American Deep-Water Shipping
THE foreigner, entering the United States for the first time, is prepared to find large newly built cities, mammoth manufacturing concerns, an unparalleled railway system, an advanced school system. He expects to find a country of remarkable natural resources, and a people of exceptional activity and enterprise. He is prepared for these things, and therefore they do not astonish him. On the other hand, there are certain things that he is not prepared for; and these, if he thinks at all, cause him to open his eyes in amazement. I will not enumerate all the surprises, because it is unnecessary, but I will confine myself to one, — and that the most impressive, — namely, the deplorable state of American deep-water shipping.
From Plymouth to Calais there is a chain of decayed seaports and idle shipyards, — a chain of rotting wharves, tumble-down piers, shipless harbors, and old sailors. All speak eloquently of a great carrying trade, of a great foreign shipping interest, of a great marine power — that was. The foreigner, when he looks at all this for the first time, and realizes what has been lost, stands aghast, and finds himself wondering whether the high estimate set upon the American people as an energetic business nation is not, after all, an unmerited one.
From a commercial point of view, — and that is by no means the only side to consider, — the United States refuses to make $80,000,000 yearly by not carrying her own exports. During the fiscal year that ended with June, 1898, there entered and cleared from United States ports, in round numbers, 50,000,000 tons of freight. Only 9.3 per cent of it was carried in American bottoms. On the basis of an average freight of $4 per ton, which seems a fair estimate, this country’s share was less than $20,000,000. If the United States had carried 90 per cent of her imports and exports, as she did in the early part of the century, her share would have reached the huge sum of $180,000,000. Bat, allowing that a bare half of the carrying trade should be hers, which is equivalent to saying that she should carry merely her own exports, there still remains the loss first mentioned. From this it is evident that the United States has lost her prestige as a marine nation, and has permitted an industry that was the pillar of her prosperity to dwindle, die, and rot.
Such is the present condition of foreign shipping in America. Now let us run over briefly the causes that have led to the condition.
In the beginning, — for, fully to understand the question, we must go back, — the voyagers to America came in vessels little better than the rude Viking ships. They had previously confined themselves to mere coasting trips, sailing from inlet to inlet or cape to cape, and rarely out of sight of familiar landmarks. When they reached the wild shores of this continent, their barks were so strained and leaky that their first thought was to discover some sheltered spot, up river or creek, to careen and repair damages. Such places, with abundant material for repair in the untouched forests near them, were easy to find. Since many of the ships were in too bad a plight to warrant repair, new ones were built in place of them ; and thus, by degrees, these careening spots grew to be shipyards.
The first settlers, whether sailors or not, soon became familiar with the sea, for most of them drew their livelihood from it. Fear of the redskin prevented them from straying far inland. Among these coast farmers and fishermen there were many dissatisfied and homesick ones. This class, in returning to their native country, found the home voyage less hazardous than the first, whereupon they straightway thought of the needs of their colonial companions, and went back with freighted ships. In this way commerce between America and Europe began.
Later, these fertile-minded pioneers, seeing the possibilities for business with the West Indies, Africa, and the Gulf ports, commenced to build ships for that trade. From the forests they selected the most perfect oaks for hulls, the straight pines for masts and spars, and the locusts for tree nails. They improved their models, did away with useless top hamper, and soon the sharp bow, the curving sheer, and the raking masts of the early slaver — the progenitor of the clipperbuilt ship — appeared upon the seas.
England, in the meantime, watched with a jealous eye her children across the sea, building vessels which outsailed and outclassed her own, and at last a mandate was issued by the king that no vessel larger than a sloop should be built in the colonies. But kingly commands were unheeded, and in 1770 North America had 309,534 tons of shipping.
Although during the Revolutionary war this goodly tonnage shrunk greatly, it recovered in a remarkable way afterward ; for the first care of the new nation’s statesmen was commerce, particularly that most vital part of commerce, the protection of ships sailing under the American flag. Men like Jefferson and Madison saw that a merchant marine was the greatest of interests, and among the first acts of the First Congress we find a law giving high protection to vessels built and run by Americans. Teas, for example, were entered by American ships at nearly one half the duty charged to foreign vessels.
Under this effective form of protection, the tonnage, which had dropped to 123,893 tons, rose to 529,471 tons in 1795 ; and the carrying of imports and exports jumped from 23.7 per cent in 1789 to 90 per cent in 1795. Ocean commerce, at the same time, rose from $12 to $26.76 per capita.
