AMERICAN MERCHANT MARINE. [An address delivered before the American Supply and Machinery Manufacturers' Association, at its annual meeting held in Norfolk, Va., May 14, 1912, by Mr. Samuel H. Barker, Philadelphia, Pa., financial editor of the North American.] American enterprise is about completing the greatest engineering feat which man has known. Next year the Panama Canal will be opened to commerce. That will be a world event. Bound up in it are almost incalculable possibilities. They fairly stagger imagination. How they shall be availed of and how turned to our best account becomes now a matter of utmost, of pressing importance. For the construction of this great isthmian waterway the American people, through their National Government, will have expended some $375,000,000. That is just about three times the capital cost of the Suez Canal, which is the world's other great artificial isthmian shipway. Toward the Panama Canal other countries have contributed nothing that the American people have not paid for in hard cash. It is an American project in which the American people have made a huge investment. While this has not all been capitalized and while $84,631,980 of the $134,631,980 of Panama Canal bonds so far issued by the United States bear only 2 per cent interest, the others paying 3 per cent, it is fair to calculate that 31 per cent per annum no more than meets the interest and sinking fund cost of the capital invest ment. On this basis the American people, having invested $375,000,000 in the Panama Canal, will be under an annual charge on account of it of $12,187,500. In addition to this, the canal must be operated and maintained. It cost $3,857,405 to operate and maintain the Suez Canal for 1910. Such a cost in the case of the Panama Canal would make it an annual charge on the American people of $16,045,000. Completed and in operation, the Panama Canal will be the greatest factor in world commerce that has been introduced since the Suez Canal came into use. It will save 8,415 miles on the present ocean voyage from New York to Pacific coast ports north of Panama. From our north Atlantic ports to points on the west coast of South America it will reduce the voyage distance by about 5,000 miles on an average. From Europe, the Panama Canal will save 6,000 miles on the present sailing distance to our Pacific coast ports and 2,600 miles to points on the west coast of South America. It saves nothing on the Suez route from Europe to Asia and Australia, but from New York it will shorten the voyage to Hongkong by 89 miles; to Shanghai, by 1,629 miles; to Melbourne, by 2,656 miles, and to Yokohama, by 3,729 miles. The economic importance of the Panama Canal is thus obvious. But its advantages for the United States are largely on paper and of only potential value unless we have ships to make use of them. Under present conditions European and Japanese shipowners will reap substantially all of the huge benefit to be derived from the Panama Canal-itself entirely an American work. Yet the isthmian waterway, which will have cost the United States $375,000,000 to create and which will cost about $16,000,000 a year to carry and maintain, can be made to pay for itself many times over. It offers an effective means to restore the American merchant marine to its rightful place on the high seas. As a nation we are paying very dearly for having permitted American ships to be driven almost entirely out of international trade. For the fiscal year 1911 American ships carried only 10.2 per cent of the imports to the United States brought by sea. They carried only 7.5 per cent of our exports going by sea. American ships carried only $280,206,464 or 8.7 per cent of the total sea-borne commerce of the country, which amounted for the year to $3,210,642,970. Figuring that ocean freight and insurance amounts to 3 per cent of the value of imports, this country paid foreigners during the fiscal year 1911, $45,132,870 on commerce for the United States carried in foreign ships. Putting the like charge on our bulkier exports at 5 per cent of their value, foreigners earned and Americans lost $90,250,926 on the ocean carriage of American products shipped abroad in foreign bottoms. As a people we pay the freight cost on imports in foreign ships. We merely do not earn the possible transportation earnings on exports made in foreign ships. American shipowners earned, during the fiscal year 1911 on the basis of computation just used, $5,132,432 on the transportation of imports to the United States, and on exports, $6,346,105. Thus the sea-borne foreign commerce of the country paid American shipowners about $11,500,000 in a year, while it yielded to foreign shipowners some $135,500,000 during the same period. Events have proved that under present conditions American built and manned ships can not profitably compete with foreign ships. Statistics demonstrate how American merchant ships have been gradually driven out of international trade. On June 30, 1911, the aggregate gross tonnage of American ships in foreign trade was only 863,495 tons, or 11.3 per cent of the total gross tonnage of the entire American merchant marine, the great bulk of which was engaged in coastwise and Great Lakes trade between American ports. From this trade foreign ships are excluded by Federal law. Gross tonnage of American vessels engaged in foreign trade in 1884 was 1,276,972 tons. Since then the American merchant marine has grown from 4,271,229 tons to 7,638,790, but that part of it in foreign trade has decreased by nearly one-third. In 1861 American ships in foreign trade had an aggregate tonnage of 2,496,894 tons, almost three times as much as now. Back in the seventies American ships carried more than 30 per cent of the imports to the United States. The largest proportion in any year since the Civil War was 33.1 per cent in 1870. For 1911 it was only 10.2 per cent. Of our export trade for that year, only 7.5 per cent was done in American ships. In 1867 American vessels carried 39.2 per cent of our ocean-borne exports. Of the total import and export trade for 1911 American vessels handled only 8.7 per cent. In 1870 they carried 35.6 per cent of such trade. Various conditions are adverse to the American merchant marine. British and German built steamships cost no more than two-thirds as much as ships constructed in American