REPORT

OF

THE COMMISSIONER OF NAVIGATION.

TREASURY DEPARTMENT, BUREAU OF NAVIGATION,

Washington, D. C., October 26, 1896.

SIR: The law prescribes that the Commissioner of Navigation shall annually report to the Secretary of the Treasury such particulars in the laws relative to navigation as may, in his judgment, admit of improvement or require amendment. In compliance with this requirement various bills amending the laws relative to navigation were recommended in the report of the Bureau for 1895, introduced in both branches of Congress, and in more or less advanced positions for consideration are awaiting the action of the law-making power. Some of these measures have been subjected to the closest scrutiny of the committees of the Senate and the House, and nearly all of them have had the benefit of the criticism of the various interests directly concerned. Some have passed one branch of Congress, and of these some have been reported by the committee of the other branch, so that conference and final action may soon be reached. In view of these considerations, and of the necessarily limited time which can be devoted to maritime matters at the coming short session of Congress, it has seemed desirable, in order to secure practical results, to confine this report mainly to a consideration of the bills now awaiting Congressional action.

THE FREE-SHIP BILL.

The adverse report of the Senate Committee on Commerce on S. 189, repealing the restriction of law which denies American registry to vessels owned by American citizens and engaged in foreign trade, unless built in the United States, takes that measure out of the list of those for which Congressional approval may be hoped before the 4th of March. The reasons in support of that bill were set forth in ample detail in the reports of the Bureau for 1894 and 1895. While their force seems unimpaired, to reiterate them now would be merely to enter upon academic discussion without the hope of immediate practical results. The necessity for the bill remains. The futility of the registry law to encourage domestic shipbuilding for the foreign trade has been illustrated by further investments of American capital in foreign-built ships under foreign flags during the year.

Our maritime rank on the Pacific is now threatened by a new rival, Japan, which, under liberal and progressive laws, has just established a transpacific steamship line to the United States, and with the cooperation of American capital is preparing to extend rapidly the service.

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In 1880 the tonnage of American vessels entering the United States from the ports of Asia and Oceanica, including Australia, was 283,395 tons, and of foreign vessels 442,251 tons. In 1895-the latest figures now available-the American tonnage entering was 308,481 tons, the foreign tonnage 657,206 tons. The large and profitable carrying trade once conducted between Asiatic and European ports by American vessels, which seldom entered American ports, has almost entirely passed away. We have already seen the American flag almost wholly disappear from the mid-Atlantic, save as borne by the mail steamers of the American Line, and the figures just presented show that the carrying trade of the Pacific is rapidly slipping from us. Before it is altogether lost it is respectfully suggested that there can be no more proper subject for Congressional inquiry than the conditions of transpacific transportation. It seems reasonably certain that in the immediate future this trade will grow to great proportions. For the control of this trade the United States enjoy 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. Within the last five years Japan's seagoing steel steamships have increased from 13 of 27,701 tons to 53 of 106,383 tons. On the Pacific we have 43 of 68,625 tons.

The Congressional inquiry proposed, it is believed, will confirm the facts and conclusions of the reports of this Bureau for 1894 and 1895. It will show that American capital on the Pacific has been obliged to seek the cover of British and Hawaiian flags. It will show that while Asiatics man the Japanese steamers of the Nippon Yusen Kaisha, Asiatics also constitute the crews of the Pacific Mail line steamers, and that differences in wages and in the provisions of seamen are not the chief factors against the United States in any future effort to regain maritime rank. It will show that Japan has adopted the policy of every other maritime nation but the United States, permitting its ship owners to purchase the instruments of commerce on the most advantageous terms and at the same time to use the national flag. It will show the important parts played by first cost of construction, and the factors dependent on it, interest, insurance, and depreciation. It will show that Government encouragement to shipping in Japan is on modern business lines and not, as practiced or proposed in the United States, through tenacious adherence to laws which for years have shown themselves impotent or through an exhumation of eighteenth century policies of discrimination and commercial warfare. But whether these beliefs be well founded or not, the need of early, thorough, and impartial investigation and of action upon facts thus ascertained will not be questioned. (Japanese subsidy law. See Appendix E.)

EXTENSION OF THE ACT ADMITTING THE NEW YORK AND PARIS.

Pending such an inquiry I have the honor respectfully to renew the recommendation of 1894 and 1895 for an extension of the principle of the act of May 10, 1892, under which the steamships New York and Paris were admitted to American registry and the steamships St. Louis and St. Paul were built in the United States. Under existing law it is impossible to establish on the Pacific a mail service even approximating our Atlantic mail service on equal conditions with those found necessary to the recent creation of the latter. The passage of the bill proposed at the coming session of Congress will thus provide early in

the struggle we must make to hold our rank in transpacific navigation a measure found necessary in transatlantic navigation after decades of a steadily decreasing trade.

