A decade later, in 1889, when conditions seemed to be growing more propitious, the subject was revived with vigor by the introduction of a navigation subsidy bill proposed by the American Shipping League.[[HJ]] From this evolved in 1890 a tonnage bounty bill reported in the House by Representative James M. Farquhar of New York.[[HK]] The final outcome, indirectly, of these moves was the reëstablishment of the postal subsidy system, abandoned in 1858, in the enactment March 3, 1891, of what is known as the Postal Aid Law.
This one ship-subsidy law now on the statutes was in its original draft one of two proposed measures, termed respectively the Mail Ship Bill and the Cargo Ship Bill, both reported in the Senate by Senator William P. Frye of Maine. The Cargo Bill provided for navigation bounties to sailing-ships and steamers. The objects of these measures, as stated by the promoters, were "(1) to secure regular and quicker service to countries now reached; (2) to make new and direct commercial exchanges with countries not now reached; (3) to develop new and enlarge old markets in the interest of producers and consumers under the reciprocity treaties completed and under consideration; (4) to assist the promotion of a powerful naval reserve; (S) to establish a training-school for American seamen."[[HL]]
Both bills passed the Senate, but the House rejected the Cargo Bill and passed the Mail Bill only after amending it essentially. The subsidy rate was cut one-third on steamers of the first class—the highest class of ocean liners,[[HM]]—and was reduced on the second class. The act as finally approved comprises the following features:
Empowering the postmaster-general to contract for terms of from five to ten years with American citizens for carrying the mails on American steamships between ports of the United States and ports in foreign countries, the Dominion of Canada excepted; the service on such lines "to be equitably distributed among the Atlantic, Mexican Gulf, and Pacific ports." Proposals to be invited by public advertisement three months before the letting of a contract; and the contract to go to the lowest responsible bidder. The steamships employed, to be American-built, owned and officered by American citizens; and the following proportion of the crews American citizens, to wit: "during the first two years of each contract, one-fourth thereof; during the next three succeeding years, one-third thereof; and during the remaining time of the continuance of such contract, at least one-half thereof." The subsidized steamships are ranked in four classes: in the first class, iron or steel screw steamships, capable of making a speed of twenty knots an hour at sea of ordinary weather, and of a gross tonnage of not less than 8,000 tons; second class, iron or steel, speed of sixteen knots, 5,000 tons; third class, iron or steel, fourteen knots, 2,500 tons; fourth class, iron or steel, or wooden, twelve knots, 1,500 tons. Only those of the first class eligible to the contract service between the United States and Great Britain. All except the fourth class to be constructed under the supervision of the Navy Department, with particular reference to prompt and economical conversion into auxiliary cruisers, of sufficient strength and stability to carry and sustain at least four effective rifled cannon of a calibre of not less than six inches; and to be of the highest rating known to maritime commerce.
The subsidy, or rate of compensation, as it is termed, for mail-carriage is thus fixed in each class: first class, not exceeding four dollars (in the original draft six dollars) a mile; second class, two dollars a mile, by the shortest practicable route for each outward voyage; third class, one dollar a mile; fourth class, two-thirds of a dollar a mile for the actual number of miles required by the Post Office Department to be travelled on each outward bound voyage. Pro rata deductions from the compensations, and penalties, are imposed for omission of a voyage or voyages, and for delays or irregularities in service. No steamship in the contract service is to receive any other bounty or subsidy from the national treasury. Sanction is given to naval officers to volunteer for service on the contract mail steamships; and, while so employed, they are to receive furlough pay in addition to their steamship pay, provided they are required to perform such duties as appertain to the merchant service. The training-school for seamen is established by a provision requiring that the contract steamers "shall take cadets or apprentices, one American-born boy for each thousand tons gross register, and one for each majority fraction thereof, who shall be educated in the duties of seamanship, rank as petty officers, and receive such pay for their services as may be reasonable."[[HN]]
The first advertisements for proposals under this act resulted in contracts with eleven existing lines, of the third and fourth classes. No bids were received for the North Atlantic service calling for American-built steamships in the first class. But an offer was made by the American Line[[HO]] to begin the performance of the service with two British-built liners—the City of New York and the City of Paris—acquired from the Inman Line, if these steamers were admitted to American registry, the company agreeing immediately to order two similar ships from American shipyards and add these to their fleet. The proposition was accepted, and a supplementary act was passed (May 10, 1892), legalizing such registry.[[HP]] The new American ships were promptly built,—the St. Louis and the St. Paul, launched November, 1894, and April, 1895, respectively,—each 11,600 tons, "larger, swifter, safer, and more luxurious"[[HQ]] than the two British-built vessels: a perfection of workmanship deemed a matter for congratulation by patriotic Americans. To this extent at least the subsidy law was declared to have been beneficent.
It had become evident, however, that the law was not fostering the establishment of new American-owned and American-built steamship lines as its promoters had hoped. In 1893 the contract service had been reduced by the discontinuance of three of the routes. In 1894 only three contracts were in operation. Up to 1898 no lines had been established on the Pacific under the law.
In the judgment of the subsidy advocates the law's failure to produce the anticipated results only proved its inadequacy in not providing enough subsidy. Accordingly, further measures were proposed affording a more generous supply.
In December, 1898, Senator Mark Hanna, of Ohio, brought forward a bill providing liberal navigation and speed bounties to all American vessels engaged in the foreign trade. This measure, as defined by its title, proposed "to promote the commerce and increase the foreign trade of the United States, and to promote auxiliary cruisers, transports, and seamen for Government use when necessary." The subsidy was again termed "compensation." It was to be payable on gross tonnage for mileage sailed both outward and homeward bound, according to speed. The rate to steamships showing on trial test a speed above fourteen knots was to increase proportionately; sailing-ships and steamers of less trial speed than fourteen knots, were to receive the lowest rate. This was fixed at one dollar and fifteen cents per gross ton for each hundred of the first fifteen hundred miles sailed both outward and homeward bound, and one cent per gross ton for each hundred miles over one hundred miles both ways. The additional speed bounties ranged from one cent per gross ton for steamers of 1,500 tons and speeding fourteen knots, to 3.2 cents for those over 10,000 tons and showing twenty-three knots. The act was to be in force for a term of twenty years, and no contracts were to be made under it after ten years.
The Hanna bill met strong opposition, and was finally dropped. A substitute measure, drawn by Senator Frye, of Maine, took its place. This also was lost with the adjournment of the Fifty-seventh Congress. At the opening of the next Congress, in December, 1901, Senator Frye introduced his bill in an amended form. This offered subsidies to contract mail-steamships based upon tonnage and speed, and practically restored the rates of the original Postal Aid Bill. It further provided a fixed subsidy upon tonnage to other American steamers and sailing-ships, registered, and to be built in the United States. The bill passed the Senate, but failed with the House.