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.
How can this defect be remedied? The answer to this question must be found by ascertaining the cause of the decline of our merchant marine. Why is it that Americans have substantially retired from the foreign transport service? We are a nation of maritime traditions and facility; we are a nation of constructive capacity, competent to build ships; we are eminent, if not preëminent, in the construction of machinery; we have abundant capital seeking investment; we have courage and enterprise shrinking from no competition in any field which we choose to enter. Why, then, have we retired from this field in which we were once conspicuously successful?
I think the answer is twofold.
1. The higher wages and the greater cost of maintenance of American officers and crews make it impossible to compete on equal terms with foreign ships. The scale of living and the scale of pay of American sailors are fixed by the standard of wages and of living in the United States, and those are maintained at a high level by the protective tariff. The moment the American passes beyond the limits of his country and engages in ocean transportation, he comes into competition with the lower foreign scale of wages and of living. Mr. Joseph L. Bristow, in his report upon trade conditions affecting the Panama Railroad, dated June 14, 1905, gives in detail the cost of operating an American steamship with a tonnage of approximately thirty-five hundred tons as compared with the cost of operating a specified German steamship of the same tonnage, and the differences aggregate $15,315 per annum greater cost for the American steamship than for the German; that is $4.37 per ton. He gives also in detail the cost of maintaining another American steamship with a tonnage of approximately twenty-five hundred tons as compared with the cost of operating a specified British steamship of the same tonnage, and the differences aggregate $18,289.68 per annum greater cost for the American steamship than for the British; that is $7.31 per ton. It is manifest that if the German steamship were content with a profit of less than $15,000 per annum, and the British with a profit of less than $18,000 per annum, the American ships would have to go out of business.
2. The principal maritime nations of the world, anxious to develop their trade, to promote their shipbuilding industry, to have at hand transports and auxiliary cruisers in case of war, are fostering their steamship lines by the payment of subsidies. England is paying to her steamship lines between six and seven million dollars a year; it is estimated that since 1840 she has paid to them between two hundred and fifty and three hundred millions. The enormous development of her commerce, her preponderant share of the carrying trade of the world, and her shipyards crowded with construction orders from every part of the earth indicate the success of her policy. France is paying about eight million dollars a year; Italy and Japan, between three and four million each; Germany, upon the initiative of Bismarck, is building up her trade with wonderful rapidity by heavy subventions to her steamship lines and by giving special differential rates of carriage over her railroads for merchandise shipped by those lines. Spain, Norway, Austria-Hungary, Canada, all subsidize their own lines. It is estimated that about $28,000,000 a year are paid by our commercial competitors to their steamship lines.
Against these advantages of his competitor the American shipowner has to contend; and it is manifest that the subsidized ship can afford to carry freight at cost for a period long enough to drive him out of business.
We are living in a world not of natural competition, but of subsidized competition. State aid to steamship lines is as much a part of the commercial system of our day as state employment of consuls to promote business.
It will be observed that both of these disadvantages under which the American shipowner labors are artificial; they are created by governmental action—one by our own Government in raising the standard of wages and living, by the protective tariff; the other by foreign governments in paying subsidies to their ships for the promotion of their own trade. For the American shipowner it is not a contest of intelligence, skill, industry, and thrift against similar qualities in his competitor; it is a contest against his competitors and his competitors' governments and his own government also.
Plainly, these disadvantages created by governmental action can be neutralized only by governmental action, and should be neutralized by such action.
What action ought our Government to take for the accomplishment of this just purpose? Three kinds of action have been advocated.