1. A law providing for free ships—that is, permitting Americans to buy ships in other countries and bring them under the American flag. Plainly, this would not at all meet the difficulties which I have described. The only thing it would accomplish would be to overcome the excess in cost of building a ship in an American shipyard over the cost of building it in a foreign shipyard; but since all the materials which enter into an American ship are entirely relieved of duty, the difference in cost of construction is so slight as to be practically a negligible quantity, and to afford no substantial obstacle to the revival of American shipping. The expedient of free ships, therefore, would be merely to sacrifice our American shipbuilding industry, which ought to be revived and enlarged with American shipping, and to sacrifice it without receiving any substantial benefit. It is to be observed that Germany, France, and Italy all have attempted to build up their own shipping by adopting the policy of free ships, have failed in the experiment, have abandoned it, and have adopted in its place the policy of subsidy.
2. It has been proposed to establish a discriminating tariff duty in favor of goods imported in American ships—that is to say, to impose higher duties upon goods imported in foreign ships than are imposed on goods imported in American ships. We tried that once many years ago and abandoned it. In its place we have entered into treaties of commerce and navigation with the principal countries of the world, expressly agreeing that no such discrimination shall be made between their vessels and ours. To sweep away all those treaties and enter upon a war of commercial retaliation and reprisal for the sake of accomplishing indirectly what can be done directly should not be seriously considered.
3. There remains the third and obvious method: to neutralize the artificial disadvantages imposed upon American shipping through the action of our own government and foreign governments by an equivalent advantage in the form of a subsidy or subvention. In my opinion this is what should be done; it is the sensible and fair thing to do. It is what must be done if we would have a revival of our shipping and the desired development of our foreign trade. We cannot repeal the protective tariff; no political party dreams of repealing it; we do not wish to lower the standard of American living or American wages. We should give back to the shipowner what we take away from him for the purpose of maintaining that standard; and unless we do give it back we shall continue to go without ships. How can the expenditure of public money for the improvement of rivers and harbors to promote trade be justified upon any grounds which do not also sustain this proposal? Would any one reverse the policy that granted aid to the Pacific railroads, the pioneers of our enormous internal commerce, the agencies that built up the great traffic which has enabled half a dozen other roads to be built in later years without assistance? Such subventions would not be gifts. They would be at once compensation for injuries inflicted upon American shipping by American laws and the consideration for benefits received by the whole American people—not the shippers or the shipbuilders or the sailors alone, but by every manufacturer, every miner, every farmer, every merchant whose prosperity depends upon a market for his products.
The provision for such just compensation should be carefully shaped and directed so that it will go to individual advantage only so far as the individual is enabled by it to earn a reasonable profit by building up the business of the country.
A bill is now pending in Congress which contains such provisions; it has passed the Senate and is now before the House Committee on Merchant Marine and Fisheries; it is known as Senate bill No. 529, Fifty-ninth Congress, First Session. It provides specifically that the Postmaster-General may pay to American steamships, of specified rates of speed, carrying mails upon a regular service, compensation not to exceed the following amounts: For a line from an Atlantic port to Brazil, monthly, $150,000 a year; for a line from an Atlantic port to Uruguay and Argentina, monthly, $187,500 a year; for a line from a Gulf port to Brazil, monthly, $137,500 a year; for a line from each of two Gulf ports and from New Orleans to Central America and the Isthmus of Panama, weekly, $75,000 a year; for a line from a Gulf port to Mexico, weekly, $50,000 a year; for a line from a Pacific coast port to Mexico, Central America, and the Isthmus of Panama, fortnightly, $120,000 a year. For these six regular lines a total of $720,000. The payments provided are no more than enough to give the American ships a fair living chance in the competition.
There are other wise and reasonable provisions in the bill relating to trade with the Orient, to tramp steamers, and to a naval reserve, but I am now concerned with the provisions for trade to the south. The hope of such a trade lies chiefly in the passage of that bill.
Postmaster-General Cortelyou, in his report for 1905, said:
Congress has authorized the Postmaster-General, by the act of 1891, to contract with the owners of American steamships for ocean mail service and has realized the impracticability of commanding suitable steamships in the interest of the postal service alone by requiring that such steamers shall be of a size, class, and equipment which will promote commerce and become available as auxiliary cruisers of the navy in case of need. The compensation allowed to such steamers is found to be wholly inadequate to secure the proposals contemplated; hence, advertisements from time to time have failed to develop any bids for much-needed service. This is especially true in regard to several of the countries of South America, with which we have cordial relations and which, for manifest reasons, should have direct mail connections with us. I refer to Brazil and countries south of it. Complaints of serious delay to mails for these countries have become frequent and emphatic, leading to the suggestion on the part of certain officials of the government that for the present and until more satisfactory direct communication can be established, important mails should be dispatched to South America by way of European ports and on European steamers, which would not only involve the United States in the payment of double transit rates to a foreign country for the dispatch of its mails to countries of our own hemisphere, but might seriously embarrass the government in the exchange of important official and diplomatic correspondence.
The fact that the government claims exclusive control of the transmission of letter mail throughout its own territory would seem to imply that it should secure and maintain the exclusive jurisdiction when necessary, of its mails on the high seas. The unprecedented expansion of trade and foreign commerce justifies prompt consideration of an adequate foreign mail service.
It is difficult to believe, but it is true, that out of this faulty ocean mail service the government of the United States is making a large profit. The actual cost to the government last year of the ocean mail service to foreign countries other than Canada and Mexico was $2,965,624.21, while the proceeds realized by the government from postage between the United States and foreign countries other than Canada and Mexico was $6,008,807.53, leaving the profit to the United States of $3,043,183.32; that is to say, under existing law the government of the United States, having assumed the monopoly of carrying the mails for the people of the country, is making a profit of $3,000,000 per annum by rendering cheap and inefficient service. Every dollar of that three millions is made at the expense of the commerce of the United States. What can be plainer than that the government ought to expend at least the profits that it gets from the ocean mail service in making the ocean mail service efficient. One quarter of those profits would establish all these lines which I have described between the United States and South and Central America, and give us, besides a good mail service, enlarged markets for the producers and merchants of the United States who pay the postage from which the profits come.[12]