yards. The Atlantic Transport Line steamer Maine, built at Sparrows Point, Md., cost $1,010,135, while her identical sister ship, the Michigan, built in England, cost $647,640. It costs more to operate ships American manned. Four years ago a congressional committee obtained some actual figures. These showed that the salary and wage cost of running the St. Louis for a month was $11,306, or 97 cents per gross ton; of the Oceanic, $9,891, or 57 cents per ton, and of the Kaiser Wilhelm der Grosse, $7,716, or 54 cents per ton. For ships in the West Indies trade there was less disparity, the salary and wage cost of a German ship being 90 per cent that of an American ship. In such trade foreign ships must more nearly pay American seamen's wages. In the trans-Pacific service the monthly wage and salary cost of running a fast Japanese passenger steamer has been found to be $4,247, or 31 cents per gross ton, while that for a similar American ship, employing mainly Chinese, is $4,836, or 43 cents per ton. It has been figured that such a ship as the Lusitania, built, run, and maintained as an American vessel, would cost nearly $1,000,000 more per annum than does the British ship. No wonder American enterprise turns from competitive operations on the high seas. The building and running of ships is a business. Men do not engage in obviously losing operations. Under the conditions shown, it is plain why American ships have been withdrawn from international trade. They can not pay. Foreign governments put additional handicaps on American ships by contributing directly and largely to the development of their own merchant marines. My subject is not that of shipbuilding bounties or of subsidies to American steamship lines, but as to how the Panama Canal can be employed to most largely benefit the American people and to best promote their interests both on sea and land. Yet I am compelled to point the issue. Foreign nations give large financial support and encouragement to their merchant marines. Government compiled figures place the total of such payments of $46,907,220 a year. Compare this huge sum with the paltry $1,074,945 which the United States paid during the fiscal year 1911 to American ships for mail service in the now only seven American routes. We paid foreign ships in the same time $2,129,654, almost twice as much. Canada paid $1,684,683 in the year ended March 31, 1909, to help her ship lines. Great Britain pays in postal and admiralty subventions about $9,700,000 a year, although only some 3 per cent of British shipping in foreign trade shares in this bounty. Quietly the British Government, as owner of nearly half the Suez Canal stock, levies a tribute. on world commerce, and from this source drew into its treasury for 1910 $5,386,300. France pays graded bounties on all vessels built in French shipyards besides navigation allowances and mail subsidies, in all about $13,425,000 a year. The other European nations give large direct support to national ocean lines. Japan grants shipbuilding bounties developed by the engines, which gives about $200,000 toward construction cost of the type of passenger steamer she is now running to San Francisco. Japan also gives mail subsidies and navigation bounties. During the fiscal year ended March, 1909, the Japanese Government paid $6,183,000 in aid of the national shipping. Under such encouragement the Japanese merchant fleet grew from 360,695 tons in 1895 to 1,288,053 tons in 1909. Under the ocean mail act of 1891, the United States post office pays to American built, owned, and officered line ships $4 per mile sailed by steamers of 8,000 tons or more, with a speed of 20 knots; $2 per mile sailed by steamers of 5,000 tons or more, with a speed of 16 knots; $1 per mile to 2,500-ton 14-knot ships; and 67 cents per mile to steel, iron, or wooden ships of not less than 1,500 tons and 12 knots speed. All sorts of ways have been proposed to revive the American merchant marine and to restore it to a position of vigor and strength in international commerce. Nearly every plan put forward has been such as would promote special interests. The Panama Canal will open a way to encourage all American shipping without discrimination or favor. It will afford a way to give the American merchant marine an important advantage in world commerce. Sentiment and false generosity should be thrust aside by the American Nation in this matter. A national business policy should be inaugurated with the opening of the Panama Canal. This huge project will be purely an American accomplishment. The American people have paid all the cost; they must maintain and operate the canal and, under these circumstances, they have a just right to claim and take for themselves its larger benefits. Give to any and all American built and manned ships free use of the Panama Canal. Levy tolls upon all foreign vessels availing of the great waterway. In this way can the American canal promote American interests. Let the tolls charged foreign ships passing through the Panama Canal be, say, those levied by the Suez Canal. That waterway is owned by a company and is under the virtual control of the British Government which, since 1875, has owned 176,602 of the 379,421 shares of the capital stock, acquired at a cost of $19,855,320. The Suez Canal was opened in 1869. It is 103 miles long, and an average of nearly 17 hours is required for passage through it. At a cost of $19,300,000 the canal is being widened to 147.6 feet and deepened to 36.1 feet, the present depth being only 28 feet. The Panama Canal will carry 41 feet of water and have a channel from 300 to 1,000 feet wide. Ships will pass through the American canal in 10 to 11 hours. It is calculated that the most advantageous handling of the world's present commerce will route through the Panama Canal the first year ships to an aggregate tonnage of 8,328,000 net tons. That would be about one-tenth the estimated traffic capacity of the canal, During 1910 the Suez Canal handled 4,533 vessels, having a total tonnage of 16,581,898 net tons. Total receipts of the company from its canal service amounted to $25,168,400. The cost of operating and and maintaining the canal, plus appropriations to depreciation reserve, was $3,857,405. Payments for fixed charges and for retiring capital obligations amounted to $6,072,602. The company divided |