Free Ships vs. Discriminatory Duties To the Editor of the SCIENTIFIC AMERICAN: The statement that the United States pays from $200,000,000 to $300,000,000 to foreign steamship lines for carrying passengers, freight, and mails is correct, with the sum nearer the $300,000,000 mark. It is an economic fact also that under present conditions it is cheaper to pay foreign steamship lines for performing these services than to attempt it with American-built tonnage aided by subsidies or discrim· inatory duties. Such a state of afairs is, in the long run, detrimental to all American interests. In the case of two European nations, if not three, their mercantile feets are practically dependent on American trafc for existence. Our present system keeps alive our sea rivals and hinders the development of our export trade. That the United States should be restored to their old” position in the deep-sea trade, is imperative from a political as well as from an economic standpoint. Without an adequate merchant marine as an auxiliary to our navy, our battleship feet is like a hull without an engine-only half equipped for its work. We have a big navy, and it is growing larger all the time, yet it is as dependent to-day on foreign built and owned steamers for transports, colliers, etc., as it was when the Spanish war broke out. The United States paid some $20,000,000 or more then for the obsolete tonnage that foreigners dumped on Uncle Sam. The views of Mr. Bowles, formerly an admiral of the United States navy, now president of the Fore River Ship Building Company, are entitled to great respect. His company is building the two battleships for the Argentine navy, and it has turned out some high-class roast freighters. His statement, therefore, “the experience of sixty years of 'free trade' in ocean transportation conclusively shows that it is not proftable to American capital under present conditions, and requires protection or some form of government aid or subsidy,” merits marked consideration. Mr. BOWles seeks to overcome conditions of “free trade” which exists in the deep-sea trade by the application of “protective principles:" "First, by mail compensation such as is provided for under the ocean mail act of 1891 and which is still in efect. "Second, the remission of the head tax of $4 when immigrants arrive in the United States in Ameriean registered steamers. "Third, by discriminatory duties applicable to American·built steamers of all types. ... A reduction of 5 per cent on all goods on whicb the ad valorem duties exceed 41 per cent, and on all goods under 41 per cent or free the importer shall receive an importer's certificate available only for the payment of duties at the custom house and equal in value to 2.05 per cent of the value of the goods so imported." The mail compensation act is still in effect, but it has done little good so far; it could be made of value in establishing new lines if American capital were generally employed in ocean shipp:ng under the American flag. The second proposition: the remission of the head tax of $4 when immigrants arrive in American steamers. It should be amended by establishing a stamp tax of $4 on all outward emigrant tickets, the same to be remitted in case the passenger sails on an American steamer. Foreign governments do not hesitate to legislate to make the emigrant traffic a source of profit to the State and to the upbuilding of their merchant marine. Third: The discriminatory duty. This is highly ob- jectionable. The refund to the steamer or the importer would run from $2.25 per ton on sugar to $4.50 on a ton of cofee. These articles, as well as hides, fax, fruits, fbers, are imported in cargo lots. An American steamer operated under such discriminatory duties would earn approximately 50 to 100 per cent more than a foreign steamer in the same trade. Under such conditions the American steamer would control the trafc in such commodities, and the control of the import would carry with it the control of the export, and subject exporters to such rates of freight as the trafc would bear. It would almost to a certainty create a monopoly in the deep-sea trade as efective as now exists in the coastwise. Although the United States have never tried the policy of “free ships” for upbuilding our merchant marine, the advocates of subsidy and discriminatory duties have always denounced it as a fallacy; yet those nations which have adopted it, are the most progressive and successful ship-owning nations. For over one hundred years our shipbuilders have been shielded from the competition of foreign builders; this has resulted in developing our coastwise and lake shipping, but it has steadily lost us the deep-sea foreign trade till it is now practically extinct. In justifcation of this, it is stated that it costs from 40 to 50 per cent more to build steamers of the same size in American yards than in foreign. This would seem to indicate that the American prices are ex-' cessive. It is also true that shipbuilding material may be imported free if used in building American steamers engaged in foreign trade. This privilege, however, is so hedged about with restrictions as to be practically valueless. "Shipbuilder's (American) labor costs are 70 to 100 per cent more than the foreigner." This is also equally true of labor engaged in making everything, from needles to automobiles, ship plates, and rails. Yet we are constantly exporting a greater quantity of all kinds of these and other manufactured goods every year. And if the American scale of wages can be paid on American goods sold in foreign markets in competition with goods of foreign manufacture, it would not be