The Future of American Shipping
THIS year the future of American shipping has become a subject of more than ordinary interest. It is now one of the gravest topics which can command public consideration.
The country is now happily past the larger part of the troubles which have disturbed its trade and industry for a number of years. For a year and a half it has enjoyed a period of uninterrupted sunshine and prosperity. National finance has been so regulated as to establish the public credit and to give certainty to business transactions. A succession of large harvests has blessed the agricultural community. Railroad building has been resumed. Trade has revived. The products of the mines are in demand. The factories are busy. The railroads have all they wish to do. Labor finds ready employment. Failures have decreased in number from one in every sixty-five doing business to one in every one hundred and five. These blessings have been accompanied by an expansion of our foreign commerce, which is without a parallel in the annals of international exchanges. The dreams of our fathers are surpassed, and the imagination of the present generation is kindled by the magnitude of what they have without effort achieved. Our commerce now begins to approach that colossal trade which gives England her distinctive place in the business of the world. In the year ending June 30, 1880, there were exported from the United States 18,000,000 gross tons of produce and manufactures ; there were imported during the same time 3,900,000 gross tons, — a total of nearly 21,000,000 tons of goods, giving cargoes to 34,000 ships, a great advance from the day of small things following the Revolutionary War, when a few hundred small sailing vessels, taking out forestry, fishery, and farm products, and bringing back manufactures, constituted the whole foreign commerce of the young nation in the New World.
Only one important American interest has failed to derive marked benefit from the phenomenal trade of the past year. A foreigner, reasoning from ordinary experience, would scarcely credit his ears if he were told that our shipping formed the solitary exception to the general prosperity, especially if he were aware that the settlement of the South Atlantic States, the purchase of California, and the discovery of gold in Australia had in each case been attended with a sudden growth of the American merchant marine ; ships often earning their whole first cost in freight money in a single year, in those times. Yet such is the fact. The records show that American vessels have derived almost no benefit from the wonderful expansion of the ocean carrying trade of the last two years. Our ships actually carry less transoceanic freight than they did three years ago, and far less than at any time during the last thirty years, the period of our civil war alone excepted. Tens of thousands of tons of American vessels lie idle at the wharves of our great sea-ports, while the sea is white with the sails and the sky is dark with the smoke of the great merchant fleets of other nations, which swarm to our shores and transact the great carrying trade that our own vessels do not seem able to take a busy part in. The carrying is secured by Europeans.
Time was when it was said that an Englishman never visited any part of the world without finding a Dutchman there ahead of him. This has been all changed. The Englishman is the first on the ground now. In whatever part of the world there is an opportunity for trade, the letters of the English consuls and the cable dispatches of the English merchants report the fact at once to London or Liverpool, where the news is digested and acted upon before the rest of the world hears of it. The news being received in advance of competitors, goods and ships are sent to the spot promptly, and the cream of the business is secured at once. The British habit of being first in the field has given to the carrying trade to and from the United States, for the past two years, its chief peculiarity. To every point of our long coast whence the products of the soil could be advantageously exported, and to every new foreign port with which a trade has sprung up, the English have established a line of freighting steamers, with sailing ships as auxiliaries. Not a month has passed without the starting of a new line. First it is to Norfolk ; then it is to Mobile ; then to Charleston, Savannah, Galveston, and other places. New lines to the old sea-ports, like that of Mr. Vanderbilt to New York and the West Hartlepool line to the Erie elevator in New Jersey, are established, and old lines are enlarged by the addition of new and more commodious ships. This has been the special characteristic of the carrying trade of the last two years ; and England now enjoys in our commerce a magnificent preëminence, which it seems folly for any European rival to contest, and despair for America to attempt to disturb.
