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The money value of the time and effort required to prepare a bond and obtain the necessary sureties, or the compensation of a ship broker for the preparation of a bond, may be moderately put at $1, so that the act has saved annually to American navigation $30,000-considerably more than the annual cost of this Bureau-while saving the Government incidentally several thousand dollars in clerk hire, fees, and contributory expenses. At the same time all the useful purposes which the bonds were designed to effect are much more satisfactorily and economically attained by the penalty system established by the act of 1895. An extension of the same principle to crew bonds is recommended.
Section 4576 of the Revised Statutes requires the master of every vessel bound for a foreign port or in the whale fishery to give a bond, with sufficient security, in the sum of $400 for the production of all the members of his crew upon return to the United States. The obvious and desirable purpose of the law, which was enacted in 1803, is to protect American seamen from arbitrary dismissal in foreign ports; but this end can be more effectively secured, with less inconvenience to masters and owners, by repealing the requirement of a bond in all cases and imposing a penalty upon any master and owner who fail to produce all the crew upon the return to the United States. The laws require so many legal papers of various descriptions from the masters of vessels that the abolition of an unnecessary document is a distinct gain in convenience, in time, and in money to the owners and masters of vessels. During the fiscal year 1894 about 5,000 of these crew bonds were issued at the custom-houses.
The form in use requires the master to obtain at least one other person to go on the bond with him, and the master must either go to the trouble to obtain a bondsman or must rely upon the ship broker, who presumably does not supply the name without compensation. This Bureau is aware of no recent instance in which suit has been successfully instituted for the forfeiture of a crew bond, and though on several occasions it has endeavored to secure such forfeitures, its efforts have not met with such success as to warrant the belief that the present procedure can be effectually invoked. It is recommended that the bonds be abolished and that a direct penalty be imposed on the master and owner of a vessel when no satisfactory reason is given for the failure to produce any member of the crew on the return from a foreign voyage. This procedure is prompt, simple, and effectual. If the boarding officer on mustering a crew and comparing it with the crew list finds men absent and not accounted for, the collector of customs at once may impose the penalty, subject to the power of the Secretary of the Treasury to remit or mitigate it. The imposition of a fine in a few instances would have a most exemplary effect and prove a genuine protection to seamen, while failure to institute proceedings for forfeiture of the bond has undoubtedly led to the belief in some quarters that the present law is merely a form.
The collection of a fine, for obvious reasons, is usually much easier than the institution of proceedings for the forfeiture of a bond. It is proposed to fix the penalty at $400, the amount of the bond now required by law, but this amount may be reduced by the Secretary of the Treasury when circumstances seem to warrant the infliction of a lesser penalty. The proposed change in the law will not only secure greater certainty and simplicity in execution, but will relieve the masters of vessels from the trouble and expense of procuring bondsmen. It will relieve the custom-houses of the work of preparing and preserving about 5,000 bonds annually, and to that extent will reduce the
expenditures of Government. It is believed that the proposition will be regarded with as much favor by the owners and masters of American vessels as was the repeal of registry, enrollment, and license bonds by the last Congress. At the same time, the proposition should commend itself to seamen as one much more likely to secure them prompt and certain protection than the present law. Legislation to abolish crew bonds and substitute penalties has been incorporated in section 3 of bill L, to be found under "Proposed legislation."
ACCOMMODATION FOR CREWS.
At the last session Congress enacted that on vessels the construction of which should be begun after June 30, 1895, a minimum space of 72 cubic feet should be provided for each member of the crew and that the spaces for the crews should be securely constructed, properly lighted, drained, ventilated, and protected from the weather and shut off as far as practicable from the effluvium of cargo or bilge water. The act was prompted by regard for the health, safety, and comfort of our merchant seamen, and it is believed that it should be gradually extended, at the reasonable convenience of masters and owners, to all seagoing vessels of the United States. It is recommended that after June 30, 1898, a minimum space of 72 cubic feet, 12 superficial feet on the deck, for each seaman be required on all seagoing vessels. By allowing two years or more to elapse before the full enforcement of this provision, ample time will be granted to every owner to enlarge and improve his crew spaces, when necessary, at his own convenience and at a time when his vessel may be undergoing repairs. The proposition thus involves no hardship on the owner and the minimum of expense. A similar law has been in force in Great Britain and Norway for some years, and more recently has been adopted by other maritime nations. An extension of the provisions of the act of March 2, 1895, concerning the measurement of vessels so as to bring all seagoing vessels after June 30, 1898, under its requirements as to minimum crew spaces, has been incorporated in section 2 of bill L.
