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It is proposed to reduce the 3-cent rate to 2 cents and the 6-cent rate to 5 cents, imposing the tax on gross tonnage. These changes will together have no material effect upon the revenue derived from tonnage taxes, continuing it at $538,000 in round numbers. A slight increase may result.
At the 3-cent rate for the last fiscal year $47,270 were collected from sailing vessels, the net tonnage being 1,575,682 tons. The gross tonnage of the vessels, 5 per cent greater than the net, is 1,654,466 tons, on which a tax of 2 cents per gross ton would yield $33,089.
At the 3-cent rate for the last fiscal year $54,402 were collected from steam vessels, the net tonnage being 1,813,415. The average gross tonnage of these vessels is about 33 per cent greater than their net tonnage, and may be put at 2,417,887 tons, on which a tax of 2 cents per gross ton would yield $48,358.
At the 6-cent rate for the last fiscal year $115,821 were collected from sailing vessels, the net tonnage being 1,930,358 tons. The gross tonnage of these vessels, 5 per cent greater than the net, is 2,026,876 tons, on which tax of 5 cents per gross ton would yield $101,344.
At the 6-cent rate for the last fiscal year $320,489 were collected from steam vessels, the net tonnage being 5,341,478. The average gross tonnage of these vessels is 33 per cent greater than their net tonnage, probably more, as this class includes the transatlantic and transpacific steamers, but estimating gross tonnage at 33 per cent more than net, it may be put at 7,121,971 tons, on which a tax of 5 cents per gross ton would yield $356,099.
The fiscal results of the proposed law compared with the present law on the basis of last year's tonnage are:
The net fiscal results of the proposed bill will be very slightly to increase the receipts from tonnage taxes. A reduction of these taxes on sailing vessels to the amount of $30,000 and a corresponding increase in these taxes on steam vessels is effected. It should be borne in mind, however, that transatlantic steamers make 6, 7, 8, and even 13 voyages a year, and after the fifth payment they are exempt from tonnage tax, while sailing vessels crossing the Atlantic do not as a rule exceed 5 voyages a year and consequently pay tonnage taxes at every entry. Transatlantic sailing tonnage under the American flag from San Francisco and Pacific ports-a good proportion of our foreign carrying trade-pays tonnage taxes at every entry.
The project involves a reduction of taxes on steamships in West Indian and Central American trade, in which the majority of our registered steam tonnage is engaged. In brief, the project would result in a reduction of tonnage taxes on all vessels under the American flag except six steamships in transatlantic trade and seven in transpacific trade. It reduces the rate of taxation on these by 16 per cent, but increases the basis of taxation by as much as the gross tonnage of these vessels exceeds their net tonnage. It would increase by $2,000 annually the total tonnage
taxes on our six steamships in transatlantic trade and by $1,200 the total tonnage taxes on our transpacific steamships, while reducing by about $25,000 tonnage taxes on other American vessels. Nearly all the increase, however, will fall upon British steamships, not because discrimination. has been made, but because they conduct to so large an extent our carrying trade across the Atlantic in steam vessels. Many of these vessels are owned by Americans, the flag being a compulsory disguise of the nationality of ownership. In view of this fact, and the further consideration that tonnage taxes, as charges on transportation, enter into the cost of the goods transported, it may be deemed desirable to reduce the 6-cent rate to 4 cents. In that event, on the basis already used, receipts from sailing vessels paying now the 6-cent rate would be reduced to $81,075, and from steam vessels to $284,879, and the entire receipts from tonnage would reach $447,400, a loss of about $90,000 to the revenue.
In what has already been said concerning tonnage taxes and gross and net tonnage will be found reasons for changes in our laws concerning net tonnage. Many charges in foreign ports are imposed on net tonnage, and, as already indicated, the net tounage of registered American steamers averages 69 per cent of their gross tonnage, while the net tonnage of steamers of other countries averages only 63 per cent of their gross tonnage. The acceptance of American tonnage certificates in most foreign ports accordingly, in effect, subjects them to heavier taxes than are levied on the vessels of other nations, because net tonnage, according to the laws of the United States, is greater than according to the laws of other nations. To be sure, other nations consent that American vessels may have the benefit of lower taxation resulting from their respective net-tonnage laws, but in order to take advantage of this right American vessels must be remeasured in foreign ports according to the law of the nation in which the port is situated. This usually involves expense for surveyor's fees, and it always involves delay and inconvenience, so that, whichever alternative he selects, the master of an American vessel is at a disadvantage.