The fleets of England trading hither are composed chiefly of vessels propelled by steam, tonnage and efficiency considered. A few countries which can build cheap sailers have, however, also been the beneficiaries of the expansion of our commerce. Here, for instance, is Norway. Inspired with the true characteristic energy of the northern races of the world, inhabiting a country where fair play in the race of life and steady habits among the people are the rule, the Norwegians have been able to secure by their enterprise as large a share of our transoceanic carrying trade as we enjoy by inheritance. They build the cheapest sailers now which navigate the ocean. Thrown out of occupation by the falling off in the Russian grain trade and the competition of European steamers, they have been for a few years past cruising the whole world in the peaceful search for cargoes with all the vigor that their ancestors displayed in the conquest of empires. They have crowded every port on the whole American coast, and they now employ as large a number of sailing vessels of the best class in our great ocean trades as we do ourselves. In fact, they dictate the terms on which the trade shall be carried on. The English steamers can secure a slightly better rate of freight than the Norwegian sailers now only because of the difference of time in making a voyage.
Italy, France, Belgium, and Spain have also been able to take a share in the large business opened to them by our treaties of navigation.
It has long been known, more or less vaguely, that our ship-owners were not getting ahead at all, and that, so small were their profits, they were not adding to their fleets in the slightest degree. Not even were they replacing all the worn-out vessels with new ones, the worst sign of maritime decadence. The reports of the government at Washington have thrown some light on the rapid decline of our navigation by exhibiting annually the percentage of imports and exports carried in American vessels. The decline was from seventy-five per cent, in 1856 to twenty-three per cent, in 1879—80. Information obtained for the benefit of the Maritime Exchange of the city of New York, however, places the present state of affairs in a far more striking light than do the government reports. There is printed weekly a paper called The Maritime Register, having the confidence and support of the members of the Exchange, and giving the names of all ships engaged in the whole foreign commerce of the United States, their destinations, the places of the world where last reported, and other details of interest and importance to maritime circles. The following tables have been carefully prepared from the issue of August 4, 1880, showing the number and nationality of vessels engaged in the whole foreign trade of the United States, except to Canada, on that day : —
SAIL : TEA NSOCEANIC.
British..........1276
American..........884
Norwegian..........882
Swedish..........143
Italian..........598
German...........395
Austrian..........165
Dutch..........49
Russian..........64
Danish..........29
Portuguese..........26
Spanish..........85
French..........57
Hawaian..........6
Costa Rican..........4
Bolivian..........2
Brazilian..........3
Argentine..........5
Mexican..........1
Haytian..........2
Nicaraguan..........2
Honduras..........1
Belgian..........2
Greek..........1
—
Total..........4682
All of large class.
SAIL : TO WEST INDIES AND SOOTH AMERICA.
British..........208
American 1..........444
Spanish..........15
Haytian..........13
Norwegian..........3
Italian..........1
Danish..........3
Dutch..........2
Portuguese..........1
French..........5
Mexican..........1
Costa Rican..........2
-
Total..........698
STEAM.
British..........447
American 2..........46
Gorman..........35
Spanish..........21
Belgian..........13
French..........9
Italian..........5
Danish..........5
Dutch..........6
Brazilian..........1
Mexican..........1
Costa Rican..........1
-
Total..........590
The writer prepared an abstract similar to this last summer, taking the Maritime Register for June l6th as representing an average week. Startled with the results obtained, he took them to a number of shipping men, and was permitted by General Merritt, collector of the port of New York, to make certain investigations at the custom house to confirm their accuracy. All the information obtained established the correctness of the exhibit.
The figures are strange and eloquent. They explain more clearly than can otherwise be done why Americans who travel in Europe so seldom have their eyes gladdened by a sight of the flag of their native land among the shipping in the great harbors they visit, and why the men from our inland cities who stroll along the wharves of the bay of New York so seldom see the same broad ensign there. Who can fail to learn without astonishment that even little Belgium, a country scarce larger than an American county, has about as many ocean steamships in our trade as we have ourselves, and that Italy and Germany have more? Who could imagine that Italy had five hundred and ninetyeight large-class ships crossing the Atlantic and the Pacific in the trade with this part of America, and that Austria, a kingdom with one small seaport, had one hundred and sixty-five ? Who now will wonder that tens of thousands of tons of American vessels lie idle at the wharves of New York and Boston ? Yet the figures given above, striking as they are, are not unique, in history. A similar showing could have been made by Italy, Portugal, Spain, and the Netherlands, respectively, just before the extinction of each as a great maritime power.
