American Ships and the Way to Get Them



[The following reply to a paper in the Atlantic for July, 1909, by a “ British Marine Officer,” on the upbuilding of the American Merchant Marine through the agency of free ships, represents so ably the views of those who believe in the stimulus of ship subsidies as an essential remedy, that it is here printed without regard to views upon principles of tariff reform which have been repeatedly expressed in the columns of the Atlantic. — THE EDITORS.]

IN the July Atlantic, an officer of the British mercantile marine painted in vivid colors the “ amazement ” with which “ European statesmen, naval and military experts, merchants and shipowners ” look at America, because our country has suffered its merchant flag in the past thirty years to be driven from the ocean. This is a new view-point, and though the theme is by no means unfamiliar to the American people, the article has attracted a great deal of attention because of the sailor-like vigor and directness with which this British officer emphasized the weakness and the folly of depending for the delivery of our enormous export commerce upon the ships and the seamen of foreign nations, our rivals in trade and possible enemies in war.

Most striking of all, and, it must be confessed, not materially overdrawn, is the picture which this transatlantic observer presents of the great and imposing battle-fleet of the United States, with no reserve of either ships or men behind it, armorclads and cruisers “ undermanned by recruits,” raw cowboys and ploughboys, for the most part from the Middle West, who hurry through their first enlistment and then quit the sea and the service never to return, — all this, because the disappearance of our merchant ships has carried with it, as one inevitable penalty, the starving and scattering of the bravest and hardiest sea-loving and sea-faring population in the world, the men who built and sailed the Yankee packets and clippers of years ago, and manned the guns of the Hartford and Kearsarge, as their fathers had manned the guns of the Ranger, Alliance, and Constitution.

It is good sometimes to see ourselves as others see us, and the sharp words of this friendly British officer are certain to intensify the determination so manifestly rising in our country to recreate an American merchant marine worthy of the present wealth and strength and the glorious maritime traditions of the Republic. Yet the author of this really notable article falls into an unfortunate anti-climax when he suggests that the melancholy loss of our ocean-carrying might have been averted by the simple expedient of a “ free-ship ” policy — that is, a wholesale purchase of American ships from British builders. Such an expedient, if it ever had been tried, would certainly have proved a disappointment, if not an absolute failure.

For the decline of the American merchant marine in ocean trade, as the seafolk of New England well know, is due to a situation which could have been only partially and slightly modified by “ free ships.” This loss of our shipping is due to, and yet could have been prevented by, the modern Republican system of protection. When, in 1861 and the years afterward, the statesmen of the new Republican party, not merely to meet the exigencies of the Civil War, but with deliberate, far-seeing purpose, set themselves to force the development through national aid of great national industries, they left out of the protective system what for three-quarters of a century had been one of the greatest of those industries, undeniably the most successful, and in the manner of its growth the most distinctively and characteristically American.

The first Federal government in 1789 had found the American merchant marine almost as shrunken and dead as it is now — a mere skeleton of 123,000 tons, capable of carrying only a fraction of our commerce, which was conveyed as now largely by British shipping. But the statesmen of 1789, in their very first tariff act, “ for the protection and encouragement of manufactures,” embodied stalwart protection for American ships and sailors through the form of discriminating tonnage and customs taxes, which compelled American merchants to employ the ocean carriers of their own country — and the law required that these ocean carriers should be built in the United States.

This bold protective measure, which Washington and Madison joined in framing and enforcing, proved so successful that by 1800 our registered merchant fleet had expanded to a tonnage of 607,000, carrying 89 per cent of our imports and exports, and by 1810 to a tonnage of 981,000, carrying 91 per cent of our imports and exports. These policies of ship protection, though modified here and there in the years that followed, were not entirely withdrawn against Great Britain, our chief competitor, until 1849, and by that time they were reinforced by a generous system of mail subsidies which rapidly developed steamship-building and engine-building in the United States, and gave to our ocean steam fleet a growth in quantity and quality far superior to that of the United Kingdom. These early American mail subsidies, by the way, — it is worth recalling now, — had been granted by Democratic Congresses, on the recommendation of Southern Democratic presidents. They created several American steam lines to Europe, with which the feebler and slower British subsidized ships could not compete, and other lines to the West Indies and in the Pacific Ocean.

