1st Session. No. 56. DEVELOPMENT OF THE AMERICAN MERCHANT MARINE AND AMERICAN COMMERCE. LETTER OF THE MERCHANT MARINE COMMISSION TRANSMITTING ITS SUPPLEMENTARY REPORT. DECEMBER 6, 1905.-Referred to the Committee on the Merchant Marine and Fisheries and ordered to be printed. WASHINGTON, D. C., December 6, 1905. SIR: I herewith transmit, in accordance with the provisions of the law directing a continuance of the inquiry of the Merchant Marine Commission, the report of that Commission. Respectfully, C. H. GROSVENOR, To the SPEAKER OF THE HOUSE OF REPRESENTATIVES. Before the close of the last session of the Fifty-eighth Congress the Senate and House of Representatives directed a continuance of the inquiry which had been undertaken the year before by the Merchant Marine Commission authorized by the act of April 28, 1904, on the recommendation of the President of the United States. Because the chief ports of the country had been so thoroughly covered on the Atlantic and Pacific, the Great Lakes, and the Gulf of Mexico through the series of hearings begun at New York on May 23 and concluded at Washington on December 12, 1904, no further public sessions were regarded as necessary or desirable. But the chairman of the Commission held a conference on May 25, 1905, in New York, with several representatives of the shipping interests who had not previously been heard, and other statements and arguments have been received and considered by the Commission during recent sessions in Washington. This further supplemental inquiry has developed no material change in the legislation originally proposed. The first report of the Commission was offered on January 4, 1905. For nearly a year the bill therein submitted, "For the development of the American merchant marine and American commerce," has been before the country for examination and debate. It has received an especially thorough examination by the great associations interested in manufactures, finance, and our export trade, and it is gratifying to note that the measure has been warmly approved by all of these associations which have thus far expressed a definite opinion. The formal declarations of some of these associations are embodied in the present report. They go to show how wide, intense, and irresistible the demand is growing for an American merchant fleet commensurate with our splendid war fleet and worthy of the great Republic. WELCOMED BY MANUFACTURERS AND MERCHANTS. It is a fact of profound significance that the chief support which the shipping bill and the entire inquiry of the Merchant Marine Commission have received and are receiving has not come from shipowners or shipbuilders, or even from the people of the States adjacent to the ocean. The most remarkable indorsements which have been given to this measure since it was introduced have come from merchants and manufacturers interested in the export trade and producers of the great interior. Not only the National Board of Trade and the American Bankers' Association, in annual session at Washington, but the National Association of Manufacturers, meeting at Atlanta, Ga., and the American Cotton Manufacturers' Association, meeting at Knoxville, Tenn., have specifically commended the shipping bill of the Commission and called in the strongest terms for its enactment. A FAR-WESTERN OPINION. Two years ago the Trans-Mississippi Commercial Congress, representing 21 States and Territories west of the Mississippi, in formal resolutions declared: That the decline of our over-sea American merchant marine from carrying 90 per cent of our exported products in American bottoms down to 9 per cent is an anomaly in the industrial development of the United States, and for a nation with a greater coast line and greater resources than any other, and an unbroken record of enterprise and intrepidity on the ocean. That every ship is a missionary of trade; that steamship lines work for their own countries just as railroad lines work for their terminal points, and that it is as absurd for the United States to depend upon foreign ships to distribute its products as it would be for a department store to depend upon the wagons of a competing house to deliver its goods. That it is the sense of this congress that the Congress of the United States should enact such laws as will tend to build up the American merchant marine. This striking declaration of western and southwestern business men and producers was reaffirmed last August by the Trans-Mississippi Congress at its annual meeting, in Portland, Oreg. A NATIONAL DEMAND FOR MORE SHIPS. Such utterances mean that the great commercial and industrial interests, not of the seacoast merely, but of all the States, demand American ships, not primarily for the sake of having the ships or even of securing the skilled officers and men so essential as a naval reserve in our national defences, but because of a recognition of the fact that American ships are indispensable now to the full expansion of American commerce. The nations of Europe fronting the Atlantic and Mediterranean that require our cotton and wheat, our corn, cattle, and provisions are, as a rule, shipowning nations and send their ships to our ports for the goods they need, thus incidentally providing facilities for our European import traffic. It is not the best national prudence or sound business sense to depend, as we do now, on these foreign ships to perform 95 per cent of our trans-Atlantic carrying, but, at any rate, in this particular trade there is a fairly regular steamship service, though controlled, of course, by foreign interests, and freight and passenger rates, though not always satisfactory, are not always exorbitant. HOW OUR TRADE IS HANDICAPPED. But when we turn to our trade with Asia, Africa, Central and South America, and Australasia we find that conditions are radically different. Unlike the chief European nations, Asia, Africa, Central and South America, and Australasia are not shipowning lands. We require from them a great quantity of imports, especially articles of food and raw materials for our manufacturers, and the great bulk of these goods are on the tariff free list. But these countries, unlike Europe, have no ships of their own to deliver all this needful merchandise in our own Atlantic, Gulf, and Pacific ports, and, of course, they do not supply the ships that are required for the proper expansion of our export commerce to their own ports. For this service both ways the United States is now dependent almost altogether on the surplus or inferior shipping of Europe. The European powers grant liberal subsidies to maintain great steam lines from their own ports to Asia, Africa, Central and South America, and Australasia, but they do not, if they can help it, allow any of their subsidies to be utilized for the maintenance of steam lines to those competitive markets out of the ports of the United States. Therefore, the manufacturers, merchants, and farmers of America are at a very serious disadvantage compared with their European rivals in this competitive trade. STOPPING AT THE OCEAN'S EDGE. We have in the United States the greatest railroad mileage and