An incidental fact, worth glancing at in passing, is the rapid increase of steam shipping in ocean commerce. In 1858, when we were carrying seventy-five per cent, of our own commerce, Mr. Thomas Rainey, then a great authority on “ the ocean post,” declared it to be the common opinion that steam vessels would never carry anything except the mails, passengers, and express freights. Admitting that under certain circumstances steam would be a cheaper motor than even the free winds of heaven, he stated his belief that wheat, cotton, corn, and lumber could never go in any other than the old way, because they were too bulky and too cheap. They could not be made to stand the cost of freight. This was the opinion not only of Mr. Rainey and the American shipping men of that day, but of the English authorities also. It was, however, an erroneous notion. A class of steam vessels, of large cargo capacity and small coal consumption, has been by the ingenuity of man devised to perform just that service ; and if the course of events since 1865 be any standard for judgment, it may now be declared that the time will soon come when there will be nothing which ocean steamers will not carry. The freight steamers are already taking cattle and petroleum; and naphtha, gasoline, dynamite, guano, nitrate, and all the other objectionable articles are pretty sure to be taken in time. There will still be a demand for the sailing vessel, because goods need not always be dispatched in haste, and it is often cheaper to put grain, etc., into a slowmoving sailer than it is to send it quickly by steamer, and then pay a good price for storage. The sailer can always be used, too, in a variety of trades, especially in long voyages, and where there is a rush of bulky goods ; but that steam is gradually gaining on the sailing vessel, and now competes with it constantly, is an important fact which it will be well to bear in mind.
At one time, the New York Custom House began to keep a record of the proportionate amount of trade, transacted by steam and sail respectively, to principal countries. The government did not require these figures, and the work was finally discontinued. Collector Merritt, however, has had compiled the following statement of the export business of the port of New York with principal countries for the year ending June 30, 1880, and this will give some idea : —
Exports of New York to
England, $26,216,606
Scotland,
Germany,
Netherlands,
Belgium,
France, —
Totals,
Sail. $130,569,396 1,465,514 12,351,890 3,052,579 7,531,932 22,411,156 —
$73,029,677 $210,139,174
Steam.
$156,786,002
22,755,438
19,284,415
6,731,381
14,325,142
16,473,402 — $283,168,851
Total. 156,786,002
24,220,952
31,636,305
9,783,960
21,857,074
38,884,558
France usually shows an excess of steam, but the rush of grain last year gave employment to sailers. The figures for the import trade could not be obtained. It would require an act of Congress and a liberal appropriation for clerk hire to get them. The task would require three months’ work. However, it is known, in a general way, that at least four fifths of the import trade takes place in steamers from the countries named above. Other custom houses along the coast would show the same general state of facts. This replacement of sail by steam tonnage is one of the signs of the times. Only by falling in with the current of events will the United States ever be likely to recover the ground she has been steadily losing these last twenty years.
Of the new influences which promise indisputably to tell against our shipping interest hereafter, the policy of France may be first referred to. The prosperity of France under the republic has not only enabled that flourishing country to pay off her war debt to Germany promptly, but has given the treasury a larger amount of revenue than it has known what to do with. The government has, accordingly, occupied itself with studying how to turn the facts of the case to account, for the benefit of such industries as were not so fortunate as the others. Beginning in 1872 with the abolition of a tax on mortgages, which netted the government 4,000,000 francs yearly, it has from time to time, up to the present fall (1880), thrown off one tax after another, until the total reductions have amounted to 307,000,000 francs. Among other things, it has abolished a tax of 3,000,000 francs on shipping, thus relieving that interest of a certain burden. This reduction was enacted on the 19th of last February. While taking these steps, the government has also been considering the propriety of lending a vigorous support to the companies who are waging a lively war with some Italian lines in the Mediterranean, and with English lines on the Atlantic. Upon the solicitation of a large number of boards in various parts of the republic, a commission was appointed, in 1873, “ to study the most efficacious manner of aiding the merchant marine and assuring its prosperity.” The complex nature of the questions proposed for the commission to consider caused much delay, but at last, this year, the government has been presented with a project of law for aiding in the establishment of steamship lines by means of subsidies, and of creating said tonnage by bounties, and the project has been adopted. It is not permitted to us to foresee the ripe fruits of a policy so recently adopted, especially since the full purpose of the French government is not yet made known. But whether the support now to be given to French shipping be extended to the vessels engaged in the Mediterranean trade, or in the business to South America or to this country, the new policy can in no case confer a blessing upon our own shipping interest. It adds a burden instead. It creates a new and urgent competition in several branches of trade which our vessels would like to enter.
