Page images

well-established facts of trade. Those who buy steamships to make money from them and are the best judges of market prices do not purchase them in this country for the foreign trade, except in the belief that the Government will make good to them part of the purchase price or cost of operation in the form of ocean mail compensation. An examination of the list of steel and iron steamships, adapted to voyages across the Atlantic or Pacific, built in this country during the last twenty years will show that nearly all were built with the expectation, gratified or disappointed, of Government aid. The fact is not referred to as in any sense a matter for condemnation, but as an index of prices here and abroad. In France, Italy, Austria, and other continental nations, except Germany, the same almost invariable rule holds good. Only vessels built in the United States are admitted to the coasting trade, so relative cost does not enter into a consideration of vessels built for that trade. Many of these vessels are of types to forbid foreign construction, even if the laws permitted it. A large portion of our steam coasting trade, represented, for example, by the types in use on Long Island Sound, the Hudson, the Mississippi, and other large rivers, could not without great risk, if at all, be brought across the Atlantic, and domestic prices are the only prices for such vessels. That steel steamships for ocean service are built more cheaply now in Great Britain than in the United States, where wages are higher, or in Germany, France, and Italy, where wages are much lower, is shown more conclusively by the presence of American, German, French, and Italian purchasers in British yards than could be shown by any inquiry this Bureau could conduct. Such inquiries as have previously been made by officers of the Government have only brought within vague and uncertain limits a fact already sufficiently defined. Mr. Charles H. Cramp, the well-known American shipbuilder, has repeatedly stated that the variable factors in shipbuilding are so numerous that scientific comparison of the cost of shipbuilding here and abroad is not practicable, and a comparison of the bids of American shipbuilders for war vessels, according to closely prescribed designs, shows such wide ranges of prices for the same vessel that a comparison of cost even in our own yards is difficult.

The average valuation per ton of the steam fleets of 11 of the world's great steamship companies gives an approximate idea of relative first cost, to be taken subject, however, to various limitations which will readily suggest themselves. The Peninsular and Oriental values its fleet at $55 per ton, the Pacific Navigation Company at $59 per ton, the Navigazione Generale Italiana (chiefly of English build) at $61 per ton, and the Austrian Lloyd (largely of English build) at $52 per ton. Depreciation at the rate of from 6 to 10 per cent annually has been allowed on these vessels by their respective owners, so that the average first cost of the 600,000 tons owned by those corporations was doubtless about $75 per ton. The Cunard Company values its fleet at $87 per gross ton, but included in the valuation are the new-built Lucania and Campania, at a cost of about $225 per ton each.

The North German Lloyd values its fleet at $77 per ton, and the Hamburg-American Line at $65, but as a large percentage of the 355,000 tons of these two companies is British build, the figures merely point to a greater cost of construction in Germany than in Great Britain The Compagnie Générale Transatlantique values its fleet at $130 per ton and the Messageries Maritimes at $127 per ton, and while some of their 380,000 tons are of British build, the greater portion was constructed at St. Nazaire and La Ciotat. The French subsidy law is

based on the computation that the average cost per ton of all classes of construction in British yards is $60 and in French yards $84.

The Pacific Mail Steamship Company values its fleet at $149 per ton. The Peru and Columbia, built in 1892, cost $177 and $166 per ton, respectively. The cost of the four steamships built in British yards in 1892 for the Peninsular and Oriental Steamship Company was $130 per registered ton.

The average cost of construction of steel steamships in British shipyards is unquestionably below that in American, French, and German yards. While the facts available are not conclusive, they point to a cost of from 25 to 35 per cent greater in American and French yards and about 15 per cent greater in German yards than in British.


The Bureau has not undertaken to conduct any specific inquiries to ascertain the relative cost of operation and maintenance under the American and under foreign flags, because there are no American figures to serve the purposes of comparison. The reports of foreign steamship corporations show in detail expenditures under the various heads which constitute expenses of operation and maintenance, but there are no corresponding American reports. The only transatlantic steamship company operating under the American flag is the International Navigation Company, which issues no annual report. As the company's steamships are navigated under the British and Belgian as well as under the American flag, no report which the corporation could issue would furnish an exact basis for comparison, unless the cost of operation and maintenance of each steamship were separately stated. The operating expenses of the Paris and New York, for example, during their last year under the British flag and their first year under the American flag, stated item by item, would furnish information as to the advantages and disadvantages of navigation under the American flag, compared with those under the British flag, more valuable than any generalizations concerning wages, provisions, depreciation, insurance, taxation, subsidies, etc., could possibly be. The Bureau has not believed itself authorized and has not been disposed to undertake an inquiry going so minutely into the business affairs of a corporation. Our only transpacific line is the Pacific Mail Steamship Company, the annual report of which is elsewhere published, through the courtesy of its officers. It throws no light on the items which go to make up cost of operation and maintenance. Its joint sailings, however, with the Oriental and Occidental Line steamers (British) indicate that there can not be any insurmountable differences in cost of operation and maintenance, which certainly would have led to a change in the conditions on which the two lines for some years have been working on apparently even terms. The remaining line from North America to Asia is owned by the Canadian Pacific Railway, with which its accounts are merged and by which it is sustained.

