much for the encouragement of trade. Ostensibly, only foreign subsidies usually aim OCEAN MAIL SERVICE. 27 at all these three requirements. British policy has usually hitherto been to subsidize ships for postal or admiralty purposes only, and to exclude all consideration of trade interests, but even in the British case rapid postal communication has mainly, and in fact necessarily, followed the lines of great commercial traffic. _Fulton’s Clermont steamed up the Hudson in 1807, and trans-Atlantic steam navigation for commercial purposes began in 1838. At that time the steam tonnage of the United States (193,423 gross tons) was greater than the steam tonnage of the United Kingdom (74,684 net tons). Within three years Great Britain, by subsidies, began the establishment of steamship lines to North and South America, Asia, and Australia, The Cunard contract was signed in 1839, the Peninsular and Oriental contract in 1840, the Royal Mail and Pacific Steam Navigation contracts in 1841. These contracts, with modifications to suit the times, have been in force continuously, and taken together the subsidized ships constitute the framework of the British auxiliary navy. Past and present contracts have been reviewed or published in full in previous reports of this Bureau, and, without going into details, rn is made specially to the reports for 1899, 1901, and 1903. ‘Regarded solely by themselves these contracts may be accepted in the sense given by one of our most careful students of economics (President Arthur T. Hadley, of Yale College) : Of England's mail-contract system it may be fairly said: (1) That its aims are political and not commercial. It is a necessity for England to have constant communication with ber colonies, and she has spent large sums for this object. It is almost equally important for her to have an efficient naval reserve and transport service, and she has made her mail contracts one among several means toward this end. (2) That the incidental commercial advantage to the subsidized companies has not been generally great except at a very early period of the system. This is evinced by the fact that rival unsubsidized lines have been equally successful and that the largest contracts have been on terms which made them a matter of indifference to the party receiving them. Regarded in their relations to British industry and commerce, it is equally plain that the mail-contract system, together with necessary naval construction, helped to make Great Britain the principal shipbuilding country and has kept her in the lead in mercantile navigation. The entire willingness of Parliament to spend any amount necessary to reassert British supremacy on the Atlantic when the speed record had in fact been won by Germany and when there seemed to be reason to look for American legislation with a view to competition on the sea was shown by the terms of the Cunard contract of 1903. The principal British ocean-mail contracts made for a term of years are as follows: PrINciPAL BRITISH OCEAN-MAIL CONTRACTS. Company. L. Peninsular and Oriental 8S. 8. Co. 2. Cunard 8. 8. C0. ouevunnsn 8. Union Castle Mail 8.8. Co. 4. Elder Dempster CO ....... 3. Posing Steam Navigation 0. 8. Royal Mail 8.8. Co....... A Orient Steam Navigation 0. Total cvernoncuananann Route. England-India-China-Australia. Ingland-New York .. Zngland-South Africa. ingland-Jamaica .... England-South America. West Indies .......... England-Australia ... Duration. [908-1915 907-1927 .900-1910 1901-1911 1900-1910 1907-1917 1910-1920 Voyages ynnually 104 Speed. Knots. 15-18 52 20-28 52 16 2 18 261 15 2%. 14 2 16 Subsidy. £305. 000=81,484, 130 218,000= 1,060,788 135.000= 656,910 40,000= 194,640 32,500= 158,146 265,000= 121,650 170.000= 827,220 905 500= 4,503,482 28 OCEAN MAIL SERVICE. For convenience the admiralty subvention of £150,000 and the mail subsidy of £68,000 to the Cunard Company have been stated together. For the same reason the Castle Mail contract with the Cape Sry, the Elder Dempster contract with Jamaica, and the Orient contract with the Commonwealth of Australia are included in the table. The subsidy to the Peninsular and Oriental about suffices to pay the Suez Canal dues on all its ships. These dues in 1907 were £338,000, the subsidy £332,784. The entire fleet of the company does not, of course, participate in the mail contract. Ships built under the mail contract are subsidized for years, in time are superseded by better ships, and the older ships are elsewhere employed. So, too, the company has steamers mainly devoted to cargo. The British mails for Asia and Australia are sent across by Channel ferries to Calais, thence by rail to Brindisi, and thence by two small and fast Peninsular and Oriental steamers to Egypt, where they are put aboard the liners as they enter the Suez Canal. The contract calls for the following routes: 1. Once a week from Brindisi to Bombay (via the Suez Canal), calling at Aden, and from Bombay to Brindisi (via the Suez Canal), calling at Aden. 9. Once in every two weeks from Brindisi to Shanghai, calling at Aden, Colombo, Penang, Singapore, and Hongkong, and from Shanghai to Brindisi, ealling at Hongkong, Singapore, Penang, Colombo, and Aden. 3. Once in every two weeks from Brindisi to Adelaide, calling at Aden, Colombo, and Fremantle, and from Adelaide to Brindisi, calling at Fremantle, Colombo, and Aden. On the entire mileage from England the new subsidy for the Peninsular and Oriental works out at the rate of $2.40 per nautical mile outward for steamships which vary from 15 to 18 and 19 knots. Such ships under the American law of 1891 would be entitled to $2.30 a mile. Presented in another way, the subsidy of £332,784 in 1907 was about 8 per cent on £2,320,000 capital stock and £1,800,000 debentures; or, again, receipts less subsidy were £2.,783,246, while expenses were £2,889,102, the subsidy thus being necessary to pay 3% per cent interest on the bonds and any profit to the shareholders. The principal features of the new twenty-year Cunard subsidy contract are generally understood, and the details were printed in the Bureau’s report for 1903 (pp. 48-52 and 224-268). The subsidy is equivalent to $20,000, in round numbers, for an outward voyage of 8,000 miles. The ten-year contract with the Union-Castle Mail Steamship Company is in the name of the colony of the Cape of Good Hope, but is part of the imperial mail system. For a voyage every week the company receives annually $656,910, or $12,600 a voyage. As the distance from Southampton to Cape Town Is as nearly as may be 6,000 nautical miles, the pay is as nearly as may be at the rate of $2.10 per nautical mile, compared with $2.30 which could be paid under our act of 1891 to steamships of from 16 to 18 knots speed, such as are employed in this service. The distance from New York to Buenos Aires "(5,868 nautical miles) is nearly that from Southampton to Cape Town, and the two voyages offer other obvious resemblances as well as obvious diélerences. If $2.10 a mile be needed to maintain a £rat-class mail and passenger steamship line long established between OCEAN MAIL SERVICE. 29 England and her colonies in South Africa, it is plain that $2.30 could not suffice to establish at the outset a similar line from New York to Brazil or Argentina. For the crews the British ships must rely on the British labor market, the American ships on the American labor market, and no changes in legislation could fix American wages at the British level, even if anyone were disposed to make the effort. The trade of Cape Colony sets toward England; the passenger trade of South America sets toward Europe, and if it be desired to divert any portion of it to the United States sacrifice must be made in order ultimately to secure the benefits of such diversion. In fact, there are no means of travel between the United States and Brazil and Argentina comparable for a moment to the Castle Mail steamships, and there seems to be no likelihood of such means being established by foreign capital. The Castle Mail contract is in itself an exposition of reasons why the United States should increase the mail subsidies possible under the act of 1891 to American lines to South America. Further evidence to the same effect is afforded by the contract of the colony of Jamaica with the Elder Dempster Company (Report for 1901, pp. 270-275). The sum of $7,500 a voyage is paid to British ships to divert trade to England which under normal conditions would come to the United States. The subsidy, of course, is one of the links by which the parts of the British Empire are bound together, but its trade features can not be ignored. Precisely the same line of argument, if it has merit elsewhere, would warrant the United States in much greater expenditures to unite more closely Hawaii, the Philippines, and Samoa to our Pacific coast. The J amaica subsidy pays 81.80 a mile outward for 15-knot ships, to which we allow only $1.15. The present Royal Mail contract is merely for connections among the lesser islands of the British West Indies, with incidental connections through the Isthmus with the west coast of South America. With the completion of the Panama Canal conditions will so change that this contract has scarcely temporary interest. Earlier contracts of the Royal Mail have been considered in other reports of the Bureau. The new ten-year contract of the Commonwealth of Australia with the Orient Steam Navigation Company provides a subsidy of $31,800 a voyage to give the Commonwealth, together with England’s contract with the Peninsular and Oriental, weekly mail connections with Europe. The subsidy is in form a mail contract, but the expeditious route for the mails between Australia and the capitals of urope is by fast steamer across the Pacific to San Francisco, thence by rail to New York, and thence by fast trans-Atlantic steamer. A few years ago there was an American ocean-mail line to Australia, and the mails were in fact dispatched by that route. The subsidy to be paid to the slower Orient steamship route is at the rate of $2.60 per mile (handicapped, however, by Suez Canal tolls), while the American line to Australia, stopping also at Honolulu, was paid $2.30. All the natural advantages favor an American trans-Pacific mail line to Australia as compared with a British line through Suez. We owe some consideration to Hawaii, which under our Constitution and laws probably can not be privileged to use Japanese subsidized mail steamers in the coasting trade. If we intend to keep our stations in Samoa, some steamship communication with them should 30 OCEAN MAIL SERVICE. be provided, for now there is virtually none. The payment of the Orient subsidy by Australia, coupled with a similar payment to the Peninsular and Oriental by England, in view of geographical considerations, would doubtless long ago have led any other of the maritime powers placed as is the United States to subsidize adequately a mail line to Australia, as even Germany, France, and Japan have done. TRANS-PACIFIC SUBSIDY. The situation has been appreciated by the Dominion of Canada and the Commonwealth of Australia, which jointly, in 1907, entered into a subsidy contract with the Union Steamship Company of New Zealand for a mail steamer once every four weeks between Sydney and Vancouver. The Canadian government pays £37,090 a year and the Australian government £2,048 a voyage, or £25,610 a year, in all, £62,700, or $304,722, annually. This subsidy is as nearly as may be equal to $299,862 paid by the United States under the act of 1891 to the Oceanic (Spreckels) Line from San Francisco to Australia. The distances by the two Toutes are substantially the same, as the American line made a slight diversion to Samoa; the British line to Fiji. The American contract, however, called for a voyage once in three weeks; the provincial contract once in four weeks. The American steamers were 16 knots; while the British ships are 14 and 15 knots, and new ships only are required to make 16 knots. As the British ships cost less to build and man, competition under such terms was not practicable. Whatever the purpose, a result of this British colonial subsidy has been to clear the South Pacific of American ships, to render more difficult even now the restoration of direct mail and trade relations between the United States and Australia, and to turn from the United States to Canada and its railroads, manufacturers, and merchants, not only Australian trade, but a share of our trade with Honolulu. To remove doubt on this score, the Canadian subsidy contract contains this clause: 7. The said steamships shall not, during the continuance of this contract, call at any port in or of the United States of America (Honolulu only excepted). CANADA AND AUSTRALIA. The Dominion of Canada, with total annual receipts aggregating $96,000,000, deems it wise to expend $1,581,800 on its steam mail services (see Appendix N), and devotes the income from the Halifax award of $5,500,000 to bounties for the fisheries. Canada also in 1908 paid to the Allan Line a subsidy of $133.333 for a mail service to France. In 1908 the joint contract between the Canadian Pacific Railway and Canada and the United Kingdom, by which a subsidy of £60,000 had been guaranteed for many years to the three Empress steamers of the corporation, was revised, and a new contract, to remain in force until April, 1911, was executed. Under this contract Canada pays annually £20,000 and the United Kingdom £25,000, in all $218,700. The mails are to be carried once in three weeks during the epymmer and once in four weeks during the winter, or 15 voyages a OCEAN MAIL SERVICE. 31 year. From Liverpool to Hongkong, by way of Quebec, the mail time is fixed at 818 hours, or by way of Halifax or St. John, in the winter, at 853 hours. The Canadian budget for the year contains an appropriation of $600,000 for the subsidy to the Allan Line steamships for carrying the mails from Canada to Liverpool. The contract made in 1906 will expire in 1912, when it is to be renewed for five years. By it the company agrees to carry the mails weekly to Liverpool from Montreal during the summer and from Halifax when the St. Lawrence is closed by ice. At present the Victorian and the Virginian, 18-knot steamers of 10,000 gross tons, the best ships of the Allan fleet, and the Canadian Pacific steamers Empress of Britain and Empress of Ireland, each 14,200 gross, 20 knots speed, are employed. Under the contract, for each 18-knot voyage the company receives £3,000 ($14,580). The American Line, for its 20-knot steamships 87. Louis and St. Paul, each 11,600 gross tons, now receives $14,557 a voyage under our mail act of 1891, Canada’s pay being almost idenfical by coincidence, accidental or designed. The American ships are of the same average tonnage, 2 knots faster than the Allan liners, and the distance from New York to Southampton is 8,100 miles, compared with 2,772 from Montreal to Liverpool. When the Canadian voyage begins at Halifax the subsidy is reduced £500. In principle and in essential details the American and Canadian contracts seem similar, and no reason appears why the American proposition should be characterized in economics differently from the Canadian. In fact both are subsidies to promote shipping and trade, but for relatively the same expenditure the United States receives larger incidental benefits in the promotion of shipbuilding and in the military phases of navigation. The contract is interesting as evidence that Canada, with less resources than the United States, has gone further in the promotion of British shipping than our own country has been disposed to go in behalf of American shipping. According to the Canadian press, the Dominion parliament this winter may seek to induce two or more of the great British builders to establish shipyards in Canada. Since 1908 Canada has paid an annual subsidy of $146,000 to the Elder Dempster Steamship Company under a five-year contract for a monthly “mail” line of 10-knot steamers from Montreal or Halifax to Cape Town, South Africa. The payment is thus $12,000 in round numbers for a voyage outward of 7,000 miles, or at a rate of $1.70 a mile. The United States does not consider a 10-knot ship a mail ship, and in fact the Canadian mails to South Africa could be carried much faster by subsidized Allan Line steamers to England or by rail to New York, thence by subsidized Cunarders to Southampton, and thence by the subsidized Castle Mail Line to South Africa. The Canadian subsidy, in fact, is a trade subsidy, and by its terms provides that shippers of Canadian goods and products “shall always have precedence for such Canadian goods and products over all other shippers.” The contract, of course, requires the steamers to go “direct ” to South Africa, thus excluding exports from the United States. The steamship company further is forbidden to use American coal, which could readily be obtained at Norfolk or Newport 39, OCEAN MAIL SERVICE. News, and is required in effect to take British coal in the West Indies. for among its terms the contract provides: Subject to the due performance by the contractors of the obligations imposed on them by this contract, they shall be at liberty in sailing from the Canadian ports to the South African ports to call solely for the purpose of coaling at any ports not situate on the continent of America. Canada also pays a subsidy of $50,000 on the Atlantic and $50,000 on the Pacific for monthly trade connections with Mexico. Ostensibly these are mail contracts, but, of course, Canadian mails for Mexico go by rail through the United States. The Elder Dempster Company holds the Atlantic contract, and T. H. Worsnop, of London, the Pacific contract. The Canadian subsidy in each case is-conditioned on an equal subsidy from Mexico. On the Atlantic for each monthly voyage Canada pays $4,166.66 and Mexico an equal amount, the distance from Montreal, via Cuba, to Veracruz being 3,400 miles. The Canadian subsidy is thus at the rate of $1.20 a mile outward, and the joint subsidy is double that rate. The United States pays $1.15 a mile outward under the act of 1891 to the New York and Cuba Mail Steamship Company for carrying the mails to Cuba and Mexico. Its steamers are 17 and 18 knots and 6,000 gross tons. The subsidized British ships are 10 and 11 knots and from 2,000 to 4,000 gross tons. The terms of the Pacific subsidy for the British line from Vancouver to Acapulco and Salina Cruz are substantially the same as the Canadian-Atlantic. As the Mexican Government has reduced its subsidy to $25,000, Canada is considering an increase of its subsidy to $75,000. Canada also pays a subsidy of $65,700 for a British line to Jamaica, the contract containing this provision: The steamers employed in carrying out the provision of this contract shall not on any of their voyages either outwards or homewards call at any port in the United States of America. The details of Canadian subsidies are to be found in the report of the Canadian department of trade and commerce, Part ITI, entitled « Subsidized Steamship Services.” This valuable document of 127 pages is instructive to all, and especially to those believing that British ships and trade are not subsidized. The Commonwealth of Australia, besides £170,000 to the Orient Steam Navigation Company, and £26,625 to the Union Steamship Company of New Zealand for its share in the Canadian mail contract, pays through its several states various smaller subsidies for mail and trade connections between the states and with New Zealand and other islands of the Pacific, and with the East, the full details of which have not been ascertained, though they aggregate upward of $300,000 annually. Thus New Zealand pays $3,402 each for ten voyages ($34,020) of the Union Steamship Company from Wellington to Tahiti (2,380 miles) to connect with the Spreckels steamer from San Francisco to Tahiti (8,630 miles), which receives $42,180 from the United States. The New Zealand subsidy is at a higher rate than the American. JAPAN. Immediately after the war with China, Japan passed her navigation and construction bounty acts of October 1, 1896, which were OCEAN MAIL SERVICE. 