1. The higher wages and the greater cost of maintenance of American
officers and crews make it impossible to compete on equal terms with
foreign ships. The scale of living and the scale of pay of American
sailors are fixed by the standard of wages and of living in the United
States, and those are maintained at a high level by the protective
tariff. The moment the American passes beyond the limits of his country
and engages in ocean transportation, he comes into competition with the
lower foreign scale of wages and of living. Mr. Joseph L. Bristow, in
his report upon trade conditions affecting the Panama Railroad, dated
June 14, 1905, gives in detail the cost of operating an American
steamship with a tonnage of approximately thirty-five hundred tons as
compared with the cost of operating a specified German steamship of the
same tonnage, and the differences aggregate $15,315 per annum greater
cost for the American steamship than for the German; that is $4.37 per
ton. He gives also in detail the cost of maintaining another American
steamship with a tonnage of approximately twenty-five hundred tons as
compared with the cost of operating a specified British steamship of the
same tonnage, and the differences aggregate $18,289.68 per annum greater
cost for the American steamship than for the British; that is $7.31 per
ton. It is manifest that if the German steamship were content with a
profit of less than $15,000 per annum, and the British with a profit of
less than $18,000 per annum, the American ships would have to go out of
business.
2. The principal maritime nations of the world, anxious to develop their
trade, to promote their shipbuilding industry, to have at hand
transports and auxiliary cruisers in case of war, are fostering their
steamship lines by the payment of subsidies. England is paying to her
steamship lines between six and seven million dollars a year; it is
estimated that since 1840 she has paid to them between two hundred and
fifty and three hundred millions. The enormous development of her
commerce, her preponderant share of the carrying trade of the world, and
her shipyards crowded with construction orders from every part of the
earth indicate the success of her policy. France is paying about eight
million dollars a year; Italy and Japan, between three and four million
each; Germany, upon the initiative of Bismarck, is building up her trade
with wonderful rapidity by heavy subventions to her steamship lines and
by giving special differential rates of carriage over her railroads for
merchandise shipped by those lines. Spain, Norway, Austria-Hungary,
Canada, all subsidize their own lines. It is estimated that about
$28,000,000 a year are paid by our commercial competitors to their
steamship lines.
Against these advantages of his competitor the American shipowner has to
contend; and it is manifest that the subsidized ship can afford to carry
freight at cost for a period long enough to drive him out of business.
We are living in a world not of natural competition, but of subsidized
competition. State aid to steamship lines is as much a part of the
commercial system of our day as state employment of consuls to promote
business.
It will be observed that both of these disadvantages under which the
American shipowner labors are artificial; they are created by
governmental action--one by our own Government in raising the standard
of wages and living, by the protective tariff; the other by foreign
governments in paying subsidies to their ships for the promotion of
their own trade. For the American shipowner it is not a contest of
intelligence, skill, industry, and thrift against similar qualities in
his competitor; it is a contest against his competitors and his
competitors' governments and his own government also.
Plainly, these disadvantages created by governmental action can be
neutralized only by governmental action, and should be neutralized by
such action.
What action ought our Government to take for the accomplishment of this
just purpose? Three kinds of action have been advocated.
1. A law providing for free ships--that is, permitting Americans to buy
ships in other countries and bring them under the American flag.
Plainly, this would not at all meet the difficulties which I have
described. The only thing it would accomplish would be to overcome the
excess in cost of building a ship in an American shipyard over the cost
of building it in a foreign shipyard; but since all the materials which
enter into an American ship are entirely relieved of duty, the
difference in cost of construction is so slight as to be practically a
negligible quantity, and to afford no substantial obstacle to the
revival of American shipping. The expedient of free ships, therefore,
would be merely to sacrifice our American shipbuilding industry, which
ought to be revived and enlarged with American shipping, and to
sacrifice it without receiving any substantial benefit. It is to be
observed that Germany, France, and Italy all have attempted to build up
their own shipping by adopting the policy of free ships, have failed in
the experiment, have abandoned it, and have adopted in its place the
policy of subsidy.
2. It has been proposed to establish a discriminating tariff duty in
favor of goods imported in American ships--that is to say, to impose
higher duties upon goods imported in foreign ships than are imposed on
goods imported in American ships. We tried that once many years ago and
abandoned it. In its place we have entered into treaties of commerce and
navigation with the principal countries of the world, expressly agreeing
that no such discrimination shall be made between their vessels and
ours. To sweep away all those treaties and enter upon a war of
commercial retaliation and reprisal for the sake of accomplishing
indirectly what can be done directly should not be seriously considered.
3. There remains the third and obvious method: to neutralize the
artificial disadvantages imposed upon American shipping through the
action of our own government and foreign governments by an equivalent
advantage in the form of a subsidy or subvention. In my opinion this is
what should be done; it is the sensible and fair thing to do. It is what
must be done if we would have a revival of our shipping and the desired
development of our foreign trade. We cannot repeal the protective
tariff; no political party dreams of repealing it; we do not wish to
lower the standard of American living or American wages. We should give
back to the shipowner what we take away from him for the purpose of
maintaining that standard; and unless we do give it back we shall
continue to go without ships. How can the expenditure of public money
for the improvement of rivers and harbors to promote trade be justified
upon any grounds which do not also sustain this proposal? Would any one
reverse the policy that granted aid to the Pacific railroads, the
pioneers of our enormous internal commerce, the agencies that built up
the great traffic which has enabled half a dozen other roads to be built
in later years without assistance? Such subventions would not be gifts.
