ADDRESS
OF
HENRY W. PEABODY
IN ADVOCACY OF THE
PLAN RECOMMENDED BY
PRESIDENT MCKINLEY
AND
THE SECRETARY OF THE TREASURY
FOR THE
Re-creation of our Merchant Marine
BEFORE THE
COMMERCIAL CLUB
OF CINCINNATI
AT THE QUEEN CITY CLUB, CINCINNATI
November 22, 1900
BOSTON
PRESS OF SAMUEL USHER
171 Devonshire Street
1900
With Q)mplimcnts of
HENRY W. PEABODY,
BOSTON, MASS.
ADDRESS
OF
HENRY W. PEABÖDY
IN ADVOCACY OF THE
PLAN RECOMMENDED BY
PRESIDENT MCKINLEY -
AND
THE SECRETARY OF THE TREASURY
FOR THE
Re-creation of our Merchant Marine
BEFORE THE
■ COMMERCIAL CLUB
OF CINCINNATI
AT THE QUEEN CITY CLUB, CINCINNATI
•November 22, igoo
BOSTON
PRESS OP SAMUEL USHER
171 Devonshire Street
1§00
Mr. President Guests, and Members of the Commercial Club:—
I esteem it a great honor to be one of your guests upon this occasion, and
a privilege to participate in your consideration of the most important national
problem, — the re-creation of our Merchant Marine.
It has been said by Mr. Carroll D. Wright that a country ranks with others
according to the volume of its exports, and that the United States, exceeding
all others, is the leading commercial nation of the world.
We might well be proud of this'greatness, if our conceit was not taken out
of us by our realization that more than 91 per cent of our commerce is con¬
ducted by foreign vessels ; that in 1899 we had of registered vessels only
848,000 tons, just the same as we had ninety-three years before, in 1807 ;
that our vessels carried in 1899 only $161,000,000 value of exports and
imports, while seventy-six years before tiiey carried $181,000,000, in 1825
being 91 per cent of the whole, against 9 per cent of the whole in 1899;
.that while leading in the volume of our commerce, we occupy the seventh
place among the eleven nations, while maritime tonnage exceeds 500,000 tons.
The zenith of our maritime power was in June, 1861, with 2,642,000 tons
registered vessels, by which we carried 66|^ per cent of our exports and
imports in 1860, then amounting to $762,000,000.
Our 848,000 tons of registered vessels include some steamers on coastwise
routes. Some others are small or inferior ; and it has been shown that our
steam and sail vessels of 1,000 tons upward, or under twenty years old, suit¬
able and available for over-ocean trade, did not exceed 300,000 tons in 1899.
This view of our decay as a maritime nation should command our serious
consideration of the conditions or causes of the decline, and the best means
for the re-creation of our Merchant Marine.
The law of registry was enacted in 1789, and admitted to register all
vessels then owned by Americans, whether built abroad or at home, but
thereafter only vessels built in this country would be admitted. The bill is
" for the registering and clearing of vessels, regulating the coasting trade,
etc.," and only by inference for the protection of ship building.
About the same time a law was enacted imposing discriminating duties on
imports by other than American registered vessels, and in 1815 was in great
degree repealed.
On December 31, 1792, " an Act concerning the registering and recording
of ships and vessels" classes together as "denominated and deemed ships
or vessels of the United States foreign-built vessels registered under the law
of 1789, and vessels built in the United States, subsequently belonging and
thenceforth continuing to belong to a citizen or citizens thereof. Also foreign
vessels captured in war and lawfully condemned as prize, or wrecked in
4
American waters and repaired at cost of three quarters the cost of the vessel
when repaired."
These laws both provide exceptions for registry of foreign-built vessels, but
our ship builders have aways claimed that they were devised to protect their
industry, and they have maintained an organization for thirty years or more
to watcli and contes't all applications to Congress for privilege, and the result
has been pi'ohibition of foreign tonnage, with scarcely any orders to our
builders for foreign trade.