The American merchant marine, as it stood at the height of its strength, in 1855, when 583,000 tons of shipping were launched in the United States, was the result of a system of national protection deliberately initiated in 1789 by the founders of the Federal government. Even through those periods when lowtariff or anti-protection theories had prevailed in Congress and the country, the merchant marine was sedulously fostered by discriminating duties, and later by subsidies to mail lines, while all the time direct bounties were paid to the vessels and men of the deep-sea fisheries, “ the nursery of the navy.” There was small protection then for pig iron and cotton cloth, but much protection for ships and, therefore, for shipbuilding. This maritime interest up to 1855 was unquestionably the most progressive, efficient, and prosperous interest in America.

Those were the years of the Dreadnought and the Flying Cloud, and of the still swifter steamers of our subsidized mail lines — the years of which this British officer writes, when the Stars and Stripes were streaming proudly at the peaks of the finest ships in the ports of every ocean. A significant decline came in the years immediately before the Civil War — our shipbuilding fell off from 583,000 tons in 1855 to 214,000 tons in 1860. One cause of this shrinkage was that, as a direct result of the fierce sectional jealousy and strife over the slavery issue in Congress, the ocean-mail subsidies were withdrawn, in retaliation on the part of the leaders of the South against the abolition ports of the North, which built and owned most of these swift and powerful vessels of such unmistakable value in the conflict now seen to be impending.

Not all the pluck and resource of Vanderbilt and Collins, the ablest ship managers of their time, could sustain the American steam lines, unsubsidized, against the treasuries of Europe; and all but a few of the splendid Yankee steamships had vanished with the clipper ships from the great trade routes of the North Atlantic when the first shots of the war were fired at Sumter. The Civil War did not begin the destruction of our ocean shipping, as is often but inexactly stated : the destruction had begun before. American ships, without their mail pay, though larger and faster ships, could not compete with the British Cunard line and its subsidy of $900,000 a year. As one of the greatest of American merchants of that period, A. A. Low, Esq., father of Hon. Seth Low of New York City, said: —

“ I only know the English have always, in peace and war, manifested a determination to hold the supremacy of the ocean, and the supremacy which they acquired by arms in war they have in peace acquired by subsidy. . . . They have driven us from the ocean by this policy just as effectively as they ever did drive an enemy from the ocean by their guns.”

The American merchant marine had prospered and grown amazingly under national protection, and it had begun to shrink as soon as that protection was withdrawn by the able but vindictive men who soon after left Washington to found the Southern Confederacy. They were frankly jealous and afraid of the mighty sea power developed by the North, which in the end justified their fears by furnishing the men and the ships that enforced the blockade and smothered the Rebellion.

It is not difficult to understand why these Southern men, meditating withdrawal from the Union, should have sought, before they went, to cripple the formidable power of the Northern-built and Northern-owned mercantile marine, with its 2,500,000 tons of shipping registered for deep-sea trade, besides the large coast fleet, and 100,000 seamen. But it is much more difficult to explain why, under the high protection policy of the Republican party in all the years since the Civil War, the merchant marine in overseas trade has remained a neglected and unprotected industry, — the only unprotected industry exposed to foreign competition.

Every Republican president since Grant has earnestly recommended a righting of this manifest inconsistency, through the form either of mail subsidies to regular lines or of subsidies to the whole body of our ocean shipping. McKinley and Roosevelt were especially insistent on a subsidy policy, and under the administration of President Harrison something was actually done — the enactment of an ocean-mail law which has stood to the present time, and has created the one American steamship line to Europe and excellent lines to the West Indies, Mexico, and near ports of South America. But this legislation of 1891 was not liberal enough to sustain steamship lines to the farther and principal South American countries and across the Pacific Ocean. New ocean-mail bills providing for such lines have been defeated by small and decreasing margins in two recent Congresses, and other bills carrying out the same purpose have been introduced in the present Senate and House for consideration next December.

It is the Solid South, aided by a portion of the Middle West, that is directly responsible for the failure of the American government to take some step to include the merchant marine within the fortunate circle of protected industries. New England, New York, New Jersey, Pennsylvania, the nearer Western States, and the Pacific Coast, have voted with increasing emphasis in recent years for subsidy to American ocean ships; but these great industrial communities, with their aroused ambitions for a broader trade, and their pride in the new American navy, have until now been overborne by the combined opposition in the National House of nearly all of the Southern Democrats and a faction of Middle Western Republicans.