83 printed in the Bureau’s report for that year. In that report it was stated : Our maritime rank on the Pacific is now threatened by a new rival, Japan, which, under liberal and progressive laws, has just established a trans-Pacific Steamship line to the United States, and with the cooperation of American capital is preparing to extend rapidly the service. * * * We have already Been the American flag almost wholly disappear from the mid-Atlantic, save 4s borne by the mail steamers of the American Line, and the figures just presented show that the earrying trade of the Pacific is rapidly slipping from us. * % % Jt seems reasonably certain that in the immediate future this trade will grow to great proportions. For the control of this trade the United States enjoys obvious natural advantages. The entry of Japan into competition for its control is a warning that a prescient nation appreciates opportunities for trade and maritime rank of which we have thus far been neglectful, and by progressive legislation hopes to overcome those advantages. _ Since that time every opportunity for maritime growth has been improved by Japan. When her laws of 1896 went into operation she had 53 ocean steel steamships, aggregating 106,383 gross tons. That merchant fleet, almost wholly British-built, in large part had been assembled to meet the need of army transportation in the coming war, as five years before Japan had had only 13 ocean steel steamers of 27,701 gross tons. The Japanese list of merchant vessels for 1909 gives the names of 206 ocean steamships of over 2,000 gross tons, aggregating 725,010 gross tons, while since 1895 the entire commercial fleet of Japan has increased from 360,695 tons to 1,288,053 tons. The Japanese legislation of 1896 gave a double stimulus to domestic shipbuilding by providing construction bounties for steel steamships oy marine engines built in Japan and by excluding from the navigation subsidies foreign-built ships over five years old. The current Japanese list shows 18 steel steamships, each over 6,000 tons, built in Japan, and practically all of her very large and fast ocean-mail steamships are now built at home. Last year the Mitsubishi yard, at Nagasaki, turned out the ZTenyo Mary and Chiyo Maru, sister ships of 13,450 gross tons, 575 feet over all, with accommodations for 1,100 passengers, and capacity for 8,000 tons of cargo. These ships are propelled by triple screws driven by turbine engines, using liquid fuel, and have attained 21 knots speed. They are, of course, equipped with the Teishinsho wireless, and throug bulkhead arrangements are practically unsinkable. They were oh in two years, and for military purposes have no equals on the acific. The Japanese shipbuilding bounty law provides a bounty of 20 yen ($10) per gross ton for steel steamships over 1,000 gross tons, which for ships like those described would amount to $130,000, and also 5 ven ($2.50) for each indicated horsepower developed by Japanese machinery, adding $75,000 more in these cases, thus entitling the ships to about $200,000 each on the completion of their trial trips. While Japan has no considerable iron mines of her own, she can transport iron ore to her furnaces from the mines of southern China lying along the banks of the Yangtze River, by sail vessels, at lower rates of freight than those for which we can carry Lake Superior ore to Pittsburg. The development of the coal mines of Manchuria has begun, Indeed, Japan has already established herself as a builder 8. Rep. 354, 61-2—3 34 OCEAN MAIL SERVICE. of steel merchant steamships. That the Japanese legislation of 1896 has accomplished the results desired is shown by the facility with which she threw vast armies into Korea and Manchuria during the war with Russia, saving perhaps her future as a nation. The appropriation in the Japanese budget for the year ended March 31, 1909, included the following in yen (yen=>50 cents) : Yen. 1, 995, 400 3, 483, 955 2, 673, 895 1,013, 880 654, 030 425. 782 Shipbuilding bounties em mee Navigation bounties mom mmm Subsidy to European line femme so essen me Subsidy to San Francisco line moomoo meme Subsidy to Seattle line. come ———— Subsidy to Australian line e-em ee Subsidies to various lines to Korea. Dalny. China, and other Asiatic and domestic Ports ee me 2,118,713 Total. — em me meme 12, 365, 655 In order to reduce expenses, the Japanese diet last April revised soth the shipbuilding bounty act and the navigation-bounty act of 1896. The new laws will take effect January 1, 1910. These laws ire printed in Appendix N. The only material change in the shipbuilding bounty act is to limit its benefits to steel vessels of over 1,000 tons. The minimum limit has been 700 tons. The navigation-bounty act is materially changed. The subsidies provided are restricted to steel steamships of over 8,000 gross tons and over 12 knots speed in regular communication with the United States, Europe, South America, and Australia. Senate Document No. 152, Sixty-first Congress, first session, contains a valuable report made to the State Department on this legislation. From this report it appears that beginning with 1910 Japan will expend 8,758,004 yen ($4,379,000) annually on its means of soup communication with the continents named. The details of the future arrangements for the Australian line are not given, but the following table presents at a glance the services to be rendered on the five routes named: SUBSIDIZED JAPANESE MAiL RoUTES. Ships. Lina, Europe cc.vencenns Jan Franciseo.... Tacoma cavecnce--deattle ...o.-.one. Jouth America ... Company. Jippon Yusen. Toyo Kisen ... Jsaka Shosan. Jippon Yusen. Tovo Kisen ... Tvpe ‘ships. Kamo Maru ../ Tenyo Maru.. New .ooaceeean Aki Maru.... NOW oo. Voyages per Tear. 26 15 26 12 3 Miles per trip. Nurn-, ber. Speed. Gross tons. Total tonnage. Knots. 25, 000 11 15-16 , 6,600-8,600 ' 84,600 15, 000 3 21 18, 500 40, 500 12, 500 6 14 | 6,200 87,200 12,500 3 15 6,400 | 19,200 95. 000 3 18 Bb, 200-9, 300 23, 800 Contracts under the terms stated above will take the place of pres-.nt contracts at the beginning of 1910. The present contract with the Australian line will not lapse until April, 1911, when a contract will probably be made with the Osaka Shosan Kaisha for three steamships aggregating 14,500 tons at an amount near the present sum, 473,092 yen. The following table shows at a glance the amount of subsidy in yen hereafter to be paid to each of the five principal 35 lines, and the ordinary commercial receipts and expenditures of those lines as estimated by the Japanese authorities: SUBSIDIES. RECEIPTS, AND EXPENSES. [ine, Europe... ........ 3an Francisco..... Tacoma ........... Seattle .... 101000 South America. ... Receipts. Fen. 3, 756, 091, R, 900, 000 |, 562, 000 |, 072,229 777.200 income. Iubsidies, Yen. 3,226, 794 2, 680, 687 L, 210, 740 476, 180 690, b11 Total. Yen. 3,982, 885 5,530, 637 2,772,740 1,548, 409 1,467,711 Expenses, Fen. 6, 850, 212 8, 870, 000 1,778, 509 1,227,607 849, 040 Expenditures. Reserves and interest. Yen. 2, 383,762 2,891, 660 1, 200, 63€ 436, 604 808, 399 Total. Yen. 9, 235, 974 3, 761, 560 2,979, 145 1,664,211 1. 657.439 Net deficit. Yen. 253, 088 180, 873 206, 405 115, 802 189, 728 Even with the large subsidies proposed, each line shows an apparent small deficit which can be overcome only by economy in administration. In the case of the lines to the United States our payments for American mails will reduce somewhat this deficit. We paid to the Toyo Yusen Kaisha $28,986 in 1908, and $16,002 to the Nippon Y usen Kaisha. The figures for 1909 will not be available for some weeks. The figures show that in each case the Japanese Government apparently deems it justifiable to invest national capital in enterprises that otherwise would be losing and in fact would not be undertaken. The commercial receipts for the San Francisco line, for example, are estimated at 8,900,000 yen, while the expenses are 6,761,560 yen. The subsidy proposed is 2,680,687 yen, or $1,340,343. The subsidy is thus 40 per cent of the total receipts of the San Francisco line, and even more in the case of the new line to South America. At first blush the figures point to a commercial impossibility, but commercial results are not alone to be considered. In the United States, for example, second-class mail matter comprises 64 per cent of the weight of American mails, but yields less than 6 per cent of our postal revenues. The business and domestic correspondence of the country, which contributes 75 per cent of our postal revenues but amounts to only 13 per cent of the weight of the mails, is thus taxed for the benefit of second-class matter. As a commercial proposition the postal subsidy to newspapers and magazines needs only to be stated to fall of its own weight, yet, as has been pointed out by the Postmaster-General : The charge for carrying second-class mail matter was Intentionally fixed below cost for the purpose of encouraging the dissemination of information of educational value to the people, and the benefit of the cheap rates of postage is bassed on to the subscriber in a lower subscription price than would otherwise be possible. The advantages which Japan expects to derive from these investments in the way of insurance against war, the development of shipbuilding, and the promotion of commerce are palpable, even though they can not be expressed precisely in yen or dollars. Even the commercial return of well-conducted steamship enterprises to governments which aid them is considerable. Thus, in 1893 the British Government contributed £353.873 to the total receipts of £2,356,820 36 OCEAN MAIL SERVICE. of the Peninsular and Oriental Steamship Conipany. In 1906 its subsidy was still £350,246, but the receipts had risen to £3,046,437. The increase represents an actual cash return in British business done and British labor employed quite apart from the large national interests served by the maintenance of this company, one of the props of the British Empire. The subsidy for the Toyo Kisen Kaisha is to be 2,680,687 yen annually for 15 voyages from Hongkong to San Francisco, equivalent to $89,356 a voyage. The distance for the round trip is almost exactly 15,000 miles, or 7,500 miles outward bound. The subsidy, accordingly, is at the rate of nearly $12 per nautical mile one way, compared with the rate of $4.60 provided by the American ocean-mail act of 1891 for steamships of 20 knots or over, like the Zenyo Maru and Chiyo Maru, already briefly described, which are on this route. This particular subsidy is the highest paid by any nation, being slightly above the current Cunard subsidy. That subsidy works out at the rate of about $7 per mile for the Lusitania, Mauretania, and the two slower and smaller steamships needed for the weekly mails to New York. Proportionately divided among the four ships, however, the British subsidy to the two great trans-Atlantic liners would be close to that paid to the Japanese trans-Pacific ships. While the British Government practically built the two Cunarders and presented them to the company, the Japanese Government paid about $200,000 each in construction bounties to the Toyo Kisen’s ships and agrees to pay each over $400,000 annually for at least five years. The new Japanese subsidy for 26 voyages to Tacoma is 1,210,740 yen, or $23,284 a voyage. As the distance outward bound is 6,250 nautical miles, the subsidy is equivalent to $3.72 per mile. The steamers are 14 knots speed, which, under the American ocean-mail act of 1891, would be entitled to $1.15 a mile. In the same manner the Seattle subsidy is 476,180 yen for 13 voyages, or $17,930 a voyage, the distance being substantially the same as to Tacoma. The rate per mile outward, accordingly, is equivalent to $2.86. The ships are to be 15 knots, and under the American law could be paid at the rate of $1.15. That the Japanese subsidy for 15-knot steamships to Seattle is at a lower rate than for 14-knot steamships to Tacoma may be explained in part by the fact that the Seattle contract is awarded to the established Nippon Yusen Company, while the larger Tacoma contract was made with the Osaka Shosan, which has hitherto operated mainly in Asiatic waters and is just venturing a regular line to North America to hasten Japanese maritime supremacy on the Pacific. Beginning with January 1, 1910, the Japanese Government will thus spend $2,183,000 annually on its steamships in trade with the Pacific coast of the United States, including Hawaii. These ships will make 54 voyages a year, so that every week it will be possible to come from or go to Japan under the Japanese flag. Even a cursory glance at the foregoing tables of these routes shows the care and exactitude with which this comprehensive project has been worked out. The contracts call for only twelve steamships, but it has been a uniform result of the subsidy policy, intelligently framed, that the faster mail ships develop a trade for the company which warrants the employment later on of intermediate passenger and cargo steamers. Such has been the result of the Cunard subsidy, of the subsidy to the French Messageries Maritimes, and others. Two of the Japanese companies named have older steamers ready to go into the trades mentioned as occasion may warrant. The former San Francisco ships are already assigned to South America. OCEAN MAIL SERVICE. 87 SOUTH AMERICAN LINE. A subsidy of 690,511 yen annually for five years is provided for a Japanese line to South America. There are to be 8 voyages a year, so the subsidy amounts to $57,000 a round voyage of 25,000 miles, or as near as may be $4.60 per nautical mile outward bound. This is the rate paid fo 20-knot mail steamships of 8,000 tons or over under our ocean-mail act of 1891. The Japanese ships, however, are to be only 13 knots, and range from 5,200 to 9,300 tons. In his admirable report on the Japanese legislation of 1909 (8S. Doc. 152, 61st Cong, Ist sess.) Mr. C. J. Arnell, of our embassy at Tokyo, says of this South American line: The Government's proposal to open a regular line to South America met with severe opposition in the Diet and considerable criticism from the press on the general grounds that it was contrary to the new policy of financial retrenchment to subsidize an enterprise whose immediate undertaking was not essential and which did not promise to be profitable for some years to come. As already reported, however, the Government seemed. to attribute more than ordinary Importance to the line and, after vigorous action, succeeded in effecting a compromise with the Diet whereby the subsidy for the present year (about 500,000 ven) was retained in the budget. There is no evidence, however, to show that the motive for the establishment of the line is more than purely commercial, and the general opinion seems to be that it is the outcome of investigations recently made in South America by Mr, Uchida, director of the commercial marine bureau. The immediate subsidizing of the line was evidently desired in order to participate in what is believed to be a promising fleld—the proposed establishment of regular steamship services by the Hamburg-American, Norddeutscher-Lloyd, and a certain Chinese company. The new Japanese line will include regular calls at Hongkong, Moji, Kobe, Yokohama, Honolulu, Salina og and Manzanillo (Mexico), Callao (Peru), and Iquigue and Valparaiso ile). On October 25, 1909, a bill was passed in the Mexican Congress to grant from the Mexican treasury to this Japanese line a subsidy of 10,000 pesos ($5,000) a voyage, or $60,000 annually. COMPARISON OF WAGES. Occasional references have been made above to the rates of subsidy provided in the American ocean-mail act of 1891. Of the various restrictions imposed by that act, one especially must be considered in any question of trans-Pacific navigation. Section 3 of that act, among other matters, prescribes: And upon each departure from the United States the following proportion of the crew shall be citizens of the United States, to wit: During the first two years of such contract for carrying the mails, one-fourth thereof; during the next three succeeding years, one-third thereof; and during the remaining time of the continuance of such contract at least one-haif thereof. For reasons well understood Americans are averse to working side by side with Asiatics. The law which prescribes that 50 per cent of the crew shall be Americans thus in effect provides on the Pacific that all shall be Americans. Possibly race differences would not be 38 OCEAN MAIL SERVICE, carried so far as to prevent the employment of Asiatics as stewards on a ship where the deck department and engine-room department were manned by Americans, but obviously each of the three departments must be altogether Caucasian or altogether Asiatic. The question of labor on shipboard, accordingly, is primarily a question of race and secondarily of wages. Appendix B contains an official statement of the wages paid on the Japanese steamships Zenyo Maru and Chiyo Maru, obtained through the courtesy of the Japanese embassy. It is explained that the relatively small number of the officers and crew and the consequent diminution in the total of wages, compared with American, British, and German steamships, is due to the fact that on these two steamships oil exclusively is used as fuel. Thereby, of course, a much smaller number of firemen is required and no trimmers or coal passers are needed, who comprise a large part of the crews of ships using coal. The American trans-Pacific steamships most nearly resembling the Tenyo Maru and Chiyo Maru are the Korea and Siberia, of the Pacific Mail Steamship Company, each of 11,284 gross tons, about 2,000 tons less than the Japanese steamers, and of 19 knots speed, compared with 21 knots of their competitors. Of the crew of 289 of the American ship, 256 are Asiatics, mainly Chinese shipped at Hongkong for the round voyage. Were these ships to be employed under the act of 1891, American crews would be required. Fewer men, however, would be needed. The following table shows the number of officers and crew and the total wages per month in dollars paid on the Korea and Siberia with their present crews and with crews under the act of 1891, a corresponding statement concerning the Japanese steamships Tenyo Maru and Chiyo Maru, and, for ready reference, the crew and wages of one of the best known German trans-Atlantic liners, Kaiser Wilhelm der Grosse, of 14,349 gross tons, 22 knots. COMPARATIVE WAGES. American. Japanese. German, Mixed crew. | American crew. 3aloon officers...... we Deck department...c.......-Engineer's department ...... Pureer's department. _ Matal No. 5 50 138 AG 980 Wages. $576. 00 785.79 2,350. 41 1 194. 83 4.836.03 No. , Wages. 48 1 cr $575. 00 1,805, 00 5,300. 00 a’ 030. 25 260 | 10, 800. 25 | No. + Wages, No. i Wages, 5 53 66 120 5. $295.12 58! 811.60 212 3,830.33 a5 2778.41 247.50 B00 | 7,715.55 243 The wages of the master or captain of the ship are not included in any of the tables above, as the master, of course, does not sign the ship’s articles and his pay is frequently a matter of personal agreement. Under the head of saloon officers are included the chief officer of the ship, the chief engineer, the purser, the surgeon, and the freight clerk, a tein employed on the Pacific, but not in general use on the Atlantic. The deck department, of course, includes the officers of the ship, boatswains, carpenters, seamen, and cadets, where they are carried. The engineer’s department includes the engineers, elec- OCEAN MAIL SERVICE. 