This is strongly evidenced by the statement of Senator Gallinger, intro¬
ducing the subsidy bill, January 12,1899. He says : "Although our builders
arc now busy with orders for naval construction and for the coasting trade,
there is not at the present time, so far as can be ascertained, any steamship
in course of construction in an American shipyard designed for transoceanic
mercantile navigation."
It is a reasonable inference tliat the ship builders devised the plank in the
Republican platform in 189B for the imposition of a discriminating duty on
imports by foreign vessels, for the purpose of stimulating orders for vessels
to be built.
On the fourth of November, 1896, I wrote to the President elect showing
that the plank was impracticable, and otherwise that it would impose an
enormous tax upon the public of duties necessarily incurred upon imports
largely received by foreign vessels.
I stated my belief " that American ownership for the foreign trade might
be coaxed into being by a different course, giving the opportunity to buy the
best vessels in tlie cheapest markets of the world for a term of years, to be
limited to foreign business, and to be free of all tax as property."
This incident I relate to show that my interest in the measures which I
now advocate was not inspired by the subsidy bill before Congress the last
two years, and it will explain my strong approval of the statesmanlike
recommendation of the President, in his message to Congress, December,
1898, expressed in detail by the Secretary of the Treasury. He recom¬
mended a positive policy which shall re-create anew a sea-going merchant
fleet, to be stimulated by bounties, and extending for a short term' of years
the application of the principles by virtue of which the New York and Paris
were admitted to registry, and the St. Louis and St. Paid built.
I was at this time in London, and read with much interest the published
message, and on December 9, 1898, I cabled to the President that " I believed
Secretary Gage's proposed mileage subsidy would induce prompt creation of
American tonnage for foreign commerce."
I sent similar cables to Seeretary Gage, to Senator Lodge, and Congress¬
man Moody.
I submit some extracts from the report of Secretary Gage, of December,
1899, a year later : —
6
"la the last Annual Report several specific recommendations were sub¬
mitted, drawn in the main from the current practices of our maritime com¬
petitors, raising no diplomatic difficulties, and believed to be adequate to our
needs. The situation is the same now as then, and the necessity for action
has become more pressing. The same propositions, accordingly, are again
submitted.
"The establishment of a system of graded bounties upon the mileage navi¬
gated by registered American vessels while engaged in the foreign carrying
trade as compensation for the training of seamen available for the national
defense, the system to have regard also to the construction of vessels which
may be promptly and economically converted into cruisers, transports, col¬
liers, and supply ships for the use of the government. Special provision
should also be made for vessels and men engaged in the deep-sea fisheries.
" Extended application of the principle of the act of May 10, 1892, by
virtue of which the St. Louis and St. Paul were constructed in this country
upon the" registry-of the foreign-built steamships Aeia York and Pa?-is, this
extension to continue for a short term of years, and to be so guarded as to
preserve the coasting trade to American-built vessels."
The law of May, 1892, is entitled, "An Act to encourage American ship
building," and its first provision is to " grant American register to certain
foreign-built steamships " ; and the admission of the Paris and New York has
the approval of every American.
The principles of the law of May, 1892, would place the foreign-built boats
upon the same footing as to foreign trade as those later to be built in this
country.
The plan does not overlook the welfare of our buili^ers, and provides for
them larger orders than they can possible realize in any other way.
I trust that your deliberations will result in your endorsement of this plan,
and that the Administration will reiterate it next month, and that the people
will demand the privilege of purchase abroad, willing to enter into obligation
to build like tonnage in the United States.
Up to 1861 the building of wooden vessels was prosperous, and we were a
rival to Great Britain in the world's commerce. The Civil "War caused the sale
of 800,000 tons to go under foreign flags, and many merchants who had built
the clipper ships for the California trade sold them,, and took up the building
of transcontinental railroads, and later did not re-engage in shipping.
Our wooden ships were later found to be inferior to the English iron ves¬
sels, and in more recent years to those of steel construction, but our laws
forbade the purchase of foreign-built vessels, and our builders were unable to
supply such vessels, and we had to do witliout ; the ship builders got few
orders for the foreign trade, and the ship-owning industry has been dying a
lingering death. •
In all otlier directions we have expanded. Sliall we remain hide-bound to
the limitations of the law of 1789, when we see its utter failure to replenish
our tonnage in the last forty years?