Notwithstanding this evidence of marine prosperity, the statesmen of the country still took an active interest in furthering it, and in 1804 they placed an additional duty of 10 per cent on all goods imported in foreign bottoms. The results were a justification of that interest ; for as against a tonnage of 576,733 in 1796, it advanced to 744,224 in 1805, and the carrying percentage of imports and exports was 91. With the exception of 1808, when the Embargo Act checked the growth somewhat, the next five years showed a steady increase in shipping, the tonnage in 1810 being 981,019.
The war of 1812 very naturally gave American shipping a setback : from 1812 to 1815, 14 per cent of the carriage in foreign trade was lost. In spite of this, the naval victories of American vessels developed such a lively interest in shipping that, had the policy of the government been different, there is no saying to what magnitude it might have grown. In 1815, however, Congress saw fit to refuse the protection it had so sensibly given for twenty-five years, and adopted a principle of reciprocity with all countries, particularly England. The effects of the new laws were not felt appreciably for several years, except that fewer ships were built, and the tonnage slightly decreased. Americans pushed their ships for the trade, and in 1820 were carrying 89.5 per cent of their exports and imports. Then came six years of unexampled prosperity to both England and America, during which time American tonnage again increased, and our carriage in the foreign trade reached its highest point, 92.3 per cent. This was in 1826. But it could not last; it was merely a spurt caused by unusual conditions. From 1826 the carriage of American commerce by American ships declined steadily. There was an increase in tonnage, but not in proportion to the growth of the country.
One of the first blows to American shipping was the appearance of British steamers in American ports in 1838. They quickly took the place of the American clipper packet lines which had previously controlled the Atlantic trade. In 1839 the Cunard Line was subsidized by England at $425,000 ; the following year the sum was raised to $550,000; and later, when it was found that this was not sufficient to make the line pay, it was swelled to $735,000. This allowing of subsidy by the British government was an indirect violation of its reciprocity agreements with this country, and one of the shrewdest moves ever made to clear the western ocean of American ships. America made a feeble attempt to meet the new steam navigation movement by establishing the Collins Line, and subsidizing it; but the competition was too strong ; the steamers met with mishaps, and the loss of the Pacific and the Arctic practically ended it.
In the fifties, the English, finding the supplies of timber running short, turned their attention to the building of iron ships. This was another blow to American shipping, inasmuch as the British Lloyds — which is to all intents and purposes headquarters for British marine insurance — immediately rated iron vessels “ twelve years A 1,” and thus outclassed all wooden ships. According to the facts and figures set forth by Mr. Bates in his book on the American Marine,1 wherein he proves that Americanbuilt sailing vessels have carried their cargoes with less damage and with greater speed than the vessels of any other nation, this high rating of iron ships is unjust, and there is little doubt that it was made with the idea of putting English iron ships in a position to secure the preference of freights, and thus push American vessels out. This plan has succeeded so well that if to-day there be an American wooden ship and an English steel ship in an American port, the steel ship will get both a higher rate of freight and a lower rate of insurance. Moreover, if there be but one freight in the port, the steel ship will get it. So common has this fact become that the American shipowner has accepted it as unchangeable.
In 1861, although American tonnage in foreign trade had increased to 2,494,894, the carriage of imports and exports fell to 66 per cent. Again, in 1865, owing to the government’s demand for ships, the Confederate commerce destroyers, and the complete demoralization of the shipping interest, it dropped to 28 per cent. This rapid retrogression was helped by the appearance of a new factor to discourage the builders of sailing vessels, — the English tramp steamer, iron-built, and rated “ A 1 ” at Lloyds for twenty years ; also by the fact that the many American ships which were sold abroad and registered under other flags during the war could not be bought back when the war ended. Congress, moreover, being in need of revenue, hastened to put an internal revenue tax on the first cost of vessels. If the United States had had a navy sufficient to protect her merchant marine when the war began, there would have been no need of her ships seeking the protection of other flags. It was the short-sighted policy of government in giving attention only to internal development that drove shipowners to this expedient, — the same government which, with criminal stupidity, imposed a duty on a crippled industry.
Between 1865 and 1870 Congress floundered and struggled to do something for shipping; little, however, got beyond the committee rooms. Since that time there has been a general apathy in regard to the subject, and the United States is now obliged to acknowledge with shame that the foreign carrying trade has gone from her. With a strange lack of interest, she has failed to take advantage of the magnificent opportunities which her position, resources, and beginning made for her, and has allowed herself to be pushed from the over-sea trade to the point of carrying to-day, of her imports and exports, a miserable 9.3 per cent.
