Further measures for providing subsidies have therefore been proposed. The Merchant Marine Commission, after a lengthened inquiry, offered a bill to Congress which was to provide a line from "a port of the Atlantic coast of the United States to Brazil," with "ships of not less than fourteen knots speed," at a subsidy rate of $150,000 a year, "for a monthly service," or $300,000 for a fortnightly service. A similar line to the River Plate was to receive $187,500 and $350,000 according to the service. The same subsidy was to be paid to a 12-knot line to South Africa. Three lines from Gulf ports to Cuba, Brazil, and Mexico were to be paid sums in proportion to the service rendered, and three lines were to be provided for the Pacific on similar terms.
In addition to providing these lines an attempt was to be made to set afloat cargo carriers by giving an annual bounty of $5 a ton gross measurement to all cargo ships continuously in service. On the whole ten new lines of ships were to be established at an expense of $2,590,000, and it was supposed that $10,000,000 might be the necessary limit of the subsidy for the tramps. In the meantime it was supposed that the existing lines working under the law of 1891 would continue in the service for the compensation provided.
Passing over the claptrap in the bill about the use of these liners as scouts,—fancy a 16-knot merchantman scouting around a squadron of Dreadnoughts!—the bill ought to be considered on its merits because it sets forth the amount of subsidy supposed to be sufficient to create a real revival of our shipping, and thus gives an idea, perhaps, of what sum would be adequate.
Accepting the Commission's statement that the subsidies would prove sufficient to place the more expensive American ships upon an equality with the foreign, and "a little more," as was said, it may be assumed that the new lines would eventually employ sixty or seventy ships. At $5 a ton the $10,000,000 might put afloat from 300 to 400 modern cargo carriers. Thus we should, at best, about double our present registered fleet, which, in 1908, numbered 478 ships. But if we compare that fleet with the German, which now numbers more than 2500 ships, or with the British, which now numbers more than 4000, we shall see that even under the best circumstances we should yet be a far cry from the supremacy of which we made boast in other days. Indeed, the fleet of liners would not number as many ships as the Standard Oil Company now employs to carry abroad its products, while the fleet of cargo carriers could not be compared, with any satisfaction, to the fleet now in use by the allied German companies of which mention has been made.
And the ships thus to be set afloat, as they crossed the seas, would proclaim to the world that they were in the carrying trade, not by right of efficiency, but by grace of a subsidy.
But now we are to consider whether any subsidy heretofore proposed would really be sufficient to sustain either liner or tramp. The effect of such ships upon freight rates, for instance, was stated before the Merchant Marine Commission, by B. N. Baker, formerly president of the Atlantic Transport Company, and an advocate of the subsidy system. He said:—
"If you added any more to the open sea traffic (the foreign traffic) of the United States than 100,000 tons a year you would so demoralize the general carrying business in rates, both as to freight and passengers, it would be so unprofitable that no one could go into it, unless you would double, and triple that compensation."
The effect of that building programme upon the organized mechanics of our shipyards—the strikes for higher wages, and the consequent increase of prices—need only be mentioned.
Then figure up the expense of the war between the lines from New York to South Africa in 1902, wherein ships lost $15,000 in a single voyage. Manifestly the American liners would need all of their subsidy ($15,625, per voyage) to meet the reductions in freight rates which the opposition would make. They would thus be no better off than they would be if they were permitted to enter the trade on even terms with the present lines—without war and without subsidy. The line to Brazil would yet have to face the disadvantages due to the triangular service which British ships maintain, though the decreasing exports of American food products would reduce those disadvantages somewhat.
In short, one may well doubt whether the proposed subsidy would enable our ships to overcome the opposition of the powerful foreign interests that are already in the trade. But if we suppose it to suffice that far, we have yet to inquire what the governments behind those powerful corporations would do. Recall the story of the Cunarders Mauretania and Lusitania. The British government gave those two ships to the company outright on the understanding that it should operate and maintain them in a condition fit to cross the Atlantic at a speed of 25 knots an hour. This was done at the time that American capitalists acquired control of a number of British lines, under the name of the International Mercantile Marine Company, and formed a working agreement with the two leading German companies. This combination threatened British supremacy on the North Atlantic, or was believed to threaten it, and the whole British nation rose up to defend, figuratively speaking. If that were possible under those circumstances, it is certain that the "subventions" now given to the British lines would be increased the moment any American subsidized ships began to cut into the British carrying trade. Increased subsidies would then be needed by the American ships. If the American people were to enter into a subsidy war it is likely that they could endure the strain longer than any other nation; but is such a war worth while to secure a part in a traffic that pays the well-subsidized Cunard line no higher profit than 2.8 per cent a year?