Annual Report of the Commissioner of Navigation for the Fiscal Year Ended ...

In January, 1899, the British commercial attaché at Berlin, in a valuable report to his Government, invited attention to further efforts of the Imperial Government to develop its shipbuilding in these words:

But, independently of this artificial stimulus, the progress of shipbuilding is yearly receiving greater encouragement from the daily increasing improvement in methods of production and from the gradually extending facilities of carriage, which are the natural results of the industrial and commercial prosperity. The new DortmundEms Canal will enable a cheaper transport of Westphalian coal and iron to the seaports, and it will thereby benefit the employment of home products, to the exclusion of foreign goods, in the construction of ships. And the further projected extension of the already extensive network of canals at a cost, it is said, of perhaps £20,000,000 for a midland and other branch canals, joining from east to west the chief rivers of Germany, will certainly add to the possibilities of providing at a cheaper price the materials necessary for shipbuilding, now one of the most important national industries. The immense development of this industry is, be it noticed, almost entirely confined to steam tonnage. The large falling off in the sailing tonnage of the German mercantile marine is considered to be unsatisfactory from the point of view of training crews for sea service, and it is partly on account of this consideration that the Government now do a great deal to develop the fishing fleets of the Baltic and North Sea.

The iron and steel industries have now attained great proficiency in every kind of production, and are daily further advancing their standard of work. Aided by the Government, they will probably soon reach the point at which they can supply all the materials which are still coming from the United Kingdom for the construction of ships. A characteristic sign of the times is the fact that Krupp, the famous maker of ordnance, has recently acquired the Germania shipbuilding yard at Kiel, whereby he will be able to turn out men-of-war, complete throughout with fittings and armaments, "all made in Germany."

Though the position of shipbuilding in Germany is most satisfactory, and has received an unexpected impetus from the passing of the naval bill in the spring of 1898, which authorized an expenditure of large sums on new men-of-war during the next six years, yet the Germans themselves acknowledge that they are still behind Great Britain in some respects, and must not, on any account, rest on the laurels already won. Therefore a keener competition than ever must be expected_by_the British public in every branch of trade connected with shipbuilding, as, indeed, in all the metal trades. One of the advantages that has hitherto told in favor of the English manufacturers of some materials required in the construction of ships is the more rapid delivery orders and the cheaper price. The great struggle on the German side has been to equal this promptness in the execution of orders and to bring down the price. These objects are, no doubt, being yearly more nearly attained. Consequently, it is of vital importance that English manufacturers should take far more care than ever before to maintain these two gradually diminishing advantages in competing with similar German products.

There is also a general conviction among Germans, which will have far-reaching and decidedly disadvantageous results in the course of years to English competition, that the condition of shipbuilding will only become quite satisfactory when the materials employed are exclusively of German production and manufacture.

Finally, through its control of the railroads, the German Government is able to give and does give in some instances lower freight rates on goods to be shipped to Africa by German steamships than are otherwise allowed.

It is not maintained that Germany's maritime growth, which began in 1883-84, is wholly attributable to legislation enacted about that time. That legislation would have been impotent had it not been in the line of a natural development. It is insisted, however, that the Imperial Government has adopted those methods, which, under its system, were open to it, to promote its shipping, and in no other country are the obligations of shipowners and shipbuilders to government greater than they are in that Empire. No money estimate can be placed upon the advantage which preferential railroad freight rates have given to the shipping interest of Germany, but the testimony is conclusive as to their helpfulness.

The German Parliament in 1885, after four years' agitation, voted an annual subsidy of 4,000,000 marks ($952,000) for fifteen years to the North

German Lloyd Steamship Company for lines to China, Japan, aud Australia. Last year this subsidy was increased to 5,590,000 marks annually ($1,320,420) for fifteen years in consideration of an increase in the service. In name this subsidy is a mail contract, but in point of fact, to the Government, it is obviously a political and commercial measure to promote German influence on the Pacific and the export of German goods to China and Japan. The argument in its favor was almost wholly based on these considerations. (See Appendix E.) The mails carried by the line in 1896 were less than 23,000 pounds. With an adequate American transPacific service the mails of eastern Europe for Asia should naturally come through New York until the completion of the trans-Siberian railroad has opened another means of mail communication with the East. In 1890 Germany voted 900,000 marks annually for a steamship line to South Africa. There is no claim that this subsidy is for mail purposes, for the mail facilities to Capetown have not been perceptibly improved. At the coming session of the Reichstag the Imperial Government proposes to ask for an increase of the subsidy to 1,200,000 marks (mark=23.8 cents) for fifteen years, to be paid to steamships built in Germany. The avowed purpose of this subsidy is to promote the export of German products to South Africa.

