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tribution to the merchant marine. The method of applying it is shown in detail in Appendix E.

The most complete bounty systems now in operation are those of France, Italy, and Japan, the laws concerning which are translated in Appendix E. The Norwegian law of 1897 provides a bounty for domestic shipbuilding only, no bounty for navigation being necessary, as differences between British and Norwegian laws, especially as to Íoad line, impel many British owners to make use of the Norwegian flag. The French, Italian, and Japanese bounties are divided into two classes-first, a bounty paid to shipbuilders for the construction of vessels; second, a bounty paid to shipowners on the mileage navigated by national vessels. The compatibility of the bounty method with treaties has never been called in question.

CONSTRUCTION BOUNTIES.

Construction bounties in theory are designed to equalize the cost of construction in domestic and foreign yards. The principal laws on the subject, printed in later pages, consist of a variety of details which can not be briefly compared. The principal item in all these laws, however, is the bounty per gross ton paid for the construction of vessels. That bounty is as follows, the French limiting the bounties for wooden vessels to those over 150 tons, and the Japanese giving this bounty only to iron or steel steam vessels of over 700 tons :

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The operation of laws granting construction bounties has not as a rule been satisfactory. The three great Latin nations which have adopted them are at peculiar and well-understood disadvantages in the manufacture of steel in all of its large structural forms, and the relatively low rates of wages in those countries do not compensate for those disadvantages. While the rates of bounty per gross ton for steel construction above stated seem very high, they fall short of the actual difference in cost of construction between French, Italian, and Spanish yards on the one hand and British and German yards on the other. The United States is not under the natural disadvantages to which the Latin countries are subject. Our annual production of pig iron has several times of late years exceeded that of Great Britain, and our permanent attainment of the first place as a steel-producing nation is no longer a matter of conjecture. The difference in the cost of construction of seagoing steel steamships in this country and in Great Britain or Germany has grown rapidly less in the last eight years. It is even asserted by those in a position to have full knowledge of the technical facts that the difference in cost of construction at present is represented by the superior workmanship, better finish, and greater durability of the American vessel compared with corresponding foreign types.

It is not desirable that the system of direct construction bounties be adopted by this country. It is complex and would require frequent readjustment to meet changes in industrial conditions, besides calling for an extended and probably expensive system of government supervision of construction. Where it has been employed it has not produced the hoped-for results. If the cost of construction in the United States, class for class and type for type, is now equal or nearly equal to the cost abroad, such bounties are not necessary for the promotion of shipbuilding for the foreign trade. If there remain a difference in cost of construction at present-which seems to be the fact that difference is indisputably becoming steadily less. Finally, the difference in first cost may properly be considered in the cost of operation, where it makes itself chiefly felt. It is very plain that any project which successfully aims to promote directly the navigation in foreign trade of vessels built in the United States also promotes American shipbuilding. While Germany offers no direct subsidies to shipbuilders, its subsidies to navigation have concededly built up German shipyards in the last dozen years with great rapidity.

NAVIGATION BOUNTIES.

Three practical courses, and only three, at the present time are open to the United States:

First. We may retain our laws unchanged, ignore national navigation, and continue to rely on vessels under foreign flags for the transportation of our exports and imports.

Second. We may permit foreign-built vessels to register under the American flag, ship crews abroad, and materially increase national navigation.

Third. We may extend direct Government aid in the form of navigation bounties to American vessels built in the United States, and thus increase both national navigation and national shipbuilding.

The last named of these three courses is suggested to a very great extent by our new relationship to the rest of the world, effected by recent and familiar events. For the first time we now hold, and shall doubtless permanently hold, territory beyond the limit of the North American continent. If all that such possession involved were the physical force to keep these domains against all comers, the vote of some extra tens of millions every year to the Army and Navy would be sufficient. The flag of the United States, it is believed, should be more than the token of conquest by superior strength. Our maritime position must correspond to our pretensions, and to attain this result American shipyards and American ships must be increased, and reasonable contributions from the Treasury toward that result must not be begrudged. For many years this country has followed the policy of encouraging through legislation various forms of industry. The argument for the encouragement of shipbuilding and navigation is incomparably stronger than the argument which may be adduced in favor of Government aid to any other form of industry. If the principle be accepted, then the first point at which it should be applied is evidently that point where both the obligation of and the need for Government assistance is greatest. We have laws to encourage nearly all kinds of manufactures and mineral and agricultural products, for which in many instances we have natural advantages far above those enjoyed by any other country. In the unrestrained competition of the high seas for the foreign carrying trade, American shipping has been

allowed to dwindle before the shipping of rival nations supported by unremitting, intelligent, and liberal legislation.