“ Navigation and maritime industry, for a peculiar reason, call for national protection ; for the art of navigation is an expedient of war as of commerce, and in this respect differs from every other branch of industry. . . . Doubt no longer exists that a navy is the best defense of the United States. And this maxim is no more true than that a naval power never can exist without a commercial marine: hence the policy of encouraging and protecting the ships and seamen of the United States.” Thus spoke Senator King seventy-six years ago ; and his words are as applicable today as they were then. What America has lost commercially by not following this advice will never be known ; but it is beyond dispute that if the country had followed the fundamental principles laid down early in its history, it would not now be discussing methods of marine advancement.
It would seem as if most of the men whose business it has been to direct the nation’s affairs have never considered the immense advantage of a flourishing merchant marine. The benefits fall broadly under four heads, — Commerce, Industry, Labor, and Moral.
The commerce of a nation does not end at its frontiers ; more particularly when its frontiers are washed by two great ocean highways, as is the case with the United States. She is owner in common of the great over - sea roads that lead to all parts of the seaboard world. These roads will yield the best return to the country which can deliver its exports quickly, at the lowest cost, in the best condition, and whose citizens receive the freight money. That our country is not in a position to secure the trade on this basis is conceded by every one ; and that she suffers great financial loss in consequence is evident.
As regards industries in general, ships under the United States flag would open up new avenues of trade, and would introduce American manufactures, novelties, and inventions into many parts of the world where to the mass of consumers they are now unknown. The modern ship, moreover, contains in complicated structure the labor of nearly every craft. Her sails are contributed by the cotton fields of the South, her planks by the pines of Carolina, her iron and steel by mines and furnaces throughout the country ; the machinist, the carpenter, the electrician, the engineer, the painter, all help to build her. In short, she is the handiwork of the whole nation.
A large American merchant marine would be a moral force, in the sense that it would carry the flag that symbolizes freedom and justice to all parts of the world, and give prestige to Americans and the American spirit of liberality. A moral force lies also in the fact that the closer a nation’s acquaintanceship with the sea, the broader and stronger its character.
So much for history and economics. Let us consider the methods by which it has been proposed that America shall regain what she has lost. Of late there has been a great cry for “free ships,” and many specious arguments in their favor. It has been said, “ As long as we cannot build vessels in the United States as cheaply as they can be built abroad, by all means let us buy them abroad.” On the face of it, this looks like common sense ; but when you probe it, you find that it has no such foundation, — that it is not true. Cheapness, evidently, has nothing to do with the question ; for English iron vessels cost much more to build than American wooden ones, and yet English shipyards turn out the larger part of the world’s shipping. And as regards the building of iron ships in the United States, whatever the conditions may have been in the past, there is certainly no valid reason to-day why she should not successfully compete with the world. Iron and coal she has in abundance, together with unequaled facilities for handling them. Mr. Carnegie has proved that American steel can be delivered in English and Continental markets and sold at a profit. The difference in the cost of labor can be offset (as it is done in other American industries) by American ingenuity and inventiveness ; as it is offset in English yards against the lower wages of Continental yards. Those who cry so loudly for free ships seem to forget that the right to purchase ships abroad will hurt rather than help the reëstablishment of the United States shipbuilding industry, will check rather than stimulate the growth of this first essential of marine prosperity. They do not seem to be aware that the Continental nations have tried free ships only to discover that the output of British shipyards was increased, while their own was not improved. They seem to be unmindful of the fact that the dependence of one nation upon another for ships is a weakness in times of peace, and a menace in times of war. Free ships are a snare and a delusion : if the United States is to regain her prestige on the high seas, she must build her own ships.
In other quarters it has been suggested that new life be injected into the ebbing industry by means of bounties or subsidies. While it is undoubtedly true that other nations have encouraged their shipping by such methods, it is equally true that these have not always been satisfactory. The meagre results of the bounty system in France and Italy are well known. France, in nine years, paid $19,000,000 ; Italy, in seven years, $5,500,000 ; yet, in spite of this government aid, both countries constantly called upon England for ships. England, to be sure, has profited by the judicious giving of subsidies, but her present position as a sea power is by no means due to subsidies alone. Only three per cent of Great Britain’s merchant marine receives public funds from the government. It is acknowledged by all shipbuilding authorities that neither bounties, subsidies, nor subventions would enable the United States to compete with Great Britain, except at a cost which places them outside the bounds of practicability.
Yet another thing urged for the rebuilding of the collapsed structure is that the United States shall revert to the old laws of protection, which made her shipping industry so flourishing at the beginning of the century, — a principle of protection formulated after the British Shipping Act of 1651. Such a reversion, however, is not feasible. Economic conditions and principles of reciprocity exist at this time which make the enactment of protective shipping laws an impossibility.
A brief statement of England’s ocean supremacy will be of interest, I think. Great Britain to-day stands preëminently the mistress of the world’s shipping interest. Her tonnage is greater than that of all the other nations of the world put together, her ships carry five eighths of the deep-water freight afloat, and she buys and sells half the cargoes on the ocean.