Yet this opposition has significantly become weaker year after year. A powerful organization, the Merchant Marine League of the United States, has grown up in the Middle West, and from its headquarters in Cleveland, Ohio, has been carrying on a patient, systematic campaign in the press and on the platform, and its labors are beginning to bear widespread results. The states which, while accepting protection and demanding it in liberal measure for their own industries, are still reluctant to protect American sea-going ships and American sailors are now Wisconsin, Nebraska, Iowa and (southern) Illinois. On the latest test votes, Minnesota, Indiana, and Kansas showed a surprising gain of strength for the merchant marine. The propaganda of the Merchant Marine League for the American ship is actively combatted in most of the Western States by the resident agents of the European steamship combinations, which now derive an income of about $200,000,000 a year from their control of our ocean carrying.

This is a prize which Europe will not relinquish without a mighty battle, for the earnings on the carriage of American commerce not only are a great source of mercantile profit abroad, but are the fund out of which in large part European governments maintain their powerful naval reserves of fast merchant ships and trained and prepared merchant seamen. Germany especially has an enrolled reserve of more than a hundred thousand sailors, supported largely by American trade, in the service of the North German Lloyd and Hamburg-American. The present weakness of the United States in this regard admirably suits the European purpose.

There is not the slightest mystery about the decline of our merchant marine. That mortifying spectacle of few or no American ships to convey our trade in peace, or to supply and sustain our battle-line in war, is due directly and solely to the fact that the industry of shipsailing in the foreign trade has, for nearly fifty years, been left alone outside of the American protective system.

“ Ah, but has not the shipbuilder been protected by our exclusive navigation laws — absolutely protected ? ” may be asked.

Yes, the shipbuilder has been protected, but the shipyard is not the main factor in the problem. It is an important, but after all a subordinate one. The shipyard makes the machinery of the shipowning industry, which is the ships. If there were a prohibitive duty on the machinery for weaving cotton or woolen cloth, and if there were no duty whatsoever on, but absolutely free trade in, the cloth itself, the industry of textile manufacture could not honestly be called a protected industry — and there would probably be a very small demand for textile machinery in the United States. The prohibitory protection of the shipbuilder is of no avail, because the use of the ship itself is not protected.

Here in a nutshell is the problem of the American merchant marine. We have established a protective system, and we have left out of that system the industry of the ocean-ship-owner. We have thereby killed that industry, exactly as we should have killed the manufacture of cotton goods or woolen goods if we had left that industry alone out of the protective system. The manufacturer could not buy his labor and materials in a protected market, and yet sell his product under terms of free-trade competition with all the world. The shipowner has not been able to buy his labor and materials in a protected market — it is only of recent years that materials have been free — and yet sell his product, which in this case is the service of his ship, under terms of free-trade competition with all the world; or, worse, under terms of free-trade competition frequently aggravated by the bounties or subsidies of other governments.

Let us take a specific case in point. A few years ago, a group of Boston merchants, alert, courageous, enterprising men, thoroughly versed in the shipping business, raised in Massachusetts a considerable amount of capital and built two large and three smaller American steel steamships especially designed for the economical carrying of heavy cargoes —the two larger ships carried passengers besides. This new Boston fleet, finding the North Atlantic crowded, was put on the route from Puget Sound across the Pacific to Japan, China, and the Philippines. The line was operated with the energy and thrift characteristic of New England. It developed an important export trade from our Northwest to the Orient. It did this without national aid, and received from our government only ten or twelve thousand dollars a year for carrying the United States mails.

But this American line ran in direct competition, from Puget Sound to Asia, with a British line of three steamers, out of a Canadian port, less adapted for economical operation but receiving a mail subsidy of $300,000 a year, and with a Japanese line of three or four steamers receiving a subsidy of $330,000. After three or four years of this hopeless competition, the Boston managers of this steamship company were compelled to abandon the service and pocket a heavy loss, transferring their three smaller steamers to the coastwise trade and selling the two larger to the government.