Another cause for concern is the action taking by China and Japan, the governments of which countries are rapidly becoming wide awake in matters of trade and navigation. We have never looked for competition from that quarter of the world. Yet the last hundred years have taught the people of those two empires something, and they are applying their newly acquired knowledge with a vigor and ingenuity worthy of Europeans. The first steamer which ever appeared in their waters was one sent thither by the English under a contract with the British government, entered into in 1840, in which year the service to Gibraltar, established three years before, was extended to Suez, Bombay, Hong Kong, and Shanghai. The contract was transferred in 1843 to the Peninsular and. Oriental Company, which survives to the present day. As soon as the English had fairly entered into the navigation of Chinese waters they found a great and virgin field of enterprise opened before them. The taxes to the Chinese government were paid in grain, and the transportation of this and other commodities along the rivers and coasts of that empire afforded profitable employment to an immense fleet of native junks. The English established steam lines in that part of the world, employing the capital both of their own and of the native Chinese merchants. In 1874, there were fifty steamers plying in the local trades in Chinese waters, exclusive of the American, English, and French lines which ran thither from across the oceans. In 1874, Li Hung Chang memorialized the throne to establish a native company for the transportation of government grain and general merchandise, with the object of retaining the profits entirely in native hands. The project was received with favor. The China Merchants Steam Navigation Company was formed, with the royal consent and support. During the first year the company had six steamers in operation, namely, the Aden, Fu-sing, Ho-chung, Yungching, Lee-yuen, and Hai-ching. The next year four more were added, and by 1877 the company had a fleet of sixteen vessels. It is not necessary here to recount the war waged with the foreign companies, the extraordinary reductions of rates to from fifty to seventy per cent, of the former amount. Suffice it to say, the native company held its own, and in 1877 had become so rich and powerful as to kill the Shanghai Steam Navigation Company (foreign) entirely, and to buy its twenty-six vessels and its wharves, etc., for 2,000,000 taels cash. The year 1877 was the turning-point. Since then China has become aggressive. She now looks to a general navigation of the high seas. She begins by proposing to run ships to America, and on the 30th of August last (1880) the pioneer steamer entered the bay of San Francisco, and announced to the world that progress is not confined to any one clime or race of people, and that China must hereafter be regarded as an active participant in the affairs of the world. The pioneer steamer was singularly enough the Ho-chung, one of the original six vessels of the China Merchants fleet, — an omen which bodes no good to the shipping interests of China’s competitors on the Pacific Ocean. Were the kingdom of the Celestials a country in which high prices reigned, America would have less to fear from this new manifestation of Occidental enterprise. The trouble is that the lowest prices in the world reign there. China enjoys the cheapest labor on the planet. Her laborers are ingenious and docile, and should modern ship-yards be opened on her river-banks to any great extent, vessels would soon be produced there which would shame the rest of the world in their cheapness of first cost and expense of operation. It is no trivial circumstance that a firm of British builders are already about to transfer their capital to China to inaugurate this work That China is qualified by nature for iron-ship building there is no dispute. Her coal fields are of enormous extent. Already 3,000,000 tons of coal are mined there yearly, largely for the native steamers. Her iron deposits are also extensive, and miners work for twelve and a half cents a day. In a recent report to the stockholders of the China Merchants Company, the directors say, “ The future of the company will be such as fully to requite the love of country and affection for its people so amply displayed by the high authorities in backing up the company’s interests.” There can be no doubt of that. What will the future of Chinese shipping in general be, if the “ high authorities ” back up its interests in the same ample way ? And what will the future of American shipping in the Pacific be ?
Japan is acting w ith the same vigor as China, and has already several steam lines in operation, one or more of which are strong competitors with American vessels in Japanese waters.