As was stated in the report for 1895, the privilege bestowed by the act of May 10, 1892, has been wisely and beneficially used; so well used, in fact, as to warrant the belief that if American shipowners and shipbuilders generally were permitted to avail themselves of the privilege it bestowed upon one corporation our merchant marine would be augmented by the purchase and registry of desirable foreignbuilt vessels, while at the same time construction in our own shipyards would be stimulated. In this belief the Bureau is confirmed by the opinions, expressed verbally and in writing, of leading shipbuilders of the United States.

While general in its terms, that act was in fact the grant of a special privilege to one corporation, as the only two vessels in existence which conformed to all of its requirements were the steamships City of New York and City of Paris. The act admitted foreign-built vessels to American registry upon the following conditions:

1. That such vessels should be steamships, engaged in freight or passenger business in an established line from a port in the United States.

2. That they should not be less than 8,000 tons each.

3. That they should have a speed of not less than 20 knots.

4. That 90 per cent of the capital of the foreign corporation operating such steamships at the time should be owned by citizens of the United States and have been so owned since January 1, 1890.

5. That American owners should obtain a complete transfer of the title to such steamships from the foreign corporation.

6. That the American owners should build in American shipyards steamships of an aggregate tonnage not less in amount than the steamships so admitted to registry.

7. That each steamship so built or contracted for should be not less than 7,000 tons.

8. That all vessels documented under the act should be available for the purposes of the United States in the event of war.

9. That foreign-built vessels admitted under the act should not engage in the coasting trade.

It is believed to be desirable, both as a matter of principle and as a matter of practical benefit to navigation, that the privilege bestowed by this act upon one shipowner and the opportunity for construction it opened for one shipbuilder should be bestowed upon all American shipowners and opened to all American shipbuilders. Every American shipowner can not command the capital to purchase vessels of 8,000 tons or upward, capable of a continuous speed of 20 knots an hour across the Atlantic, nor has every American shipbuilder the facilities to construct a like class of vessels. The bulk of the carrying trade of the Atlantic and Pacific is not carried on in ocean greyhounds and doubtless never will be. If the principle so successfully invoked in the case of the New York and the Paris is to be of general service to American shipowners and shipbuilders, it must not be restricted by conditions as to tonnage and speed which enable only those with great capital to make use of it.

The purpose of the act, declared by Congress, was "to encourage American shipbuilding," and it has already accomplished that purpose as far as it can, unless extended. More encouragement, under a more general law, based on the same principle, it is safe to assert

from experience, would accomplish still more for shipbuilding and for navigation. Of all the conditions prescribed in the act of May 10, 1892, only three appear to conform to the purpose declared in the title of the act, while the remaining six are limitations or impediments to the encouragement afforded. They may now well be removed, in view of the success which has attended the experiment on a restricted field. Those three conditions are the requirement that an equivalent tonnage should be constructed in American shipyards for the tonnage of foreign construction admitted to registry, that American ownership should be established, and that foreign-built vessels thus admitted should not engage in the coasting trade.

The admission of the New York and Paris, coupled with the construction of the St. Louis and St. Paul, has demonstrated that a more liberal policy toward shipping than that which has hitherto been followed does not mean the closing of American yards. It has been shown, on the contrary, that the admission of foreign-built vessels to American registry is possible with a simultaneous increase in American construction, and may even contribute to it. To stop at the act of 1892 without carrying it to its logical conclusion by giving it general application and enabling all to share in its benefits is avowedly to stop short at the grant of a special privilege, to put aside an opportunity to increase the tonnage of the American merchant marine and the construction of vessels in American shipyards.

Under present conditions the difference in cost of construction is such that the American shipowner desiring two steamers for foreign trade buys both in foreign yards and neither at home. Under an extension of the act of May 10, 1892, that difference in cost of construction would be reduced one-half. What was saved in the first cost of the foreign-built vessel would be available for expenditure in American yards. Conditions would thus be created which would certainly be more favorable to domestic construction of all kinds of vessels than those which now obtain. There would still be a difference in favor of foreign purchase and navigation under foreign flags, but the incentive to such purchase and navigation would be lessened materially and possibly in time wholly neutralized.

The fact is not overlooked that the four great steamships which carry the American flag on the mid Atlantic, by virtue of the act of May 10, 1892, are receiving the munificent mail compensation provided by the postal subsidy act of 1891, but, as already indicated, the act of 1891 was not sufficient to establish a fleet of 20-knot steamers until supplemented by the act of 1892. It is possible that the measure proposed would not add more 20-knot steamships to our fleet, unless heavy mail payments were provided, but for that purpose the law is already adequate.

The bill recommended adopts the principle of the act of 1892, and frees it from those restraints upon the encouragement of American shipbuilding imposed solely to define in general terms the steamships New York and Paris. It (S. 188, H. R. 2665) is now pending in the Senate Committee on Commerce and in the House Committee on Merchant Marine and Fisheries. Its text is a follows:

A BILL to encourage American shipbuilding.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Commissioner of Navigation be, and he is hereby, authorized and directed upon application by a citizen of the United States or a corporation organized under the laws of the United States or of any