3¢ tricians, oilers, water tenders, firemen, and coal passers, while under the purser’s department are included all those assigned to personal service such as cooks, bakers, butchers, stewards, stewardesses. barbers, porters, laundrymen, bell boys, ete. } The monthly pay of 289 men, comprising the mixec crew of Americans and Asiatics on the Korea, is $4,836, while the monthly pay of 243 men on the Japanese ZT'enyo Mary is $4,247. The smaller Japanese crew and pay roll, as stated, are due to the use of oil as fuel. Under similar conditions the difference in total wages would uot be considerable. If the American ship were operated with an American crew under the provisions of the act of 1891 the number of the crew could be reduced to 260, but the monthly pay roll would be increased to $10,800. In the matter of wages alone, accordingly, the American crew would mean an additional cost of operation of $72,000 a year, less wages not paid to part of the crew discharged while the vessel is in port abroad. The vice-president of the Pacific Mail Steamship Company, Mr. R. P. Schwerin, in a statement submitted to the Merchant Marine Commission (vol. 2, p. 1409) stated that the annual cost of provisions for the mixed crew of the Korea is $20,140, while the estimated cost of provisions for an American crew of the same ship would be $48,767, a difference of $28,000. To carry and feed the American crew alone, accordingly, would entail an additional expense of fully $80,000 over the corresponding expense of the Japanese ship. This sum in itself would be equal to a handicap of about $2.25 a nautical mile outward throughout the year. Averages are often deceptive, but with the usual qualifications attention is drawn to the fact that the average monthly wages of an American grew for the American steamships Korea and Siberia are $41.54, due mainly to the high wages paid to American firemen. The average monthly wages on the same ships with mixed (Chinese) crews are $16.78." The average monthly wages of the Japanese steamships Tenyo Maru and Chiyo Maru are $17.48, while the average monthly wages of the German trans-Atlantic Kaiser Wilhelm der Grosse are only $15.43. The pay roll of the German steamship was for the voyage of March 19, 1901. Since then German wages have increased only about 7 per cent. The annual report of the Bremen Chamber of Commerce for 1908 shows that the average monthly wages of German seamen at Bremen for the past eight years have been, for 1901, $14.47; 1902, $14.51; 1903, $14.59; 1904, $14.61; 1905, $14.66; 1906, $15.09: 1907, $15.97; 1908, $15.49. GFYRMANY. The discussion of subsidies in the German Reichstag began after the receipt of the following communication: BERLIN, April 6, 1881. A new “merchant shipping act,” the object of which is to afford state aid to the French merchant shipping, was promulgated in France on the 29th day of January, 1881, and is calculated to exercise an influence on the shipping trade of other countries, and in particular that of Germany. The undersigned therefore takes occasion to lay a memorial relative to this law before the Germar Parliament for its consideration. . VoN BisMARrRck, Imperial Chancellor. OCEAN MAIL SERVICE. This memorial, a closely printed pamphlet of 10 pages, may be found in the United States Consular Reports, No. 112, January, 1890, pages 108 to 118. It reviewed subsidy laws and contracts of various zountries, particularly France and England, at that time, and concluded as follows: Germany pays in the over-sea trade to the participating German steam lines B sum in proportion to the weight of the parcels forwarded. At present these allowances amount to $47,000, in round numbers. It is deserving of serious consideration whether under the circumstances as given German shipping and German commerce can hope for further prosperous development as against the competition of other nations aided by public funds and assistance. Four years after this memorial was presented—a time which seems very short in the United States, where twelve years have been spent inconclusively in debating changes in our ocean-mail act of 1891— the German Reichstag passed a law, on April 6, 1885, under which on July 3, 1885, the German Government contracted to pay annually for fifteen years to the North German Lloyd Company 4,090,000 marks ($973,420) for steamship lines to Asia and Australia. In 1898 this subsidy was increased to 5,590,000 marks ($1,330,420). Beginning with April 1, 1908, this subsidy was increased to 5,820,000 marks ($1,385,160). The changes in the subsidy, of course, have been recompanied by larger and faster steamships and by extension of the lines of communication. One of the earliest results, if not purposes, of this policy established under Prince Bismarck, was the virtual creation of the industry of ocean-steamship building in Germany. With the bill submitted to the Reichstag by Prince Hohenlohe in 1898 for the increase of the North German Lloyd subsidy was a very complete report of the operations of the contract of 1885. (Report of the Commissioner of Navigation for 1898, pp. 188-147.) In this German report it is stated that on the completion of the contract a German shipyard, the Stettin-Vulcan, with skill and experience had laid the foundation of a new industry by building ships for the oriental trade as well as fast steamships to the United States; that other shipyards sprang into existence, among the foremost that of Schichau, in Dantzic, and Blohm & Voss; and that “ all experts assert that without the influence of the government ocean-mail service such a steamer as the Kaiser Wilhelm der Grosse could not have been built.” Indeed the argument in 1898 for the revision of the German subsidy of 1885 is pertinent to our own situation. That report stated: It was decided by the establishment of an imperial mail-ocean service that our commerce by sea called for quicker, more direct, and more regular transportation in order to make it more efficient, and, above all, to compete with foreign enterprise. That this need for the long voyage to eastern Asia and Australia eould be met, not as in the case of relatively short voyages to America by German shipping without government assistance, but that such navigation, on account of its expense, should be promoted by state aid, is shown in the amendment to the steam mail act of the 20th of November, 1884. And experiance has proved the truth of that view. Quick and well-managed, regular steam communication—experience has taught—is the backbone of oversea navigation. It is indispensable to passenger and postal travel; by its speed and regularity it does most to encourage commerce in the greatest and smallest industries. The closer and greater the connection between the commerce and industries of two countries the greater the need for steam n:lvigation. In the attainment of this necessity, Germany, with her steadily growing industries and constant increase of power among the nations, should no longer remain under the protection of alien flags, but be- OCEAN MAIL SERVICE. 41 neath her own flag and with her own steam navigation should bring her home oroducts to a prominent position. The advantages to be gained by Germany's establishing a steam mail service to east Asia and Australia are expressed in the following: 1. Connection between Germany and the above-named countries, especially as markets for German products, is important, and trade would be increased by steam navigation. It would make German industries more active and impart new life to the German marine. 2. German commerce, by the transportation and export of goods, would be made more independent of foreign agents, relieved of the disadvantage of reshipping goods in foreign ports and the additional expense pertaining thereto, and ‘he leaving of its goods at the mercy of agents. 3. In the matter of passenger travel, German ships with German accommodations would furnish a quicker passage than private companies without state help could offer. 4, The mail service, especially for letters, would no longer be dependent on foreign transportation. * * * Among the branches of German industries most benefited by the establishment of the ocean mail service, shipbuilding must be mentioned, for which it opened a new period of development. * * * At the close of the Chinese-Japanese war the question arose which of the European nations would understand best how to take advantage of the new state of affairs, for a great field for the increase of industrial relations with the Asiatic kingdoms was opened. China, particularly, had not only thrown open her harbors to foreign commerce, but through the introduction of machinery and railroad building bad created a great activity in the iron and machine inlustries, * * * In this industrial competition Germany is most actively interested. Political commercial movements in Great Britain and the United States may occur in the next year which may make Germany think it necessary to be independent of these two powerful nations and the British colonies by widening and strengthening her markets. In this expansion China, with her 400,000,000 population, and Japan, with her rapid awakening, both calling for European industries, take a prominent place. * * * The proposed increase of our government mail service would also be of Assistance to the German navy in eastern waters. The principal maritime nations now provide that their large merchant steamships can be employed as auxiliary cruisers for war purposes, and the German navy needs similar additions. The new transoceanic steamships proposed to be built under the subsidy law will be available for this purpose. The existing contract would not meet this necessity. It is for the interest of national defense that this contract be revised. The greater the speed attainable by the government ocean mail service the more useful would it be in the event of war, * * * For success in international competition it is desirable to lose no time, and aspecially as the recent acquisition by Germany of Chinese territory at Kiaotschau necessitates quicker postal connection with Asia. This makes it essential that the North German Lloyd be in condition with ships ready, fully equipped, especially built for speed and comfort, to undertake to supply fortnightly communication with eastern Asia as soon as the contract is closed. Under these circumstances the increase of 1.500.000 marks in subsidy should be made payable within” the year 1898. On February 1, 1890, the Reichstag authorized a fifteen-year contract with the German East African Steamship Company, of Hamburg, which was extended in May, 1900. Under this contract the company receives an annual subsidy of 1,350,000 marks ($321,300) for its lines to Africa. The principle followed in the government sontracts with the. North German Lloyd Steamship Company, of Bremen, and the German East African Steamship Company, of Hamburg, is clearly explained in the valuable note verbale of the Imperial German foreign office, dated December 30, 1908, and printed in Appendix N. In that note it is stated: The reason why the Bmpire disburses these amounts lies rather in the neces “ity of having at its disposal regular ship connections for the public post, travel, and freight with certain lands across the sea, it being impossible for a private 19 OCEAN MAIL SERVICE. shipping company to start such lines without state funds, since they can not pay the costs of operation unaided. Apparently the German Government nearly twenty-five years ago carefully considered the question whether it is better for a community to employ its capital at a profit than at a loss, and decided that in view of other considerations it is at times advisable to invest government capital in enterprises which otherwise would be losing and would not be undertaken. The facts in the wonderful growth of German shipping are reasonably familiar to all. The following short table shows the increase in the number, net tonnage, and total crews of ships of Bremen and Hamburg, the great centers of German shipping, from 1885 to 1908. Bremen...... Hambure ... Total _ Number. oR Tat tons. © 91 Qq RAR Crew. £,023 A. 49/ Number, 465 697 908 Net tons. 668, 541 1,255,463 924 Sod Crew. 19,921 28,032 47, 953 The gross tonnage in 1908 of the Bremen steamships was 1,112,769 tons, of which 206 ships of 739,903 gross belonged to the North German Lloyd. The gross tonnage in 1908 of the Hamburg steamships was 2,022,140 tons, of which 164 ships of 869,762 gross tons belonged to the Hamburg-American line. Either of these merchant fleets is superior in carrying capacity to all the ocean steamships under the American flag in foreign trade. The German pay to German ships for German ocean mails has increased from $47,000 in 1881 to $2,246,290 (9,438,-190 marks) in 1907. The following table shows the expenditures in marks (mark=23.8 cents) during the years 1905, 1906, and 1907. GERMAN SUBSIDIES AND MAIL PAY. Company. Line, 1905. 1906. 1907. l. Payments on the basis of the imperial postal steamship laws: North German Lloyd, Bremen. German East Africa Line, Hamburg. Bremen-Eastern Asia and Aus tralia. Hamburg-East and South Af: TIC. Marks. 5, 590, 000 1,350, 000 Marks. Marks. 5, 590, 000 los, 590, 000 1.850.000 ! 1, 850. 000 Total... A 940. 000 6. 940. 000 8, 940. 000 2. Separate payments of the postal administration: Jaluit Co., Hamburg. ...ceaa.... Sartori 8.8. Co., Kiel......._... Grand Ducal R. R, Administration, Schwerin, M. J. F. Braunlich, Stettin......... North German Llovd, Bremen. . Sydney-Jaluit-Hongkong ...... Kiel-KOrsor ...eu.unu-- oy Warnemunde-Fedrc (20, 000 178, 000 0° 000 120, 000 178, 000 80. 000 120, 000 178,000 80, 000 320, 000 bE37 474 Sassnitz-Trelleborg............. Bremen-New York, Bremen-Brazil, Bremen-La Plata, Bremen-Cuba, Mediterranean-Levante, and other lines. Hamburg-New York, Hamburg-West Indies, Hamburg-Cuba-Mexico, Shanghai-Tsingtau-Tientsin, and other lines. From April 1, 1908, the amount of the annual compensation is 5,820,000 marks. ® Of which thesel sums for the Bremen-New York line: 1905, 530,500 marks; 1906. 568,318 marks; 1907, 627,305 marks. ¢'Of which these sums for the Hamburg-New York line: 1605, 213,643 marks; 1906, 203.411 marks: 1907, 308.437 marks. 2732. 887 GERMAN SUBSIDIES AND MAIL Pay—Continued. OCEAN MATL SERVICE. io Company. Line. 1907. Marks. 129, 443 63,771 173, 865 2.249 174 7,091 2,955 20, $89 1, 492 10, 472 17, 422 2,053, 349 2,498, 190 5 503.349 | 9,382,654 . 9,438, 190 2. Separate payments, ete.—Cont’d. Hamburg-South America 8. 8. Co., Hamburg. Cosmos Line, Hamburg. ........ Woermann Line, Hamburg..... German Fast Africa Line, Hamburg. Atlas Line, Bremen...ccoeeu. -. Hansa Line, Bremen............ German Levante Line. Hamburg. A. Kirsten, Hamburg .... Argo Line, Bremen. .........-. Dldenburg-Portugal Steamship Company, Oldenburg. Roland Line. Bremen. .oe.. -o» Hamburg-La Plata and Hamburg-Brazil. Hamburg-South America. ...... Hamburg-West Africa, Cape Town-Swakopmund. Bombav-Fast Afric... -cecnu-Bremen-Turkey ....cceuaveeaen-. Bremen-La Plata and East India. Hamburg-Levante ............. Hamburg-England .........c-.. Rremen-England.. gp Hamburg-Morocec w Bremen-Chile-Peru.. Total... Grand total .. It will be noted that the mail payment to the North German Lloyd fast steamers to New York was only $149,298 in 1907, but our Government paid the company $272,856 for eastbound mails. The Hamburg- American Line to New York received $73,408 in German mail pay and $64,629 from the United States. The German payments for South American mails amount to about $75,000 annually. Of these payments the note verbale mentioned states: The North German Lloyd, Bremen, and the Hamburg-American Line, Hamburg, were paid for the German letter posts on the line to New York 5 francs for 1 kilogram of letters and postal cards, 50 centimes for 1 kilogram of other matter, while for the letter posts to other countries the ocean transit charges provided for in the Rome International Postal Convention were paid. These rates are those paid by the United States to foreign ships, being equivalent to 35 cents a pound for letters and cards and 44 cents a pound for other articles. The rates of sea and inland postage which we pay to American ships are 80 cents per pound for letters and post cards and 8 cents per pound for other articles. Tt can not for a moment be contended that the remarkable growth of German shipping in the past quarter of a century is due mainly to the two mail contracts. Those contracts had a great part in cre: ating the shipbuilding industry and in promoting German commercial and political influence in Asia and Africa. They had their share in promoting the building of the very fast German trans-Atlantic liners. But the growth of German shippin is part of the general industrial growth of the Empire, the causes 3 which will not be considered in these pages. Undoubtedly the very low rates of wages paid to the crews of German ships give German shipowners a material advantage over their British competitors and render American competition impossible under normal conditions. Average wages on German trans-Atlantic ships are not so high as, or at best only equal to, Japanese wages on Japanese ships and Chinese wages on ships in trade with Hongkong on the Paciic. The German seaman, however, avoids distasteful military service. Again, German public sentiment, from the Kaiser down to the humblest subject, appears to be enthusiastic in OCEAN MAIL SERVICE. support of the German mercantile marine. In twenty-five years no increase of German subsidies has failed in the Reichstag. The special exemptions and privileges, if any, which Hamburg and Bremen may confer on their great steamship lines in exclusive terminals or control of immigrant traffic under imperial sanction are not known to the Bureau, PREFERENTIAL EBAILROAD RATES. The railways of Germany are owned and operated by the Government, and are a powerful instrumentality in promoting the German export trade and German shipping to the East and to Africa. This aid can not, of course, be reduced to terms of money. In principle the Government establishes very low freight rates over its railroads for articles sent from the interior on through bills of lading to be exported on German steamships. The following extract from the report in 1902 of a committee of the British Parliament illustrates the operation of the system: The system of preferential railway rates is much more elaborately established in the official tariffs of the German East Africa and the German Levant lines. {t is equivalent to an indirect bounty. Assistance is given by granting largely reduced rates of carriage by all German state railways to goods exported from inland places in Germany on through bills of lading either to Rast Africa or to the Levant, respectively, by the German East Africa Line or the German Levant Line steamers. These combined land and sea through rates of freights, which were introduced for the Levant Line on June 15, 1890, and for the East Africa Line on April 1, 1895, are lower than those in force for goods sent to German ports for direct exportation by sea. They attract goods to the steamship lines. Goods sent by the Levant Line steamers on through bills of lading to stations on Turkish and Bulgarian railways also profit by reduced rates of carriage on those railways. Up to the beginning of the South African war a similar advantage was granted on the Delagoa Bay Railway (Netherlands South African Railway) for through goods from Germany to the Transvaal, and these rates per mile were lower than those charged per mile by British railways from Cape Town for the same kinds of goods. But it should be noticed that the actual sea rates to Africa from continental ports and from British ports are the same, owing to the German steamship lines working in conference with the British lines to maintain uniform ocean rates. The differences in favor of German combined land and sea through rates of freight as against the British rates will be best appreciated by a perusal of some of the appendixes to this report, and especially Appendix (1902) 17, nanded in by Sir Charles Cayzer; but a few examples may be given here. The cost per ton of sending iron rails from Birmingham to Liverpool, which is 97 miles, or 156 kilometers, is 8s. 4d.; the cost per ton of sending iron rails from Oldenburg to Hamburg, which is 160 kilometers, is 8s. 4d. on the East African tariff and 8s. 2d. on the Levant tariff. Again, the cost of the carriage of machinery packed for export from Leicester to Glasgow, 313 miles, or 504 kilometers, is 36s. 4d. a ton; from Wronke, East Prussia, to Hamburg, alse 504 kilometers, it is 10s, 10d. a ton on the Ilast African tariff and 7s. 10d. a ton on the Levant tariff. The carriage of hardware from Birmingham to London, 111 miles, or 179 kilometers, is 21s. 8d. a ton; from Flensborg, Schleswig-Holstein, to Hamburg, also 179 kilometers, it is 4s. 2d. a ton on the East African tariff, and varies according to the class of hardware between 4s. 1d. and 4s. 94, on the Levant tariff. The rate for export bales of cotton from Manchester to Bristol, 175 miles, or 282 kilometers, is 22s. 4d. a ton; from Berlin to Hamburg, 279 kilometers, it'is 8s. 7d. on the East African tariff and 4s. 1d. on the Levant tariff, Plows and cement can be shipped to Delagoa Bay rather more cheaply by British than by German route, but the German through tariff to Delagoa Bay is cheaper, and in most cases far cheaper, for bicycles, bottles, brush ware, carpets, galvanized iron and heavy ironwork, glass, furniture, hollow ware, iron pipes, nails, and pianos. The reduced rates have been, and are, fixed in accordance with the experience gained in Germany as regards the working DCEAN MAIL SERVICE. 