In regulating the local affairs of our republic, we are not compelled to pay much attention to what other powers are doing. With reference to shipping, we must. The merchant who neglects to observe what his competitors are doing and the manner in which they are building up their business at his expense is certain to appear in the list of bankruptcies sooner or later ; and the same principle holds good with reference to nations engaging in foreign trade and navigation.
Considering, now, the opposition which America will encounter in rebuilding the decayed fortunes of her merchant marine ; considering, also, how cheaply our products are now transported to foreign lands, and that we have no distant colonies to protect, our colonies being planted on the broad bosom of our own vast domain, within our own borders, it might almost be asked, Why concern ourselves about the future of our shipping at all ? Are the prosperity and security of our nation at all dependent, in this age, upon our shipping ? Why not let things take their natural course ?
Well, there are reasons for concern. The present state of affairs is injurious, as will appear upon a moment’s reflection. One reason is that shipping in these modern days plays a certain part with reference to periods of temporary and local over-production which good wagon roads and railways play with regard to periods of temporary and local underproduction of food. Famines, ancient and modern, have generally owed their severity to the lack of good roads ; there was no way to transport the bountiful harvests of one region into the heart of the locality suffering from starvation. This was true of ancient days in England and on the Continent, and is still true of modern times in Asia. On the other hand, an abundance of shipping plying direct to foreign lands serves always to relieve a temporary glut of goods in the home markets. The lack of steam lines running in the interest of American merchants and manufacturers was severely felt in this country in those years of reaction following 1873. The present American line to Brazil owes its origin to the sudden and intense desire felt in this country, in those years of depression, for a new outlet for our manufactured goods.
Another reason is the loss of income
to a country having as large a commerce as the United States, consequent upon its transportation being in foreign hands. The sums paid for freight money in the commerce of the United States are
larger than most people suppose. The following statement of them, for the calendar year of 1879, has been prepared with the aid of suggestions by Dr. E. H. Walker, the old statistician of the New York Produce Exchange :
| Articles | Average rate from American Ports for the Year. | Total Pay-ments of Freight Money. |
|---|---|---|
| Wheat, bushel | 7 pence | $20,580,000 |
| Corn, bushel | 7 pence | 12,240,000 |
| Other grain, bushel | 7 pence | 460,000 |
| Flour, bbl | 2 1/2 shillings | 3,900,000 |
| Petroleum, bbl | 4 1/4 shillings | 14,710,000 |
| Coal, ton | 1 dollar | 600,000 |
| Cotton, lb | 3/4 cent | 13,400,000 |
| Wood, and manufactures of | 6,000,000 | |
| Tobacco | 30 shillings | 640,000 |
| Naval stores, bbl | 80 cents | 789,000 |
| Oil cake | 25 shillings | 920,000 |
| Provisions, ton | 20 shillings | 5,270,000 |
| Alcohol and turpentine, bbl | 4 shillings | 295,000 |
| Miscellaneous goods, ton | 20 to 30 shillings | 8,500,000 |
| $88,304,000 |
This is only a rough (though carefully prepared) estimate, but it understates the truth, if anything. On the import trade, the earnings of the ships cannot have been less than $45,000,000, which again is a safe estimate. If American ships had been enjoying the place in the trade which they used, having the long voyages and profitable part of the business, they would have earned about $110,000,000 of this total of freight money. As it is, they earned only $23,000,000 of it. The injury to the country is great. Accumulation of riches is one thing which America lacks, and every loss of income helps maintain the high rate of interest prevailing here, and aggravates the high prices resulting from protection.
A third cause for concern is the evil to which America is exposed by the lack of sufficient shipping to export her products, in case of war among the European powers. Suppose that the 447 English steam vessels trading to these shores were withdrawn, in consequence of war between Great Britain and one of her powerful rivals. The United States would not then have vessels enough to transact her own commerce, even with the aid of the coasting fleet. An arrangement would perhaps be made by means of which the English vessels would be put under the protection of some foreign flag, but that there would be a serious derangement of our commerce is certain, and a due regard for the future requires that that contingency should be provided against, if pos sible.