They would be at once compensation for injuries inflicted upon American
shipping by American laws and the consideration for benefits received by
the whole American people--not the shippers or the shipbuilders or the
sailors alone, but by every manufacturer, every miner, every farmer,
every merchant whose prosperity depends upon a market for his products.
The provision for such just compensation should be carefully shaped and
directed so that it will go to individual advantage only so far as the
individual is enabled by it to earn a reasonable profit by building up
the business of the country.
A bill is now pending in Congress which contains such provisions; it has
passed the Senate and is now before the House Committee on Merchant
Marine and Fisheries; it is known as Senate bill No. 529, Fifty-ninth
Congress, First Session. It provides specifically that the
Postmaster-General may pay to American steamships, of specified rates of
speed, carrying mails upon a regular service, compensation not to exceed
the following amounts: For a line from an Atlantic port to Brazil,
monthly, $150,000 a year; for a line from an Atlantic port to Uruguay
and Argentina, monthly, $187,500 a year; for a line from a Gulf port to
Brazil, monthly, $137,500 a year; for a line from each of two Gulf ports
and from New Orleans to Central America and the Isthmus of Panama,
weekly, $75,000 a year; for a line from a Gulf port to Mexico, weekly,
$50,000 a year; for a line from a Pacific coast port to Mexico, Central
America, and the Isthmus of Panama, fortnightly, $120,000 a year. For
these six regular lines a total of $720,000. The payments provided are
no more than enough to give the American ships a fair living chance in
the competition.
There are other wise and reasonable provisions in the bill relating to
trade with the Orient, to tramp steamers, and to a naval reserve, but I
am now concerned with the provisions for trade to the south. The hope of
such a trade lies chiefly in the passage of that bill.
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 impracticability
of commanding suitable steamships in the interest of the
postal service 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 much-needed
service. This is especially true in regard to several of the
countries of South America, with which we have cordial
relations and which, for manifest reasons, should have
direct mail connections with us. I refer 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
satisfactory 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 States in 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 consideration of an adequate
foreign mail service.
It is difficult to believe, but it is true, that out of this faulty
ocean mail service the government of the United States is making a large
profit. The actual cost to the government last year of the ocean mail
service to foreign countries other than Canada and Mexico was
$2,965,624.21, while the proceeds realized by the government from
postage between the United States and foreign countries other than
Canada and Mexico was $6,008,807.53, leaving the profit to the United
States of $3,043,183.32; that is to say, under existing law the
government of the United States, having assumed the monopoly of carrying
the mails for the people of the country, is making a profit of
$3,000,000 per annum by rendering cheap and inefficient service. Every
dollar of that three millions 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 profits that it gets from the ocean mail service in
making the ocean mail service efficient. One quarter of those profits
would establish all these lines which I have described between the
United States and South and Central America, and give us, besides a good
mail service, enlarged markets for the producers and merchants of the
United States who pay the postage from which the profits come.[12]
In his last message to Congress, President Roosevelt said:
To the spread of our trade in peace and the defense of our
flag in war a great and prosperous merchant marine is
indispensable. We should have ships of our own and seamen of
our own to convey our goods to neutral markets, and in case
of need to reenforce our battle line. It cannot but be a
source of regret and uneasiness to us that the lines of
communication with our sister republics of South America
should be chiefly under foreign control. It is not a good
thing that American merchants and manufacturers should have
to send their goods and letters to South America via Europe
if they wish security and dispatch. Even on the Pacific,
where our ships have held their own better than on the
Atlantic, our merchant flag is now threatened through the
liberal aid bestowed by other governments on their own steam
lines. I ask your earnest consideration of the report with
which the Merchant Marine Commission has followed its long
and careful inquiry.
The bill now pending in the House is a bill framed upon the report of
that Merchant Marine Commission. The question whether it shall become a
law depends upon your Representatives in the House. You have the
judgment of the Postmaster-General, you have the judgment of the
Senate, you have the judgment of the President; if you agree with these
judgments and wish the bill which embodies them to become a law, say so
to your Representatives. Say it to them individually and directly, for
it is your right to advise them and it will be their pleasure to hear
from you what legislation the interests of their constituents demand.
The great body of Congressmen are always sincerely desirous to meet the
just wishes of their constituents and to do what is for the public
interest; but in this great country they are continually assailed by
innumerable expressions of private opinion and by innumerable demands
for the expenditure of public money; they come to discriminate very
clearly between private opinion and public opinion, and between real
public opinion and the manufactured appearance of public opinion; they
know that when there is a real demand for any kind of legislation it
will make itself known to them through a multitude of individual voices.
Resolutions of commercial bodies frequently indicate nothing except that
the proposer of the resolution has a positive opinion and that no one
else has interest enough in the subject to oppose it. Such resolutions
by themselves, therefore, have comparatively little effect; they are
effective only when the support of individual expressions shows that
they really represent a genuine and general opinion.
It is for you and the business men all over the country whom you
represent to show to the Representatives in Congress that the producing
and commercial interests of the country really desire a practical
measure to enlarge the markets and increase the foreign trade of the
United States, by enabling American shipping to overcome the
disadvantages imposed upon it by foreign governments for the benefit of
their trade, and by our government for the benefit of our home industry.