THE LOYALTY OF THE AMERICAN MERCHANT MARINE.

In every war in which the United States has participated during my lifetime the American merchant marine, ships and sailors, have filled an honorable and necessary part, and it is with profound regret and sorrow that from time to time during the discussion of the pending bill I have heard shipowners denounced in terms which in my young manhood would not have been applied to the most hardened lawbreaker.

I have heard men denounced as parasites and leeches on the Public Treasury whom we all know risk their capital and devote their best energies of mind and body to the prosecution of ventures on the sea which have helped to give us the commerce that renders profitable all form of industrial enterprise and labor at home. To these very men in time of emergency the Nation has always turned first for help and met with prompt and generous response.

I have seen the time when the United States was a close second to Great Britain-so close that the race was neck and neck between us in the race for the title of "Mistress of the Seas."

I shall not enter into an examination at this time of the causes which for the past few decades have made us a laggard in the race and have transferred easily to our rival the title for which we once fairly competed. It was my national pride and glory then to see the American flag flying in foreign ports; but now, to my profound sorrow, our flag is now hardly found or seen in any foreign port.

I have seen it gradually disappear, first from the remote ports, then from those nearer at home, until to-day, as Senators are well aware, our flag is seldom seen abroad, and American ships are engaged almost exclusively in the coastwise trade. COASTWISE TRADE RESERVED TO THE UNITED STATES UNDER OUR NAVIGATION LAWS.

The coastwise trade of the United States for a century has been reserved to American vessels. This fundamental principle of our economic system has been known to other maritime nations for generations. In fact, I doubt if we have any other rule of conduct which is so generally known abroad as is this rule. It is as well understood in London and Hamburg as in Washington that the carrying trade of the United States from the Atlantic to the Pacific coast can be conducted only in vessels of the United States, whether the route be around Cape Horn, through the Straits of Magellan, or through the Panama Canal.

The principle of the reservation of the coasting trade was established by the fathers of the Republic, Jefferson and Madison, as well as Franklin and Hamilton, and up to the present time the wisdom of that policy has not been disputed.

I now, however, note with regret that the author of the pending Panama Canal toll bill in the other branch of Congress has introduced a measure to open our coasting trade to foreign vessels, and it may perhaps be that the bill before us is the first step in a policy subversive of all our maritime traditions. The pending bill is certainly in conflict with one of our most firmly established commercial principles. I had always believed until the last few months that the unrestricted commerce between the States was a cardinal principle of our economic faith. If I have read history correctly, the removal of charges upon and impediments to the navigation of the Potomac between the Colonies of Maryland and Virginia was one of the prime causes 49046-13560

for the meeting of the Annapolis convention which was the first step toward the union of the Colonies, the Declaration of Independence, and the establishment of the United States of America. Certainly for 30 years Congress has made it perfectly clear that

no tolls or operating charges whatever shall be levied upon or collected from any vessel, dredge, or other water craft for passing through any lock, canal, canalized river, or other work for the use and benefit of navigation, now belonging to the United States or that may hereafter be acquired or constructed.

There are none left in Congress of those who voted for this measure in 1884, but I venture the suggestion that the late John G. Carlisle, who presided over the House of Representatives which passed this measure, and the late Allen G. Thurman, who was a member of the Senate which concurred in enacting it-to call to the minds of our latter-day exponents of Democracy the names of only two leaders who really understood and lived up to the traditional principles of their party-it would be a surprise to these men, I say, could they be told, as we are being told, that freedom of navigation between the States is another name for wholesale subsidy to shipping and is inconsistent with the principles of the Democratic Party.

The great State of New York a generation ago abolished the tolls on the Erie Canal, and a few years ago voted upwards of a hundred million dollars for the improvement of that waterway. Would anything be more fantastic-to use no stronger word-than to assert seriously that by these two great acts of her people and her legislature the State of New York aimed to give subsidies to the owners and captains of her canal boats and to raid the State treasury and rob the people for the benefit of the few who chanced to have put their money in these humble craft.

FREE TOLLS NOT A SUBSIDY.

The passage of American ships in commerce between the States from New York to San Francisco through the Panama Canal free of tolls is no more a subsidy, to my way of thinking, than the passage of less pretentious vessels from New York to Cleveland or Chicago free of tolls through the Erie Canal.

The fundamental rule in each case is the same, that the commerce between the States by right ought to be free from Federal taxation or charges, save only when the necessities of war require Congress to push the taxing power to its furthermost limits.

This well-established principle of freedom of intercourse between the States has been challenged during the discussion of the pending measure, and I am not certain that the responsible majority in its desire to do things differently from the way in which they always have been done will not use the pending bill as the first step in the policy of erecting national tollgates on all navigable rivers and canals which have received the favorable attention of Congress.

The charge of subsidy to shipping business seems to me without force or effect for the reason that there is no single track between any of the ports of the United States bordering on the ocean, and anyone can build and operate a vessel without restriction, engage in the coastwise and ocean trade, and go where he pleases.

If it is called a subsidy by the shipping interests, then it seems to me equally fallacious as vessels that are built in

American shipyards, by American mechanics who are citizens of this country or capable of becoming, give the profits to the American people rather than to foreign people; also money expended in this country for labor and raw material used in the construction of American ships help to build up the industries of this country rather than foreign industrial activity.