But what is worse than all, in a national point of view, is the weakness entailed by our lack of a flourishing marine. America would certainly be humiliated in any war which should be forced upon her by a foreign power, as matters now stand. The immense distances of our sea-coast expose us peculiarly to danger from the attacks of a naval power. There are illustrations enough in our own history. England herself was never seriously menaced except from the sea. Our situation is much like hers, only worse, on account of the greater length of coast. With not one ship in the American navy which can face a European iron-clad, and no forts to speak of in the harbors, what would be the situation of affairs in case a few European war ships, with a fleet of swift merchant steamers or auxiliaries, were dispatched to threaten the coasts of the United States? The damage which might be done in one short month is inconceivable. The officers of the American navy are fully awake to this danger, and their reports to the government and their private conversation represent it constantly. Strange as it may seem, England, with her magnifi-
cent naval power, apprehends the same danger to herself in case of a war with any of the great Continental powers. When Russia was causing a few rapid steamers to be converted into cruisers in American ship-yards, two or three years ago, great alarm was felt in England, not only in regard to her merchant shipping, but for the safety of the country itself. The first lord of the admiralty only allayed this anxiety by stating in Parliament that it was proposed to arm thirty merchant vessels as cruisers, and require the steamship counties to build their new vessels with reference to the possibility of having to carry heavy guns and a quantity of coal large enough to remain at sea for protracted periods. In a recent address to the United Service Institution, the Marquis of Lansdowne presiding, Admiral Sir W. K. Hall went so far as to say that he regarded England as at the present time in almost a perfectly defenseless position, the plans of the admiralty not having been carried out. The admiral referred with regret to the time in 1808 when there were twenty-one admirals and captains in the House of Commons and fourteen in the House of Lords, and Parliament thus had members who could advise what should be done. In that memorable year measures were sanctioned which proved in every way satisfactory to the country. The fact is, the development of the modern ocean steamship, swift, big, and strong, has given a new turn to naval affairs. It has exposed a coast nation to new perils, and made the state of its merchant shipping of the utmost importance to the national security. A commissioner is now in vestigating this whole subject in England, with a view to adopting a policy which shall provide for the safety of that kingdom ; and if the reader wishes to know what the sentiment of the American naval officers is on the same point, he will find it very accurately represented in the report made to the government at Washington in the year 1877.
Many other minor considerations might be adduced to show that the future of our shipping is a subject for public concern. Reference might be made to the private interests which would be benefited by a busy navigation by native vessels. The above will suffice, however.
If, now, we turn the eye to the future altogether, we might see the United States, thirty, twenty, or perhaps even fifteen years hence, taking the place among the maritime powers of the world for which nature has fitted her, if only we were sure that an intelligent policy would be promptly adopted by the government at Washington. Only one country is equally well fitted for the first rank, and that is England. Not even China, with her immense population and cheap labor, is so well qualified as the United States to stand first. The reason is found in the size of the foreign commerce of the countries. Search faithfully the history of the world, and find, if the reader can, a country which ever was great upon the sea when it did not import and export a great quantity of goods. Find one, if possible, which failed to become great in time, after its foreign commerce became large, and after its government had framed an intelligent policy with reference to its shipping. It cannot be done. America is better fitted than ever was any other land for possessing a large marine, because of her extensive commerce in bulky goods and the geographical position which compels her to trade across the broadest oceans and with the most distant powers. It is estimated that America would rank with England could she carry seventy-five per cent, of her trade in her own vessels, as she did in 1858. Could she carry eighty-five per cent, she would stand first. But can and will this ever be done ? There is the point. Looking abroad, one sees the low wages, the low interest, and the eager preparations of rivals to bring to bear a new competition, and one sees also the continual construction of the best and largest class of vessels out of the profits of the present trade. Looking at home, one observes the absorption of capital in railroads to the newly occupied regions in our territory, the high cost of operating ships, the high interest, and the failure to replace all the worn-out vessels with new ones. Let things remain as they are, and no one needs to be told what the result will be. But let there be an awakened will on the part of the United States, let there come up the same demand from the people which at different times has compelled England, France, China, and Japan to act, and no one can doubt that there will be a change. The future is almost entirely within our own hands, and the change from the present discouraging state of affairs will be exactly proportionate to the obstinacy of our determination to have things go the way we wish them to go.
Henry Hall.