FRANCE AND ITALY.

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 French 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 FrancoPrussian war French shipbuilders objected to the policy, and in 1872 it was abandoned, and France adopted discriminating duties. Other nations, including the United States by proclamation by President Grant, promptly retaliated, and the policy proved so injurious to all French interests that it was abandoned in 1873, after a little over a year's experience, 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 system established certain bounties to be paid to French shipbuilders directly. France, almost alone among the principal nations, imposes customs duties on shipbuilding materials, and the construction bounties were accordingly in part a rebate or drawback on sums already paid by shipbuilders to the Government. These construction bounties, it was conceded, were not sufficient to offset the enhanced cost of construction in France. To help equalize this difference navigation bounties were provided for vessels built in France. Under this system it is probable that there would have been an increase in French shipyards had not the law also provided that foreign-built vessels to be brought under the French flag should unconditionally receive half the navigation bounties provided for French-built vessels. This intricate system by which customs duties were balanced against construction bounties, and apparently large bounties for navigation were in fact reduced one-half by being shared with foreign-built vessels produced the maximum expenditure from the French treasury with the minimum results to French shipbuilding, though it did rapidly promote French navigation, leading to the establishment of numerous French lines to North and South America and Africa. The development of lines to Asia was hampered by the French law which requires all the officers and three-fourths of the crews of

French vessels to be French citizens, although Europeans are unable to endure the heat of the tropics in the firerooms of steamships.

In 1893 a revision of this law was effected by which foreign-built vessels under the French flag were deprived of the bounty, the construction bounties on wooden vessels doubled, with only a slight addition to the bounty on steel vessels, and the navigation bounties for French steamships reduced by about 25 per cent, while those for sailing vessels were greatly increased. That act allowed a sail vessel 1.70 francs (32 cents) per gross ton per 1,000 miles, and a steamship 1.10 francs (21 cents) per gross ton per 1,000 miles. This legislation, so obviously out of accord with the tendencies of modern shipbuilding and navigation, has proved both expensive and unsatisfactory. The bounties to sail vessels (3.2 cents per gross ton per 100 miles) have been sufficient to pay all the expenses of every description of navigating such vessels, and French yards, not employed in naval work or on mail steamships, are engaged in building large square-rigged vessels, to be navigated for the bounty, without regard to cargo. This system has proved as objectionable as the systems of 1871 and 1881, and another proposition is soon to be submitted to the French Chamber of Deputies. This new plan concedes to steamships the same bounty as that which sail vessels have enjoyed, thus preserving the peculiarity of the excessive sailing bounty already noted. It also proposes a shipowners' bounty (compensation d'armament) based on tonnage, the smaller vessel receiving proportionately the larger bounty, and the bounty to be paid for the number of days the vessel is in commission, regardless, apparently, of whether she is in port or at sea, and of whether the vessel is slow, requiring a small engine room force, or fast, calling for a large number of firemen.

Under these varying systems France has spent annually several millions of dollars, besides devoting about $4,000,000 annually to her two principal steamship companies, the Messageries Maritimes and the Compagnie Générale Transatlantique, which together own about 40 per cent of the French steam tonnage.

The most instructive considerations in the French policy or policies are, first, the importance attached to a merchant marine by the Republic; second, the frequent changes in legislation; and third, the adjustment of details in each system, for which there was doubtless some reason in the minds of French legislators, but which seem to the American mind inconsistent with one another, and taken as a whole out of accord with the tendencies of marine construction and navigation nowadays. There may be room for the widest differences of opinion as to the theoretical propriety and the commercial advantages of a policy of government aid to all its shipping; but even a casual review of the fluctuations and inconsistencies of the French methods will show that deductions as to the general results of such a policy, based on the French experiments, are wholly inconclusive.

Under a general system analogous to the French, adopted in 1886 and slightly modified in 1896, the Italian steam merchant marine has increased 400 per cent in twenty years, or twice as fast as that of France, and much more rapidly than that of Great Britain. The absolute and relative expenditures under the Italian method have been much less than under the French. The Italian laws have provided for construction and navigation bounties. Italy, like France, imposes customs duties on shipbuilding materials, and the construction bounties are designed in part as an offset to those taxes. The Italian laws of 1886 and 1896 did not undertake, as have the French, to give larger bounties to sailing vessels than to steamships, and they are also without other

features which render the French legislation peculiar. Italy is virtually without coal of her own and pays a bounty on coal imported in Italian vessels. The country's iron mines are unimportant, so that Italian ship-builders labor under the greatest disadvantages. Manufacturing conditions in the United States and Italy are thus so widely different that the Italian policy of promoting national navigation and shipbuilding on the one hand does not afford a precedent for the adoption of that policy by the United States, and on the other hand it furnishes no facts from which to conclude that the adoption of that policy by the United States would fail to produce the satisfactory result which its advocates expect. Italian legislation does, however, contribute to the inevitable conclusion to be drawn from the legislation of other countries, that national navigation and shipbuilding are generally deemed essential to the national defense and the general welfare, and as such have a title to the consideration of government superior to that of any other industry.

