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These recommendations have been embodied in bill E to be found under the heading, "Proposed legislation."
The essential provisions of State laws imposing compulsory pilotage on coastwise sailing vessels and the rates of pilotage at various ports in those States may be found in Appendix H.
REGULATION OF SAILING VESSELS AND THEIR OFFICERS.
The American delegates to the International Marine Conference, in their report to the Secretary of State in 1890, said:
While the laws regarding the Government inspection of steam vessels may be assumed to insure upon them the necessary security of life and property at sea, so far as the strength of the vessels, proper equipment, etc., are concerned, no such provisions exist by law with regard to sailing vessels. A totally unseaworthy sailing vessel may put to sea at the risk of all lives and property on board; furthermore, she may be overladen and utterly deficient in the necessary equipment for the safety of her crew and passengers in case of accident, such as boats, life rafts, life-preservers, pumps, etc., or fire-extinguishing apparatus. There is, moreover, no legal requirement as to the qualifications of officers of sailing vessels, and no certificate of qualification is required by law of such officers. If the owners or insurers do not require some evidence of competency, any man may obtain command of a sailing vessel, however unfit he may be for the position.
Steps should be taken to remedy the condition to which attention was thus directed. It is believed, however, that such steps should be gradual. The laws already put sailing vessels at a disadvantage, and the addition of new and proper obligations upon their owners and masters ought to be preceded, or at least accompanied, by the removal of unfair and unnecessary burdens to which they are now subject. The removal of some of these burdens has been favored in other pages.
I have the honor to recommend that after July 1, 1898, the masters and mates of all sail vessels of over 700 tons be required to take out an annual license, certifying to their character and competency, and that after that date the hulls of all such vessels be subject to an annual inspection, such licenses to be issued and such inspections to be made as is the case now with steam vessels and their officers.
The bill is designed to affirm the principle of Government regulation of sail vessels, rather than to establish at once a complete system. For this reason it is limited to the masters and first mates of sail vessels of over 700 tons, and is not to apply to them until two years have elapsed. Over 11,000 of our sail vessels are under 100 tons, and it is not desirable to attempt, certainly at present, the regulation of this large number of small vessels. Sail vessels of over 700 tons number 685, and constitute the bulk of our ships engaged in deep-sea foreign trade. The masters of these vessels hold positions of responsibility, not only to their owners, but also to the Government for their conduct abroad and for the care of the lives and well-being of their crews, and it is proper that the Government should see that only competent men are intrusted with this responsibility. Fairness to all interests, however, suggests that some time should be allowed to elapse before the bill shall go into effect. Two years seem to be sufficient for the preparation of such regulations as will be needed to carry out the measure, and for masters, mates, and owners to accommodate themselves to its provisions. The measure is much less stringent than the law which Great Britain enforces without complaint from any source. Under that law the master and mate of every British foreign-going vessel of over 100 tons must have a certificate of competency, and the vessel must be provided with lifeboats, belts, and life buoys according to a schedule fixed by the Government.
The inspection annually of the hulls of sail vessels of over 700 tons is deemed imperative, for many of these vessels in trade, especially on the Pacific, are very old. The safety of these craft is reduced almost entirely to a matter of money-making or losing, and that, it is submitted, on grounds of both humanity and public policy, is not a proper basis on which to place the lives of our seamen. These suggestions have been incorporated in bill F.
REPEAL OF RECIPROCAL TONNAGE-TAX EXEMPTIONS.
The early repeal of the law exempting from tonnage taxes vessels from foreign countries, islands and ports which extend to vessels from the United States, a like exemption in their ports is recommended. The theory of the law may be excellent, but its workings bring no benefits to the American merchant marine commensurate with the benefits bestowed upon and the revenue surrendered to the merchant marines of foreign nations which have taken advantage of it. The conditions of our navigation render it a complete misapplication of the principle of reciprocity on which presumably it was based.
Should Congress see fit to repeal this law, it will be possible at the same time to reduce from 3 cents to 2 cents per ton the tonnage tax now imposed on vessels from foreign ports in North America, the Gulf and Caribbean ports of Central and South America, the West Indies, and Hawaii-a carrying trade which we conduct on nearly even numerical terms with our foreign competitors. These two propositions will reduce by $5,000 to $8,000 annually the aggregate tonnage taxes levied on American shipping. They will increase by from $70,000 to $75,000 our annual receipts from tonnage. They will increase the effi ciency of the Marine-Hospital Service by placing at its disposal this increase of revenue. They will prescribe a more equitable method of contribution to the maintenance of that service. They will remove discriminations in certain cases against our own vessels and in favor of foreign vessels, which have grown out of the law in question. They will secure a more even and just treatment by the United States of the vessels of all nations, including our own, and they are in strict conformity with our treaty obligations. The law in question is contained in the two provisos of section 11 and in section 12 of the act of June 9, 1886, as amended April 4, 1888, section 11 being in turn an amendment of section 14 of the act of June 26, 1884. These portions of law, the repeal of which is proposed, read:
Provided, That the President of the United States shail suspend the collection of so much of the duty herein imposed on vessels entered from any foreign port as may be in excess of the tonnage and light-house dues, or other equivalent tax or taxes, imposed in said port on American vessels by the government of the foreign country in which such port is situated, and shall, upon the passage of this act, and from time to time thereafter as often as it may become necessary by reason of changes in the laws of the foreign countries above mentioned, indicate by proclamation the ports to which such suspension shall apply, and the rate or rates of tonnage duty, if any, to be collected under such suspension.