These five Boston ships were all built in the United States, by American workmen, out of American materials — they could have been built out of foreign materials imported free of duty, but in that case they would not have been eligible for the coastwise trade. Now suppose that under a “ free-ship ” policy the five ships had been built or bought in England. They would have cost somewhat less money, — perhaps twenty-five to thirty-five per cent less, — simply because English mechanics will work for one half of the wages of American. But would that have equalized conditions and enabled the British-built American ships, earning practically no subsidy, to compete with British ships subsidized for $300,000 a year, or Japanese ships subsidized for $330,000?

Nor is this experience in any way exceptional. On all of the important routes of the world’s commerce, the dominating factors in transportation at the present time are the great national mail-subsidized lines of foreign governments. The year before this Boston-owned Puget Sound line was abandoned, another American line, the Oceanic, was driven off the route from San Francisco to Australia. Though this American Oceanic line performed the fastest and most exacting service in the Pacific Ocean, it was paid at a rate about one half of that given to the French or German companies running out from Europe to Australia; much less than that of the British lines, and less than that of the Japanese. These Oceanic steamers were among our few naval-reserve ships; and, as naval auxiliaries under our law, were manned by American seamen at $40 a month, while the European and Japanese ships in the Australian trade were manned chiefly by Asiatics at $8.

It is simply paltering with a great and vital national question to plead that a “ free-ship ” policy — that is, the purchase of American ships in British yards — would of itself enable American shipowners to meet the conditions with which they are confronted in the Pacific and Atlantic oceans. The British officer who urges this “ free-ship ” plan as allsufficient declares, in all sincerity, that it is “ pure nonsense ” to say that British steamship companies receive “ national aid in the way of grants and subsidies.” Fortunately, this is a matter of official record, and our British officer need only turn to the postal and admiralty reports of Great Britain, and the postal reports of her colonies, to discover that, instead of “ one or two of the big mail companies,” as he says, there are thirty or more great lines of British steamers, to all parts of the world, receiving from $8,000,000 to $9,000,000 in subsidies in the present year. Since 1840, the British expenditure upon subsidies exclusively to British ships has been very nearly $300,000,000. It is the custom to proclaim that none of this protection has been given to slow “ tramp ” ships, and, directly, this is true; but indirectly the enormous mail-subsidy grants of the British government have quickened and developed the entire mercantile marine of the United Kingdom. For these subsidies in the beginning opened up new trade routes and created commerce in which the slower cargo craft inevitably shared. And in the early days of steamship-building the mail subsidies served as bounties and gratuities for the development of new shipyards and engine works in which mail liners were built at first and cargo-carrying vessels were afterwards constructed.

There are two great conspicuous British steam lines entering the ports of Boston and New York — the Cunard and White Star companies. Both of these have been mail-subsidized by the British government for many years — the Cunard line from its earliest beginnings. It is this latter company which has afforded the most illuminating recent example of the generosity and courage with which Great Britain fosters her mercantile marine. For the British government, with the express sanction of Parliament, has actually loaned to the Cunard line out of the British Treasury a sum approximating $13,000,000, to pay for the construction of the Mauretania and Lusitania, and has also provided a subsidy of $1,100,000 a year for twenty years, sufficient to repay the loan with interest! In other words, the Cunard line is fitted out with great new ships at the direct cost of the British taxpayers — a subsidy proposal which nobody has ever yet had the hardihood to suggest to the protectionist government of the United States.

The White Star line, with other British companies and a few American and Belgian ships, was organized a few years ago into the International Mercantile Marine Company, popularly known as the Morgan combination. This great concern within a year has hauled down the American flag from three of its seven American transatlantic steamships, and has transferred these vessels to Belgian registry, presumably to make them eligible for Belgian subsidies, or to gain a somewhat cheaper cost of operation, through a reduction of the wages of the officers and the food-scale of the crews.

The Congressional Merchant Marine Commission in 1904-05 formally inquired of the International Mercantile Marine Company if it would seek American registry for any of its British or Belgian vessels in case a free-ship law were recommended by the Commission for enactment at Washington. Not only did the Morgan Company reply with an emphatic “ no,” but the same answer was returned on behalf of every other company in which American capital is invested in foreign-built ships now flying foreign colors. All this correspondence is officially recorded in the report which the Commission presented to Congress, but these significant facts seem to have been forgotten by those persons who are now urging a “ free-ship ” policy as the proper and the only necessary encouragement to the merchant marine of the United States.