The difference in the cost of operating an American vessel, as already analyzed in certain instances of broad application, compared with the cost of operating a foreign vessel is at present an obstacle to our success on the seas. There is no indirect way by which this obstacle can be wholly overcome, even if indirection were desirable. That difference can be so nearly equalized by the assistance of Government as to establish conditions under which American competition will be feasible. With the changes in laws and new measures already recommended, it is proposed that there be enacted a bill providing for navigation bounties to American vessels, graded so as to meet as far as practicable the differing conditions in different branches of the foreign trade. It has already been shown that in trade within a zone of 500 miles from our coasts American shipping enjoys special advantages which enable it nearly or quite to overcome advantages possessed by foreign shipping. In the zone beginning 500 miles from our coasts and extending to 1,500 miles from them our peculiar advantages rapidly disappear, and foreign shipping carries on twothirds of the trade with this country. Beyond 1,500 miles none of the factors in the cost of operation are favorable to American vessels, while present natural advantages have been strengthened or substitutes for them supplied in the case of competing foreign vessels. Distance navigated is obviously the first measure of the varying degree of Government assistance required.

A second measure is the tonnage or size of the vessel. Navigation bounties adjusted on the basis of tonnage serve at the same time the purpose of indirect bounties on construction. They have this plain advantage over construction bounties, that when based on tonnage, coupled with the distance traversed, navigation bounties represent actual public services performed in the training of seamen and the extension of trade and national prestige, while construction bounties are advance payments in the expectation that such services will be performed. While there are, of course, exceptions, smaller vessels as a rule engage also in the coasting trade, and, enjoying the advantages of our laws on that subject, have less need of and less claim for further legislative consideration.

Material of construction is a factor which may be almost wholly ignored. We can build wooden vessels as cheaply as they can be built anywhere, though, under present conditions, such vessels are in fact expensive to operate, as is shown by their rapid disappearance from the world's merchant fleets. Except for limited uses, they must soon cease to be an appreciable element in our foreign trade. So far as the number of men employed in navigation and their rates of wages are concerned, there is no distinction based on the material of construction.

The average number of men per 1,000 tons required to man steam vessels in foreign trade is 24, and to man sailing vessels is 17, according to British returns. These figures are recited to indicate approximately the difference in the cost of operating steam and sail vessels, so far as wages are involved. This difference is accentuated by the fact that the differences in American and British wages to able seamen are not great (Appendix C), while the differences in wages of American and British engineers, firemen, and trimmers, not employed on sail vessels, constitute a large part of the difference in cost of operation

under the two flags, respectively. In order to grant a measure of assistance proportionate to actual conditions of competition, a distinction in the bounties for steam and for sail vessels seems desirable.

If the ocean mail act of 1891 is remodeled, as suggested, the subject of speed will be considered in connection with that measure. In a general navigation bounty law provision may also properly be made for vessels equally or exceeding 14 knots an hour.

Under the French bounty law of 1893, the Italian bounty law of 1896, and the Japanese bounty law of 1897 the highest rate of bounty paid for navigation is the French rate of 32 cents per ton for each 1,000 miles navigated by a French steel sailing vessel in transoceanic trade. The French rate for steel steamships is 21 cents per ton for each 1,000 miles, the like Italian rate 15 cents, and the Japanese rate 12 cents (gold), or, respectively, 2.1 cents, 1.5 cents, and 1.25 cents per ton per 100 miles on the outward and homeward voyages. These rates are referred to, not as a guide for our own action, but as an indication of the extent of government support deemed desirable by the countries named. Under our ocean mail act of 1891 we established substantially the uniform rate of 2 cents per ton per 100 miles. Thus our four great trans-Atlantic liners, of an average of 11,150 tons, receive $4 a mile for the ship, or $400 per 100 miles on the outward voyage. This rate is less than 4 cents per ton per 100 miles on the outward voyage, or barely 2 cents per 100 statute miles on the entire round trip. Yet the vessels under this contract are 20-knot steamships with very large crews. The steamships on our new mail line to Santiago and Jamaica are 2,000-ton vessels, required by law to make 12 knots, and actually capable of 15 knots speed. The rate of compensation for these vessels is $67 per 100 miles on the outward voyage, equivalent to 3.3 cents per ton per 100 miles on the outward voyage, or 1.7 cents per ton per 100 miles for the round trip. While the act of 1891 should be remodeled, as already indicated, the figures given suffice to show that lower bounty rates on general navigationbased on mileage and tonnage, and not involving speed requirements— than are employed by France will be adequate to produce the desired increase of American shipping.