I have stood nearly two years in support of this Administration measure.
6
and necessarily I am in opposition to the partisan narrow measure now before
Congress.
The Frye-Payne bill proposes to admit foreign-built vessels to registry not
for a term after the enactment of the bill, but only such foreign-built steam¬
ships as were on January 1, 1900, owned by or were under construction for
account of American citizens ; and that those vessels shall receive less than
one half the subsidy which will be accorded to the vessels to be built in the
United States.
Great stress is made that at time of registry the entire vessel shall be owned
by American citizens, but there is no requisition that thereafter even a major¬
ity of ownership shall be maintained ; and it is admitted by the committee of
Congress that there is no barrier to prevent these vessels under the Ameri¬
can Hag, and with subsidy contract secured for ten or twenty years, being
owned in great part by aliens.
I quote from the bill. Section 26 : "The word 'person' or 'persons' or'cit¬
izen ' or ' citizens,' where used in this act shall be deemed to include ' corpora¬
tions,' ' associations,' and ' partnerships ' exis'ting under or authorized by the
laws of either the United States, of any State, of any Territory, or of any
foreign country, unless otherwise limited by this act."
Under some of our State laws, corporations may be organized without any
requirement of the American citizenship of shareholders, or anj' local obliga-
, tiou except payment of prescribed dues.
I regard this loophole as a most serious menace to the regaining of our
commerce. It is the boast of some foreign steamship companies that if the
bill passes, they are prepared to secure its benefits. After protecting ship
building so rigidly, under .the law of 1792, let us now be not unmindful that
it has required continuous ownership by a citizen or citizens of the United
States, and not give license to foreigners to own our registered vessels, and-
receive our subsidy to compete the harder with us.
The foreign-built vessels which it is proposed to admit to registry, said to
aggregate 318,000 tons register, are owned by five or six firms or corpora¬
tions in New York City, namely : —
Steamships
Tonnage
International Navigation Co,
Atlantic Transport Co. .
T. llogan & Sons . . .
F. E. Bliss
Vf. E. Grace & Co. . . .
United Fruit Co
15
16
12
8
6
2
102,000«
114,000
47,000
31.000
21,000
3,000
59
318,000
Senator Frye says that the committee is of the opinion that, " as a maxi¬
mum, not to exceed 320,000 tons of foreign-built steamships will apply for
registry under this bill." If the President had recommended that 320,000
7
tons of vessels should be admitted to registry, provided another 320,000 tons
should be built in" this country by the owners, we might concede that these
owners had the middle of the road, to secure the privilege.
But if the President meant what he said, and we know that he did, he
wished to temporarily suspend the prohibition of the law, that the people
might for a short term of years buy vessels abroad.
. We would not hinder the aforesaid owners from registering those vessels
along with other vessels which they might add to them, and they should not
begrudge the rest of the people their privilege to avail of the same plan after
the enactment of the bill ; nor would we deprive our builders of business, but
provide for them more orders for ocean steamships than they can realize in
any other way.
The Commissioner of Navigation estimates the capacity of our shipyards
for merchant vessels at 100,000 tons per annum, which he thinks will be
realized for them under this bill, in excess of their building for the coastwise
trade, and warships for the United States and other governments.
An analysis of the results of this bill would appear to warrant an increase
of our present available 300,000 tons to 1,000,000 or 1,100,000 tons in the
next five years. Surely that cannot satisfy you.
I have been told that the first draft of the Hanna-Payne bill did provide a
year's opportunity for purchase of vessels abroad, but the Promoters Com-'
mittee did not approve it. Their animus was clearly shown by the remarks
of one of their members at a meeting of the New York Board of Trade and
Transportation about March 1 last, in which I participated. He said : " We
are only concerned in taking care of the fellows who have already invested in
foreign ships. . . . The ship builders would never consent to carrying on
that principle, and opening the door to the present investor in foreign ships."
The foregoing remarks were from an argument directed against an amend¬
ment introduced by me that the Board urge legislation by Congress for the
Merchant Marine according to the recommendations of the Administration,
and which was defeated.
