The Story of the American Merchant Marine

by John Randolph Spears

Other views of the world's carrying trade are of interest here. The Hamburg-American Company runs steamships in sixty-eight different lines. There is a line of its ships from Europe to each port of importance from Montreal to Newport News. It maintains other lines to the important ports of the West Indies, to Ports Limon and Colon on the narrow mainland, and to every important port on the north, the east, and the west coasts of South America. It reaches nearly every port of importance on the coasts of Europe, and down the west coast of Africa. Indeed, on the west coast of Africa the natives see two German steamers to one under the British flag. It sends other ships through the Suez Canal to skirt the coast of Asia as far as Vladivostok; it maintains cargo gatherers among the islands along shore, and then, from Japan, it reaches across to Portland, Oregon, where it connects with our Northern Pacific Railroad. It runs every kind of ship from the 23-knot passenger packet to the economical cargo carrier that uses perhaps little more than ten tons of coal a day. The traffic of the world is, in a way, within the touch of this one corporation. The worldwide tides of commerce are felt and noted daily in the home office, and while losses are suffered, here and there, through depressions in business, or through competition, the profit made by the vast fleet as a whole is sufficient to yield regularly the modest dividends that satisfy the owners.

The fact that the powerful North German Lloyd is allied with the Hamburg-American in all matters that affect German commerce and trade is also a matter of interest in this place.

To show now how an effort to force a new company into an established trade affects freight rates, it is necessary only to refer to such an instance as the "war" that prevailed in the trade from New York to South Africa in 1902. As Smith notes in The Ocean Carrier, the rival steamships lost from $10,000 to $15,000 on every trip. Moreover, the low rates were of no advantage to commerce, for commerce demands stability first of all. It is worth noting, too, by the way, that in the course of this war, goods were carried by English steamers from New York to Africa for less than was charged by the same companies on ships from London to the same destination.

When American capitalists tried to establish a line of ships from New York to Brazil some years ago, the venture failed. One reason for this was the higher cost of American ships and crews. Another was extravagance, especially in providing terminal facilities at Rio de Janeiro. Old merchants in Brazil still smile when they talk of what the American line did in that way. But the most important reason for failure was the advantage enjoyed by British rivals in the triangular line route followed by their steamers. In the currents of commerce on the Atlantic the British manufacturer ships large quantities of goods to South America, the South American producer ships large quantities of coffee to the United States, and the American producer ships large quantities of food-stuffs to Great Britain. The British ships had profitable cargoes from home to Brazil. At Rio de Janeiro and Santos they cut the rates far below cost, and then on arrival in the United States they secured cargoes for home at a profitable rate. The profits on the two trips enabled them to endure the cut on the middle passage. But because American manufacturers had little to ship to Brazil the American ship lost money on both passages.

Every business man understands the advantages of one who is well-established in any trade, over one who is just beginning, but one method by which established lines of ships hold their trade must have mention. The merchant who sends all his goods by the established line receives a rebate of 10 per cent on the amount of his freight bill, the rebate being calculated once in six months, say, and the payment being made six months later. If the merchant ships an ounce of stuff by a rival line he loses all the rebate, and he may be punished in addition, if the rival is a new line. The merchant, having rivals in trade, feels the loss of the rebate seriously; his rivals by loyalty to the established line continue to enjoy the rebate even when rates are cut below those of the new line, and below cost. In such trades as that between New York and Rio de Janeiro, where a number of lines are plying, the established lines unite their entire resources to kill off a new line trying to enter the trade.

When the American people have before them any proposition for the revival of the American merchant marine, they should keep in mind that ships designed for the purpose and at least in sufficient numbers, are afloat in every trade of the world; that the freight rates are maintained at a point where the profits are as low as any afforded by any branch of the world's work; that the men doing the work have been developed with the steam carrying trade, just as the splendid American sailor of the sail was developed by his environment, and they are therefore at once well-informed, alert, enterprising, resourceful, persistent, and merciless. Observe, too, that in the work of the high seas man faces primeval conditions, brute force prevails as nowhere else, and the fittest survives.

Perhaps a definition of terms is needed here. By fitness we mean the ability to do the world's work on the terms which the world offers. We have learned to build bridges and locomotives on those terms, but, in spite of the fact that our ship-builders and ship-owners are fully protected in the "home market," they have not yet learned how to combine the locomotive and the bridge into a ship fit to compete with the unsubsidized ships—the cargo carriers—now in the world's traffic.

In connection with the known degree of efficiency of the world's merchant marine, as now afloat, consider a statement that can be found on page 1248 of the Report of the Merchant Marine Commission. It is, perhaps, the most discouraging statement that has been made in connection with our merchant marine.

"The statistics of loss of ships at sea afford matter for reflection.... They show, as the United States Commissioner of Navigation has summarized them, that out of every 100 American seagoing steamships over 100 tons, for the past seven years, on the average 2.24 have been lost each year; that out of every 100 foreign seagoing steamers over 100 tons, for the same period on the average 1.98 have been lost each year." (See also An. Rep. Com. Nav., 1904, p. 19.)