The Story of the American Merchant Marine

by John Randolph Spears

As a system for modern adoption "discrimination" is objectionable for three reasons. One is that it provides at best for keeping our ships in trades between home and foreign ports only; it does not provide for trade between foreign ports. Next it is a system for supporting ships that are confessedly inferior to those already in the trades—it places a premium upon inefficiency. Last of all it is a system that must excite all foreign governments to retaliation; and that those governments will be eager to retaliate, and that they will find ways enough for doing so, is beyond doubt. In connection with this statement it is necessary to keep in mind that we shall soon cease to export wheat in any form, and the growth of population is so great that we shall soon cease to export other, perhaps all other, food products. Before inviting retaliation we must look ahead.

Indirect discrimination has been proposed. Under this the ships of any country were to be permitted to bring in without discrimination goods produced under their flag; but goods brought from any other country were to be subjected to a discriminating tax. Any analysis of our imports, however, shows that if British goods were taxed when brought here in any but British ships, all such goods would be forced into British ships at once, to the great advantage of the British shipping. They could not at present, nor for years to come, be forced into American cargo carriers. As the system would in like manner help German shipping, the policy would but make our task the harder.

Before considering the policy of paying direct subsidies a glance at the oft-repeated assertion that our shipping is "our one unprotected industry" seems necessary. What does "protection" provide for any industry, or what does it pretend to provide? Simply the home market—this and nothing more, at best. This is done by laying a tariff upon imports. But the American shipping is now and always has been protected that far—absolutely protected, in fact, by prohibition. The importation of ships has been forbidden, and the use of foreign ships in the "home market" has been reserved to home-built ships for nearly 100 years. If "protection" could enable any industry to expand from the "home market" to the foreign, then the coasting trade industry should have expanded long since over all the world. Unhappily, however, the profit found in well-protected industries does but tend to make the beneficiaries contented, and willing to let well enough alone.

Ever since the Civil War efforts have been made to induce Congress to modify the navigation laws far enough to enable Americans to buy ships in the cheapest market and sail them under the flag. It is said that this would give our shipyards so much employment in repairing the foreign fleet so to be purchased that our builders would soon learn how to set afloat ships as cheap as any in the world. It is not easy to treat seriously one who supposes that repairing tramps would develop the distinctive type of ship able to produce results in ton-miles, which is imperatively needed; but when it is remembered that free trade in ships quickly drove the British from the sailing ship to the screw steamer, the proposition looks attractive. For free trade—the necessity of swimming unaided in rough water or drowning—might compel the American builder to produce the revolution-making ship for which we are to hope.

We now come to the policy of paying direct bounties as a means of creating a merchant marine; and nowhere are candor and accuracy of statement more important.

Bounties were paid in the colonial days. Virginia gave a subsidy of tobacco to induce her people to build ships, and they built one ship. When the whale fishery was depressed, just after the Revolution, Massachusetts gave a bounty on Massachusetts oil, with the result that the market was flooded, and the fishery was depressed more than ever. In spite of a bounty paid on oil by Rhode Island, her sailors continued to favor the slave-trade. For some reason those who favor subsidies as a means of reviving our shipping never quote these facts.

Of the effect of subsidies upon the Collins Line and of other subsidies, something has already been said. The first grant to the Cunard Company was made for military and diplomatic purposes only, but when subsidized American ships appeared, the Cunard grant was increased to maintain the British flag in the trade. That is a fact beyond dispute.

It is manifest that the subsidy was of benefit to the receiver. It helped the company to build improved ships. It gave the builders some experience. It provided schools for the instruction of seamen in the art of handling steamships. The subsidizing of the Royal Mail, and of the lines to other parts of the world, where private enterprise was unequal to the occasion, created an increase of commerce as well as some addition to the shipping of the country.

With equal candor the evils of the system apparent in those days ought to be told. The subsidized Cunarders not only drove off the American subsidized lines but they drove away the unsubsidized Great Western line. They depressed all British shipping that entered the trade to New York and Boston. If they had had a larger subsidy they would have spread to Philadelphia, and thus would have prevented or delayed the establishment of the Inman Line. The British shipping in the trade to the northern ports of America was not increased by the subsidy to the Cunard Company; it was, on the contrary, restricted. Paying a subsidy to establish a line where no steamers had traded before, and none could trade without government aid, was a very different thing from forcing a new line of steamers into trade already supplied with shipping, and even congested. Paying a fair price per pound to a ship for carrying the mail ought not to be confused with paying a subsidy. The first Cunard mail pay was not a subsidy; it was a low price for the work done. Senator Rusk declared, in the document already quoted, that the British Post Office Department "derived a clear income of no less than $5,280,800" from the contract in the first six years it was in force. After Collins began running his ships by aid of a subsidy the British subsidized Cunard to enable him to compete.

When the Collins Line reduced freights from £7 10s to £4, commerce was certainly benefited, but the reduction was ruinous to shipping. It was especially injurious to the American packet lines. The advent of the subsidized Collins Line did more to injure the American shipping of its day than any other influence except that of the iron screw steamer.