unquestionably the cheapest and most efficient railroad transportation in the world. Our unrivaled railroad systems would go far to enable us to command the markets of the world but for the fact that when our goods destined for Asia or Africa or Central America or other distant markets reach the seaboard they find there not the regular steam lines provided by the liberality of European governments, but either no available tonnage at all or some slow, inefficient, uneconomical foreign craft, discarded because of its inferiority from the European steamship service and sent over here by some foreign company as "quite good enough for the Americans." TRADE AND THE FLAG. In a few instances, under the half-hearted, inadequate assistance of the postal-aid act of 1891, or on the initiative of bold individual enterprise, American steam lines are now in operation over seas. In every instance these steam lines have had a marked effect in increasing American export commerce. This is especially true in the markets of Asia, to which two American lines, both now unsubsidized, and both unprofitable, run across the Pacific. It is true in the case of our trade with Australia that it has been stimulated very largely by the fast and regular service of an American steam line out of San Francisco, insufficiently paid under the law of 1891. It is true of our trade with Cuba, Mexico, and Venezuela. Wherever the flag of the United States appears above a modern merchant service the result invariably is a large quickening of American export trade. But these American steamship lines are but a shadow of a fleet. They, and our sail fleet together, convey about one-tenth of our overseas commerce, leaving nearly nine-tenths of it to the uninterested, spasmodic care of foreigners. The western merchants and farmers of the Trans-Mississippi Congress of 1903 got at the very kernel of this question of the American merchant marine when they declared in their urgent resolutions that "it is as absurd for the United States to depend upon foreign ships to distribute its products as it would be for a department store to depend upon the wagons of a competing house to deliver its goods." THE DIFFICULTY IN SOUTH AMERICA. Manufacturers and merchants of the Western States who appeared before the commission at its sessions on the Great Lakes and elsewhere emphatically testified that they were baffled in their efforts to build up an export trade, especially to South America, by the arbitrary methods and irregular, inadequate service of the so-called steamship companies under foreign flags which monopolize this ocean carrying. Many of these business men have themselves been to South America, and have found that in order to visit or communicate with their foreign customers they had to go via Europe and her subsidized lines, thus crossing the Atlantic twice to reach their destination. In many instances, if the quickest delivery is desired, they have had to send their goods by the same circuitous way. Under these circumstances need we wonder that our exports to Brazil, carried entirely in foreign ships, have shrunk from $15,135,000 in 1895 to $11,046,000 in 1904? STUNTING OUR EXPORT COMMERCE. The decline of our ocean shipping, our one unprotected industry, has ruined shipowners and shipbuilders alongshore from Eastport to Galveston and from San Diego to Puget Sound. It has impoverished and scattered our shipyard mechanics, the most skillful in the world. It has robbed the country of the hardy officers and seamen who should constitute our naval reserve; but it has done more than this-it has choked the normal growth of the export trade of the United States to four of the five other great continents. Therefore, there is not a wheat farm in the Dakotas, a cattle ranch in Texas, or a cotton plantation in Mississippi, Georgia, or the Carolinas where the loss of American shipping has not made itself felt in shrunken sales and opportunities for profit. Of course it will and must cost something to establish American shipping lines and give our people the facilities they need for export commerce. It has cost the European nations, our competitors, something to develop their lines to all quarters of the world. Great Britain alone has expended for this purpose, since 1840, between $250,000,000 and $300,000,000. SHIPS TO SERVE ALL CLASSES AND SECTIONS. National subventions to American shipping will, of course, encourage shipowners and shipbuilders of New England, New York, Pennsylvania, Virginia, Louisiana, California, and Washington; but these ships, built and run regularly and efficiently for the carrying of American mails and commerce, will just as surely win new markets for the farmers, manufactures, and merchants of every State in the Union who have anything to sell; and unless American ships are encouraged by national legislation these new markets never will be won, for the day will never come when Great Britain, or Germany, or France, or Italy will subsidize great national lines of ships to convey to Africa, or South America, or Asia, or Australasia American goods to compete with European goods or the products of European colonies. If we are ever to have an efficient transportation service to the world's great neutral markets we must establish it ourselves and maintain and operate it beneath the American flag and in American interests. PUSHING OUR GOODS IN FOREIGN LANDS. Not only is an American ship itself the most efficient carrier of American commerce, but the officers of that ship, the American passengers who tread its decks, and particularly the American merchants who go out to represent the steamship company and to push its business, are inevitably pioneers and drummers of American trade in foreign lands. For years our ministers and consuls and American travelers abroad have complained that there were no American mercantile houses in foreign countries, and that American goods, therefore, had to be handled by foreign firms which preferred to sell their own country's merchandise. But why should there be any American houses in South America, or Asia, or Africa, or elsewhere where there are no American ships? Everywhere in the world's experience it has been found that the first merchants who go out to foreign countries go as agents of shipping. Soon goods from the home country are consigned to them; they develop a commission business; they branch out into general mercantile trade and, growing stronger, demand banking facilities. There were once American houses in China, India, and South America, but that was when we had American ships on whose trade their foundations rested. When these ships vanished the houses themselves soon disappeared. When American ships return, there will again be American mercantile establishments in all ports of the world, to push the sales of American goods abroad with the same shrewd sense and indomitable energy that have built up our enormous domestic commerce. A SEA MILITIA OR NAVAL RESERVE. Though the first and paramount argument for an American merchant shipping is the imperative need for our own ships to expand our commerce, there is a second consideration of large importance, |