ABOLITION OF ENTRY AND CLEARANCE FEES ON THE NORTHERN
Section 4382 of the Revised Statutes provides a fee of 50 cents for each entry direct from a foreign port and each clearance direct to a foreign port of a vessel navigating the waters of the northern, northeastern, and northwestern frontiers of the United States otherwise than by sea. The same section provides a fee of 25 cents for receiving the manifest of each railroad car or other vehicle laden with goods, wares, or merchandise from foreign contiguous territory.
Section 22 of the customs administration act of June 10, 1890, abolished all fees exacted and oaths administered by officers of the customs, except, as provided in that act, upon the entry of imported goods and the passage thereof through the customs. In the case of The United States v. Gustave A. Jahn et al. (65 Fed. Rep., 792) Justice Wheeler said:
Now, Congress did not content itself by abolishing the particular sections of the law relating to fees and leaving the rest as it was, but they declared emphatically that all fees exacted by customs officers in passing goods through the custom-house, or passing them through the other way shall be abolished; that is, the whole thing was cut up by the roots, so that goods passed through without any charge for fees.
Basing their decision upon this case, the Board of General Appraisers has held that the fee of 25 cents for receiving the manifest of a railroad car on the border has been abolished, and the railroad systems running into Canada, as well as other vehicles, are now exempt from this charge.
The entry of a vessel is independent of the entry of merchandise and the passing of goods through the custom-house. It is required whether the vessel carries cargo or is in ballast, and is properly required for a variety of purposes set forth in the navigation laws, as distinguished from the laws relating to the importation of merchandise. During 1894, 20,093 vessels entered the United States with cargo and 9,912 in ballast. The fee for the entry and clearance of a vessel thus does not appear to be a fee "upon the entry of imported goods and the passage thereof through the customs," and does not appear to have been repealed by the customs administrative act of 1890.
The abolition of this charge of 50 cents on the entry and clearance of vessels on the Great Lakes and northern frontier is recommended, as the corresponding charge upon competing railroads has been abolished by the administrative act, as construed by the Board of General Appraisers. The fiscal results of this step will be an annual saving of about $13,000 to the navigation of the lakes and northern rivers. The entries and clearances of vessels between the United States and Ontario, Quebec, and Manitoba during the fiscal year 1894 were:
Fifty cents levied on each entry and on each clearance would have imposed a charge of $5,678 on American vessels and $7,324 on foreign vessels. The recommendation for the abolition of the fee of 50 cents upon the entry and clearance of vessels is confined to the northern borders, because their navigation comes into competition with railroads and should not be subjected to tolls from which railroads are exempt. The abolition of the corresponding fees on the seaboard ($1.50 for vessels under 100 tons and $2.50 for vessels over 100 tons) would be a concession to foreign vessels treble its worth to American vessels, the combined entries and clearances for 1894 of the former being 24,067 and of the latter 11,280. The recommendation made has been incorporated in section 8 of bill L.
TARIFF DUTIES ON SHIPBUILDING MATERIALS.
The maritime nations of the world admit shipbuilding materials free of duty. Duties are imposed in France, the Government paying back in the form of bounties for construction amounts more than equivalent to the duties and specifically designated as "compensation for customs duties." For many years our laws have recognized the propriety of exempting shipbuilding materials from tax, and by different tariff acts successive steps have been taken toward that end; but in this respect our navigation is still at a disadvantage compared with that of other nations.
By the act of June 6, 1872, all lumber, timber, hemp, manila, iron and steel rods, bars, spikes, nails, bolts, copper, and composition metal
necessary for the construction and equipment of vessels built in the United States were admitted in bond free of duty. This privilege, however, was restricted to vessels built for the foreign trade or trade between the Atlantic and Pacific Coasts of the United States, and vessels, on the materials of which duties were remitted, were not allowed to engage in the coasting trade for more than two months in any year, except on payment of the full duties.
Under the same restrictions by section 8 of the tariff act of October 1, 1890, the list of materials which could be imported free of duty was enlarged by the addition of wire rope, plates, tees, angles, and beamsthe chief materials of iron and steel vessels. The scope of the privilege was also extended by a proviso that these materials could be imported free for vessels built for foreign account and ownership.
Under the same restrictions by section 7 of the tariff act of August 28, 1894, the list of materials which may be imported free of duty for shipbuilding was made comprehensive by including "all materials of foreign production which may be necessary for the construction of vessels," and "all such materials necessary for the building of their machinery, and all articles necessary for their outfit and equipment." The privilege, however, remains restricted to vessels built for foreigners, or for vessels in the foreign trade, including the trade between the Atlantic and Pacific Coasts of the United States. The full amount of the duties must be paid if the vessel engage for more than two months in the coasting trade.