I have all my life been a Republican, and in favor of our protection sys¬
tem, when it protects, or is necessary to our industries.
I have been proud to support the recommendations of the President, the
head of my party, although I have found myself at variance with some mem¬
bers of Congress and the promoters of the pending subsidy bill.
On May 17, my Congressman, Mr. Moody, introduced into the Congressional
Record an open letter regarding this measure, and the secretary of the promo¬
ters wrote a long letter in rebuttal to General Grosvenor, which he inserted in
the Record May 31 last, with this introduction : —
"Mr. Speaker, I avail myself of the order for general debate granted by
the House to place in the Record an open letter addressed to me as chairman
of. the House Committee on Merchant Marine and Fisheries, and which pur-
8
ports to be a reply to a letter of one Peabocly, a British inercbant and char¬
terer of foreign sliips in our foreign trade.
" I may only add that, of course, anything which will benefit American
shipping and American labor will injure the jjusiness of Mr. Peabody, and
the British-American interests he represents,then follows nine pages of
IMr. A. R. Smith's letter.
I am an American merchant in foreign trade, and without anj' affiliations
with foreign ship owners ; but I confess that I am obliged to charter foreign
vessels, because there are scarcely any American ships.
There have been built in the United States in the ten years ending in 1898
an average of 21,000 tons gross register ocean steam vessels, England build¬
ing an average of 908,000 tons.
During the year ending June 30, 1899, there were built in our country: —
Kor domestic trade, vessels, barges, etc 250,000 tons
For foreign trade, 19 ocean steamers 44,000 ,,
Two sailing ships of steel 0,000 „
Total, 300,000 tons
In Great Britain there were under construction on September 30, 1899, 471
steam vessels of steel, of 1,331,000 tons, beside warships.
The transition from sailing ships to steamships has been a gradual process
with our competitors, so that they have plenty of steamers and the expe¬
rience of running them. We have furnished them cargoes aggregating some
28 million tons weight, and paid them in freights 160 millions of dollars
annually. It would be a libel upon Americans to allow that they have lacked
enterprise or capital to have maintained our tonnage according to our in¬
creased commerce since 1865 ; it was simply impossible by reason of the
laws of registry.
American merchants, manufacturers, and railroad companies have been
compelled to utilize foreign vessels, and to encourage and approve the estab¬
lishment in our ports of foreign houses and agencies for the conduct of lines
of vessels that ought to be American, willing to cooperate with foreign
steamship owners, who enter upon established routes of commerce which
have been occupied by Americans, whom they would drive out of the field if
they could.
Many of the gentlemen present are identified with our trunk lines of rail¬
roads, and allied with foreign steamship companies, to connect with their
terminals, because there are no American steamships available.
I give an instance of the expanding needs of Boston, and how it has to be
supplied.
The Boston & Maine R. R. Company has so increased its connections and
terrninal facilities that it required greater ocean service, and the President
sent an agent in September to invite the European steamship companies to.-
9
put on more boats to various ports in Europe. He has returned and the
papers report " that he was very successful ; sailings will be multiplied and
new routes established, icMch means large commerce for Boston."
This growth would be ranch more pleasing if the commerce was conducted
in considerable degree by American vessels.
If the simple recommendation of the President in 1898 had been made law
in early 1899, there would now have been no lack of American steamships,
and freights would have been much lower by reason of the competition for
connection with our own railway systems.
"Who is afraid of too many vessels under the Stars and Stripes? Our
people will not increase the world's tonnage so much by reducing the tonnage
of foreigners by purchases as to rely entirely upon our slow replenishment,
when the millions of tons building in Europe along with our building will
some day develop an oversupply.
The president of the International Steamship Company and of the Ameri¬
can Steamship Line is chairman of the Promoters Committee, and it is not
strange that the subsidy is adjusted to yield to the fast passenger and mail
boats of the line more than three times as much subsidy as a freight boat
of 9 or 10 knots would receive for the same distance.
These slower boats are the preferred type for cargoes, and can afford much
cheaper freights than the 14 knot or the 21 knot boats. This will be of
interest to the Grangers ; they deliver cargo in the antipodes from New York
in 55 to 60 days.