This condition can be remedied best by bringing our laws for the ascertainment of net tonnage into accord with the more important provisions of the laws of other nations. The present law of the United States, the British and Norwegian laws, and other information bearing on net tonnage are incorporated in Appendix D, relating to admeasurement. Based on this information, and following closely the British rule for deductions, which during the last year has been adopted by Norway and is in general use, a bill has been drafted by this Bureau (Appendix A c) to establish the desired accord. Italics indicate the changes from the existing law. These changes are:
(a) The limitations of crew space to 5 per cent, and of all deductions to 50 per cent of gross tonnage, are repealed. The limitation of 5 per cent is liable to be exceeded in the case of sailing vessels under 100 tons by the spaces actually appropriated to the crew, and owners should be entitled to the full deduction. It has been deemed desirable to define precisely the nature of crew spaces and to fix a minimum of the space for each member of the crew. This provision is taken from sections of the British merchant shipping law, which has stood the test of practical operation for some years. The minimum space for each man is fixed at 72 cubic feet. A bill before the House of Representatives (H. R. 5506) proposes that 120 cubic feet (18 superficial feet on the deck)
shall be the minimum. The British commission on labor last summer issued a report concerning the present minimum of 72 cubic feet under the British law, in which it is said:
We are of opinion that the evidence shows this accommodation to be too small for sanitary purposes, and that in view of the increased size of modern ships and the fewer hands they require in proportion to their tonnage, it might be increased in the case of new ships to 120 cubic feet.
Regard for the health and comfort of our merchant seamen dictates the enactment of some law fixing the minimum of crew spaces, and as the paragraph on this matter in the proposed bill is to apply only to vessels, the construction of which shall be begun after July 1, 1895, it may be desirable and accord with the views of shipbuilders, shipowners, and sailors to fix that minimum at 120 cubic feet (18 square feet on the deck). The paragraph imposes a penalty on the owner for failure to provide proper crew spaces, and a fine for the benefit of the seamen on a master who encumbers with cargo the quarters of the crew.
(b) The deduction for the master's cabin involves no change from existing law, under which that space is now deducted in the ascertainment of net tonnage and included in crew spaces. A separate statement of its measurement on the certificate is desirable for the convenience of our vessels in foreign trade.
(c) The deductions for navigation spaces, (d) donkey engine, whether below or above deck, and (e) sail room should be made to give our sailing vessels especially the advantage of these deductions which the vessels of Great Britain, Norway, Sweden, Denmark, and other nations enjoy.
(f) The deduction for propelling power embodies what is known as the "British rule." It is the most important of the changes proposed and brings our law in this matter into accord with the laws of Great Britain, Norway, France, and Austro-Hungary. Many German vessels also carry supplementary certificates showing their measurement for propelling power according to this rule. Under it the net tonnage of American steamships will be considerably reduced. Charges imposed on net tonnage in foreign ports will be reduced in proportion, and American certificates of measurement may be accepted in the ports of the countries enumerated without requiring our vessels to undergo remeasurement. The rule as drawn covers most seagoing steamers of modern build, and in the case of those not included within the percentage limits of the rule, owners, by paragraph (g), may have their vessels measured according to that rule or according to the system now in vogue in this country. It is to be presumed that the owners of seagoing vessels will take advantage of the new rule.
(h) To encourage the construction of quarters for the crew above deck it is proposed that such spaces need not be included in gross or net tonnage and thus become exempt from taxation based on tonnage measurement. This policy is adopted by the more progressive commercial nations. The construction of such quarters is growing and is especially noted in the annual report of the U. S. shipping commissioner at New York (Appendix B). To give the owner the full benefit of the "British rule" for motive power, these spaces may be computed for the temporary purpose of ascertaining the deductions to be made for power.
(i) For the purpose of giving owners the further benefit of that rule, they are accorded the option of having measured spaces above deck to admit light and air to the engine room, subject to the approval of this Bureau.
It is proposed that this act shall go into effect the first day of next July, and that thereafter its provisions shall regulate the ascertainment of net tonnage. The owners of vessels documented before that date are to have the option of availing themselves of its benefits or retaining their present certificates of measurement. It is assumed that American vessels in foreign trade will take advantage of the proposed scheme of measurement.
To meet probable changes in the measurement laws of other countries, as well as minor differences between the system now proposed for American vessels and some foreign laws in force, the bill proposes to confer authority for the issue of an appendix to any American certificate of measurement, giving a statement of measurement according to foreign laws. Such an appendix is designed only for use in foreign ports, and its purpose is to save American vessels the delay and expense incidental to remeasurement abroad. This device is employed by Germany, Norway, and other maritime powers. In the absence of a uniform international system of ascertaining net tonnage it affords a simple and effective means of determining tonnage without repeated measurements.