45 cost per train mile over long distances, and the primary object is the building ap, promoting, or increasing of German export trade to the countries in queszion, and the enabling it to compete successfully with the trade of other foreign states to those countries. From the German point of view the policy of all these direct and indirect subsidies has been thought a good investment, and worth the money spent, but an element of success is the energy and enterprise of the recipients. (Report of the British select committee on steamship subsidies, pp. V and VIL) _ The system employed by Germany through railroad preferentials is not feasible in the United States under our present laws regulating Interstate and foreign commerce. The considerations which now control in the United States are set forth in the report and opinion of the Interstate Commerce Commission on February 5, 1904, in the matter of the Publication and Filing of Tariffs on Export and Import Traffic, the following extract from which seems pertinent: The market for American products in the Orient is not yet established, but is still in the formative state. The American producer meets there competition from England, France, Germany, and other European countries. Freight rates from those countries are by water, need not be published, and are subject, so far as we know, to no governmental supervision. It is asserted that if the rate under which the American manufacturer must operate is a fixed quantity, which can only be varied under certain conditions, he is at a disadvantage in comparison with his European competitor; that the search for these markets 18 a joint venture between the manufacturer and the carrier, and that each must be ready to meet by advance or reduction the competition which is found. The carrier should not be prohibited from giving aid to the American producer. There is this further consideration: Lines of ocean communication between Pacific ports and the East have not yet reached that stage of development to which they have advanced upon the Atlantic. While, as already said, very few railway systems are directly interested in lines of transportation leading from the eastern seaboard, exactly the reverse is true upon the Pacific coast. Nearly all transcontinental lines either directly maintain or are interested in lines of steamships plying between a Pacific port and the Orient. It is alleged that in no other way can the necessary vessels for ocean carriage be obtained at the low rate which must be made. It is apparent that a line of railway can not successfully maintain a steamship line across the Pacific unless it has power to prefer its own line to other ships. But if it is compelled to publish an inland differential it must accord that rate to anyone who offers merchandise for transportation. It must carry to and from the port for the same price when the freight comes or goes by some tramp steamship as when it is carried in its own vessels. It may, to be sure, publish a through joint rate, and may use its own steamers exclusively in carrying under this rate, but in that event it must publish the joint rate and rest therefore’ under the disad-7antage of not being able to vary it as occasion requires. Upon the other hand, it is evident that the practice contended for by these transcontinental carriers might ultimately result in a condition highly prejudicial to the public interest. If the railway line has power to prefer its own steamship to other ocean transportation, to carry to the seaboard for a much lower charge in one case than in the other, this must result in discouraging the development of independent lines to the Pacific coast. The ocean carrying trade to and from those ports must unavoidably become concentrated in those lines having satisfactory rail connections. 1f now these several lines agree among themselves upon rates from inland points to foreign destinations in exactly the same way that the transcontinental lines themselves have to-day agreed as to rates between inland points, there would result a condition of monopoly producing much higher through rates than as though the inland carriers were compelled fo afford inland service upon the same terms, however the traffic might move y water. Without, however, attempting to discuss the questions of policy which might be presented, for the proper consideration of which the commission does not now possess the necessary information, it is evident that there may be here a condition where the rigid enforcement of the present requirements of the act as to the publication and maintenance of foreign schedules would work a substantial hardship to both the carrier and the shipper. IB OCEAN MAIL SERVICE. FRANCE. Nothing has occurred in the past ten years to require a modification of the following extract from the report of the Bureau for 1899: The efforts of France to increase her merchant marine have been out of proportion to the results attained. Uncertainty as to the course to be pursued by the IPrench Government has done almost as much harm to French shipping as indifference or inaction could have wrought. In 1866 France adopted the “free-ship ” policy. After the Franco-Prussian war French shipbuilders objected to the policy, and in 1872 it was abandoned, and France adopted dis->riminating duties. Other nations, including the United States by proclamation by President Grant, promptly retaliated, and the policy proved so injurious to nll French interests that it was abandoned in 1873, after a little over a year's axperience, and the ¢ free-ship ” policy, which has since been in operation, was restored. In 1881 a complicated system of construction and navigation bounties was adopted. This in turn was followed by another construction and navigation bounty law in 1893. Of that law it will suffice to say that it offered to sail vessels a bounty of 3.2 cents per 100 nautical miles per ton, sufficient to enable these vessels to sail at random about the seas withcut engaging in commerce and still pay dividends, while to steamships the bounty was only 2.1 cents. This attempt to change the normal course of development of marine architecture naturally failed, and although expenditures for shipbuilding bounties rose from $400,000 in 1893 to nearly $1,800,000 in 1900, and for navigation bounties from $1,200,000 to nearly $3,000,000 in the same period, the French mercantile marine showed no proportionate increase. French shipbuilders turned from the steamer, the natural instrument of modern commerce by sea, and built sail vessels to get the bounty. Some of the obviously ineffectual provisions of the law of 1893 were changed by the law of April 7, 1902, which fixed at 150,000,000 francs ($28,960,000) the maximum expenditures for navigation and operating bounties for the ten years’ life of the act. This law of 1902 was again changed by the law of April 19, 1906, which was to be effective for ten years, and is in force at the present writing. The law of 1906 provides a shipbuilding bounty of 145 francs ($28) per gross ton for steel steamships and $18.33 for steel sail vessels; for wooden steamers over 150 tons $7.72, and for wooden sail vessels $5.80. These bounties are gradually reduced until the highest is lowered to $19.30 in 1916, and the others proportionately. The shipowners’ bounty (compensation d’armement) allows graded rates for each day a vessel is in commission. For a steel steamship the allowance is 4 centimes (100 centimes=19.3 cents) for each gross ton up to 8,000; for each ton from 3,000 to 6,000, 8 centimes; and for each ton over 6,000, 2 centimes. A 10,000-ton steel steamer would thus be paid $56 daily. The bounty for sail vessels is 1 centime less. To get this bounty a 14-knot steamer between the shipment and discharge of its crew must average daily 90 miles, and a sail vessel 85 miles. Shipowners drawing bounties under the act of 1902 may remain under that act or change to the act of 1906. The payment of all these bounties, of course, is subject to numerous qualifications and requirements; thus, the shipbuilding bounty is paid only when 90 per cent of the workmen are French. Shipbuilding bounties are limited to 50,000,000 francs, shipowners’ bounties to 150,000,000 francs, or in all $38,600,000. The French DCEAN MAIL SERVICE. 17 budget for 1908, according to a dispatch just received from the Amerizan embassy at Paris, contained appropriations of 10,400,000 francs ($2,007,200) for shipbuilding bounties and 81,500,000 francs ($6,079, 500) for general navigation and shipowners’ (compensation d’armement) bounties. . France also pays annually about $120,000 in fisheries bounties. The ocean-mail service of France is carried on mainly by her two great steamship companies, the Messageries Maritimes and the Compagnie Générale Transatlantique. As far back as 1827 France paid a subsidy of 5,000 francs a voyage (franc=19.3 cents) for monthly sailings from Bordeaux to Veracruz. The first contract with the Messageries Nationales (since known as the Messageries Impériales and now Messageries Maritimes) in 1851 was for 3,000,000 francs annually for mail lines with 13 steamers to Malta, Constantinople, and Alexandria. In 1861 the Compagnie Générale Transatlantique entered into its first contract for an annual subsidy of 8,300,000 francs for mail lines to North America. From this beginning France has developed a comprehensive ocean-mail system by which regular connections are maintained with North and South America, Asia, Africa, and Australia. The contracts by which this system is supported provide in most instances for a fixed sum per marine league and a fixed number of voyages, the total subsidy not to exceed a fixed sum. The mileage traversed varies slightly from year to year, as under our ocean-mail act of 1891, so the total expenditure varies. Following is 2 Singlets statement of the payments for the year ended December » 1908: Frencr MAIL SUBSIDIES, DECEMBER 31, 1908. Route. Mediterranean ... ..... China-japan .. --e.e---AUSEEALIR 20e mee nermmanns Indian Ocean ........ Brazil-Argenting.....e... New YOrk....ccevmeuncann JUDA-MEeXiCO ae rnnnannn-as West Africa coveeeceennn--Algiers-Tunis. cece --Do.. srwon D0 pi es Corsica, ........ cee Calais-DOVveTr «vere eenan TOLER :cvvnmwuins Jompany. Messageries Maritimes ..... Id wef Géng Shargeurs Réunis ....... ‘éndérale Transatlantiaue. Iavigation Mixte........ I'ransports Maritimes . Traissenet & Co ..... Jorthern Railwav... Ships. 11m ber. Sneed. 7 10 7 = Knots. (3 4 4 ox La 1 Subsidy. Per mile, | Total, $0. 84 1.99 199 Lf ry 18 No $265, 889 1,149, 574 624,202 371, 456 289, 500 1,042, 200 864, 254 51, 338 308, 800 62,132 106,150 81. 542 ab. 217. 037 i A 2 Tnelunding £153.6685 navieation bounties _ The five-year contract with the Messageries Maritimes for a mail ine twice a month to Brazil and Argentina provides a subsidy of %12,400 a voyage, or about $2 a mile outward bound, for a 14-knot steamer, while our law of 1891 provides only $2.30 for a 16-knot steamer. In October, 1908, the Government concluded a new and comprehensive contract with the Messageries Maritimes which was debated 18 OCEAN MAIL SERVICE. at length in the Chamber of Deputies last June and July, socialists opposing. The Bureau is not es of action finally taken. The contract provides for an annual subsidy of 15,000,000 francs for twenty-five years, which under certain conditions may be increased to 17,500,000 francs. The total mileage is to be 2,102,000 miles, and the average subsidy, accordingly, $3.20 per nautical mile outward. The fastest steamships of the company make 18 knots, for which our act of 1891 provides for $2.30 per nautical mile outward. The French rate for lines to Japan and China is $3.86, and to Brazil and Argentina, $1.90. The growth of French merchant shipping as well as that under other foreign flags is shown in Appendix F. NORWAY. The relative increase in the ocean steam shipping of Norway during the past twenty years has been second only to the relative increase in Japanese ocean steam shipping. In round numbers, the world’s steam shipping has increased from 13,000,000 gross tons in 1890 to 86,500,000 gross tons in 1909, nearly threefold. In that time the ocean steam tonnage of Japan has increased from 138,000 oross tons to 1,150,000 gross tons, that of Norway from 246,000 gross tons to 1,388,000 gross tons. Yet the aims, lines, and conditions of the maritime development of the two countries have been absolutely different. Japan, as shown, has devoted her energies through various forms of state aid to the creation of fleets of fast steamships, convertible, if necessary, to military purposes, and developing trade in fixed directions almost under imperial control. Individual enterprise has developed Norway’s steam shipping, which, to a great extent, is a conversion from sailing vessels. The largest Norwegian steamers, the Stigstad and Henrik Ibsen, are only a trifle over 4,500 gross tons, and the majority of Norwegian steamers of size are built in England. While Japan has established two great shipyards through shipbuilding bounties, Norway merely refunds the duties on materials imported for shipbuilding, which amount annually to about $26,800 (100,000 kroner). In the United States such materials for years have been admitted free of duty when used in ships for foreign trade, and under the Payne tariff law such materials are admitted free for ships to be used not over six months in the coasting trade. In their physical relations to the sea there is an obvious similarity between Japan and Norway, for one is composed of a number of narrow islands, and the other 1s so penetrated by fiords that nearly all parts of the country are relatively near salt water. Much of the local communication of Norway is necessarily by water, and the Government, which owns and operates the larger part of the small railroad mileage, is also compelled to assist in maintaining small steamer routes for mails and trade between different Norwegian ports and the near-by ports of Sweden and Denmark. The importance of Norwegian shipping in the world’s commerce, the large number of American citizens of Norwegian birth or descent, and the general discussion here and abroad of subsidy projects warrant the publication in full in Appendix N of the contributions (crown=26.8 cents) of the Norwegian Government to its shipping. OCEAN MAIL SERVICE. 19 These contributions comprise, first, the sum of 2,096,225 kroner mnually ($561,788) paid for 115 mail routes on the sea, very few of which touch foreign ports. They resemble in some respects our star routes and even our rural free delivery. The largest single amount 1s 369,625 kroner ($99,060) for the mails by sea between Christiania, the capital, and Bergen, the principal seaport; the smallest, $48 annually, for the route between Haugesund and Bormedal. In return for these payments the ship guarantees safe custody of the mails, their delivery to the shore, free transportation of postal officers when necessary, and indemnity for loss through negligence. Strictly speaking, these payments, with one exception, are not in the nature of subsidies to promote shipping. Besides these mail payments the Norwegian Government pays about $500,000 in the form of trade subsidies to Norwegian steamships. Of these the Norwegian department of public works states: A yearly state subsidy is granted several national steamship companies in order to enable them to keep up steamship routes in districts where such contmunications are considered as required but where a steamship line could not be kept up to the extent required without support from the side of the authorities. The state further accords by contract compensation to certain ship owners in order that they should keep up certain routes to foreign ports. For the financial period 1908-9 (five-fourths of a year) 1,916,250 kroners were granted for such purposes. The subsidies thus described, aggregating $513,555 for the fifteen months ended June 30, 1909, are divided among 41 companies. These companies are bound to conform to the time tables of the state railways, to carry the mails free of charge, to set aside fixed sums for repairs, and to hold their books open to state inspection. Of these contracts the more important are for the lines from Norway to American Gulf ports, to Newcastle, and to Spain. The contract for the route to the United States (Appendix N) calls for 9 voyages a year to Cuba, Mexico, and an American Gulf port, for which $33,500, $3,700 a voyage, or about 66 cents a mile outward, is paid. The contract requires new ships for the route to be built in Norway, if no serious loss in time or cost is involved. For some years past the trade of the Gulf of Mexico, particularly the fruit trade, has been carried on in small Norwegian steamers with Norwegian crews on long contracts. The purpose of this subsidy is doubtless to bring these distant Norwegian seamen into direct touch with the mother country and also to send out to them special Norwegian products. The payment is, of course, as distinctly a subsidy nd as essentially protective as some of the large amounts paid by Japan, The line between Norway and Newcastle, England, is paid $56,950 trade bounty, and also $25,125 for carrying the mails. This payment began in 1891, and though the subsidy per voyage is less than $500 it has sufficed to turn from British to Norwegian steamers a considerable part of the trade between the two countries. For the line to Spain $18,400 annually is paid. Necessity compels and tradition invites the Norwegians to become seamen. There capital and labor naturally turn to the sea, and laws which in the United States would be restrictive, in Norway are merely S. Rep. 354, 61-2——4 30 OCEAN MATL SERVICE. the affirmation of local customs. Thus the law requiring threefourths of the crews of Norwegian ships to be Norwegians imposes no restraint on the growth of Norwegian shipping, while a similar law in the United States would virtually drive all our ships in foreign trade to foreign flags. While the principle of subsidies has been accepted in Norway, the amounts as shown are relatively small and mail and trade are their chief aim. This year, however, a project has been put before the Norwegian Parliament for the establishment of a distinctly Norwegian steamship line between Norway and the United States, based on the principle of shipbuilding and navigation bounties and admiralty subventions. While the Storthing has not yet acted upon the project, dispatches show that there is strong public sentiment in its favor. This national Norwegian undertaking has the support of important Norwegian banks and business interests, and the idea of national subscription to the shares both in Norway and among Norwegian communities in the United States has been discussed. The admiral of the Norwegian navy has expressed himself in guarded terms in support of the project. It is proposed to begin with a line of two small Norwegian steamers making a fortnightly service between Bergen, Trondhjem, and New York. The project is sufficiently explained in the following extract from the petition of its promoters addressed to the Norwegian Storthing and referred by it to the Royal Government: In consideration of what has been stated above, we beg to submit the following proposition: 1. That in view of the establishment of a regular mail-carrying steamship route under the Norwegian flag between Norway and the United States of America, realizing in all essentials the plan worked out for “ Den Norske Amerikalinie,” a state subsidy of up to 350.000 kroner ($93,500) a year be granted during three subsequent years, upon such conditions as may be stipulated. 