Whether Americans can enter into the transoceanic carrying trade under their own flag, if Congress shall remove the present insurmountable barrier of a first cost of construction much in excess of that to British and German competitors, is thus purely a matter of speculation. There are no authentic facts upon which to base an opinion, and there can be none until the experiment has been tried. It is a certainty that as long as the difference in cost of construction remains a fact of which all shipowners take cognizance there will be no basis of actual

bookkeeping upon which to determine the cost of operation under the American flag. Should it at any time appear that on account of the greater cost of operation and maintenance it is impossible to navigate vessels under the American flag in competition with vessels under foreign flags, it will then be evident that any endeavors to promote American shipbuilding for foreign commerce will be wasted, for after ships were built they could be navigated only at a loss. On a fair trial, I am confident no such state of affairs will be found to exist.

While there is no information upon which to base definite statements as to the cost of operation under the American flag, fortunately the material upon which to base statements as to the cost of operation under foreign flags is abundant and exact enough to permit examination of the more important factors involved. For this purpose the annual report of the greatest of the world's steamship companies, the Peninsular and Oriental Steamship Company, is taken. It is taken after a comparison with the reports of other steamship companies of various nations, printed in later pages, which warrants its acceptance in all large matters as a basis for general conclusions. Such comparison, where possible, shows slight changes in percentages, but establishes the items in substantially the same relative positions. As indicating, then, the relative importance of the various items which go to make up the working expenses and cost of maintenance of a successful navigation company is the following statement of the working expenditures of the Peninsular and Oriental Steamship Company, the percentage of each, and, in the last column, the percentages, omitting the items peculiar to its navigation, namely, Suez Canal tolls, dividends, and miscellaneous; though dividends, as interest on capital invested in the plant, should properly be considered whenever the question of first cost of construction is raised:

[blocks in formation]

*Excluding Suez Canal tolls, dividends, and miscellaneous.

It will be noted, not only in the figures above, but also in all reports which state separately the cost of coal, that in modern navigation it is about one-fourth of the operating expenses, exceeding wages, not only in the case of mail and passenger ships, but in the case of cargo steamers as well, for while cargo steamers require much less coal, for patent reasons they also are navigated with smaller crews. No effort has been made to institute a comparison between the cost of bituminous coal for steamship use here and elsewhere at the hour of writing, because qualities of coal are numerous, the prices can be readily ascertained here and abroad on any day, and the market prices vary. Such inquiry, furthermore, is not important. If a steamship coals by the trip, it pays, for example, Southampton prices one way and New York prices the other. If it coals for the round voyage, an American trans

atlantic steamship can make Southampton or Liverpool its coaling point as readily as New York after the first trip across. So far as coaling, the largest factor in operating expenses, is concerned, American steamships for most long foreign voyages stand on an equality with foreign steamships. When the price of coal in England is lower than in the United States a British steamer from Liverpool to Rio de Janeiro and return would, of course, have the advantage in this item over an American steamer from New York to Rio and return. To render the conditions of competition in such cases more nearly equal, and especially to benefit our coastwise, West Indian, and Central American steam navigation, it is suggested that a bill placing bituminous coal on the free list, where anthracite coal long has been, would relieve American navigation of one of the handicaps put upon it by the statutes.