Provided, further, That such proclamation shall exclude from the benefits of the suspension herein authorized the vessels of any foreign country in whose ports the fees or dues of any kind or nature imposed on vessels of the United States, or the import or export duties on their cargoes, are in excess of the fees, dues, or duties imposed on the vessels of such country or on the cargoes of such vessels.
But this proviso shall not be held to be inconsistent with the special regulation by foreign countries of duties and other charges on their own vessels and the cargoes thereof, engaged in their coasting trade, or with the existence between such countries and other states of reciprocal stipulations founded on special conditions and equivalents, and thus not within the treatment of American vessels under the most-favored nation clause in treaties between the United States and such countries. NAV 95, PT 1. -4
SEC. 12. That the President be, and hereby is, directed to cause the governments of foreign countries which, at any of their ports, impose on American vessels a tonnage tax or light-house dues, or other equivalent tax or taxes, or any other fees, charges, or dues, to be informed of the provisions of the preceding section, and invited to cooperate with the Government of the United States in abolishing all lighthouse dues, tonnage taxes, or other equivalent tax or taxes on, and also all other fees for official services to, the vessels of the respective nations employed in the trade between the ports of such foreign country and the ports of the United States.
In accord with the provisions quoted, proclamations have been issued from time to time exempting from tonnage tax vessels from all ports of the German Empire, and of the Netherlands, the free Dutch East Indian ports, Colon, Panama, and Bocas del Toro in the United States of Colombia, the ports of San Juan and Mayaguez in Puerto Rico, Grey Town in Nicaragua, the islands of Trinidad, Montserrat, Tobago, Grenada, and Guadeloupe in the West Indies, and the Province of Ontario. In return vessels from the United States entering the ports of the countries and islands named are exempt from tonuage taxes, light-house dues, and equivalent charges. The policy of this law, as was stated in the annual report of the Bureau for 1894, is "worthy of a great and generous maritime power," but its practical workings have shown it to be most unbusinesslike and unprofitable legislation for the United States.
The proclamation exempting vessels from Germany from tonnage taxes was issued January 26, 1888. During the seven fiscal years ended June 30, 1894, covering virtually the period during which vessels from Germany have been exempt-except the last fiscal year, returns for which are not yet available-the entries of foreign vessels from Germany into the United States numbered 4,972, of 9,680,837 net tons. During the same seven years, American vessels entered from Germany into the United States numbered only 25, of 30,368 net tons. These figures afford an approximate measure of the large sacrifice of revenue made by the United States for an insignificant return from Germany. The tonnage tax on vessels from all the countries of Europe, except Germany and the Netherlands, is 6 cents per net ton. Levied on upward of 9,600,000 net tons from Germany, for the seven years it would have amounted to over $580,000.
This estimate of the loss of revenue through the exemption from tonnage tax of foreign vessels entering from Germany must, however, be somewhat reduced to ascertain the true loss of revenue for the septennate. Tonnage tax is paid by a vessel only five times a year, and vessels making over five voyages are exempt for the rest of the year after the fifth payment has been made. Some of the express steamers of the North German Lloyd and Hamburg-American lines have made seven or eight or perhaps nine voyages to the United States annually, and those repeated voyages are included in the figures given above. To be strictly accurate, deduction should be made from the tonnage figures above for the voyages, after the fifth, made by any given steamer from Germany. It is impossible, without ascertaining the precise number of voyages every vessel has made annually from Germany to the United States, to compute just what this deduction should be, but allowing liberally for it, the loss of revenue has been upward of $400,000 for the seven years, or about $60,000 per annum.
The fleets of the North German Lloyd and Hamburg-American lines, usually employed in constant trade with the United States aggregate upward of 160,000 net tons, on which a tonnage tax of 6 cents per ton, levied five times, amounting annually to $48,000, has been waived by the United States. For this most generous concession the United States
receive virtually no return. German statistics do not specify separately the number and tonnage of American vessels entering German ports, their insignificance entitling them only to a place among the scattering. During the seven years named, however, the total clearances of American vessels from the United States for German ports numbered only 15, of 21,156 net tons, and the entries from German ports 25 vessels, of 30,368 net tons. The levy of a tax of 6 cents per ton by Germany on this tonnage would have produced between $1,200 and $1,800 during seven years, or less than $300 per annum. Under the provisions of our own law, the repeal of which is now urged, the United States, to secure an exemption of $200 or $300 a year in taxes on American vessels in German ports, have exempted foreign vessels from Germany in American ports from annual tonnage dues amounting perhaps to $60,000. It is submitted that there is no reciprocity of benefit in such an arrangement, and business prudence dictates its termination.