2. That for the fiscal period July 1, 1909, to June 30, 1910, such a subsidy of up to 50,000 kroner ($13,400) be granted to the line, provided the route be opened during that fiscal period. 3. That as a part of the capital required for the construction of two vessels a subsidy of up to 100,000 kroner ($26,800) be granted for the fiscal period July 1, 1909, to June 30, 1910, toward the fitting out, etc., of the vessels, in view of their employment as armed cruisers, according to detailed specification and conditions. 4. That in view of the employment of the vessels for purposes of defense a yearly subsidy of 75,000 kroner ($20,100) per vessel, running from the inauguration of the route, be granted, upon such conditions as may be hereafter stipulated. NETHERLANDS. The budget of the Netherlands for 1908 contained appropriations of 2,189,081 florins (florin = 40.2 cents), or $880,011, in the interests of Dutch steam navigation companies. Of this amount, 88,384 florins were appropriated for the marine reserves of Holland and 6,600 florins for their subsistence. The balance was to meet payments on ocean-mail contracts between the Government and various Dutch steamship companies. Through the usual channels copies of these voluminous contracts have been forwarded to the Bureau and are on file. The salient features of these contracts may be gathered from the following table: OCEAN MAIL SERVICE. 51 NETHERLANDS MAIL CONTRACTS. Company. Holland-American Line............. Nederland Steam Navigation Co.s... Rotterdam Lloyd. oocveiienanas Zeeland Steam Navigation Co....... Royal West India Mail veueseenonnnns Java, China, Japan Line...... .... Royal Holland LI0Fd «eases veeer onan Royal Packet CO......ouo.. Support of Marine Reserve. . Total. Service. Weekly to New York ...... on Weekly to Java and Dulch East Indies cenal0 i ccsc nanan an Jnsmingw England....... ad BE To Dutch Guiana... 83 voyagesannually................... 24 voyages to Brazil and Argentina... Service among Dutch East Indies..... Pay. Florins. Dollars. 2,200=_ 884 291, 200=117, 062 72,800= 29, 266 249, 600=100, 339 465, 000=186, 930 67,600= 27,175 287, 500=115, 678 225, 000=_90, 45( 133, 197=174, 14£ 94,984= 88,18¢ 2 189, 081 =_880, 00f ¢ The Nederland Line steamers also receive a subsidy of 70,000 lire ($13,510) from the Italian Government for stopping 26 voyages at Genoa en route to Batavia. The intimate connection between ocean-mail transportation and commerce are, of course, familiar, so while the payments mentioned in form are mail subsidies and so described they obviously tend to promote trade. The sum of 1,334,297 florins was spent on Dutch lines connecting the Netherlands with Java, Sumatra, and other islands of the Dutch East Indies. It is worth noting that the people of the Netherlands thus deem it worth while to spend over $500,000 in a budget necessarily framed with the greatest economy, in order to bind their eastern possessions to the mother country. Through the steamers of the Rotterdam Lloyd and Nederland companies it is possible every week to go, under the Dutch flag, from Holland, by way of cither Genoa or Marseille, through the Suez Canal, to the Dutch East Indies. Every month one may leave Batavia, under the Dutch flag, for Hongkong, Shanghai, or Yokohama, while the Government contributes liberally to a frequent mail, passenger, and freight service among the Dutch East Indies. By comparison the expenditures of the United States for connections with the Philippines are insignificant. In November, 1907, the Government contracted for fifteen years with the Royal Holland Lloyd Steamship Company for 24 voyages a year to Brazil and Argentina. For the first five years the annual subsidy 1s 300,000 florins, for the second five years 200,000 florins, and for the last five years 100,000 florins. The ships for this service must be built in Holland, and this year the Frisia, a twin-screw steamship of 14 knots, 6,500 gross tons, was built on the Scheldt. The subsidy, about $5,000 a voyage, is thus at the rate of about 85 cents per mile outward bound, or 30 cents less than is provided by our ocean-mail act of 1891 for an American mail steamship of the same speed and size, The Holland-American Line is paid by weight for carrying letters and newspapers to the United States, but the letter mail. of course, goes across the Channel from Flushing to take the fast English ships, or goes by the fast German or French steamers. ITALY. For some years the Italian Government has carried out a comprehensive system of promoting its shipping interests. The system includes navigation bounties, construction bounties, bounties for repairs 52 OCEAN MAIL SERVICE. in Italian shipyards, and refund of duties on imported materials. These projects are incorporated in the Italian law of July 23, 1896, which was modified in some particulars by the act of 1901, Besides this general law, the Italian Government for years has had oceanmail contracts with its principal steamship lines, especially the Navigazione Generale Italiana, which are in part in the nature of navigation bounties and partly mail compensation. One of the principal features of the Italian law of 1896 (Report Commissioner of Navigation for 1899, pp. 169-170) is the provision for a navigation bounty of 0.8 lira (lira=franc=19.3 cents), or 15} cents, per gross ton for each 1,000 nautical miles for Italian steamers or sail vessels in trade beyond the Straits of Gibraltar, the Suez Canal, or to the Black Sea, or the Danube. Voyages in the Mediterranean are paid 10 cents per 1,000 miles. These bounties are gradually reduced with age. In the case of steamships of 16 knots or over the secretary of the navy may provide for 50 per cent additional bounty. Foreignbuilt vessels receive half bounties. Steel vessels built in Italy receive a construction bounty of $14.86 per gross ton; wooden vessels, $3.38. The principal changes made by the amendments of 1901 are a limit of 8,000,000 lire to the total annual expenditures for navigation and shipbuilding bounties, the exclusion of foreign-built ships from navigation bounties, and a proviso that steamers shall not be paid for more than 380,000 miles a year; or sail vessels for more than 12,000 miles a year. The maximum annual navigation bounty a steamship can receive is thus $4.65 a gross ton unless the secretary of the navy for a 16-knot steamship authorizes an increase up to 50 per cent. Thus the Duca degli Abruzzi, 16} knots, 7,800 gross tons, would be entitled under the law to $36,270 per annum and 50 per cent additional if the secretary of the navy elects. Apparently this allowance is not made. The round voyage from Genoa, Naples, to New York and back is 15,000 miles, and under favorable conditions a 16-knot steamship would make between four and five voyages annually, so that the navigation bounty would be a trifle over 50 cents per mile traversed or $1 per mile outward. Besides the navigation bounty, however, a construction bounty of about $115,000 was due upon the successful trial trip of the steamer. The following table shows the expenditures for the past three years and the provision in the Italian budget for the current year for the general bounties to Italian ships under the law of 1896, as amended : ITALIAN BouNTIiEs, 1906-1909 Tar.f refunds......... Construction bounties Repair bounties........ Navigation bounties: Steam. [ail Total. ceeca--. Li ha Tormmmretlidollars. 1008. Lire. 1,409,489 2,500,088 109,474 8, 020,085 205. 1RS 7,244, 821 1, 358, 15 1907. Lire. 561, 122 1,160, 271 999 473 8,207, "9 160 149 rq _ db. Lou 1908 Lire. 6,003,498 1,158,675 1909. Lire. > 4,488,426 - 8,511,575 8,000, 000 1’ 544’ 000 The largest single beneficiary of the navigation bounty is the Navipazione Generale Italiana, which has received an average of 780,000 OCEAN MAIL SERVICE. b3 lire annually for the past five years (791,723 lire in 1908), besides its mail subventions. The fast Italian mails for America, of course. are sent by rail to Channel ports, so the-Italian lines to the United States are not under mail contract. The navigation bounty of 780,000 lire is paid for 26 voyages to New York, aggregating 234,000 miles, and 34 voyages to Brazil and Argentina, aggregating 468,000 miles, in all 702,000 miles, or 21 cents per mile the round voyage. The principal expenditures of Italy, however, are under her ocear and Mediterranean mail contracts, a summary of which follows: ITariaN MAIL CONTRACTS. Cormapany. Annual mileage. Subsidy. Aver age per mile. Company. Annual mileage. Subsidy. Aver age per mile, Navigazione Generale Italiana o.oo... Nederland e.........-Venezianf... cece-... NOIO0R, sevuurinass som PIES ecnramwnne we Napoletana.... es , 752, 960 352, 386 143, 856 187, 628 164, 355 84. 465 31,816,774 13, 510 212,300 106, 150 126,222 19 300 $1.03 .38 L.47 277 .76 93 Jiciliana . - La Cava. ......... Miscellaneous administrative expenses ... Total.... 46, 851 8 38 $26, 648 1,872 $0. 57 +29 7,141 ....... 2,328,917 |..nenn-@ The subsidy to the Nederland (Dutch) Steamship Company is a mall payment, pure 309 simple, to a foreign corporation for carrying the Italian mails to Batavia 26 times year. The 103 steamers, aggregating 258,400 gross tons, of the Navigazione Generale Italiana comprise over a fourth of the steam tonnage of Italy, and the mail and navigation services of the company reach nearly every port of the world where the Italian flag is seen. The contracts of the company with the Government fill a small volume. Following are the routes, which involve 80 per cent of the appropriations to that company, the remainder being voted for short and frequent voyages between Italian ports: CONTRACTS WITH NAVIGAZIONE GENERALE ITALIANA. Route Miles. Voyages, Subsidy per niile, Total. !. Naples-Palermo.... “ew " Genoa-Alexandria ....o....o.... < ann Naples-Palermo-Constantinople ..... PE — , Venice-Constantinople....-cuaaeevencemueennaansene Port Said-Bombay........... wm rom mmm SR Civitaveechia-Gulf Aranci... Ths Bombay-Singapore.. eee Venice-Port Said.. PO Masgua-Aden......coaanen .. Naples-Palermo-Tunis ........ es Alexandria-Massua ..- wo Naples-Tripoli.... ww Tunis-Tripoli.... a Leghorn-Tunis.... frp— 16. Genoa-Port Said......... ws 16. Syracuse-Malta-Tripoli.........cocc . 17. Alexandria-Port Said-Tripoli ... 336 2,750 2,700 2, 600 6,000 313 4,900 2,775 810 720 2,400 1,080 {, 060 915 2,910 1,270 1 350 213 5% 62 52 12 313 12 24 $1.76 1.00 1.00 1.05 .93 3 . 60 .33 .€2 .62 = > Lire. 986, 826 807,976 747, 302 739,116 726, 480 497,044 489, 960 444,576 858, 545 317,208 311,922 280, 332 277,212 237,900 197, 798 165, 556 99.185 7,684,934 1,483,194 RF 12 26 13 L: .9 1 3: Total fi seme 1dpllars.. “4 OCEAN MAIL SERVICE. The configuration of the Italian peninsula and of the Italian islands is such that communication in many cases is possible only by sea, and a considerable part of the Italian subsidies are similar to our payments for railroad mails, for star routes, and even for rural free delivery. There are only about 12,000 miles of railroads in Italy. Thus the largest single appropriation in the table above is for the daily steamer between Naples and Palermo. In the mail contracts with other steamship eompanies the entire payment of 654,000 lire to the Puglia Company, 100,000 lire to the Napoletana, 138,070 lire to the Siciliana, and 9,700 lire to La Cava are wholly for services between domestic ports. Italy produces no coal, so the expenses of steam navigation are correspondingly increased. Other expenditures, such as those to the Navigazione for the routes marked 2, 8, 9, 11, for example, are obviously to maintain close connections with Italian possessions on the Red Sea, for Italy is no exception to the rule of nations by which it is considered a national obligation of the first importance to have superior transportation facilities under the national flag between the central government and its remote possessions. The only exception is the United States. The contract of the Navigazione Generale was for fifteen years from 1893, and the conditions of renewal at this writing are still under consideration. The speed required ranges generally on 10 to 18 knots. The rate of subsidy given above is or the round voyage. For the outward voyage alone, as provided in our ocean-mail law of 1891, the rate above, of course, should be doubled. For 12-knot steamers we pay 77 cents under the act of 1891, so that the lowest Italian rate is more than double the American. All the Italian fifteen-year mail contracts expired June 80, 1908, but have been temporarily extended, with notice of final termination on June 30, 1910, when the whole subject will be reviewed by the Italian Senate and Chamber of Deputies, with a view to new arrangements more in accord with the development of Italy and of shipbuilding since 1893. A review on this page of the contracts in force, accordingly, would be unprofitable. The general navigation bounty law of Italy also will probably be recast within the next few months. Italian anchorage taxes, corresponding to American tonnage taxes, in 1907 amounted on Italian ships to 2,095,011 lire ($404,337); on foreign ships to 9,570,106 lire ($1,847,080), a sum more than suflicient to pay navigation and shipbuilding bounties. SPAIN. The Spanish Cortes this year enacted a law approved June 17, 1909, which establishes a comprehensive system of mail subsidies and navigation and shipbuilding bounties. The essential features of the law are printed in Appendix N. Last year Spain expended 10,282,000 pesetas ($1,984,426), of which 8,445,292 pesetas (peseta=19.3 cents) were appropriated to the Compafiia Trasatliantica for its lines to the Philippines and elsewhere. An examination of the details of these expenditures is unnecessary here, as the new and more comprehensive project covering ten years is about to go into effect. The project calls for an annual expenditure of 2,750,000 pesetas ($530,750) for general navigation bounties, 2,000,000 pesetas ($386,000) for navigation bounties to mail lines to Brazil, ir. New York, Habana, and to the Adriatic and Black seas, 9,627,909 pesetas ($1,858,186) for OCEAN MAIL SERVICE. b5 navigation bounties to mail lines to the Philippines, Argentina, New York, Cuba, Mexico, and the Caribbean, and 1,943,400 pesetas ($375,076) for steam connections with the Canaries and Balearic Islands and Spanish possessions in Africa. The shipbuilding bounties are not estimated, but the amount presumably will not be large. The rates per gross ton for vessels built in Spain are for steel passenger steamers $35.70, for steel cargo steamers $32.80, for wooden sail vessels $19.13. During 1908 the shipbuilding bounties amounted to only $38,000. The general navigation bounties are limited to 2,750,000 pesetas ($530,750) a year, and only 350,000 tons may share in them. The general rate is 0.4 peseta, or 7.7 cents, per gross ton per 1,000 miles. _ The principal subsidized mail routes, to be carried out in most instances by the principal Spanish steamship corporation, the Compafiia Trasatldntica, may be thus summarized: Spang Main RoUTEs. Route. Voyages. 1. To the Philippines .- Cimeen 2. To Argentina. ...coooeee aacncnen-a 8. To PortoRico,Cuba, Venezuela, and Colombia. 4. To Cuba and Mexico ...-..- + alice wun B. To New York, Cuba, and Mexico...{.....do CREREY 6. To Fernando P6..een.