The Republican platform of 1900 states that the conditions "supply a
compelling reason for legislation, which will enable us to recover our former
place among the trade-carrying fleets of the world." Shall we allow the
before-mentioned group of ship owners to shape this important legislation to
just suffice for their own plans and advantage, or demand a real privilege for
the people at large ?
During our history some 2J million tons of our registered vessels have
been sold to go under foreign flags ; this figure might appropriately be made
the limit of our purchases, in our extremity, from foreign builders, which
would require similar tonnage to be built in this country, and so provide pos¬
sibly a fleet of 4 to 5 million tons. If the people do not buy, there can have
been no harm in affording the opportunity.
One of two things will come to pass. Either the promoters, by their influ¬
ence over the Republican press and in Congress, will press the subsidy bill
for passage between December and March, advance the date for the closing
of the door of opportunity to owners of foreign-built vessels to about Decem¬
ber 1 or 31, and, if possible, pass it. It may then appear that a considerable
number of foreigns teamship contracts will have been filed, and the same favored
group of New York capitalists will have the lion's share of them'; there will
be more tonnage offered than Senator Frye indicates.
10
Or, slionM it appear, as I believe to be the fact, that much interest has
arisen in the Merchant Marine, with more conservative capitalists and citizens,
OS a new Qeld for investment, the bill maj be mode to conform to the Presi¬
dent's plan, and a year or more given for the people to procure foreign-built
steamships ; and 1 believe that there would be« within ayear, abont two million
tons, or 300 to 450 steamships registered, to be doubled in a series of years
by building in this country.
The advantages to our shippers and raih-oads would be immediate in the
receding of the now high rates exacted by the foreign lines, as the American
vessels would be in competition.
The stimulus to all these new investments wonld be the subsidy, and the
advantages to the country in reduced rates would far exceed tlie cost of
subsidy, besides tlte saving or retention in our country of a portion of the
large sum paid to foreign owners in freights.
There can be no disagreement as to the poverty of our Merchant Marine,
or that our commerce is enormous and growing, the exports for last month
exceeding 163 millions—more than our vessels carry in a year; or that the
time has come for rapid and material increase of our tonnage.
When our government has been in need for transports, it has not waited
for vessels to be built, but has bought of foreign owners as best it could.
Now the problem faces us, upon the threshold of the opening Congress, with
a measure in the interests of half a dozen corporations, two or more of which
are, according to the papers, considering consolidation.
Are yon willing to abandon to two or three groups of owners your right to
share in this investment opportunity, in harmony with your great raüroads?
Let that bill pass, and you will commit our future to that plan for twenty or
thirty years, since every owner securing a contract for subsidy may enjoy the
full time, by substitution of vessels, for any lost or withdrawn, and con¬
tracts entered into cannot be abrogated by change or repeal of the subsidy act.
The only immediate replenishment under the Frye-Payne bill will he real¬
ized from the admission of foreign-built tonnage, and some contracts already
made with our buiWers, who are, with orders for our government, foreign goy-
ernments and coastwise tonnage, full of business for two years to come.
There is no chance for you unless, like the aforesaid owners who press this
measure, you have already under purchase or contract abroad vessels to
brought into registiy.
The promoters want all its privileges themselves, and you will see that they
have looked out for number one. They will like to have yon commit to them
the monopoly of the slice of onr commerce that they may wrest from the
foreigners j they want none of your help, except to sanction the bill.
By the Bepublican press under their control, everything favorable, matters
and editorials furnished by them, have been served to the public, and trade
organizations indnced to pass resolutions in favor of good legislation or of
11
this measure, Tphicli is represented as the best that can be secured, and the
only one that can pass,,and that is approved by the Administration.
Some organizations are stated by the committee to have declared in favor
of the bill who do not know of it themselves, and deny the fact, but their
influence goes in just the same.
It is not too late yet to secure a bill in the larger iuterèst of our Merchant
Marine, and for the participation of the public.
Your influence is great. If you agree in appeal for broader legislation,
others will follow your example.
5556 042 481713