On this point the experience of other nations is certainly eloquent. “ Free ships ” means now in practice British-built ships, the yards of the United Kingdom, developed in part by the generous mail subsidies and in part by the huge naval construction, standing in point of number and the general cheapness of their product ahead of the yards of the continent of Europe.

Germany in the beginning tried the “ free-ship ” expedient alone, having no shipyards in which either merchant craft or men-of-war of large size could be constructed. The experiment was a complete and acknowledged failure, the German mercantile tonnage increasing only from 1,098,000 in 1873 to 1,243,000 in 1881. Then Bismarck appealed to the Reichstag for a positive and liberal policy of state aid through mail subsidies, preferential railroad rates, and other potent forms of imperial encouragement. Now the real growth of the German merchant marine began, and the tonnage of the Empire rose to 2,650,000 in 1900, and to 4,232,000 in 1908. The subsidies to the imperial mail lines were given on the express, significant condition that the ships receiving them should be built in German shipyards, by German workmen, as far as possible of German materials. Under this direct and vigorous protectionism, Germany, which thirty years ago was forced to buy even her battleships in England, has now developed several of the greatest shipyards in the world. For a long time the North German Lloyd has purchased no important ship abroad, and it was recently announced that hereafter the HamburgAmerican line would depend entirely upon native construction.

The experience of France was similar. After a long and patient trial of “ free ships,” the French people found themselves in 1881 with actually a feebler ocean fleet (914,000 tons) than they had possessed in 1870 (1,072,000 tons), while French shipbuilding was so nearly dead that it was a serious question whether French battleships would not have to be procured from England. In sheer desperation at the utter failure of the “ freeship ” experiment, the French government resorted to subsidy and bounty on an extensive scale. The British officer writing in the Atlantic Monthly states that “ Statistics declare a decrease” in French tonnage under this policy. He is very seriously misinformed. The records of the Bureau Veritas show that the French mercantile marine, which was 914,000 tons in 1881, has actually doubled to 1,952,000 tons in 1908 — the later increase consisting chiefly of steamships of high character. This gain is all the more notable because it places France almost on an equality with the 1,977,000 tons of the merchant marine of Norway, to which France twenty years ago seemed hopelessly inferior. The Norwegian government, grasping the significance of this, has lately begun to offer subsidies of its own to create steamship lines to the West Indies and South America, while a very much more ambitious project has just been broached for a direct Norwegian line to the United States.

Sweden lends public money to her shipowners to establish lines, after the British Cunard example. Austria grants bounties to native shipyards, and subsidies to ocean steamship services. Even Russia, taught by the results of the late war, is offering national aid to arouse the maritime enterprise of her people. Italy has a subsidy and bounty system similar to that of France, and the strong new steam lines which Italian capital has recently established across the North and South Atlantic are due directly to this powerful national protection and encouragement.

But perhaps the most striking recent example of the success of state aid in the creation of an ocean shipping is the experience of Japan. There, too, the first reliance was placed on a “ free-ship ” policy, and there, as elsewhere, while depended on alone, this ignominiously failed. In the war with China in 1894, Japan found herself with only about 200,000 tons of ocean vessels, and with almost no facilities for repairing, not to say building, them. The Japanese statesmen thereupon launched out upon the most generous and comprehensive system of subsidy and bounty, encouraging both “ tramp ” ships and regular lines. and developing native shipyards by the expedient of granting a bonus for every ton of ocean shipping constructed. In ten years the Japanese merchant marine had grown from the 200,000 tons of 1894 to 830,000 tons. The total for 1908 is 1,243,000 tons, and the Japanese payments for subsidy and bounty, exclusively to Japanese ships, are not far from $6,000,000 a year.

China and the United States are the only important governments which have held aloof from the modern policy of direct and liberal national aid to the merchant marine. Subsidy to shipping in some form or degree — in the form of payments either to regular mail lines or to all ocean ships — is now as fixed a practice as is the use of the gold standard among progressive nations.