--. ome dlinnpitir Every 4 weeks. . Monthly..eeuuee ..do. wn Total.cvan a Average. Subsidy. Total. Per mile. 3500, 488 335,133 300,903 281, 605 274,709 166, 200 $1.70 2.81 1.91 2.81 L91 1.29 1,858,128 » Minimum. Number. b Steamships. Speed. Tonnage. nots. 122 133-15 12413 4, 500 134-16 125.17 29,000 b 7,500 39, 000 b&,000 + 2,000 2 400 i 1] Besides the subsidies tabulated above, the Spanish law provides for 10-knot cargo boats a subsidy of 950,000 pesetas (3183350) for 12 voyages to New York and Habana and $129,310 for 24 voyages to Argentina. Over ten years after the loss of the Philippines, Spain deems it desirable to spend about $500,000 annually in maintaining communication under the national flag with the archipelago. For 14-knot steamers to Argentina, once a month, Spain is willing to appropriate at the rate of $4.60 a nautical mile outward, the rate for 16-knot American steamships defeated in the House of Representatives last March. The recent subsidy legislation of other countries in fact shows that various shipping propositions which have passed the Senate of the United States during the past ten years, and failed in the House, have been studied elsewhere, and that some of their features, adapted to varying national conditions, have been gy in the laws of other countries. Spain has already provided for a subsidized line through the Panama Canal. The Spanish law increases Spanish tonnage taxes to 14 cents at each entry, which may be commuted by payment of an annual tax of 2 pesetas, or 39 cents, the annual maximum under our tariff act of August 5, 1909, being 30 cents. “np 17) OCEAN MAIL SERVICE. AUSTRIA-HUNGARY. Austria-Hungary on February 23, 1907, passed a comprehensive navigation and shipbuilding bounty law (see Appendix N), to be in operation for fifteen years. The bounty is confined, of course, to vessels in competitive foreign trade, and foreign-built ships are admitted to it only when launched less than two years before placed under the Austrian flag. Among other requirements is a prescription of the amount of Austro-Hungarian exports and imports which must be carried. Under this law steamships built in the dual Empire after January 1, 1907, are entitled to 10 crowns (crown=20.3 cents) per gross ton for each of the first three years after launching. Beginning with the fourth year this bounty is reduced annually 5 per cent, and beginning with the tenth year the annual reduction is 10 per cent. Foreign-built steamships registered under the Austrian flag before December 31, 1910, are entitled to an annual bounty of 7 crowns; registered after December 31, 1910, to 6 crowns. The percentage of reduction for age is, of course, the same. Austrian-built sail vessels are entitled annually to 6 crowns for three years with the same reduction for age. To receive these bounties a vessel must be in commission at least nine months a year. The law also grants a shipbuilding bounty of 40 crowns ($8) per gross ton for steamers and 14 crowns ($2.80) for sail vessels built in Austrian yards and of at least 50 per cent domestic material. For engines and boilers built in Austria a bounty of 8 crowns per 100 kilograms (say, $1.60 per 200 pounds) is provided. A uniform navigation bounty of 2 cents per net ton is appropriated for all types of vessels in the foreign trade, under the limitations already indicated. Still further, ships receiving these various -bounties are exempt from the industrial taxes of Austria. The general bounty each year can be paid only to 15,000 gross tons of steamers and 3,000 gross tons of sailing vessels. Foreignbuilt vessels are not entitled to any bounty unless the quota above is not filled by Austrian-built ships. The shipbuilding bounty can not be granted to more than 25,000 gross tons during a year, but when a balance remains it may be carried over to following years. There is no limitation to the amount of the navigation bounty, but with the general bounty it can not exceed the following annual maxima: 1908, $880,000; 1909, $940,000; 1910, $1,015,000; 1911, $1,060,000; 1912 and thereafter, $1,120,000. Under the general law the maximum appropriations for 1910 will be 5,000,000 crowns ($1,015,000) for the navigation and trade bounty provisions and 1,000,000 crowns ($203,000) for construction bounties, assuming that 25,000 tons of Austrian steamships are built in the year and making no allowance for the machinery bounty. These provisions of the general law, however, are not the main reliance of Austria for the military strength of its merchant marine. It has specific mail contracts with the Austrian-Lloyd Steamship Company, whose 60 steamships, of 196,292 gross tons, comprise a third of Austria’s tonnage in foreign trade. The Austrian Reichsrath on February 23, 1907, authorized a navigation and ocean-mail contract for fifteen years with the Austrian-Lloyd Steamship Company, by which a maximum annual subsidy of $1,450,000 is assured to the company. In addition the Government OCEAN MAIL SERVICE. 517 agrees to refund to the company annually, when the contract is in full operation, its Suez Canal taxes on 42 voyages into the Indian and Pacific oceans, amounting to about $375,000. Still further, the contract binds the company to build its new mail steamships in Austrian shipyards, in return for which an additional annual shipbuilding bounty of $240,000 is guaranteed. The following synoptical table shows the details of this fifteen-year contract: ATUSTRIAN-LLOoYD SUBSIDY. Route. | Voyages. 1. Trieste-Constantinople.. a 2. Trieste-8alonica. ...c.ooovoeenermamenn, 8. Trieste-Smyrna-Constantinople...... 4. Trieste-Beirut-Messina....ceeeaenens 5. Trieste-Alexandria. .cocvvinenacnnann-A. Constantinople-Braila .......ccoano oe 7. Constantinople-Qdessa ...... wn 8, Constantinople-Batum....... re 9. Trieste-Bombaya...... ww 10, Trieste-Bombava..... ve 11. Trieste-Calcuttae.... oH 12. Trieste-Kobea 32 52 52 26 6 i 6 x Total... Miles per voyage. | 2,542 3.414 3534 3,700 3, 893 2,424 828 819 .,262 7,656 656 244 19. 643 Minimim gTOSS tons. , 000 © 000 800 000 000 000 80 800 000 000 , 000 "res (OG Minimum speed. Knots. L 2 Subsidy per mile. Bl.44 97 97 L997 3 44 “7 "a oF 3} oe) Total annual subsidy. $190, 345 172, 202 178,256 93,314 9%, 308 181, 509 16, 063 21,412 63, 655 118, 624 35, 960 117, 940 162, 644 1,450,432 e Suez Canal dues also refunded. The round voyage rates of subsidy to Austrian steamships may be compared with ‘outward rates under our act of 1891. For 10-knot steamers the Austrian Government pays from 69 cents (plus refund of Suez Canal charges) to 97 cents per nautical mile. The Government of the United States does not class as mail steamers those below 12 knots. For 12-knot mail steamers the Austrian Government pays $1.44 and for 13-knot steamers, $1.14 (plus refund of Suez Canal charges). For 12 and 13 knot mail steamers our Government pays 77 cents per nautical mile. For the 14-knot Mediterranean steamers to Egypt the Austrian Government pays $1.44, while the maximum payable to vessels of that speed under our act of 1891 is $1.30. On the part of the Hungarian Government separate mail contracts are made with the following Hungarian steamship companies under the following laws: TIUNGARIAN MAIL CONTRACTS. Adria Royal Hungarian 8. 8. Co. (act of 190%) rove Hungarian Levant Co. (act of 1898) oom Hungarian-Croatian 8. S. Co. (act of 1901) ree Hungarian River Navigation Co. (act of 1894) mmm Crow ns.# I 140, 000 180, 000 590, 000 800, 000 Total. ee 2,710,000 Hungarian ships also received 750,000 crowns for navigation bounties and 850,000 crowns for shipbuilding bounties under the act of 1907. To complete the ocean mail system outlined above, the Austrian Government has just drawn an agreement for South American a Crown=20.3 cents. 58 OCEAN MAIL SERVICE. lines with the United Austrian Shipping Company. The contract is for fourteen years from 1910 and carries an annual payment of 1,000,000 crowns ($200,000) for voyages once in three weeks at the start, to be increased to once in two weeks in 1912. The Reichsrath has not yet ratified it, but public sentiment favors it and ratification is probable. RUSSIA. The navigation of Russia is exceptional in that it comprises as many distinct phases as the navigation of the United States. Russia has not only a coast on the Baltic Sea and on the Pacific Ocean, but also on the White Sea, Bering Sea, and Arctic Ocean, the Black Sea, and the Caspian, while the river systems of the Empire are important. A large part of her navigation hn certain months is blocked by ice, and communication between her Pacific ports and the Baltic and Black seas is necessarily subject to Suez Canal dues. With a relatively great coast line in the aggregate, Russia is thus much less favorably placed for maritime enterprises than smaller nations. The merchant shipping of the country since Peter the Great introduced the art of shipbuilding has been closely connected with the Government. The principal Russian steamship company, the Volunteer Fleet, was created in 1877, not as a commercial venture but as a military measure in view of possible war. Its capital was subscribed by wealthy Russians, and the Government has virtually the control of its board of directors. The amount of state aid thus always has been considerable and is at the present time in proportion to Russian steam tonnage. Russian subsidies are not in the form of mail contracts, although mail transportation is required, but are given for specified voyages on specified routes. During 1908 they amounted to 2,997,239 rubles (ruble=51.5 cents), or $1,543,578. The details are given in Appendix N. Besides these, 650,000 rubles ($334,750) was appropriated to refund the Suez Canal dues paid by Russian ships. The vote for Caspian Sea navigation was $149,030 for the White Sea and Arctic Ocean, $148,350, and for the Black Sea and Danube River, $161,288. These forms of navigation are not within the sphere of general international competition. Since the war with Japan the operations of the Russian Volunteer Fleet and the East Asiatic Company have been materially altered, and some of their best steamships formerly employed in trade through the Mediterranean with Port Arthur have engaged in the trans-Atlantic trade to New York. In 1908 the Russian Government made an eleven-year contract with the Russian Volunteer Fleet Company by which an aggregate payment of 6,905,000 rubles ($3,556,075) is guaranteed, payable in varying annual installments for two voyages a week out of Vladivostok to Chinese and Japanese ports. Details of the contract are in Appendix N. For 1909 the amount allowed is $412,000 for a total of 220,380 miles, or at the rate of $3.75 a mile outward, compared with $2.30 a mile allowed under our oceanmail act of 1891 for steamships of 16 knots, which the Russian contract ships are required to develop on trial trips. Temporarily the company has been allowed to employ foreign steamers of less speed for a lower subsidy, but beginning with January, 1910, Russian ships must be used. OCEAN MAIL SERVICE, 59 The war of 1904 demonstrated that the weakness of the large nation and the strength of the smaller lay, in part at least, in the merchant marine of each. Since then Russia has been engaged in a study of the merchant-marine systems of other nations, and particularly of the forms of legislative promotion of navigation and shipbuilding. Appendix N contains the draft of a bill pending last July in the Duma for shipbuilding bounties. These bounties range from $25.75 to $51.50 per gross ton, and in the case of steamers an additional bounty of $18 per indicated horsepower is allowed for engines built in Russia. These figures are very large and they indicate the lengths to which the supporters of the measure are willing to go in order to secure a merchant fleet and the seamen, necessity of whom for national defense has been demonstrated to Russia. The officers and seamen of the Volunteer Fleet are part of the military forces of the Empire. DENMARK. The Danish laws do not provide for navigation or shi building bounties, admiralty subventions, or appropriations for rE aos The United Steamship Company is paid at pound rates for transporting mails and parcels post to the United Btates, and the Danish ast Asiatic Company is paid in the same manner for carrying the mails, etc., to St. Thomas in the West Indies. The amounts are not stated, but they must be small, as the fast trans-Atlantic mails of Denmark, of course, are sent by the 20-knot steamships under other flags. The Aarhus-Kallundborg Line receives 12,000 kroner (kroner = 26.8 cents), or $3,618, for its services. Denmark paid about $10,000 annually for its steam connections with Iceland and the Faroe Islands, according to the report to the British House of Commons in 1902. Whether that amount is now paid has not been ascertained. Also ab that time Denmark was paying trade subsidies to lines of the United Steamship Company to England to promote the sale of fresh butter and Danish agricultural products in England. These amounted to $48,000 in round numbers, and in addition the steamers were exempt from $26,800 in government harbor charges at Esbjerg. The Danish Government also on the government railroads gave exports the benefit of reduced rates on the long haul, including distances on land and sea. In 1902 all these forms of payments amounted to between $140,000 and $150,000. Doubtless they have since been changed immaterially. Inquiry has not been i on the subject, because these payments are solely for the development of the trade of Denmark with her immedate neighbors or with her remote islands of Iceland and St. Thomas, and they offer no important consideration to the people of the United States. Resemblances between natural conditions in Denmark and Norway readily offer themselves, and the growth of Danish shipping is due to natural causes—so to speak— Tather than to the small state appropriations mentioned, which have other and definite purposes. SWEDEN. Sweden has adopted a special method for the Homan of Swedish navigation companies. The Diet in 1903 esta lished a fund called the “ Rederilane-fonden” (shipowners’ fund), from which the 50 OCEAN MAIL SERVICE. State loans money on favorable terms to Swedish navigation companies. The fund in 1908 was 5,000,000 crowns (crown—26.8 cents) ($1,340,000), increased in 1905 to 10,000,000 crowns, and in 1907 increased to 15,000,000 crowns ($4,020,000). The amount so loaned in 1909 has not been ascertained. In 1906 Sweden entered into a fiveyear contract with the Swedish Nordstjernan Company, guaranteeing a total subsidy of 510,000 crowns, increased in 1908 to 655,000 crowns, for a steamship line to Buenos Aires, the subsidy for 1909 being 150,000 crowns ($40,020). In 1907 a five-year contract was made with the Swedish East Asiatic Steamship Company for a total subsidy of 1,850,000 crowns for regular service to the Orient, the annual payment being about $100,000. This subsidy is calculated to pay all the Suez Canal tolls of the ships. These subsidies, of course, are trade and navigation subsidies, for there are much quicker ways of sending Swedish mails to Asia and South America. For its mails to the United States only $3,752 are paid to Swedish ships, included with $137,752 paid in 1909 for the ocean-mail service to neighboring European countries. PORTUGAL. Portugal has no laws for general construction or navigation bounties or admiralty subventions and makes no appropriation for naval reserves. The Empresa Nacional de Navegacao received for its mail service during the year 1907-8 a sum equivalent to $53,000, and the appropriation asked for during 1908-9 was equivalent to about $50,000. Its contract with the Government, made in 1905, binds the company in return to carry free mails and official correspondence and parcels post up to the weight of 1,000 kilograms per trip. Beyond this weight the payment to any port is 2 cents per kilogram, and the post-office agent is transported and maintained without charge to the Government. BELGIUM. Belgium grants no subsidies and is so far dependent on foreign shipping in certain directions that it offers a bonus to German steamships to call at Antwerp. Since 1889 it has paid to the German Australian Steamship Company 1,500 francs a voyage to have its monthly steamers for Australia call at Antwerp, where at least 1,500 tons of outward freight are guaranteed. Under a somewhat similar arrangement the North German Lloyd Company is paid 60,000 francs a year, in return for which its steamers under contract with the German Government for voyages to Asia and Australia agree to stop at Antwerp for cargo. The Government also repays to the company all its Belgian and Dutch pilotage taxes. The steamers of the German Kosmos Line for Chile and Peru stopping at Antwerp are also exempted from pilotage charges. During 1908 the refund of pilotage charges amounted to 170,000 francs, and other payments, as above, to 120,000 francs; in all, 290,000 francs, or $58,000. SOUTH AMERICA. The countries of South America are not shipbuilding countries, and so far as they have merchant steam fleets they are composed mainly of vessels built in England. The shipping under the flags of OCEAN MAIL SERVICE. 61 the countries of South America, of course, have only a trifling share in the world’s foreign commerce, but those countries repeatedly have manifested a willingness to vote liberal subsidies to promote ocean commerce. Spain is now inviting Argentine cooperation. The Lloyd Brasileiro, of Rio de Janeiro, is the principal company of South America. It operates 53 steamers mainly along the coast of South America, although it is now undertaking to carry on communication with New York with chartered steamers. The latest official reports are to the effect that the Government of Brazil, always closely connected with the company, intends to buy a controlling interest in it and operate it as a government commercial mail line to the United States as well as along the Brazilian coast and to the La Plata. The negotiations in October have not been reported as yet concluded. A September report of the British legation at Rio de Janeiro states of Brazilian subsidies: The national mercantile marine is subsidized to the extent of about £260,000 ($1,300,000) per annum in return for stipulated services having in view the opening up of the interior and keeping in touch with coastal and fluvial ports for postal purposes. These subsidies refer to grants from the Federal Government, but occasionally companies are permitted to receive subventions at the same time from state governments, The most heavily subsidized company is the Lloyd Brasileiro, which receives £I 87,000 ($008,820) annually and is granted numerous privileges, which, however, do not appear to leave it in a very satisfactory position. The company’s contract is doubtless burdensome, which may partially account for its being so often in trouble, but it is of great value to the country in regard to the particular purposes for which it was initiated, viz, the establishment of regular services between little-frequented ports and as an adjunct to the navy. Its present affairs are undergoing a change and are too involved and ill defined to permit of any concise statement. To some extent the Brazilian river postal subsidies resemble the payment in 1908 of $758,235 by our Post-Office Department to our river steamboats for carrying mails, as on the Yukon. | In 1905-6 the Argentine Congress passed a bill providing a subsidy of $25,000 a voyage for fast steamships under the flag of Argentina between Buenos Aires and the great seaports of Europe. No action under the measure has yet been reported. } The Government of Chile is considering the question of ocean-mail subsidies. Last year it paid $45,625 to the Chilean _Compaiiia Sud Americana and $14,600 to the British Pacific Steam Navigation Company for mails to Panama. The ultimate Chilean arrangements, of course, can not be made until the opening of the Panama Canal. Including the amount stated above, Chile 1s reported to have paid $953 195 for its mails by sea last year. OTHER COUNTRIES. The Government of Roumania owns the railroads and also a steamship line connecting its ports with those of Turkey and Greece. From Turkey and Greece no information was requested. China has no budget and makes no formal contracts for its ocean mails, but allows certain privileges to the steamship companies carrying them which are regarded as sufficient compensation. Mexico’s joint subsidies with Canada for British lines on the Atlantic and Pacific and the contract to join with Japan in subsidizing a Japanese trans Pacific line have been referred to. No inquiry was made concerning Central American States. 