Beyond the unfavorable revenue conditions created by this law, in it are also involved positive and appreciable discriminations against American vessels and in favor of competing foreign vessels. Under a ruling of this Bureau, dated November 26, 1890, and rendered pursuant to an opinion of the Attorney-General at the time, the express steamers of the North German Lloyd and Hamburg-American lines, which touch at Southampton to take on passengers and mails, but do not enter or clear there, have been regarded as entering the United States from Germany, and exempt, therefore, from tonnage tax. Southampton is the terminus of the American Line steamships St. Louis, St. Paul, New York, and Paris, and at that point they come into direct competition with the two great German lines named. The law in question imposes an annual tax on the 25,000 net tons of the four American Line steamships of $7,500, while two of its chief foreign competitors at Southampton, each with about an equivalent tonnage, are wholly exempt from this tax. It is difficult to conjecture the reasons which impelled the enactment of this law, though one may readily perceive how benefited foreign interests may have urged its adoption and may oppose its repeal.
Unquestionably tonnage taxes to an extent are taxes on consumption, and as such are paid in part ultimately by American consumers, but this particular law derives only negative strength from that consideration. If that consideration is to have weight, it argues for the abolition of all tonnage taxes rather than for the preservation of the present discrimination. The abolition of tonnage taxes would compel the adoption of some indirect method of taxing our own people to sustain the Marine-Hospital Service.
The operation of the law in the case of Germany is not exceptional, though the extent of our maritime relations with that Empire renders the figures more striking taan in the case of other countries, islands, and ports which have availed themselves of our inexplicable self-sacrifice in legislation. Similar results have followed the application of this method of "reciprocity" in other cases. Vessels from the Netherlands have been exempt from tonnage tax since April, 1887. During the seven years previous to June 30, 1894, the entries of foreign vessels from the Netherlands into the United States numbered 1,363, of 2,436,584 net tons. The entries of American vessels from the Netherlandswhich are also an approximate measure of American clearances for the Netherlands-numbered only 14, of 17,225 net tons. During these seven years the Government of the Netherlands has relieved American shipping in that country of about $1,000 taxes, while the Government of
the United States has relieved Dutch and other foreign vessels from the Netherlands of upward of $100,000 in tonnage dues. The exchange, obviously, is not on even terms. The Netherlands-American steamship line to Rotterdam, competing to an extent with the Red Star Line steamers to Antwerp, has a net tonnage of about 30,000 tons in regular trade with the United States, which under existing law is relieved every year of about $9,000 tonnage taxes, while the Red Star Line steamers of American ownership from Antwerp påy tax to the United States at the rate of 30 cents per net ton annually.
Germany and the Netherlands are the only nations of Europe which have taken advantage of the provisos of section 11 of the act of June 19, 1886, and accepted the invitation of section 12. The entries of foreign vessels from Europe into the United States during the fiscal year ended June 30, 1894, numbered 4,796, of 9,668,111 net tons. The entries of American vessels from Europe during the same period numbered 114, of 341,876 net tons. Should Europe accept the invitation held out by the provisions of law in question, for every dollar of exemp tion American vessels would receive abroad foreign vessels would receive nearly $30 in exemption in the United States. The receipts from tonnage tax would be reduced by over $350,000, and it would be necessary to raise this amount from the people in some manner in order to maintain our Marine-Hospital Service, to which the proceeds of tonnage taxes are now devoted.
Since April, 1887, vessels from the free ports of the Dutch East Indies have been exempt from tonnage taxes. These are the only Asiatic ports to which the law applies, and it applies to no Australian or African port. During the seven years ended June 30, 1894, 9 American vessels, of 7,135 net tons, have entered from the Dutch East Indies, while 229 foreign vessels, of 297,050 net tops, have entered from those islands. Included in these totals are the arrivals from Batavia, which is not an exempt port, but with which we carry on much of the trade summarized in the figures just given. The imposition of the 6-cent rate on the 7,135 American tons entered from the Dutch East Indies during seven years would have produced only $430, or about $61 a year, and when from this has been deducted the sum now paid by American vessels coming from Batavia and Dutch East Indian ports not free, it will be seen that the tax which it is proposed to levy will be so small as not to pay the clerk hire required to compute it accurately. From foreign vessels the Government would receive possibly $1,000 a year. The operations of the sections referred to upon navigation from Central American, West Indian, and Canadian ports must be considered in the light of somewhat different conditions. First, the tonnage tax on vessels arriving from these ports is only one-half the rate levied on vessels from transoceanic ports; second, the voyages are much shorter. Thirteen voyages a year are the utmost which a transatlantic steamer performs, except in rare cases. Voyages between our Gulf ports and the West Indies are short and frequent, and those between our lake ports and ports in the Province of Ontario still shorter and more frequent, though covering only those months when the lakes are free from ice. Finally, this navigation, which geographically is coastwise, though politically foreign trade, is shared by the United States on much more nearly even terms with foreign nations than is transoceanic navigation. The half-rate tonnage tax applies to vessels entering from foreign ports in North America, Central America, the West Indies, the Hawaiian Islands, and several of the ports of Venezuela and of the United States of Colombia in South America. The net tonnage of American vessels