REPORT OF AMERICAN MERCHANT MARINE COMMISSION. | 79

in part by the Government by means of an annual payment called a
“‘subvention.” This payment is for value received by the Government
 and value lost by the shipowuner. It is a purchase by the
Government of a preemptive right in vessels which are especially
constructed and kept under Admiralty rules.
On the other hand, a subsidy is a gift for which the Government
receives no direct equivalent and which is intended to assist a new
enterprise. These British subventions differ in principle and in effect
from subsidies. If the British Government, for naval purposes, chooses
to compensate shipowners for building and running auxiliary cruisers,
that is no reason why we, for commercial purposes, should make gifts
to our shipowners to increase their profits and so attract capital in the
ocean carrying trade. Subventions are based on military congsiderations,
 while subsidies are an extension of the principle of Government
aid to certain industries, and a confusion of the two is a disregard
both of facts and of principles.
The foregoing are a few reasons why we can not support the bill as
favored by the majority of the Commission. We believe that the subsidy
 features are wrong in principle and that it would result in an
enormous expenditure from the Treasury of the United States. We
believe that the argument that the money to be thus expended would
be in any appreciable degree derived from the increase of tonnage
taxes is utterly fallacious. If anything is accomplished toward the
building up of our own over-sea carrying trade a large and steady
decrease in the income from tonnage taxes is inevitable. It is equally
true that under the same conditions there would be a rapidly growing
increase in the amount paid in the way of subsidies.
It will be observed also that, unlike other subsidy bills which have
been offered from time to time, there is absolutely no limit to the
amount which may be expended under this bill. It may be true, and
we hope it is, that for a short time the payments to naval volunteers
and the increased expenditures for ocean mail service can be met by
tonnage taxes and the profits from foreign mails; but it must be borne
in mind that the expenses of the Marine-Hospital Service which have
heretofore been paid from the fund arising from tonnage taxes must,
Inder the proposed bill, be met by a direct appropriation from the
reasury.
LA Tn dollars annually will be required for this purpose alone.
S0 it will be seen that with an accelerated decrease of the fund arising
from tonnage taxes and the lowering of the rate of profit from the
Ocean mail service it would not be long until there would be an
Increased drain from the National Treasury, leaving entirely out of
view the subsidies provided for in sections 2, 3, and 4 of this bill.
What this increase would amount to can hardly be conjectured.
What we do know is that the only limit is the number of vessels that
would apply for the subsidy.

James H. BErrY.
ALEXANDER S. CLAY.
STEPHEN R. MALLORY.

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