32 OCEAN MAIL SERVICE. The subsidized lines of all the principal maritime countries of Europe, of Japan, and of Australia through the Suez Canal give Egypt, of course, the best ocean-mail facilities of any country in the world. The Egyptian Government is under a fifteen-year contract to pay $29,550 to British shipowners for mails from Alexandria to Constantinople and has made a supplementary contract for $24,962 for weekly mails to Suakin. SUEZ CANAL TOLLS. The refund of Suez Canal tolls as a means of promoting national shipping is a specific part of the policy of Russia, Austria-Hungary, and Sweden, and indirectly through their subsidies to national mail lines using the canal such refund is in effect part of the policy of Germany, France, Holland, Japan, Italy, and Spain. The British Peninsular and Oriental subsidy chances to be almost exactly the sum of its Suez Canal tolls, $1,600,000. The present rates of Suez Canal tolls are 7.75 francs ($1.50) per net ton, reduced to $1 for ships in ballast. Passengers pay $1.93, children between 12 and 3 years half rate, and children under 8 years are free. There are also variable pilotage, towage, and anchorage charges in certain cases. The transit receipts in 1907 were $22,388,000. About one-fourth of this amount is refunded by their respective Governments to steamship companies in the form of subsidies. This general policy will doubtless be considered when upon the completion of the Panama Canal the policy of the United States concerning tolls shall be determined. There is ample precedent for the refund of tolls to be paid by American ships, especially as the United States will pay all the costs of building the Panama Canal. FREE SHIPBUILDING MATERIALS. The extensive shipbuilding bounties provided by France and some other countries are designed in part as a refund of customs duties on materials imported for the construction of ships. The United States began in 1871 the policy of admitting free of duty materials for shipbuilding, and has gradually extended that policy. Section 19 of the tariff act of August 5, 1909, contains this comprehensive exemption: 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 six 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. The tariff, accordingly, will not hereafter enter directly into the cost of building American ships which for at least half the year are engaged in foreign trade. OCEAN MAIL SERVICE. 53 STATUTORY RESTRICTIONS. The statement is often made that the “repeal of our antiquated navigation laws” would be followed by the speedy return of American prominence on the ocean. This statement is always made without a bill of particulars, and usually without discrimination between results due to legislation and results due to causes over which legislation has but slight influence. The conditions under which men follow the sea are radically different from the conditions of fifty years ago. The conditions under which men work on shore in the United States are, of course, different now from the conditions of the first half of the last century. Legislation has had only a moderate effect in bringing about these changes. The statutory restrictions on American shipping are briefly as follows: First. Ownership of American vessels is restricted by section 4131 of the Revised Statutes to “citizens of the United States or a corporation organized under the laws of any of the States thereof.” This restriction as to ownership does not differ materially from the restriction imposed by the laws of other nations, although in a few instances foreign part ownership of national vessels is permitted to a limited extent. Transportation on the water here and abroad, however, as transportation on the land, has passed practically into the control of corporations. The shares of many of these corporations are on the market and there is no reason in statutory law why a large or even controlling interest in an American steamship should not be purchased by British or German capital, or why large amounts of American capital should not be invested in British or Norwegian ships. In fact considerable American money is invested in ships under the British and Norwegian flags; considerable English money is invested in Spanish ships, and German money is invested in ships under the Brazilian flag. In its recent contract giving heavy subsidies to the Cunard Company the British Government has insisted that all the stock of the corporation should be owned by British subjects. In pursuance of this policy the Cunard articles of association now contain this clause: No share in the company shall be held by or in trust for or be in any way under the control of any foreigner or foreign corporation or any corporation under foreign control. This rigid rule in a special case proves the rule that capital is international and that the flag of a ship does not necessarily indicate the nationality of those who share its profits or losses. The requirement of American ownership is thus no real restriction upon the development of our shipping. Second. The master of an American ship and all officers who shall have charge of a watch, including the pilots, shall in all cases be citizens of the United States. This requirement, also imposed by section 4131 of the Revised Statutes, is substantially the law of foreign nations, except England. In 1853 England repealed the law requiring three-fourths of the crews of British vessels in foreign trade to be British subjects and the entire crews in the coasting trade to be British subjects. Since that time the officers of British ships, except of subsidized lines, are not required to be British subjects. 54 OCEAN MAIL SERVICE. While the law just referred to is a restriction upon American shipowners, it should be borne in mind that our naturalization laws make an exception in favor of seamen. Under section 2174 of the Revised Statutes any foreign seaman declaring his intention of becoming a citizen of the United States, who has served three years creditably on board of merchant vessels of the United States subsequent to his declaration, may be admitted to citizenship. Less than three years’ service would scarcely qualify a man for the position of watch officer, so that the restriction as to citizenship of officers is not onerous. It is almost as easy for a competent and industrious Norwegian or German to qualify himself for the position of watch officer on an American ship as it is for him to buy an American farm. Few probably would care to change our laws in these particulars. Third. Except in the case of crews of subsidized ocean-mail steamships under the ocean-mail act of 1891, there is no restriction upon the nationality of the crews of American merchant vessels. Since the act of June 26, 1884, such crews may be shipped for a round voyage to the United States at a foreign port and at rates of wages only slightly higher than those obtaining at such port. We have no statutory standards of seamen’s qualifications except in the case of officers. The obligations imposed by law on American shipowners with respect to the crews of their vessels are not more rigid, generally speaking, than those of foreign nations, and in some respects are less restrictive. No one such statute is recalled the repeal of which would place American shipowners in a better position for success in international competition. Fourth. In 1898 Congress improved the minimum scale of provisions for seamen on American ships and that statutory standard is now higher, from our point of view, than those of other nations. That, however, is to an extent a matter of national taste, and doubtless the German, Italian, or Japanese is as well satisfied with the diet furnished him under his flag as he would be with the American bill of fare. Furthermore, on American ships, both before and since the act of 1898, the food furnished generally has been better than that prescribed by law. Statute has not brought about this result and statute would not change it. The abundance and variety of our food supplies, our relatively sparse population, and climatic conditions have formed our standards of what a man should eat and drink and these standards have been carried on board our ships. Probably no one would care to reduce by law our minimum food scale for ships, and if it were done it would not be possible to feed our seamen as cheaply as the seamen of some other nations are fed. For these conditions the “ antiquated navigation laws ” can not be held responsible; they are in advance of others. Fifth. The Frye law of 1895 regulating forecastle accommodations was passed in advance of the requirements of other nations. It was prompted by consideration for the health of seamen, and, in fact, has led since to improvement in the forecastles of foreign ships. That law is not antiquated, and there can be no rational argument in favor of its repeal. ~ It is an example for others as shown at page 78. Sixth. In the days of sailing vessels fewer men were required to man an American ship than a foreign ship, but the men, generally speaking, were more intelligent and more efficient. In the modern steamer the greater part of the crew is employed in handling coal, OCEAN MAIL SERVICE. 65 where the mental qualities that formerly entered into seamanship have no part. The act of 1908 gave the local inspectors the power to fix the complement of the licensed officers and crew of cargo or passenger steam vessels “ necessary for her safe navigation.” The law is not antiquated nor is it unnecessary. It is, of course, possible that at times the judgment of the local inspectors may err in prescribing too large or too small a crew, but in all such cases appeal to higher authorities is possible, and it is certain that for any length of time in any number of cases unreasonable requirements as to the crew will not be prescribed. REGISTRY LAW. In the last analysis criticism of our “ antiquated navigation laws” will be found to be criticism of one law, and only one, the registry law of December 31, 1792, incorporated in section 4132 of the Revised Statutes, which reads: Vessels built within the United States, and belonging wholly to citizens thereof, and vessels which may be captured in war by citizens of the United States and lawfully condemned as prize, or which may be adjudged to be forfeited for a breach of the laws of the United States, being wholly owned by citizens, and no others, may be registered as directed in this title. The laws of all other nations now permit their citizens or subjects to buy ships anywhere and put them under the national flag. In some instances a registry tax is imposed, somewhat resembling our new tax on foreign-built yachts owned by Americans, but such registry taxes are moderate. In most instances subsidized mail steamships must be built in domestic shipyards, in some instances of domestic materials; and in France the shipwrights must be mainly citizens of France. Generally speaking, however, the citizen or subject of any foreign country can buy a ship where he pleases. The privilege of buying a ship abroad means nothing to a British subject, because ships are built more cheaply in the United Kingdom than elsewhere. The privilege means much to Norwegians, most of whose steamers are bought in England. The United States differs from the United Kingdom, Germany, Japan, Norway, and other countries in the extent of its coasts and the great volume of its domestic trade by water. Our coasting trade has two natural divisions, the trade of the Great Lakes requiring, in round numbers, 2,800,000 gross tons, and the trade of the Atlantic and Pacific seaboards employing, in round numbers, 3,700,000 gross tons. Either of these merchant fleets singly is exceeded only by the entire shipping under the British flag, 18,800,000 gross tons, and the entire shipping under the German flag, 4,355,000 gross tons. Norway, for example, ranking next among foreign nations, has in all 1,993,000 gross tons, France 1,893,000 gross tons, Italy 1,319,000 gross tons, and Japan 1,152,000 gross tons. The registry law has not checked the growth of American shipping In the” domestic trade, for under that law we rank next to the entire British Empire. It is quite possible that the building and operating of American vessels in the coasting trade share in the high costs that obtain generally throughout American industrial life, but those high costs have not, relatively speaking, checked our general industrial growth. The repeal of the registry law, so far as vessels in the coasting trade are concerned, has seldom been S. Rep. 354, 61-2——5 56 OCEAN MAIL SERVICE. seriously advocated. The admission of foreign-built ships to American registry solely to engage in the foreign trade has been earnestly opposed on the ground that it would weaken or destroy the American adr industry. Yet for years no ship has been built in the United States for the foreign trade, except under the ocean-mail act of 1891 or in anticipation of action by Congress to promote the merchant marine in foreign trade. Steamships have been built under that act or to engage part of the year in some of the trades reserved to American vessels, such as the transportation of cargoes from Pacific to Atlantic ports by way of the Isthmus of Panama or of Tehuantepec, but as an independent proposition the registry law is a dead letter so far as promotion of the building of ships at home for foreign trade is concerned. It is necessarily a dead letter, for if ships were built here more cheaply it would be unnecessary, as England discovered in 1850; and when ships are more costly, American capital, seeking investment at sea can readily enter foreign maritime corporations. The repeal of the registry law, so far as ships in foreign trade is concerned, has been earnestly advocated as the one measure necessary to bring about the return of American ships into the competitive ocean transportation business. Reports of this Bureau in 1894 and 1895 may be quoted to this effect. Yet more thorough examination of essential facts will raise considerable doubt as to_the efficacy of such repeal unless accompanied by other measures. Repeal may be advocated as an academic proposition; it may be advocated because the law is at best a dead letter, and it may be advocated in order to clear the way for subsidies when its inadequacy has been shown by actual experience. NATURAL AMERICAN OBSTACLES. Assuming that the law permitted the American registry of a foreign-built ship for foreign trade, would such ships in fact be put under the flag? Since the war with Spain, and partly on account of it, American capital has been more disposed than formerly to venture across the sea. Large amounts of American capital a few years ago were invested in foreign ships and much is now so invested. Ship owning, however, is not a necessary form of investment here as in England and Norway or as it was when the Union was a fringe of States along the seaboard and before transcontinental railways were built. Ship owning is not sought out here for the compliments and honors of Government as in Germany and Japan, where imperial influence is exerted in ways for the encouragement of shipowners apart from the grants of funds by parliaments. On the contrary, in a few quarters in this country the business of ship owning is regarded as akin to railroading, and both have been viewed with suspicion as schemes to exploit our countrymen rather than to extend our country’s resources. The profits of the ocean transportation business as a rule are moderate, the competition is keen, and the risks considerable. The ownership of American ships in foreign trade has almost ceased, and that form of investment is not familiar to banks and capitalists here as it is abroad. It probably would not be difficult to secure American money for investment in established shipping enterprises under OCEAN MAIL SERVICE. 67 foreign flags, for that has been done. Such investors, however, have uniformly stated that there is no adequate business reason for transferring such vessels to our flag, even if the law permitted it. The words “ privileges of a vessel of the United States,” used in the statutes, are illusory, except in the coasting trade. In Central American trade our flag offers plain political advantages. For, these conditions no law is responsible. They are the results of the natural development of our own and other .countries, each along the lines which promise the best returns for capital and labor. American capital is not predisposed toward the sea at present. Much less is American labor so predisposed. With a vast amount of productive land, permitting almost any industrious man who wishes it to own his home and raise a family, the United States stands in a different relation to the ocean than do England, Norway, Italy, Japan, or even Germany. The surplus population of those countries must emigrate or follow the sea. Low as are the wages of German sailors, they compare not unfavorably with wages in German factories. In all branches of ocean transportation where one terminal is at a foreign center of sea labor, such as Liverpool, Antwerp, Genoa, Marseille, or Hongkong, a steamship under the American flag is not at an insuperable disadvantage compared with the same ship under a foreign flag, because under either flag the ship can draw its crew from the same labor market. But in trade to South America, for example, where there is no native seafaring Jpuaiion, the conditions are different. The American ship out of New York for Rio de Janeiro must pay New York wages, while the British ship from Liverpool, the German ship from Hamburg, and the Italian ship from Genoa pay the wages of those ports. Those wages to a very great extent are governed by the general rates of wages of the country, and those general rates in turn are the product of many factors, of which legislation is not usually the principal. Evidently the American, wherever he buys his steamer, can not, under normal conditions, send it from New York to Rio in competition with a foreign ship to the same port from any of the maritime centers of Europe. Partly on account of higher wages, British shipping is slowly yielding its supremacy, for British steam tonnage in ten years has declined from 53 per cent of the world’s total to 45 per cent. As Germany has no coasting trade, her shipping must go foreign. Among the fanciful causes for the decline of the American merchant marine, the high tariff is sometimes included. Of course any tariff is to an extent a check on international trade. But the tariff operates precisely the same on foreign as on American ships. If it were so high that nothing could be brought by sea into the United States, then foreign as well as American ships would have to enter in ballast and earn their living out of export cargoes. What ships would do the business would be determined by other considerations than rates of duty. So long as in bulk our exports (regardless of values) exceed our imports, some ships must enter the United States in ballast and clear with cargoes. The situation in the United Kingdom would be the reverse, were it not that her exports of coal (62,000,000 tons, not including 19,000,000 tons of bunker coal) suffice to send a large ocean steamer loaded from England or Wales every hour for 38 OCEAN MAIL SERVICE. avery day in the year. Cargoes both ways are naturally desirable for successful navigation, but they are not principally controlled by tariffs, and their presence or absence does not determine the nationality of the ships which do the business to be done. The argument from natural adaptability may be pushed too far. Every fact which tells now against an American merchant marine in the foreign trade told with equal force within the memory of this generation against the creation of a modern navy, yet a navy second only to England’s has been created within twenty years. As an abstract money-saving proposition in times of world-wide peace, perhaps the ideal condition for the United States would be the complete abandonment of the sea to those who can build the cheapest ships and sail them at the smallest cost. In that event we should rely for our ocean-mail transportation and express business on the fast steamships of the great maritime powers which build them according to naval plans and operate them avowedly to strengthen military and commercial power. For the transportation of exports and imports we should rely on cargo boats built cheaply in England, manned by the surplus population of Europe and Asia, and managed by the shrewdness of northern Europe. These are substantially the conditions which prevail in the ocean transportation business of the United States at present. They obtain in the ocean transportation business of no other considerable nation. The endeavors of other nations to maintain different conditions have been outlined. The reasons for those endeavors are, briefly: 1. An ocean merchant marine involving shipyards as well as ships and men is regarded as an essential element of national defense. 