Repairs, renewals, insurance, depreciation, and interest on original investment together amount to fully one-fourth of the ordinary cost of operation and maintenance. These factors are all based on cost of construction, and they will be greater in proportion as first cost is greater. While better workmanship, involving greater first cost, may in some instances reduce expenditures for repairs, renewals, insurance, and allowance for depreciation, it involves an increase in the expendi ture for interest on first cost, but these factors depend to so great an extent on the hazards of navigation that the benefits of superior workmanship can not usually be fully realized. It is in these items that the present disadvantages in operating American steamships chiefly lie. The minimum rate of interest demanded in this country is higher than in Great Britain, the cost of construction is greater, so that the basis on which depreciation and insurance are fixed is larger, and the cost of repairs is higher. If our construction is sounder and more durable, as is maintained by American shipbuilders, the rates of insurance and allowance for depreciation and the need of repairs and renewals should be less than in the case of British vessels. The relations of these matters to one another can not be determined until transatlantic steamers of recent American build have been in operation for some time. The first year's performance of the St. Louis may be expected to furnish information on these points. Repairs, renewals, insurance, depreciation, and interest on investment, all based on first cost, amount to fully 25 per cent of operating expenses. If first cost in this country is 25 per cent greater than in Great Britain, these items increase by from 6 to 7 per cent the annual cost of operating American-built steamships compared with British-built vessels. Superior workmanship may reduce this difference. The transfer of a foreign-built vessel to the American flag involves obviously no increase in any of these factors, except, possibly, interest on investment and cost of repairs.

Maritime nations no longer discriminate in the charges they impose on shipping for or against a flag, and, so far as such charges are concerned, American shipping is in theory on equal terms with the shipping of other nations. In practice we are at some disadvantage on account of changes in the laws of foreign nations concerning net tonnage, on which many navigation charges are based. A modification of our admeasurement laws is suggested and discussed in subsequent pages, which will remove this inequality. Extended reference is also made in later pages to the differences in the methods of taxing shipping as property which obtain in the United States and in foreign countries. In some of the States, American shipping in foreign trade is exempt from all State and local taxation, and thus has an advantage

over the shipping of foreign nations which impose taxes on the income derived from this source. In other States the taxation of American shipping is so heavy as to forbid its competition with the shipping of foreign nations. Under the head of "administration" are included the expenses of the central office, agencies, and general business supervi sion. While the scale of business expenditure in this country is higher than abroad, this factor, it is assumed, is not a serious drawback to the prosecution of maritime enterprises under the American flag.


The law provides for no complete roster of the men employed on American vessels in the foreign carrying trade; but on several bases of estimate the number required to man our registered tonnage can not exceed 25,000. If the average number of men per 100 tons were no greater on American than on British vessels, the number required to man our registered tonnage would not reach 20,000; but the proportion of small vessels to our entire registered merchant fleet is much larger than in the case of the British fleet, so that a larger number of men is required for our vessels in proportion to the entire registered tonnage. The returns of the Eleventh Census indicated the employment of 106,436 persons on all vessels of the United States for the calendar year 1889, of whom 58,750 were returned from the States bordering on the Atlantic coast and Gulf of Mexico; 15,809 from Pacific States; 15,881 from the Great Lakes, and 15,996 for the rivers of the Mississippi Valley. These figures serve to corroborate the estimate given, as our registered tonnage is confined, of course, to the seaboard States, and the census returns for these States are understood to include the large number of men employed on the Hudson River, Erie Canal, Long Island Sound, in river trade generally, and in the coasting trade.

The maximum number required to man our registered tonnage being between 20,000 and 25,000 men, returns of shipping commissioners and consuls indicate that those actually employed during the last fiscal year on our vessels in foreign trade certainly did not exceed 12,000, and probably did not reach 11,000.

Undoubtedly the gravest consequence of our failure to bring our navigation laws into harmony with requirements of ocean transportation is the loss of Americans to man our vessels. For some years the American deep-sea sailor has seen the field of his employment steadily shrinking. The larger cargoes and quicker time of freight steamers under foreign flags have so reduced the cost of transportation that American sailing vessels have not been able to compete with them. No steps to supply our navigation with these cargo steamers have been taken. Cost of construction in this country has been so much greater than abroad that it has not been possible to build at home freight steamers to compete for the transatlantic trade, while the registry law has discouraged their purchase abroad by refusing American registers to vessels thus purchased. Our own laws have thus taught their owners to look upon such vessels as foreign property, and have taught American seamen to regard their decks and holds as natural places of employment for foreign sailors. The discouragement of yearly narrowing chances for employment at sea and the inducements on land, which our remarkable internal development has afforded, have almost extinguished the race of American seamen. It will be relatively an easy matter to bring our merchant fleet up to its former rauk on the seas. The passage of the "free ship bill," popularly so called, will effect that

« PreviousContinue »