unreasonable to expect that our shiphuilders could compete with the foreign builder on steamers built for foreign trade only. In the case of the two battleships being built for the Argentine government, it was done. The contract was secured in competition with foreign competitors, and it is to taken for granted that the labor employed in building these ships receives the American wage scale. It is stated that to build the hulls of the battleships costs more in the American yards, but that Americans can turn out big guns and armor plates so much cheaper than can the foreigner, that the total cost of building in American yards is less than the foreigner's price. It is something to be proud of-to be able to build armor and big guns cheaper than can European concerns; and as this is the case, it is somewhat difcult to see why steamers cannot likewise be built cheaper in American yards. The labor in gun and armor making is as well paid as labor employed in shipbuilding. A few years ago Krupp offered armor plate to the United States at much under the American prices. Now apparently American makers can undersell Krupp. Justification for denying American registration to foreign-built, American-owned tonnage is that it costs more to operate the foreign-built Un,l0 the American flag and that Americans would not avail themselves of the privilege. Congress has been petitioned to pass such a bill, and assurances were given that on its passage a fleet of modern fast boats would be enrolled under the American flag for foreign trade. Yet Congress hesitates to pass such a measure, although no American interest could be injured in any way. Another stated objection to the admission of “free ships” is that “the admission of foreign-built steamers would kill the art of shipbuilding in the United States.” Well, as far as building for the foreign trade is concerned, it is dead now. It is some years since any steamers were built for trans-Atlantic trade, and the few built in the last decade were in many cases put under foreign fags and are now operated between European and American ports. Holland, Norway, Sweden, Belgium, are countries with a small population and but little natural resources, yet owing to their free-ship policy they have feets of merchant steamers that trade in every quarter of the globe. Up to 1849 England had navigation laws similar to those of the United States. In that year they were repealed, and with their passing England's shipping began to expand till to-day she is far and away the most important shipping nation in the world. Germany took pattern by England and also passed a free-ship measure which is still in efect, and her merchant marine began to expand; she has continued the policy of allowing German citizens to buy or build steamers in the cheapest market, granting German registration, to this day. In addition, all shipbuilding material is admitted free of duty into Germany. This policy has placed her second among the shipping nations of the world, and it has aided the development of her shipyards; they have kept pace with the growth of the German tonnage. and to,day vie with England in turning out the largest and fastest steamers afloat. France is the one European country that stands out pre-eminently as a believer in bounties for shipbuilders and subsidies for tonnage. Her policy has been in efect for years; she pays enormous sums annually in aid of her merchant marine, yet it is a negligible factor as compared with England and Germany, and hardly compares with many of the smaller countries. The freight rates on French ships are higher than on tonnage of countries not subsidized, and tonnage of other countries has no difculty in competing with the French, even to the ports of France. . The policy of subsidy and bounty followed by France may induce the building of steamers, but it does nothing to advance trade and commerce. For our foreign trade we need a merchant marine, and to secure it we should have “free ships.” It is pointed out by Admiral Bowles that to move one· third of our present foreign commerce, it would require ten years to build the necessary steamers-and the Panama canal is to be opened in 1915; possibly in 1913 according to Col. Goethals. At the outside, less than four years from now steamers will be using this canal. A free-ship bill is the solution of the American merchant marine. It can do no harm to any American interest. Our yards build no tonnage for the foreign trade; even if they could compete to-day, they could do no more than keep pace with the ever-increasing demand for tonnage. If it is necessary to subsidize to keep our shipyards going, let it be for steamers of the highest class and of high speed-20 knots at least; steamers that will be of value in case of war, and that can deliver mails and passengers to South American ports in quicker time than is now possible. Such steamers will do something to stimulate travel and intercourse between the nations of South America and the United States. The great lines of traffic are operated by steamers of moderate speed and low cost of operation, and until we can build steamers of such a type as cheaply as foreign builders, Americans should be allowed to buy foreign-built steamers with the privilege of American registration, to ply in foreign trade only. With the passage of such a bill, tonnage under the American flag would rapidly increase and our commerce correspondingly expand, and nbt the least important benefit to follow, will be that our battle fleet will have an ample supply of colliers and transports. Chicago, Ill. CHARLES DEPESEE.
This article was originally published with the title "Correspondence"