2. Regular connections under the national flag are regarded as essential between the mother country and distant insular possessions. 3. Regular connections are regarded as instrumentalities to push national trade, especially through superior mail and passenger steamships. £ The prospects of perpetual peace are not regarded as sufficiently promising to justify a nation in intrusting its entire foreign commerce to the ships of powers which in the past at least have been from time to time involved in wars with one another while bystanding nations without shipping have found their means of transportation curtailed as did the United States in the Boer war. AMERICAN FISHERIES BOUNTIES. The fact is sometimes overlooked, particularly by those inclined to question the constitutionality of navigation bounties, that with the sanction of every President from Washington throogh Lincoln, from 1793 to 1866, the United States uninterruptedly followed the policy of paying bounties to the men and boats engaged in sea fisheries. These bounties for many years averaged $300,000 annually, and from 1793 to 1851 aggregated $10,055,877. From that time until they ceased in 1866 the payments are so included with other items in Treasury accounts that to ascertain the precise amounts paid annually would involve more labor than perhaps the information is worth. In Appendix O the laws and payments of the United States are stated in some detail, OCEAN MAIL: SERVICE. 59 DISCRIMINATING DUTIES. The policy of discriminating duties on imports in foreign ships or discriminating tonnage duties on foreign ships is hopelessly impracticable. The response of other nations to our declaration of such a policy would be direct. They would impose discriminating duties or tonnage taxes on American ships in their ports. Such taxes would be no burden to their own people, because American ships carry only an insignificant per cent (7.3) of our exports. What we should try to gain for American ships at home they would lose abroad. No checkmate on the international commercial chessboard could be simpler. If instances in point are needed, our own early history and the French experiment of 1871-72 show the efficacy of the retaliation which the discriminating duty advocates .would now invite. Incidentally the necessary abrogation of all our commercial treaties would mo bewildering confusion into every branch of our foreign commerce. From such confusion the farms of the interior would suffer with the factories of the seaboard and the railroads which unite them. Indirect discriminations are equally futile. What if, beginning next year, trade between Brazil and the United States were confined to American and Brazilian ships, or with Argentina to American and Argentine ships, or with China to Chinese and American ships? The inquiry will provoke its own answer in the mind of every American and every citizen of those countries who has or hopes to have business dealings with one another. AMERICAN FISHERIES BOUNTIES. AMERICAN L:AWs For Bounties To FrsEiNG VESSELS AND STATISTICS. February 16, 1792.] AN ACT Concerning certain fisheries of the United States, and for the regulation and government of the fishermen emploved therein. Section 1. Beit enacted by the Senate and House of Representatives of the United States of America 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 after the tenth day of June next, and as a 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 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 procefing, 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-eighth 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 quantity of sh taken on board such vessel during such season: Provided, That the allowance ena on any one vessel, for one season, shall not exceed one hundred and seventy ollars, (By the act of July 8, 1797, the bounties to fishing vessels were increased 33% per cent. to take effect on January 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 allowances to partain vessels emnploved 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 ges from any foreign port or Fhe 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 re 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 term of credit for the payment of duties shall be nine months. Suc. 2. And be it further enacted, That on all pickled fish of the fisheries of the United States, exported therefrom subsequent to on last day of December, eighteen hundred and fourteen, there shall be allowed and paid a bounty of twenty cents per barrel, to be paid by the collector of the district from which the same shall be so exported, 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 1 2 OCEAN MAIL SERVICE, 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 som Ey 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 bereceived 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 Po 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 i 4 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 a 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 3 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 hereof 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, that they are truly intended to be exported as therein specified, 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 intended to be exported, ay 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 canceling the bonds given on the exportation of goods entitled to drawback: And provided also, That the bounty or allowance ag aforesaid shall not be paid unless the same shall amount to en dollars at least upon each entry. Src. 3. 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 as 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 bors 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 ever ton of such vessel's burthen according to her admeasurement as licensed or ey if of 20 tons and not exceeding 30 tons, $2.40, and if above 30 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 scason aforesaid, or a part thereof, as the case may be, in such proportion as the fish they shall respectively have taken may bear to 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. 8. 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, OCEAN MAIL SERVICE. 73 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, toreceivetheallowancesaforesaid. And if atany time within one year aiter 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 $100, to be sued for, recovered, and distributed in the same manner ag 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.” SE0. 7. And be it further enacted, That the owner or owners of every fishing vessel 5 20 tons 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 to ray J 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 E 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 A collector aforesaid. Src. 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 is 1a provisions of the act entitled ‘‘An act for the government of persons in certain sheries.”’ Ske. 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. [Fifteenth Congress, second session, chapter 88.1 AN ACT in addition to and alteration of an act entitled “ An act laying a duty on imported salt, granting a bountv on pickled fish exported, and allowances 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 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 5 November in every year, for each and every ton of such boat’s or vessel's burden, according to her admeag urement 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 ly but less than four months, of 4 OCEAN MAIL SERVICE. the season aforesaid, $3.50: Provided, That the allowance aforesaid on any one vessel for one season shall not exceed $360. Sze. 2. And be it further enacted, That such parte of the fifth and sixth sections of the act hereby amended as are contrary to the provisions of this act be, and the sme are hereby, repealed. Approved, March 8, 1819. SEC. 5. of an act reducing the duty on imports, and for other purposes. (Chapter 74, Twenty-ninth Con-‘gress, first session, July 30, 163 Src. 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 a8 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, 8x0. 4. And be it further enacted, That all laws and parts of laws allowing fishing counties to vessels hereafter licensed to engage in the fisheries be, and the same are rereby, 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 lo 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. 8g0. 3. 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 en aged in the fisheries shall be paid only on boats or vessels the officers and at least os fourths 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. rTune 28, 1864.1 AN ACT repealing certain provisions of law concerning seamen on board public and private vessels of the United States. Be it enacted by the Senate and House J 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 Apa _— hundred and thirteen, as makes it not lawful to amploy on board any of the public or private vessels of the United States any person Or persons except citizens of the United States or Dpssngy 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, sne 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, as 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 i be citizens of the United States. DCEAN MAIL SERVICE, A 75 FISHERIES BOUNTIES. Whale isheries. Tonnage. 5,129 3,163 2,364 [,104 763 5,647 3, 466 3,085 3,201 2,390 2,339 6.015 0,507 9,051 "596 777 589 299 ,830 4,942 567 1,230 1168 (224 A750 7,386 6,445 7,995 3.582 ), 503 1346 3,379 1,984 ‘5,992 4’ 201 Yanyr Cod and mackerel. 29... “01, 1 Tonnage. 9,062 23,348 32,542 32,062 20,959 23,048 30,933 34,962 40, 628 2,740 2,979 3,427 ), 382 ‘1,522 1,812 2,014 7,465 9,183 0, 306 1,998 , 487 ,828 234 459 5,877 1,855 3,937 8,126 54,807 39, 107 76,078 *2,040 12,203 39, 226 ’8, 255 7,447 31,462 13, 656 33,939 35, 687 = I TE i... Vena Bounty paid. Dollars. 72,966 93,768 36.280 76,889 30,475 04, 684 28, 605 87,853 74, 520 (04; 447 17,173 45,986 52,027 (62,191 161, 254 142,911 47,166 3,406 1,811 84,736 119,919 148, 915 61, 623 07,34 70, 052 9,897 6.706 38,924 08,724 315.859 206, 185 29. 145 Year. Ey ony . Lummi GARR oR ‘Whale Asheries. Tonnage. 57,284 39,705 2,797 73,246 101, 636 108, 424 97,649 "6,254 ~3,1317 1,860 2,285 "6,927 7,405 1,990 2,517 8,614 1 0,903 ~7,420 3,859 «2,613 °0,186 ‘6,017 "1,644 3,798 3,203 11.901 “6, 848 79,461 "5,842 Ig, 594 5,728 5, 841 5,734 7.714 9,228 5,145 1,233 05,170 "9 2R4 Cod and mackerel. Tonnage. 101,797 97,529 07,189 02,456 11,447 17,486 11,781 29,731 7,363 26,713 08,242 104, 305 77,873 70,902 73,000 01,396 98, 404 15,781 19,132 33, 405 4, 608 31,819 6, 156 3,119 19,078 9,969 3,540 2,339 0,196 ‘8,846 46,707 62,764 32,641 04,197 168, 309 159, 241 112, 677 98,231 76.065 Bounty naid. Dollars. 261, 069 197, 642 200, 428 219,745 245,182 218,218 223,784 213,001 250, 181 Bas 32 (2) None. aBounty paid from 1839 to 1851, inclusive, was $3,618,558, or an average of $300,000 per year. bd Bounty paid from 1852 to 1866, inclusive, grouped with other expenditures in the Treasury reports. APPENDIX E. AN ACT To provide for ocean mail service between the United States and foreign vorts and to promote commerce. Be it enacted by the Senate and House of Representatives 7 the United States of America in Congress assembled, That the Postmaster-General is hereby authorized and empowered to enter into contracts for a term not less than five nor more than ten years in duration, with American citizens, for the carrying of mails on American steamships, between ports of the United States and such ports in foreign countries, the Dominion of Canada excepted, as in his judgment will best subserve and promote the postal and commercial interests of the United States, the mail service on such lines to be equitably distributed among the Atlantic, Mexican Gulf, and Pacific ports. Said contracts shall be made with the lowest responsible bidder for the performance of said service on each route, and the Postmaster-General shall have the right to reject all bids not in his opinion reasonable for the attaining of the purposes named. Ske. 2. That before making any contract for carrying ocean mails in accordance with this act the Postmaster-General shall give public 76 : OCEAN MAIL SERVICE. notice by advertising once a week for three months in such daily papers as he shall select in each of the cities of Boston, New York, hiladelphia, Baltimore, New Orleans, Saint Louis, Charleston, Norfolk, Savannah, Galveston, and Mobile, and when the proposed service is to be on the Pacific Ocean, then in San Francisco, Tacoma, and Portland. Such notice shall describe the route, the time when such contract will be made, the duration of same, the size of the steamers to be used, the number of trips a year, the times of sailing, and the time when the service shall commence, which shall not be more than three years after the contract shall be let. The details of the mode of advertising and letting such contracts shall be conducted in the manner prescribed in chapter eight of title forty-six of the Revised Statutes for the letting of inland mail contracts, so far as the same shall be applicable to the ocean mail service. Sec. 3. That the vessels employed in the mail service under the provisions of this act shall be American-built steamships, owned and officered by American citizens, in conformity with existing laws, or so owned and oflicered and registered according to law, and upon each departure from the United States the following proportion of the crew shall be citizens of the United States, to wit: During the first two years of such contract for carrying the mails, one-fourth thereof; during the next three succeeding years, one-third thereof, and during the remaining time of the continuance of such contract at least onehalf thereof; and shall be constructed after the latest and most approved types, with all the modern improvements and appliances for ocean steamers. They shall be divided into four classes. The first class shall be iron or steel screw steamships, capable of maintaining a speed of twenty knots an hour at sea in ordinary weather, and of a gross registered tonnage of not less than eight thousand tons. No vessel except of said first-class shall be accepted for said mail service under the provisions of this act between the United States and Great Britain.” The second class shall be iron or steel steamships capable of maintaining a speed of sixteen knots an hour at sea in ordinary weather, and of a gross registered tonnage of not less than five thousand tons. The third class shall be iron or steel steamships capable of maintaining a speed of fourteen knots an hour at sea in ordinary weather, and of a gross registered tonnage of not less than two thousand five hundred tons. The fourth class shall be iron or steel or wooden steamships capable of maintaining a speed of twelve knots an hour at sea in ordinary weather, and of a gross registered tonnage of not less than fifteen hundred tons. It shall be stipulated in the contract or contracts to be entered into for the said mail service that the said vessels may carry passengers with their baggage in addition to said mails and may do all ordinary business done by steamships. Sec. 4. That all steamships of the first, second, and third classes employed as above and hereafter built shall be constructed with particular reference to prompt and economical conversion into auxiliary naval cruisers, and according to plans and specifications to be agreed upon by and between the owners and the Secretary of the Navy, and they shall be of sufficient strength and stability to carry and sustain the working and operation of at least four effective rifled cannon of a caliber of not less than six inches, and shall be of the highest rating known to maritime commerce. And all vessels of said three classes heretofore built and so employed shall, before thev are accepted for OCEAN MAIL SERVICE. 7 the mail service herein provided for, be thoroughly inspected by a competent naval officer or constructor detailed for that service by the Secretary of the Navy; and such officer shall report, in writing, to the Secretary of the Navy, who shall transmit said report to the Postmaster-General; and no such vessel not approved by the Secretary of the Navy as suitable for the service requiredshallbeemployed by ‘the Postmaster-General as provided for in this act. Src. 5. That the rate of compensation to be paid for such ocean mail service of the said first-class ships shall not exceed the sum of four dollars a mile, and for the second-class ships two dollars a mile, by the shortest practicable route, for each outward voyage ; for the third-class ships shall not exceed one dollar a mile and for the fourthclass ships two-thirds of a dollar a mile for the actual number of miles required by the Post-Office Department to be traveled on each outward bound voyage: Provided, That in the case of failure from any cause to perform the regular voyages stipulated for in said contracts or any of them, a pro rata deduction should be made from compensation on account of such omitted voyage or voyages; and that suitable fines and penalties may be imposed for delays or irregularities in the due performance of service according to i contract, to be determined by the Postmaster-General: Provided further, That no steamship so employed and so paid for carrying the United States mails shall receive any other bounty or, subsidy from the Treasury of the United States. Sec. 6. That upon each of said vessels the United States shall be entitled to have transported, free of charge, a mail messenger, whose duty it shall be to receive, sort, take in charge, and deliver the mails to and from the United States, and who shall be provided with suitable room for the accommodation of himself and mails. Sgc. 7. That officers of the United States Navy may volunteer for service on said mail vessels, and when accepted by the contractor or contractors may be assigned to such duty by the Secretary of the Navy whenever in his opinion such assignment can be made without detriment to the service, and while in said employment they shall receive furlough pay from the Government, and such other compensation from contractor or contractors as may be agreed upon the parties: Provided, That they shall only be required to perform such duties as appertain to the merchant service. Sec. 8. That said vessels shall take, as cadets or apprentices, one American-born boy under twenty-one years for each one thousand tons gross register, and one for each majority fraction thereof, who shall Pe educated in the duties of seamanship, rank as petty officers, and receive such pay for their services as may be reasonable. Sec. 9. That such steamers may be taken and used by the United States as transports or cruisers, upon payment to the owners of the fair actual value of the same at the time of the taking, and if there shall be a disagreement as to the fair actual value of the same at the time of the taking, between the United States and the owners, then the same shall be determined by two impartial appraisers, one to be appointed by each of said parties, they at the same time selecting a third, who shall act in said appraisement in case the two shall fail to agree. Approved, March 3. 1891