The two measures proposed concerning tonnage taxes and net tonnage together constitute one project looking to the equitable treatment of American vessels at home and abroad, and considerably reducing an important factor in cost of operation, navigation, and port taxes based on tonnage. The enactment of the tonnage tax bill alone would leave American vessels in foreign ports still subject to disadvantages, and the enactment of the net tonnage bill alone would effect a very heavy reduction in the revenue from tonnage taxes, the direct benefit of which would go chiefly to foreign vessels. Together they constitute a consist ent project for the improvement of the present condition of our navigation.
The law (sec. 4136, R. S., as amended by the act creating this Bureau) confers authority on the Commissioner of Navigation to issue a register for a foreign-built vessel, wrecked in the United States, if purchased by a citizen of the United States and repaired in an amount equal to three times its cost. The authorities agree in establishing 3 miles from shore as the limit of jurisdiction. A vessel wrecked more than 3 miles from the coast line of the United States, this Bureau has always held, can not be admitted to registry under section 4136, but requires a special act of Congress. Several such instances have occurred during the year, and for evident reasons it is often difficult to determine whether a wreck actually occurred inside or outside the 3-mile limit. This narrow geographical limit does not appear necessary to the general scheme of section 4136, and its sole effect is often to put applicants to the inconvenience of securing the passage of a bill by Congress and to require the time and attention of Congress for special bills where the only question involved is the question of the point where a wreck took place. It has seemed to this Bureau that the convenience of Congress, of applicants for registry, and of shipbuilders engaged in repair work would be served by changing the form of section 4136, so that instead of reading "whenever such vessel shall be wrecked in the United States and shall be purchased and repaired by a citizen," etc., it shall read "whenever such vessel shall be wrecked, and shall be purchased and repaired in the United States by a citizen," etc. There is no reason to apprehend that wrecks, generally, will be towed
from long distances to be repaired under the proposed section, and even if they were, the effect would be simply to enlarge the field for repair work in this country. A bill (H. R. 7045) to accomplish the purpose suggested passed the House of Representatives at the last session and is now before the Senate Committee on Commerce. It is published in Appendix A, and its enactment is recommended as a measure of convenience in the administration of section 4136.
There is little to be said in favor of the general policy of our laws which admit foreign-built wrecks to American registry, and deny the same privilege to new and sound vessels, the repairs on which from time to time would be made usually in American yards, and it is suggested that the section of the Revised Statutes under consideration furnishes an additional reason for the passage of the "free ship bill," popularly so called.
U. S. SHIPPING COMMISSIONERS.
Summaries of the annual reports for the last fiscal year by the U. S. shipping commissioners are to be found in Appendix B. They furnish useful information concerning the present condition of our merchant seamen and the extent of our merchant service.
The offices of these 22 shipping commissioners are the points where the authority and care of the Federal laws over merchant seamen are most directly and most frequently exercised. Contracts with seamen are made in their presence, and in the first instance they stand for the guardianship of the Federal Government over American sailors. This theory of guardianship, which led to the establishment of United States shipping offices, was set forth by Mr. Justice Story (Harden v. Gordon, 2 Mason, 541, 555) as follows:
Every court should watch with jealousy an encroachment upon the rights of seamen, because they are unprotected and need counsel; because they are thoughtless and require indulgence; because they are credulous and complying, and are easily overreached. But courts of maritime law have been in the constant habit of extending toward them a peculiar protecting favor and guardianship. They are emphatically the wards of the admiralty; and, although not technically incapable of entering into a valid contract, they are treated in the same manner as courts of equity are accustomed to treat young heirs, dealing with their expectancies, wards with their guardians, and cestuis que trust with their trustees. The most rigid scrutiny is instituted into the terms of every contract in which they engage. If there is any undue inequality in the terms, any disproportion in the bargain, any sacrifice of rights on one side, which are not compensated by extraordinary benefits on the other, the judicial interpretation of the transaction is, that the bargain is unjust and unreasonable, that advantage has been taken of the situation of the weaker party, and that pro tanto the bargain ought to be set aside as inequitable.
It is the duty of shipping commissioners to afford facilities for engag ing seamen, especially in foreign trade, superintend their engagement and discharge, and in general to defend seamen from efforts to defraud or misuse them on land or on sea. The positions, therefore, call for the exercise of good judgment, firmness, and other qualities, above the mere ability to keep books and perform clerical labor. Very few complaints have reached this Bureau concerning the conduct of these offices, and very few complaints by owners, masters, or seamen were made to commissioners, during the year.
The service was conducted last year by 22 commissioners at as many of the principal seaports, 27 deputies and employés being assigned to the 8 chief ports. The largest force, 12 men, is stationed at New York, while the force at San Francisco consists of 6 men, and at Philadelphia of 5. The expense of the entire service for the year was $59,934.72. The