The discrimination in favor of foreigners and against our own shipowners in this restriction seems as clear as it is incomprehensible. Presumably duties have been remitted since 1872 on these different lines of shipbuilding materials in the belief that the cost of shipbuilding would thereby be reduced and the market for shipbuilders would be increased. Both shipbuilders and shipowners accordingly would profit. If such be the purpose and actual results of this legislation, there is every reason why American shipowners should be privileged to derive at least as much benefit from the law as it now bestows upon foreign shipowners. Under the law as it has stood for twenty-three years a vessel built in Maine for a British subject, to be used, for example, between Halifax and Portland, receives the full benefit of free raw materials, while if the same vessel be built for an American citizen for trade between Portland and Boston full duties must be paid on any imported materials used.
In so far as these duties may enter into the cost of construction they both reduce the profits of the builder and increase the cost to the owner, if the latter be an American engaged in the coasting trade. A fair regard for American shipbuilders and shipowners, which has prompted the successive steps toward the same liberality shown by other nations, will suggest the extension of the act so that it shall apply to vessels for American ownership, engaged between American ports, as well as to vessels for foreign ownership in remote lands.
The constitutionality of the several provisions of law just referred to has never been called into question, and they seem to afford an adequate reply to those who profess to fear that a bill admitting foreign-built vessels to American registry for the foreign trade would constitutionally carry with it the same admission to the coasting trade. Laws distinguishing these two trades always have existed in every nation, and doubtless always will continue to exist. Our discrimination in the matter of duties on materials of shipbuilding, however, is different from the laws of other nations in that we discriminate against our own
coasting trade and in favor of foreigners. It may be held that the duties on shipbuilding materials are not heavy and that the amount of material imported is not large, so that the relief to be afforded by the removal of this discrimination would not be considerable.
Statistics are not available to show the extent of the burden, but the fact that our first steel full-rigged ship was built under the provisions of section 8 of the act of October 1, 1890, is evidence that there is an appreciable gain to American shipbuilding and navigation in the policy advocated. By extending to the full year instead of two months the privilege of free raw materials for coasting vessels, it is believed that not only would the coasting trade benefit, but our foreign trade as well, through the employment of vessels, ordinarily in coasting trade, at favorable opportunities in the foreign trade. The same reasons apply to the use, free of duty, of materials for repairs as for materials of construction. The removal of these discriminations against our coasting trade is the aim of bill I, "Proposed legislation."
TRANSFER OF SEA STORES.
Sections 2795, 2796, and 2797 of the Revised Statutes, enacted in 1799, exempt from duty the sea stores of vessels, so long as they remain on board the ship for which they are purchased. It is believed that this privilege can be extended with advantage to our shipping by permitting the transfer of such stores under proper supervision from one vessel to another vessel of the same line. This recommendation has been suggested by the recent experience of our only transatlantic line. That line now operates nine steamships under the American flag and others under foreign flags between New York, Philadelphia, Southampton, and Antwerp. Changes in the direction of trade and travel and the necessity for repairs from time to time will require the substitution of one steamer for another and the transfer of crews, stores, and equipments. On such an occasion recently, when the International Navigation Company was recasting its service, it was found that the law does not permit the transfer of stores from one ship to another of the same ownership except upon payment of duty. While such transfer could readily be effected in a foreign port, in its home ports the company was denied this ordinary business privilege. Such petty obstacles furnish one out of the several reasons why our navigation has not thrived, and as they develop from time to time it is believed that they should be removed. No question of principle is involved in the proposed extension of the law concerning sea stores, as the extension is to apply only to vessels of the same ownership, where there is to be no transfer of stores by sale, but merely a transfer from ship to ship under customs. supervision. This recommendation is embodied in section 16 of bill L under "Proposed legislation.”
STATE TAXATION OF SHIPPING.
Action by the legislatures of Maine, Michigan, Minnesota, and Wisconsin and agitation in the legislatures of California and Massachusetts during the current year warrant the hope that seaboard and lake States are awakening to the economic mistake and injustice of heavy taxation of shipping as property. It is a mistake for the States in their relation to the Union to impose such taxes, for they place American vessels at a disadvantage in competition with the vessels of our sagacious and untiring foreign rivals. It is a mistake for the States in their relations to one another, for such taxes defeat their own ostensible ends by driv