Her success is no secret; it has certainly not been due to chance, but has grown from the spirited interest in ships that every British subject takes, and has always taken. This spirit has culminated in the great corporation known as the “ British Lloyds,” which corporation more or less dominates every vessel, no matter of what nationality, that sails in foreign trade. In its list of shipping (Lloyds’ Register) it has stamped, or omitted to stamp, the quality of every foreign-going vessel afloat. It has been the means of centralizing the marine insurance business to such an extent that British companies carry seven eighths of the risks of the world.
For two hundred years, since the days when underwriters and men connected with shipping met at the coffee house of Edward Lloyd in London, and applied the principles of marine insurance taught them by the Lombards, British shipowners have sent their ships to sea with feelings of absolute safety ; for they hold a paper underwritten at Lloyds as good as gold, in case of accident to their property. The board of directors in this corporation represent the entire shipping interest of Great Britain. It has fifteen hundred agents in various parts of the world, — men with thorough knowledge of ships in general, whose duty it is to report shipping news. As a result Lloyds is a tremendous power ; the words of its experts are accepted before parliamentary committees as truisms, and its authority in the matter of ratings has given it the control of the world’s oversea traffic.
American shipping needs two things: it needs a revival of national interest, and it needs some kind of government aid. Of the former, thanks to the naval successes in the late war, there are some signs; but practical encouragement from the government, except by the antiquated, makeshift methods already referred to, seems to meet with no serious consideration. It is surely patent that neither bounties, subsidies, nor free ships will revive American shipbuilding or restore our once great merchant marine. The remedy must be more than an outward application. To compete successfully with Great Britain’s long experience in the art of shipbuilding, her persistence in controlling the tropics and the trade of the tropics, her national interest in remaining the ruler of the seas, American shipping must be launched anew, stimulated and supported by the nation, in a much stronger and broader fashion than has yet been tried.
At present, everything connected with American shipping is weak and unsatisfactory. Consuls and shipping commissioners and other marine officials are chosen, for the most part, without regard to their ability or knowledge of shipping ; examinations for master and mate are so lax that other nations will not recognize an American certificate ; and the maritime laws of the country are not only inadequate, but unenforced. It appears, then, that before America can take her rightful place on the sea, there must be a general and thorough change in her maritime policy and system.
The first step in this direction should be the formation of a body similar to the British Board of Trade, or a Department of Merchant Marine like the Department of Agriculture, in order that the interests of shipowners and seamen, and all maritime matters, may receive particular and constant attention. The head of this department should be a Cabinet officer. He should be chosen to his position by the advice of the chambers of commerce, shipowners, and shipmasters’ associations of the country. The department should have under its control all seaboard consuls, who should be chosen from past officers of the boards of trade, naval officers, and shipmasters, and should hold their office until incapacitated by age. It should inspect, while building, every vessel put together in American yards, performing this service without expense to the owner. Examinations for the position of master, mate, and engineer should be part of its duty. But this is only in the line of general improvement. Something more specific and radical is needed to place the United States on an equal marine footing with England, — some measure that will protect and invigorate the industry without being a protective law.
To that end, it is suggested that in connection with the department there should be a liberal system of marine insurance. Every ship built under government inspection, and engaged in foreign trade, should have her hull insured free ; the department, with the United States Treasury behind it, acting as underwriter. And all cargoes carried by over-sea routes under the American flag should be insured at a lower rate than that offered by foreign insurance companies.
The establishment of such a department would result in American ships becoming the best built in the world, it would secure them cargoes in the face of all competition, and it would make them pay. It would awaken the dormant industry of shipbuilding, raise a new and better breed of seamen, and give back to America her long-lost carrying trade.
There is no doubt that the United States is to be the greatest commercial country on earth ; her activity has never been equaled in the world’s history ; her latent energy is beyond the power of economics to demonstrate. She spends hundreds of millions in war, and her credit suffers nothing ; she passes through grave political crises, and comes out unscathed. Yet she can never take her rightful place among the nations, never hold her own in the coming fight for the tropic trade, never become a great naval power, until she carries her own commodities and establishes a worthy merchant marine.
If there is one thing that America has to be ashamed of, it is the neglected state of her shipping. It is a disgrace to the nation. No wonder the foreigner opens his eyes in amazement; no wonder the ancient mariners of the capes foam at the mouth when they speak of it. The sight of gray old Salem, with its empty harbor, its deserted, rotting wharves, and not a deep-water ship to its name, — the sight of this historic port alone is enough to make any patriotic American go out into the highway in sackcloth and ashes.
H. Phelps Whitmarsh.