OTHER NATIONS.

Detailed reference to the maritime policies of other nations does not seem necessary. Information relating to the subject may be found in Appendix E. Briefly, however, Japan has for some years paid large subsidies to her principal steamship lines, and by a law enacted in 1896 gives general construction and navigation bounties. Spain since 1866, in pursuit of a colonial policy, has paid large subsidies annually to her principal steamship company, for lines connecting the Philippines, Cuba, and Porto Rico with the Peninsula. To what extent those subsidies will be maintained in view of changed conditions has not yet been publicly shown, but that the subsidy policy will not be abandoned is indicated by tentative propositions for the establishment of Spanish lines with the Spanish-speaking countries of South America. Spain offers construction bounties, but little use is made of them. Holland's subsidies, which are relatively small, are for the purpose of establishing connections with the Dutch East Indies and with Curaçao. Russia for several years has paid liberal subsidies to certain Russian lines, especially to Asia, and in January will put into force a law restricting the trade between Russian ports on the Baltic and Black seas and Pacific Ocean to Russian vessels. The Suez Canal taxes of Russian vessels are paid by the Government. Austria-Hungary gives annually a large subsidy to its principal navigation company, and in 1894 adopted a law for general construction and navigation bounties.

Norway, Sweden, and Denmark, from natural conditions, are compelled to look to the sea for the employment of both labor and capital. Two-thirds of the crews of the vessels of Norway and Sweden must be subjects. On the other hand, the laws permitting the partial investment of foreign capital in vessels under these flags are very liberal, and there are the fewest practicable restrictions on Scandinavian navigation. For several years British vessels, especially of the older and slower types, have been transferred, with a nominal change of ownership, to the flags of these northern countries. In a report to the British Board of Trade the minority of the commission investigating the manning of British vessels said in 1896:

The transfer of British vessels to foreign flags with merely a colorable change in ownership has happily not hitherto been adopted to a serious extent, but undoubtedly the competition between British and foreign flags is daily growing more keen. Vessels can be transferred to the flag of several countries besides those mentioned in the report-notably Holland, Belgium, Hawaii (now under the protectorate of the United States)-without any practical difficulty as regards change of interest. If so transferred, they would be free from legislative restrictions as to the quantity of

cargo carried, or other state control, pay lower rates of wages, employ fewer hands, and are allowed to carry many more passengers, with less boat accommodations. From a parliamentary return just published, it appears that between the 1st of January and 15th of May, 1896, 173 British vessels, representing a gross tonnage of 132, 195, were transferred to foreign flags.

The British shipowner has undoubtedly a laudable prejudice against placing his property under the flag of another country, but for self-preservation he may be compelled to take refuge in this course rather than lose all prospect of profit in the employment of his capital.

Legislative or administrative action for the promotion of the merchant marine fills a large place in the policy of nearly every Government except the United States at the present time, though for different reasons. Great Britain's subsidies, recently renewed, are chiefly to secure the best types of steamships, to strengthen naval power, and to promote political and commercial aims; Germany's subsidies, recently extended, are to promote shipbuilding and for political and commercial purposes; the freedom of shipping from restrictions in the Scandinavian countries is to secure the largest opportunities for the employment of their surplus population; the bounty systems of France, Italy, and Japan are to promote shipbuilding and for political and commercial

ends.

EXPENDITURES BY FOREIGN NATIONS FOR MERCHANT SHIPPING.

The following table shows the current annual expenditures of the maritime nations of Europe and Japan, so far as they have been ascertained, in behalf of their respective merchant navies. The latest available official reports, reports of steamship companies and mail contracts, copies of which are on file in the Bureau, have been used. The statement is not complete, but it is believed to be accurate as far as it professes to go. Complete figures for the current year would probably increase the total of $26,355,641. For the fiscal year ended June 30, 1899, the United States paid for ocean mails to American vessels $998,211, and to foreign vessels, $487,038, of which the British Cunard and White Star lines received $245,620, and the North German Lloyd $157,057.