This does not mean that the policy of “ free ships ” is totally discredited and abandoned: it is simply condemned as insufficient in itself without some form of direct protection and encouragement to native shipbuilding and to navigation. As a rule, the governments which grant subsidy or bounty also allow their people to purchase foreign-built ships, but such ships are usually excluded from the benefit of a part or all of the subsidies, and especially is it required that the faster steamships, the auxiliary cruisers, of the national mail lines shall be of native construction. This, as has been said, is the policy of Germany, and in British mail contracts like that of the Cunard line it is stipulated that the subsidized ships shall be “ built in the United Kingdom.” Unless it be China, or perhaps Russia, no nation now adheres to an absolutely unrestricted “ free-ship ” policy, with no thought of native shipbuilding.

Hitherto, every proposition for a trial even of a limited form of “ free ships ” has been rejected in the United States, but it is interesting to note that the latest ocean-mail bill to be brought forward in the American Congress — the bill of Representative Humphrey of Washington, a member of the recent Merchant Marine Commission — contains a provision authorizing American registry of foreign-built steel steamships of upwards of 5000 gross tons, owned by American citizens; these ships to be employed exclusively in the foreign, and not in the domestic or coastwise trade, and to be eligible to none of the mail or other subsidies of the United States. This proposal is presented by its author to test the sentiment of Congress and the country. With it is associated in the Humphrey bill a provision which Senator Gallinger of New Hampshire, Chairman of the Merchant Marine Commission, has introduced in the Senate, for increased ocean-mail compensation to create swift and regular lines of naval auxiliary steamships to Brazil, Argentina, Chile, Peru, Japan, China, the Philippines, and Australasia. This ocean-mail measure has recently received the outspoken approval of President Taft and Speaker Cannon, and the whole question of new and progressive shipping legislation will undoubtedly be taken up with vigor at the regular session of Congress opening in December next.

The article of this British sea officer expressing the astonishment of Europe at the maritime feebleness of the United States comes at a time when public sentiment is unmistakably arousing on the subject in America. In one respect, at least, the United States is more fortunate than this British observer seems to be aware — in the possession already of a large group of thoroughly modern and efficient shipyards. Our good critic is very far astray when he declares that “ With the exception of Cramps’, America has hardly a private shipbuilding yard of any consequence.” Within a few miles of the office of the Atlantic Monthly, on the shores of Boston Harbor, at Fore River, stands one of the most active and celebrated shipyards in the world. At Bath, Maine, is another modern shipyard, which has launched a battleship of 15,000 tons. Near the Cramp yard on the Delaware is the splendid great plant of the New York Shipbuilding Company at Camden, the birthplace of a noble fleet of armorclads and liners. There is another large and efficient modern yard, that of the Maryland Steel Company, at Sparrow’s Point, near Baltimore; and farther south, in Virginia, on Hampton Roads, is the Newport News shipyard, founded by the genius of C. P. Huntington, and equipped with a group of dry docks for the heaviest repairing. On the Pacific, there are the Moran Yard at Seattle, and the Union Iron Works at San Francisco, which have wrought powerful battleships, and are fit, of course, to undertake any class of mercantile construction.

These great American shipyards, in their present development, are the result of the naval expansion of the United States, but they cannot be successfully maintained either by the demands of the present naval programme or by the relatively light and fitful work of the coastwise trade. There must be great merchant steamships for these yards to build if their costly machinery is to be saved from rust and ruin, and their skilled mechanics held together against the iron need of their government in time of war. To throw away these mighty shipyards of America, where our steel battle-line has been built, because European shipyards, with their double benefit of subsidy and cheap wages, can do certain work more cheaply, would be an act of unconscionable folly. The development of an American merchant marine and the development of American ocean shipbuilding must proceed together; for history contains no record of any maritime nation permanently great which bought or borrowed its ships from the yards of a rival.

A legislative measure like the Humphrey bill, which provides for the encouragement of native shipbuilding through mail subsidies reserved to home-built ships, and at the same time honestly invokes whatever virtue there may be in a “ free-ship ” policy by opening our registry to foreign-built ships without subsidy for foreign commerce, has some sanction of experience to commend it. But an unlimited “free-ship” policy, applying to mail ships and even to the coastwise trade, long and vainly advocated in this country as the one expedient to restore our shipping, would simply be free trade run mad.