These ships in this country also pay a city, county, and State tax, and assessments in some form are levied by most States on this kind of property, New York being the exception by exempting American vessels engaged in domestic and foreign trade from direct taxation as property. Wages paid to sailors and officers on ships flying the American flag are nearly double those paid on foreign ships.

For the same reason, because of higher wages paid to American mechanics, the cost of building a ship in this country is approximately one-third more than anywhere else in the world, while, of course, ships flying under foreign colors pay nothing to this country in the way of taxes, and come from foreign port to the ports of the United States, and in no way help to decrease the burden of taxation of this country.

The charge that this subsidy is a huge monopoly and trust in vessels engaged in the coastwise trade by those advocating the repeal of free tolls shows that they have given but little consideration to this measure, for the reason that railroads which have a monopoly have paid by far a better rate of interest on investments than companies who have shipping interests and who have paid but a fair rate on the capital invested, the hazard of loss being very great.

I have endeavored to show how meaningless is the use of the word "subsidy" in the discussion of the bill before us, but that word has no terrors for me or for the people of the State of California, whose future lies on the sea.

The policy of subsidies is consistently followed by the maritime nations of the world mainly for military and postal services, and I have no doubt in time that the United States will give up its rule of isolation and singularity in this respect, just as it changed its policy about 30 years ago and started to become a first-class naval power.

As an American, and especially interested in navigation and anything pertaining to industrial pursuits, I think that anyone giving this question the necessary attenton and study will agree with me that the coastwise trade should be kept open and unrestricted to the people of our country.

I am sure the Senators who are supporting the pending bill will give respectful consideration to the recent report of the British Board of Trade to the British Parliament, showing the following subventions paid to merchant ships:

Austria (1910).

Mileage bounty, Austria Lloyd-.

State subsidies to A. Lloyd

Dalmatian service

Development of navigation.

Steam navigation on Danube River.

Postal subsidies.

Reimbursement Suez Canal dues..

Working and voyage subsidies to nonsubsidized naviga-
tion.

$1,030, 000 250,000 190, 000 40, 000 250,000 310, 000 480, 000

1, 450, 000

4, 000, 000

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Postal subsidies to North German Lloyd and German
East Africa Line_..

Also:

German East Africa and German Levant Line get indirect
bounties in form of largely reduced transportation_rate
on all German State railways to goods exported on
through bills of lading from inland places by either line.
Italy (1910).

Commercial, maritime, and postal services_
Navigation and construction bounties-.

1,750,000

2,400,000 1, 600, 000

4, 000, 000

United States (1912-Act of 1891).

Mail pay (includes encouragement of commercial and naval facilities) --.

980, 000

EXEMPTING COASTWISE VESSELS NO DISCRIMINATION AGAINST ANY NATION.

I have endeavored to show that the opponents of this bill occupy a position fortified at every point by recognized principles of American policy, including the policy of extreme liberality in the commercial treatment of other maritime nations, while the advocates of the bill, starting with the rejection of the most recent declarations of the three national parties and their national leaders during the last presidential election, are already driven to advocate measures and theories subversive of those which have been consistently followed from the beginning of our Government.

There is no question in my mind that the Panama Canal act of 1912, by exempting our coastwise vessels from Panama Canal tolls, involved no discrimination of any kind against Great Britain or any other nation.

I well recall that during the discussion of the Hay-Paunce fote treaty in executive session the late William P. Frye, Senator from the State of Maine, than whom the Senate has never seen a more just and impartial counsellor in our foreign relations and a more devoted advocate of the merchant marineI recall, I say, that Senator Frye in executive session distinctly took the view that the proposed amendment of my colleague, Senator Bard, of California, to the IIay-Pauncefote treaty by specifically exempting our coastwise trade in terms in the treaty was entirely unnecessary, though perhaps harmless, because foreign ships could not engage in the coasting trade from the Atlantic to the Pacific either through the Straits of Magellan or through the transisthmian canal when opened; that the question of discrimination accordingly could never arise, because this rule of our maritime conduct was as well understood abroad as at home.

THE MEANING OF THE BRITISH PROTEST.

The British protest, as I read it, takes no other or different view. It merely expresses the fear that the principle of coastwise exemption may be so administered as to lead to discrimination against British vessels in contravention of the treaty. This fear does not involve national honor; it is not a charge of perfidy against the Congress which passed and the President who signed the Panama Canal act of 1912; it does not intimate that the national platforms and the national candidates of 1912 were lost to all sense of propriety and all understanding of the solemnity of international obligations.

This expression was merely a reasonable admonition that in the administration of the canal act officers responsible for government shall see to it that all the rights we have conceded to other nations shall be scrupulously observed and shall not be lost sight of by those charged with the control of the canal.

I must confess that the fear expressed by Sir Edward Grey and Mr. Mitchell Innes, of the British embassy, would have seemed to me more reasonable if it had been uttered after instead of before the action of the officers of the administration with reference to the discriminating-duty section of the Underwood Tariff Act.

Be that as it may, if I have read with understanding the British notes, the remedy for the situation lies in careful instructions by the President, the Secretary of the Treasury, the Secretary of War, and the Secretary of Commerce, in their respective spheres, to subordinate oflicers in their several departments who have to do with Panama Canal affairs and the duties of collectors of customs.

Until this remedy has been tried; until some reasonable proposition for arbitration or mediation, if there be any question to arbitrate or mediate, has been tried and has failed, the Senate should hesitate long before taking a step the ultimate consequences of which may be fraught with serious perils to the Republic.

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