The French budget for 1897 contained appropriations of $8,000,000, in round numbers, for the promotion of the French merchant marine, including ocean-mail pay, navigation and construction bounties, and fishing bounties. The appropriations for the French navy for 1896 (1897 not at hand) were, in round numbers, $53,000,000. For the past ten years the average annual appropriations of the United States for the Navy have been $26,000,000 (excluding the appropriation of $56,000,000 at the last session of Congress). An expenditure by the United States of $4,000,000 a year on the development of our merchant marine would not be out of proportion to the expenditure of the other great republic, if naval appropriations be accepted as a superficial basis of comparison. The United States, however, is abundantly able to devote as large a sum annually to the development of its merchant marine as is France, while the reasons in support of such an expenditure by this country are stronger and the results would be much more satisfactory. The yearly sum of $8,000,000 will not be required. Less than $4,000,000 could be expended advantageously on the basis of our navigation for 1897. An average annual expenditure of $5,000,000 or $6,000,000, scientifically adjusted to the actual conditions of competition and maintained for twelve or fifteen years, it may

confidently be predicted, would bring the United States to a rank above Germany and second only to Great Britain as a commercial power on the seas. The end to be attained is believed to be well worth the charge to be put upon the revenues. Even the expenditure will have its offsets on the Treasury books. Our past expenditures on naval construction have considerably reduced the cost of building war vessels in this country, and, with the extension of existing yards and the establishment of new yards, the cost of naval construction would still further decrease with the decrease of cost of commercial marine construction. Again, this autumn the first large war vessel for a foreign nation undertaken in this country for many years was completed, and several more such vessels are now being built. The United States has obvious political advantages as a builder of warships for foreign nations. Any measure tending to increase our shipbuilding facilities will attract a trade which, under equal conditions, would gravitate to this country. German expenditures for the promotion of the merchant marine and domestic shipbuilding began in 1885. During the past four years, as a result of that policy, foreign nations have spent $25,000,000, in round numbers, for war vessels in German yards. This construction has not only been a source of profit to individual builders and of wages to their employees, but in the development of the industry has been a source of manifest strength to the Empire, not merely for fighting purposes, but in the larger and more important pursuits of commerce and manufactures.

Our competitors have proceeded according to well-defined modern business methods, each selecting and imitating from current practices what was best adapted to its peculiar situation. By investing the necessary capital in the enterprise, the United States can have a creditable shipping in the foreign trade and become a shipbuilding power of the first class. There is no other way in which at this time that result can be reached.

DEEP-SEA FISHERIES.

A comprehensive and well-considered project for the restoration of our merchant marine must not overlook our deep-sea fisheries and the men engaged in them. From this source both our merchant marine and our Navy have always drawn considerable strength, and from the beginning of our Government this industry has been deemed entitled to special consideration. From Tables 14 and 15, at the end of this volume, it appears that the documented tonnage of vessels over 20 tons engaged in the whale, cod, and mackerel fisheries on June 30, 1898, was 62,823 gross tons, compared with 100,494 gross tons in 1888. Tonnage in the cod and mackerel fisheries alone has declined over 30 per cent during the decade. The decrease in tonnage involves a decrease in seamen and fishermen. Many years have elapsed since the industry has received direct consideration from Congress. In the meantime the competing Canadian industry has more than held its own under a bounty system through which the Dominion government contributes $160,000 annually to promote the deep-sea fisheries and to maintain the force of fishermen. In 1897 Japan passed a law appropriating $75,000 annually to encourage the industry on the Pacific. France expends $300,000 in round numbers annually on its deep-sea fisheries, and Germany has of late years granted government support to the industry on the North Sea. Under existing arrangements

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